Are You Robbing Tomorrow to Fund Today?

How do you balance saving money for tomorrow with spending money on a family that you can see and touch…today?

Well, it might help to understand how money and human nature affect one another over the long run.

You see, you can never get today back.

This also means that the saving that you’re not doing today will be much harder to make up tomorrow. Why? Well, the math is against you. But so is your own human nature.

The only way to make up for saving that you’re not doing today is to either save more, earn more on your money or work more, pushing back Tomorrow even farther into the future.

Let’s take the example of a 25-year-old who starts to save $2,000 a year and earns say 5% on his investment and he does so for 40 years. If he did that, he’d have about $250,000 by the time he turned age 65. Well, if he waited not to do it at 25 but rather to start at 35 and save the same $2,000 a year, he would have about $140,000 at 65. If he waited until he was 40 to start, well he’d only have about $100,000 at his age 65 retirement.

So, can the 35-year-old simply save more to reach the same $250,000 by age 65? Well, sure. He’d have to save not $2,000, but about $3,600 per year.

Could he do better with a higher rate of return? Well, you bet he could. Our hypothetical late-bloomer 35-year-old could save the same $2,000 a year as his 25-year-old counterpart and have the same $250,000 by age 65 if his investment earned about 8%. Well, that may not sound like a big difference, but it represents a significant increase in risk – which presents a much greater opportunity for loss (as well as the opportunity for gain).

Well, finally, our 35-year-old late-saver could simply work longer…say to age 75…and save at the same rate as his 25-year-old friend, for 40 years.

So, when confronted with the previously mentioned choices (save more, work longer or try for a higher rate of return), which do you think he’ll go for? Higher rate of return every time! You see, this isn’t really a math problem, it’s a human problem. And human nature (without significant push back) will choose the easy way out every time.

By the way, when does later come?

Well, let’s suppose that you’ve got small children. Will they get less expensive to raise as they age? Do you plan to help them pay for college? Might they have a wedding to pay for one day? And those cute little rug rats might even grow up, get married and give you a second generation of rug rats – cuteness compounded! Is there a possibility that you’re gonna want to spend money on those grandchildren?

Well, I know that you don’t have enough money today. You don’t have to convince me of that.

What you’ve got to understand is that you will never have enough money. There will always be “necessities” crying out to be bought or rented or leased. And every one of them will whisper in your ear, “You can save for tomorrow…tomorrow.”

The truth that you can avoid but never escape is that when you fail to save today, you’re robbing your tomorrows to fund your today.

The solution is BALANCE within a PLAN.

BALANCE means taking advantage of every opportunity for good that Today offers you, without robbing Tomorrow of its rightful resources.

PLAN means identifying and prioritizing that which is most important to you and allocating the dollars in proportion to those priorities.

You’re only gonna get one today. So, live it to the fullest by all means. But by the use of a balanced plan, teach Today to not steal from Tomorrow.

 Offering you Wisdom on Wealth, I’m Byron Moore.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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