Mum-of-two, 43, who is on track to ‘retire wealthy’ reveals the four vital money lessons she wish she had known earlier
A mother-of-two has told how to save successfully and put yourself on track to retire rich – claiming it can be achieved in just four steps.
According to 43-year-old Holly Johnson, she and her husband started getting “serious” about their finances in their late 20s.
Although they worked hard to cut back on certain things, and lived an “intense frugal life” to pay off “every cent of the debt” they had, there were other financial burdens they had not taken into account.
“We never gave much thought to what will happen next, or how our attitudes about money can change dramatically as we get older,” Holly from Indiana wrote in a piece for Business insider.
According to 43-year-old Holly Johnson, she and her husband started getting “serious” about their finances in their late 20s
According to the credit card expert, both she and her husband became self-employed and started making more money as their careers progressed.
“Now that I’m 43, I can say with certainty that we are financially independent and on track to retire rich when our children leave home in seven years,” she said.
Make more money, no matter what
Holly’s first lesson is to make more money — and you might have to think outside the box about how.
“Regardless of what anyone else says, there’s only so much you can save when you’re on a fixed income,” she explained.
“You can lower your (online streaming) bills and start using a monthly meal plan. From there, other steps, such as buying a smaller home and shopping around for auto insurance and homeowners insurance, may yield only limited savings.”
To save a few more dollars, Holly suggested working for yourself or getting a part-time job.
“If I could go back and change something in this area, I would have left my traditional job to become self-employed as quickly as possible, instead of spending years wondering if I was making the right move,” thought she.
Holly’s first lesson is to make more money — and you might have to think outside the box about how
Compound interest can make a big difference
Holly said she regrets her finances because she and her husband didn’t invest in their retirement fund sooner.
She said they started contributing to a retirement fund in their late 20s, but at the time contributed only a “nominal percentage” of their income.
“Now that I know and understand the magic of compound interest, I wish we had contributed a lot more than we did,” she said.
The savvy saver went further by urging everyone to start putting money aside regularly as soon as possible.
Holly said she regrets her finances because she and her husband didn’t invest in their retirement fund sooner
‘After all, by investing early you can start building a nest egg that will increase in value over time, and with compound interest you can ultimately grow wealth based on the wealth you have already earned from your past investments you deserve,” she explained.
Holly used an example of investing the same amount at age 30, compared to investing the same amount in total at age 40.
In the first scenario, she used the scenario of investing $1,500 per month for 30 years, starting at age 30.
“If you earned an average return of seven percent, you would end the 30-year period at age 60 with just over $1.7 million,” she explained.
Holly then compared it to investing $2,250 for 20 years starting at age 40.
“Which means you’re making the same $540,000 of investments on a shorter timeline,” she said.
“With the same seven percent return, you would end your 20 years at age 60 with just over $1.106 million.”
Making one bad decision won’t set you back
Although Holly and her husband are about to retire comfortably, she admits that they have made some mistakes in the past – and overall it has not adversely affected them.
“For example, we postponed investing for our retirement, as I said, and we spent too much on renovating our second home and sold it at a loss,” she says.
However, she says that over time they have realized that a few mistakes won’t completely destroy their financial plans.
Although Holly and her husband are about to retire comfortably, she admits they’ve made some mistakes in the past – and overall it hasn’t adversely affected them
“In the end, my husband and I made a lot of good decisions, including going self-employed, investing heavily during our highest-earning years, and avoiding debt for more than a decade,” Holly admitted.
“Although the mistakes of our past have held us back to some extent, the good decisions we have made have more than made up for the difference.”
Don’t overestimate mental energy
Although saving money is important to Holly and her husband, she now believes that time with her family is more important.
In the past, Holly said she spent a lot of her free time and energy saving money, while now she devotes that time to her family.
“Now that I’m older, I prefer to spend my free time working or relaxing with my child,” she explained.
‘These days I use money to buy freedom and time – the two things in life that are truly priceless.’