Anybody that knows me knows that I am a HUGE advocate of education in all areas so that people in society are well rounded individuals. However, this article got me thinking that maybe if we have limited resources in public education why don’t we spend a little more time focusing on the more practical topics in education. My freshman year of high school I took a course in biology that is required by the state along with all the other freshmen and a few sophomores that didn’t make it through the first time. Today I can still remember a few things from that class about chromosomes and how plant and animal cells are different, but not too much remains since I haven’t used hardly any of that information since then, even as a college student in Engineering. However, my senior year of high school I took a Personal Finance / Economics course and the standards for the course were set so low to make sure that everybody graduated that we didn’t really learn anything. So, even though I took the class three years after the biology class, I remember more from the biology class – AND I actually use finance tools every day, as do the rest of my classmates. Then, I come across this article that shows that Americans are spending more than they make, on average. Considering that everybody has to work with money in their life no matter what they do after high school perhaps a personal finance and econonomics class should have been made a little bit more of a priority than a biology class, given limited resources and a choice had to be made between the two (as an example).

The whole concept sounds simple enough, live on less than you make, but somehow people just haven’t figured it out. As Dave Ramsey says, this is normal in America, but come on people; wake up and stop being normal! Investing $100 per month for 40 years results in $1.1 million after 40 years. Again, thats $25 per week and investing it in a 12% mutual fund for 40 years means you can retire as a millionaire. This is at a savings rate of 15%, and that translates to a person with an income of only $8000 per year. Considering the average American brings in more like $30,000 per year and would rather only work for 30 years before retiring this will still result in $1.3 million (although if that person did work the extra 10 years to total 40 years at $30k/year they would have $4.3 million!). If you are in doubt, click here to use my excel worksheet to calculate the number yourself. If you would like to use the sheet to see what kind of money you should have later on in life, change the blue numbers and the green items will update automatically.

Maybe if a few more people would save up and think this way we could all save a little money and not have to give the government so much of our money for programs like social security... but perhaps that discussion is for another commentary. However, in conclusion to the topic of saving money and making sure that money in equals more than money out (instead of a savings rate of -0.5%!) - there is no excuse for people in the US to not achieve the status of millionaire during their lifetime.

3/10/06