Team Tony cultivates, curates and shares Tony Robbins’ stories and core principles, to help others achieve an extraordinary life.
Does father know best?
Legal Disclosure: Tony Robbins is the Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning.
Do you remember the rush of exhilaration when your father handed you to keys to his classic car, or your mother gifted you the family heirloom furniture? Being given a gift by a mentor, at the start of your life’s great journey, is one of the most powerful moments you’ll treasure for a lifetime. Mentors appear throughout the journey of our lives to offer their wisdom time-tested guidance, but as landscapes rapidly shift and change, the old maps can lead us astray.
And when it comes to finance, what worked so well for your father could be disastrous for you.
Chances are, one or both of your parents served at a single company for the span of their career, saving and investing for retirement through sponsored plans and maybe even earning a pension. The era of stable employment, yearly paid vacations and even 401(k)s are now as realistic a plan as stuffing cash under your mattress. This is the new normal. You have new rules to learn and new skills to master.
Just as you wouldn’t want your paycheck calculated on an abacus, you absolutely need the most forward-thinking strategies when it comes to your financial freedom. Let’s save our modern love for classic and vintage where it still works best. Your future depends on it.
Forget pension plans even exist — soon they won’t.
According to Forbes, not only is job-hopping every two years the new normal, people aged 19-36 have grown up in a workplace world of ever-expanding choices — hobbies can now be nurtured into passions and monetized. Your dreams may ultimately reach toward the same traditions of owning a home and starting a family, though chances are you view getting there very differently from how your parents did at your age.
Compared to thirty years ago, possibilities now seem limitless. Globalization not only brings the opportunity to earn a living in exotic locations, it’s shifted the workforces available to North America companies and displaced many who once relied on a single career to fully fund their lives and retirement. Technology has virtually automated one-click business: making, selling, marketing and building revenue streams. There’s no longer one right answer for everyone — only your answer.
Even if you’re fortunate enough to land a job like dad did, with an employer offering a pension, the likelihood you’ll remain long enough to collect is slim-to-none. Traditional benefit plans have nosedived since the ‘80s and those still offered are closed to new participants. But this isn’t news — the age of the employee is coming to an end. While many in their ‘40s and ‘50s are moving into their third and fourth careers, people under the age of 36 are breaking through defunct, limiting mindsets and diversifying their approach not only to finance but earning and spending.
Build your money machine and start creating passive income.
If you’ve already decided on your personal percentage to pay yourself first, as outlined further in our post on how to create a money machine, congratulations — you’re leveraging the magic of compounding to build an exponential return on your hard-earned money. However, it is your choosing to earn it. If you haven’t yet, click over and learn why harnessing the power of compound interest is the most important foundational decision you’ll make — and the earlier in your life you take this leap, the greater the returns you’ll reap later in life. We assume you’d rather retire rich and as soon as possible!
Only one in four people today under 30 own stocks, more than half believing they lack the money to invest, and many more simply don’t trust stockbrokers and advisors. After the housing crisis and nearly constant economic turmoil, who could blame them? But with automatic savings into compound accounts, you decide exactly what number is right for you and you maintain control of where you choose to place your investments. Compounding works like magic, but it’s very simple to understand. Your investment rides a steady average rate of return to continue doubling its total — over 30 years your initial sum balloons into a stack of cash even Scrooge McDuck could swim in.
This is your money machine.
Only you can design it, build it, and, most importantly, set it on “automatic” so you don’t even see the money before it adds to your principal. The best part is, you’ll soon forget the money is even in motion and painlessly adjust your personal budget, no matter what your base income is.
Some 65% of millennial-aged people polled by Nerdwallet have a current savings account, but only 9% have invested in some form of tax-deferred IRA plan. In this age of constant workplace transitions, job migration and layoffs, maintaining an employer-matched 401(k) has become a well-intentioned artifact of the the pre-recession era. Most experts recommend younger workers forgo 401(k) in favor of Roth IRA plans which tax funds upfront, rather than on withdrawal. The amount you’ll lose on deposit is minuscule compared to the chunk that could be taken when the fund matures. With a Roth IRA vs. traditional, the bulk of your retirement savings stay yours, tax-free.
Pay yourself first — any way you want.
Now, how you earn the money you’re paying yourself with is possible through so many more streams today than ever before. The sharing economy allows us to easily catch rides with one click on Uber or Lyft, book entire homes all over the world through AirBnB and enjoy delivery and task services for nearly anything you can imagine. And it allows us to easily participate as a provider and contribute to an overall income while pursuing interests, on our own time as it works best for us.
Turnkey e-commerce services like Shopify, Etsy and Zaarly have empowered makers and designers across the globe to set up online stores and reach customers for their unique products, transforming hobbies into thriving businesses. Becoming your own boss by creating something meaningful is easier than ever — as many niches as can be imagined have massive potential for sales and revenue.
As the popular blog, “Smart Passive Income” explains, the basic keys to building a passive income are finding an online business that takes advantage of automation, allowing transactions, fulfillment and growth to happen without your constant attention. Pat Flynn founded the blog in 2008 after being laid off from his job and turning his attention to mastering passive income building. You can read monthly statements outlining his income reports for an example of how one person has successfully scaled the mountain of financial freedom.
While fathers can offer priceless wisdom for a lifetime and the insight to prepare you for the road ahead, today’s economic landscape no longer resembles the peaks and valleys they traversed. Become a pioneer by first building yourself a solid foundation and make one of the most important decisions of your life today — choose your percentage and pay yourself first. Diversify your career for maximum adaptability. Build a passive income to make money while you pursue your greatest passions in life.
Header image © Anton Watman@shutterstock, Article images © Anchiy/shutterstock, Telekhovsky/shutterstock, GaudiLab/shutterstock, loreanto/shutterstock, Kudia/shutterstock