The following excerpt teaches investing lessons through one of my favorite stories about me and my grandson. I’ve taken this excerpt right from my new book, “Money Mastery.” You can order your copy of “Money Mastery” here: click me! You’ll learn about how to get out of debt, how to start investing and how to build wealth God’s way.
The second step (to building the First X) is to learn to live on 80% of your income. And honestly, I would even challenge you to live on 70% of your income, but that’s not immediately possible for most people.
So how does it work? Well, the 80% goes to your expenses: debts, rent, food, fun, etc. Then you tithe 10%, put 5% with someone who can professionally invest the money, and then personally invest the other 5%. (If you live on 70%, it looks like: 10% to tithe; 10% to professional investor; and 10% to personally invest.)
A mandatory withdrawal starts at the age of 70 for many Americans’ 401k’s and IRA’s. And often that mandatory withdrawal is taxed at the earned income tax rate. So what happens is that these people end up paying more in taxes when they retire then when they were working.
So instead of doing that, take 5% of your income in the beginning and learn how to invest it yourself. Do not only professionally invest it. I started teaching my grandson how to personally invest when he was eight years old. I pulled him aside and said, “Brayden, listen, Poppa is going to teach you how to invest.” We went out on a Saturday morning and found a garage sale with an old, broken-down, red wagon. It was rusted over and missing a wheel.
We paid $2 for that broken wagon. Then we took it home and I found some black and red paint in my garage. We bought a new wheel. I let him do a lot of the sanding and some of the painting. When it looked like new again, we put a sign out in the driveway and put the wagon up for sale.
We took $2 and turned it into $20! I showed him how to personally invest. We had some costs with paint and a wheel and a lot of elbow grease. We put in a lot of sweat and equity. But Brayden walked away knowing how to invest.
That is a simple example of how you can invest yourself. Find ways to bring in extra income by learning to personally invest in something. This could be a Mary Kay business or an eBay shop or flipping cars.
When you learn to live on 80%, you are practicing mastering your money. It’s going to be difficult to set aside those funds when you normally spend them. It’s actually going to require you to start mastering yourself. You’ll learn self control and discipline. And when you learn these things, then you will be in a stronger position to start building wealth. You’ve just got to dig the trench.
Now, I understand for most people 80% is nearly impossible immediately. But if you’re serious about money mastery, you can grow to learn to live on even 70%—especially if you’re taking value to the marketplace. And if your income is increasing, then that 70% or 80% becomes a lot bigger.
You can order your copy of “Money Mastery” here: click me!
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