Your Taxes: Life lessons for any age
I was recently given the opportunity to speak to a group of talented young students at the Daniel’s College School of Business. I presented the students with some life lessons about how to be successful personally, professionally and financially, and I think many of those lessons can serve as a reminder to us grown-ups as well!The first lesson is the #1 secret to getting rich: spend less than you make! I have worked with clients ranging from school teachers to CEO’s and there is not necessarily a correlation between annual salary and net worth. The simple secret to amassing wealth is to live below your means. And, while I don’t believe that money can buy you happiness, I do believe that money buys security and that is something we all desire.Another important life lesson is to always be charitable. My personal passion is with Rotary, yours may be with your church, your animal shelter or your child’s school. Whatever it is you feel strongly about, make sure that you are giving back at all times. During some periods of your life, this may be by writing a check. During other periods, cash may be tight and you only have time to give. All that matters is you give all that you can. The rewards you will receive will outweigh your investment every time.The rest of my talk centered around how and why to save money. Whether you’ve been saving for 20 years or you are just starting out, it’s never too late to make an impact. Did you know that if you save $5 per day for one year, the cost of 1 cup of coffee or a pack of cigarettes, and invested that money with an 8 percent return, you would have $3,800 in 10 years, $8,100 in 20 years, and $17,600 in 30 years. If saved that same $5 per day for 30 years, you would have contributed $54,750 to savings, but it would be worth $215,000! Check out the concept “time value of money” online some time, it’s a very powerful concept!The students also wanted advice on how they should save their money. As always, I advised them to seek out a qualified financial planner, but the current popular theory is to start with saving into your 401(k) up to the amount your company will match, then invest the next $5,000 into a Roth IRA, and then max out your 401(k). After that, if you have more money to invest, the options are plentiful.And, the last bit of advice I offered them was to take a fresh look at the American Dream. In this new economy, home ownership may not be the best goal for everyone. There is a newly found sense of security in being able to pay your bills each month without fear or stress, and renting a place until you save up enough to cover the down payment, several months of mortgage payments, and enough for repairs and maintenance on a house may be the best option for your family.Of course, this advice doesn’t necessarily apply to everyone, but please consider sharing bits and pieces with your kids, your parents and your friends. Given that it’s graduation season, perhaps you could pass it along to your favorite graduate as well!Michele Knight, owner of Knight Accounting & Technology, is a CPA and QuickBooks ProAdvisor based in Dillon. For more info and to contact her, visit http://www.cpamichele.com.
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