I was reading this article on MSN Money, and it really intrigued me how true it is.
The article was about If you can retire at 40 and how? The solutions suggested was quite simple to save 20% of your every paycheck, and put it in an index mutual fund and don’t touch it until you are 40…sounds too good to be true, but calculations say that its a good decision. On an average, the index funds have good returns.
Question is, how easy it is to take out that 20%, and wait for delayed gratification when you can have it now! Again, there are two schools of thoughts:
1. You are young now, you have whole life infront of you. Spend, enjoy, have fun..who has seen tomorrow??
2. No one has seen tomorrow..better save for tomorrow because you never know what could happen.
Both of the streams are right, and its very difficult to choose one. Right? (if its easy let me know how you made it easy 🙂
Anyways, so my questions remains the same..what thought stream to follow? What would you do? Is it true that we write our destiny? and if we do, should we write it now by spending and having fun, or by saving for later?
In Richest Man in Babylon, Author has given a success rich recipe of saving 10%, paying-debts 20%, spending 70%.
So, that makes saving part easier..but again, if you do have debt ..which most of us today have, it makes the things difficult because now you have 30% to save, and only 70% to spend…talk about a shopping spree!
Another way of money management suggested by an indian story is of 25% for all…that means 25% to past – for Debts. 25% for present – thats for spending. 25% for future, means savings and investing. and 25% for charity and giving back to society. I wonder how many of us still believe in society, and giving back to it…but still, this again is a good recipe for success, provided you can stop your hands from going into your pocket everytime you see a new dress on display in the mall.
Give me your frank opinion…what strategy will you prefer of these 3? or, if you have another strategy…please do share. God bless.