I hate it when my friends perform better than I do. Not that I wish them any worse. I just wish I were doing slightly better. Fortunately, it is always possible to improve my financial outlook by managing my personal finances better.
With personal finance, you can improve your life with the resources you have. The only question is: what are you willing to sacrifice to get there?
It turns out that you don't need to sacrifice very much – provided you invest sustainably. What is a sustainable investment? It is a payment you can make regularly with the income you have, for as long as you can work.
If you don't think you have a little extra lying around, it is because you are prioritizing other costs – like HBO, or cigarettes, or eating out. But sacrificing any one of these for your long-term financial success could bring you a fortune.
Check out what happens when you put away $25 a month into a fund that earns 5% interest. Most savings accounts will not reward you like this, but you can find investment funds that will return more than that.
So let's say you are putting away $25 per month into this account. You start to do this regularly when you are 25. Not because you really believe a word of what I am saying, but because the next time you are hanging out in a group of friends, you can say, "Oh, I almost forgot to make my IRA contribution this month. But then I did, because I am a responsible person who is financially stable and who cares about my future."
By the time you are 70, that sacrifice will have earned you $50,000 in cash.
Imagine what you would do with it. Maybe you buy a car, or a freaking boat. Maybe you move to Costa Rica and live happily ever after for the rest of your days.
OK, so maybe that is enough to move your feet in the right direction. You open the account and sacrifice 3 packs of cigarettes a month. You forget about it because it's only $25 a month.
At 25, that seems like a lot of money, but by 30, you don't think so anymore. You are earning more by then, and you have developed some equally expensive vices. So you quit $50 worth of vices per month. That is the equivalent of a cup of coffee every workday. You start drinking the sludge at the office/store/shop/whatever.
Because that sludge may taste bad today, but at 30, it will earn you another $75,000.
By the time you are 70, you would have $125,000 in cash. Grab a quaint house in the country to live out the rest of your retirement, or a yacht.
We could do this all day, at the end of which, you would have a great retirement and a decent estate to leave your kids. All for making a couple of sacrifices early in your life.