I recently had the privilege of chatting with Howard, who just turned 50. After spending just 25 years in the workforce, Howard and his wife recently retired with a portfolio worth in excess of $2 million.
Here are some of Howard’s most important lessons for younger savers.
Start early
As soon as Howard graduated from university, he immediately started saving. He used the common rule of thumb of putting away 10% of his income.
A few months later, he realized he could be putting away a lot more. He immediately upped his savings rate to 30%. He then upped it to 50%.
Howard loves thinking how those dollars have grown over the years.
Keep costs low
Howard is the first to admit the main reason why he ended up in a small town was because it offered a low cost of living.
It was true then and it’s true now, especially for people who will make a similar salary no matter where they live. Dollars go farther in a small town.
Avoid lifestyle inflation
Howard was ecstatic when he got married. Now he could use his wife’s income to really goose his savings rate.
She had other ideas, and Howard was soon forced to spend a little more than he was comfortable with. But he kept his eye on the prize, and still managed to save more than ever.
Make it a game
Howard’s last piece of advice is perhaps the most powerful. By making saving a game, people can avoid feeling burnt out. Treat each net worth milestone as a different level without losing sight of the ultimate prize--financial independence.
