The average American will not reach the majority of their goals.

This is a sad buy true reality. They wake up and they are 45 years old, overweight, in a home that is too small, raising expensive kids, saddled with debt, and have little or no retiremnt savings. How did this happen?

Most started this vicious cycle when they were in their twenties. They took on student debt, used credit cards to supplement their "lifestyle" and saved nothing. When their incomes started to rise, the expenses rose to match or exceed them. A wife, mortgage and kids led them into a seemingly never-ending race to make enough to survive.

How does one stop this cycle?

The answer is simple...start early. Many of the younger (under 30) persons that come into my office have no idea that they can make a significant impact on their future financial health.They believe that they do not make enought money in the early stage of their career and they are waiting until they get older and make more money before investing. This is the biggest mistake and misconception I see with younger clients.

What specifically can a young person do to build wealth?

A young person can begin laying the foundation for wealth-building. This entails the following:

1. Build up a savings account with at least 3 months of expenses- This will keep them from using credit cards for emergency expenses. It also allows them to pursue career opportunities without worrying about a temporary lapse of income.

2. Start investing the smart way- Most young persons are in a low tax bracket. Pay a little bit of tax now and reap the benefits of tax-free income at retirement! They should be taking advantage of Roth IRAs and Roth 401k accounts at work. The great thing about payroll deductions is that the investor never "sees" the money. It is out of their hands before they see it in their bank account or paycheck. Take advantage of any company matches, this is FREE MONEY! If you do not have an employer plan, start a Roth IRA at a reputable institution and have them start taking out a small amount each month automatically from your bank account. This lets the young person treat the investment like a bill. Most of us get used to paying small bills that are automatic. Think about your cell phone or cable bill. They were hard to get used to in the beginning but after a couple of months people get used to paying them.

3. Stay out of debt- Keep one or two credit cards for emergencies. But if you use them for emergencies pay them off with your emergency savings. The stock market averages around 10-12% over time, but credit cards for young persons charge around 20% interest. Keep your balances low or at zero.

4. Educate yourself- Not everyone needs a degree to succeed. But everyone needs knowledge to succeed. If you know what you want to do for a career, find successful people in the same industry and learn from them. Find out how they got to where they are and emulate them. Some careers do require formal education. A cheap way of getting that formal education is to take advantage of community colleges for the first two years of school. The first two years of general education for a degree program are very similar at a four year university and community college. Then transfer to the school of your dreams for the portion specific to your degree focus. This will cut your education costs by as much as 50%. If you don not know what you want to do then take some classes or interships in various fields. The best way to find out if you like something is to do it.

All of the information above is general advice. Everyone's circumstances are unique and will require unique solutions. The general concept is to start early. I could bore you with statistics and projections, but the best thing I can tell you is to get your finances in order while you are young and life is simpler. Marriage, kids, careers, and life in general will make it much harder to build wealth if you start later.

Another piece of advice is to see a financial advisor that specializes in financial planning. They usually give a free consultation to prospective clients. You can pick their brain for an hour for free and gain some useful tips. You can also build a relationship that will help you when your life and finances do get more complicated and you need more financial advice.


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