establishing an irrevocable trust for the children, which will allow their assets to be managed by the successor trustee (one or more persons chosen by the parents) until the children are old enough to collect.
“My mother always encouraged me to save money,” says Karen. Her mother, a welfare recipient, took her to open her first bank account when she was 14 years old. “She would say, ‘Don’t spend all of your money on a lot of expensive things, only buy what you need.’” The Smiths have passed on this financial knowledge to their son and daughter.
Today, Johnny, 51, and Karen, 46, still have a number of years left before they retire. “I see a lot of skiing, and we love to travel,” says Johnny. “We want $1 million by the time we retire. That’s what we’re aiming for, and we are going in the right direction,” he adds.
The couple has achieved many of their financial goals.
They offer four tips to those wishing to build wealth for retirement through saving and investing:
Stick faithfully to a systematic program. Just as you allocate dollars to pay your bills and support your lifestyle, regularly sock away a portion of your income for savings and investments.
Don’t buy anything you can’t afford. The Smiths have stuck to this rule. If they do buy big-ticket items, they make sure to pay cash for it. “Anything that we put on a credit card, we pay the balance in the same month the item was bought,” Johnny says. Unnecessary liabilities only add up and diminish your assets and overall net worth.
Work together to achieve your financial goals. This includes not keeping money secrets. “We sit down and discuss everything, what we are going to do, and how we are going to spend our money. What’s his is mine, and what’s mine is his,” says Karen.
Stay away from credit card debt. Resist the lure of credit cards. Paying interest on borrowed money can keep you from achieving your financial goals.