The most frustrating thing about understanding personal finances is recognizing that if a person had 100k invested by age 30, they would have 1million by age 65, and be able to comfortably retire. Of course, most 30-yr-olds don’t have 100k laying around, so nearly everyone is disadvantaged from the start.
Our parents didn’t plan for us 30 years ago, so now we have to plan for ourselves. Most adults try to save money slowly, by investing 5k per year. This strategy works, but slow investments take more and longer; so it will take 40-years and 200k in investments to get to 1million. Which means that we’ll be working longer, and retiring later.
In past generations, parents didn’t need to have a financial plan for their children, but now it’s essential. Simply loving a child is not enough, a parent must prepare for their children’s future needs, and the best way of doing that is to give them financial security.
People my age are starting to marry and have babies, but most of them are going about it haphazardly; failing to plan for the long term, and not really saving money for their children’s futures. A child is a lifelong responsibility, and they’ll need more than just food and shelter.
If you invest 10k for a newborn infant, they’ll have 65k by the time they reach 29-yrs old. And if they invest it into their own retirement, they’ll have 750k by the time they reach 65-yrs. All without making any further investments.