I had my third child about a week and a half ago. Now that things are starting to settle down (as much as they can with three children) I’m slowly getting back to work. It’s inevitable that I will start thinking about wealth generation and my finances when alone with my thoughts.
My new goal – retire at 54
I realized that I will be 54 when this new little one graduates college. My new goal is to be able to retire/slow down when he is done with college. How great would it be to own my time with so much life left?
My next task after that was to start writing down the actions that will help me get there. I figure that is 22 years away so its not so much about drilling into the numbers at this point but just trying to directionally move in the direction that I need to.
The first thing that I wrote down was to continue to increase my income at my 9-5.
The next action I wrote down was to continue to control my expenses. If you know anything about me, this is the foundation of my personal finance success. I have detailed spending data going back 7 years and can tell you that I’ve increased my spending by about 1.5% each year.
When you pair a spending increase of 1.5% each year and an income growth of about 7%, that gap starts to grow pretty big. Which brings me to my next point: investing.
I need to continue to invest as much as I can. This means investing across the board. I just need time to work for me. I’ll continue to invest into index funds via my retirement accounts, invest in index funds via a brokerage account and invest in real estate.
Actions I need to take
After making that list I realized the action items I need to take are:
- Increase my income
- Control my expenses
- Invest in retirement accounts
- Invest in real estate
The beautiful thing about that list is that these are all items I’m already doing. Granted I hope that the numbers I’m making and investing get larger over time.
It’s great to see that the actions I need to take are ones I’m already taking.
Patience and discipline
I’m listening (via Audible) to a book about Charlie Munger. The same day I made a list of these actions is the same day I stumbled across the chapter titled “The Right Stuff”. Its about the attributes Charlie believes someone needs to have success and create wealth.
The first two attributes? Patience and discipline. Not only are those two attributes I work to strengthen every day but they are the exact ones I need to continue doing the things I’m already doing.
The fact that I’m already doing the things I need to do is great. However, the single greatest risk is that I get bored of doing them. What if I slack off at work? What if I stop controlling my expenses? What if I start picking stocks?
These are the biggest risks to my wealth creation. Its a very real thing and these are the things that I need to avoid at all costs.
Keep doing what you’re doing is harder than it sounds.