Today's financial sacrifices can result in big dividends in the future

Mike Summey -- Very successful Real Estate Investor gives some wise advice....

When I was a young man just getting started in life, I struggled. The product of a broken home and with little education, I struck out at the tender age of 15 to make it on my own. I remember those times when I woke up knowing I would have to earn money that day or I wouldn't be able to eat that night. Too proud to accept handouts and unwilling to turn to the government for help, I embarked on a journey that led to a most important discovery: I learned what is required to live the lifestyle of success.

I couldn't help but notice people around me who by middle age were living what appeared to be charmed lives. I never missed an opportunity to pick their brains and try to learn how they did it. The first thing I learned was that it is nearly impossible to earn your way to wealth. Sure, high-income earners often had big houses and fancy cars, but very few of them could sustain their standards of living if they were suddenly unable to work.

I also learned that truly wealthy people were the ones who were able to live on the income from their investments. They also seemed to be more relaxed because they weren't facing the daily pressures that having to earn an income to support a lavish lifestyles can bring. I wanted to be like them.

Once the income from your investments is adequate to cover the cost of your remaining days on earth, you have reached what I call "functional retirement," and there is no age limit associated with it. It's the point in life where you are able to choose what you do. If you wake up and want to play golf or go fishing, you can.

Many people lack patience and try to reach functional retirement too quickly. They play the lottery, invest in high-risk speculative ventures or turn to illegal activities in an attempt to get there with little sacrifice. They can't see themselves ever becoming wealthy, so they resign themselves to working the rest of their lives or scrimping by on a Social Security check in their elder years.

Another telling sign of impatience is people who mortgage their futures by committing tomorrow's income to buy more today. These are the ones who struggle to make payments on cars and boats and run up big credit card bills. Too many people in America suffer from an "I-want-it-now" syndrome. They fail to see how this mentality guarantees an "I-will-have-less" lifestyle later.

Life is like a bank account: You have to make deposits before you can make withdrawals. If you deposit part of your earnings each time you get paid and live on what's left, gradually your bank account grows. If you keep at it long enough, eventually the earnings from your investments can replace your paycheck.

"But," you say, "how can I invest when I can barely pay my bills now?" Answer: It's simple. You reduce your standard of living for a period of time just as you would if your income was suddenly cut by 10, 15 or 20 percent and you couldn't find another job to replace the loss. Is that easy? No. Is it possible? Absolutely.

Here's a tip: Pay yourself first. Each time you get paid, take a portion of your earnings and put it aside in some type of savings account. Then force yourself to live on what's left. It may mean you live in a smaller house or drive a smaller car, but doing so will result in a much higher standard of living in the future.

Developing the habit of saving is the secret to financial success. As long as you are saving and investing regularly, you are on the road to financial independence.
Many young people tell me that money isn't everything - they want to be happy too. But are those two things mutually exclusive, or have we just been brainwashed into thinking that way? If you want the real answer, ask elderly people who are struggling to keep a roof over their heads and food on the table. I'll bet they'll tell you they wish they had saved and invested when they were younger.