Saving Your Money Will NOT Make You Rich - Especially in a Quick Manner

You know what annoys me?  When people who aren’t in a position to speak about something try to advise others how to do something they themselves haven’t done or aren’t doing.

I woke up this morning and turned on ABC’s “Good Morning America,” where a woman named Mellody Hobson was giving tips on how a person can retire by age 65 with $1,000,000 in the bank.  I’m already looking at this report like it’s going to be a bunch of bull because (a) she wasn’t old, and (b) she didn’t have a million dollars saved up.  That’s two strikes, and she hadn’t even opened her mouth yet!

She basically reiterated the same techniques I’ve heard time and time again.  To save time, here’s a short list:

• If you’re 25, save $75 a week in a mutual fund with 8% return, and you’ll have a milli by the time you’re 65
• Contribute money to your company’s 401(k) plan so they’ll match your amount and help you earn more money for retirement
• Focus on putting more money in your retirement fund and less on putting it in your kid’s college education fund
• If you’re 45 or 55 and haven’t been saving since 25, you can still make a million - you just have to contribute more per month (say, somewhere between $1500 to $5500 of your earnings) to have that money by 65
• Consider working past 65 so your retirement fund will be even higher
• Be dilligent about how you spend every dollar

All these techniques, though, have two things in common: they lean heavily towards the idea of “saving” for wealth, and they make you wait WAY too long to enjoy the money!

This lady has NO idea what she’s talking about!!  Okay, let me rephrase that: she has SOME idea of what she’s talking about - it’s just that most of it isn’t going to be helpful.  Here’s why:

1. Saving money now to be spent later WOULD be a great idea, if it weren’t for the fact that economic inflation makes future money worth LESS than today’s money.  Think of it in this way: 10 years ago, you could have filled up a 12-gallon gas tank for $15.  If you had decided to save that money in a mutual fund account in 1998, you would now have $31.81.  However, if you tried to use this money to fill your 12-gallon tank now, guess what?  At $4.11 per gallon, you’d only be able to get 7.5 gallons into your car!
2. By the time a person turns 65, they’ll have additional expenses they may not have had in their younger days.  Medicare, doctor expenses, pills, surgeries, hospital stays, nursing homes, and a plethora of other things can pop up at an older age that the younger version of yourself may not have thought about, and a million dollars can be spent up pretty quickly!
3. Even if you attempt to do what she says and “save, save, save,”  life can always throw a curveball that makes saved money become obsolete.  Got money in your company’s 401(k)?  If the company goes belly-up, they might not have to pay you at all!  Invested in stocks?  A catastrophe like 9-11 or Katrina can completely cause them to be wiped out.

What I hate most about her tips, though, is that they make a person wait TOO long to get a million dollars!  Now, I’m no millionaire myself, but I read books by people who ARE millionaires and/or billionaires - T. Harv Eker, Donald Trump, Russell Simmons, Robert Kiyosaki - and all of them have one very important thing in common:

THEY DIDN’T WAIT UNTIL THEY WERE 65 TO BECOME FRIGGIN’ MILLIONAIRES!!

Why? Because they knew that simply saving up money wasn’t going to make them rich.  They knew in order to get rich, they had to figure out ways to make their money work for them, even at times when they weren’t physically working themselves. 

People may think they’re doing this when they put their money into accounts that help their money gain interest; in reality, stocks and mutual funds are the lazy man’s way of accelerating money.  The people whose names I listed above started businesses, obtained real estate, created products, all with the goal of using their ideas to double, triple, or quadruple their earnings.

This woman also doesn’t mention another important thing: that working soley for the benefit of yourself will NOT make you rich.  Wealth is the result of figuring out how you can help the most number of people possible while charging money for your services. 

A guy like Robert Kiyosaki can write a book called “Rich Dad, Poor Dad,” and become rich because his book helps others figure out what they’re doing wrong with money.  In the process of helping MILLIONS of others, he also makes money off the book.  A person going to work everyday in the hopes of saving up money for retirement is only helping themselves (and their company - but it doesn’t count because, as an employee, you CAN be replaced if you mess up), and therefore can’t make their money grow as fast.

So, my advice on how to become rich is this: don’t listen to people who aren’t rich on how to become rich.  Read books by people who ARE rich and study their moves so you can retire early enough to enjoy your money and all life has to offer.  If you’re fortunate enough, you just might be able to have lots of cash to spend BEFORE you hit 65!

-Aaron P. Taylor