being on Oprah, I have completed my bachelor of commerce degree and masters of business administration and written for a number of newspapers and magazines. I own a house and have an awesome partner. I’m an entrepreneur and started an online money school called MeVest, and I have savings for the future. I also have a lot of fun! By the time I retire, I’ll have millions of dollars. Because of this success, I’ve become a spokesperson and advocate for young people who want to chase their dreams and be fully equipped to handle the price tag. My passion is for teaching and speaking about money management and financial literacy. I have delivered presentations to thousands of people across North America, with audiences ranging in age from 6 to 80.
Before we go any further, I want to assure you that I was (and still am!) normal — like you! I went to school, worked a part-time job through high school and university, and completed my homework even when it was tough or boring. When I graduated, I got a full-time job and worked hard at that, too. I travelled. I bought a car. I purchased a home. On weekends, I socialized with friends and squeezed in a little relaxing time. I went through the same ups and downs that every young person experiences. The only difference? I wanted to be wealthy by the time I was 30 and I started planning earlier than usual to make that happen.
Today, at 30, I am rich and I did it myself. And the best part is that I haven’t had to make huge sacrifices to get there.
Now I want to show you how you can become rich by 30 too.
Listen Up!
Out of all the advice you’ll read in the pages that follow, this could be the most important: you can do extraordinary things with your life. You may think that you can’t, or that what little money you have to contribute to your own financial future isn’t enough. You can, and it is. All of your time, talent, money, and effort will pay off in the long run — literally and figuratively — if you can focus on making positive financial choices today.
So how do you do it? This book is going to get you started. As you read, you will find useful information on getting motivated and organized, pursuing your education, getting smart with your money, and getting started with your career, savings, and investing. Perhaps for the first time in your life, you’ll be getting financial advice from someone your own age — someone like you. You’ll learn about basic money management, including how to make or find money, debt reduction, budgeting, getting a job, and investment strategies. You’ll learn how to live a frugal life without making painstaking sacrifices. You’ll learn why it makes so much sense to start planning when you’re young, and why it pays to diversify. You’ll learn tips and tricks to pay for college, university, trade, or technical school. You’ll learn the difference between savings and investments, and pick up some short- and long-term investing strategies. Perhaps most importantly, you’ll learn that money is only one part of a balanced and happy life — personal and career satisfaction are just as important.
When the tips, techniques, and strategies on the pages that follow are combined, they make for a very “rich” lifestyle and great personal and financial fulfillment. This book doesn’t offer a “get rich quick” scheme. It is about learning the financial fundamentals that will secure your financial future in the long term. And by reading it, you are well on your way to financial success.
Happy saving!
CHAPTER 1
Get Motivated: Why Money Matters
A Few Boring Truths
Ready or not, the future is upon you. Before you even know it, you’ll be thinking about things like the cost of college, mortgages, cars, kids, vacations, and — yup — retirement! It may sound boring, but it’s your responsibility to think about these things. You must take positive steps now so that you can create the future you want. You are the only one who can make your dreams — financial and otherwise — come true. If you don’t look out for your future, who will?
The Sort-of-Boring Truth about the Distant Future
Kevin is 23 years old and the youngest of three children in his family. His mom and dad are both in their mid-60s, but neither can afford to retire. The situation is starting to worry Kevin. His parents seem tired all the time, and he’s concerned about their health. He’s even started to take on extra shifts at work, in between classes at school, so he can help out with the bills and groceries. One thing Kevin knows for sure is that he doesn’t want to end up in the same position when he turns 60! He knows the only way to avoid this scenario is to work hard now and get smart with his money.
Money is the key to your long-term financial security. It’s scary to think about this, but by the time you’re ready to retire, you will need approximately four times the amount of money that you need now — just to live the way you’re living now (keep those “lifestyles of the rich and famous” fantasies in check!). This hard-to-swallow truth is due to a nasty little thing called inflation. Inflation makes the dollars in your bank account today less powerful as time goes by. For example, four dollars today might be worth only one dollar 40 years from now.
Think about it this way: A 65-year-old woman with $1 million in retirement savings could call it quits tomorrow and not have to live below the poverty line. However, 40 years from now, a 65-year-old woman wanting to call it quits would need to have socked away $4 million to maintain her lifestyle! Another way to look at it? One million dollars today will be worth only $250,000 in 40 years. This is what financial gurus refer to as the time value of money, which essentially means that money is worth more today than in the future.
If this isn’t scary or depressing enough, wait until you hear the next part! The next time you receive a paycheque, have a look at the section on the stub where the deductions are listed. There are deductions for income tax and government pension plans, like Canada’s Canada Pension Plan (CPP) or Social Security in the United States. There may even be deductions for things like medical and employment/unemployment insurance. On average, for every dollar you earn, you’re really taking home only 65 to 70 cents, and sometimes less. What it boils down to is that the taxman and government get paid before anyone else, including you — the one who earned the paycheque in the first place.
Think the government’s retirement savings plan will be enough for you? Think again. The government’s retirement savings program will help you to a small degree. But that money will not allow you to retire comfortably because it’s a small sum. We’ll more than likely have to count on ourselves to assure our financial security.
Boring, and a little bit depressing, but true.
So your money becomes less powerful and less valuable as time passes. And you’re not likely to get much help from the government, or anyone else, for that matter. Are you ever going to be able to retire? Or buy a house? Or go to college? Or have a wedding? Or go on vacation? Of course you will — if you learn to care about your money. Handled properly and managed wisely, your money can not only keep up with inflation, it can beat it!
The Not-So-Boring Truth about the Not-So-Distant Future
Maya is 16 years old and in her second-last year of high school. She has average grades and comes from a financially average household. She loves to hang out with her friends, dance, and, most importantly, shop. Recently Maya has started to think about what she might want to do with her life. She made an appointment with the guidance counsellor at school to discuss her dream of becoming a children’s doctor. When she sat down with the counsellor, however, she discovered two things: the cost of medical school was very high and her grades would also have to be very high for her to have any chance of getting a scholarship.
Now Maya’s reconsidering. Unless something changes — both with her commitment to school and her financial planning — her dream will never become a
