I ran across an interesting blog post on Managing Money from Andy Warren, longtime author and a founder of SQLServerCentral.com. It struck me because I'm in the process of re-budgeting things at home and also trying out some new investments, so I'm learning a few new things, and re-learning a few that I've forgotten or ignored.
Most of us in the IT world make a good living. I know that some younger people might not realize it, but think (or ask) what your parents make, and how quickly salaries have risen in IT. Not that we don't earn it, but we're well paid, at least in the US as compared to many other fields.
One thing that I agree with in Andy's blog is that many people aren't taught how to take care of their money. They don't necessarily make great decisions and with all the advertising, sales, financing, and "deals" out there to make your life more fun, I think it's easy to get into trouble.
Slightly off topic from the database world, but I think it's worth a mention to remind you that your career and your life are important, and managing your money is a skill that's worth learning, just like picking up C#, SSIS, T-SQL, or any other skill you use in your job. Note that I'm not an investment professional and I'm not telling you what to do, but just giving some thoughts on taking care of your money.
My Mom had me read The Richest Man in Babylon years ago, and I've never forgotten the advice to pay yourself first. Save that one gold piece out of ten and you'll be set for life. If you're not sure about the power of savings, check out these facts:
Let's say you start saving at 20 years old, you make $40k a year, and you put 10% away. At a conservative 6% interest, you'll have $917,745. Close enough to a million for me. If you wait until you're older, look at these figures:
- 25 - $663,166
- 30 - $474,428
- 35 - $334,503
- 40 - $230,766
Or put another way, to have a million dollars when you retire, you can save $4700 a year at age 20 (or a little more than 10% of $40k), at 30 you need to save $8,974, and at 40 you need to save $18,227. If you earn more or can save more, than you can do better. If you're interested, here's a millionaire calculator, but there are numerous other ones on the Internet. I tend to like the basic articles at MSN Money, and I'd advise you to read a few of them regularly and pay attention to your finances. The Motley Fool has some good resources as well.
Andy has some great advice for budgeting, which is the place to start, and here's another 5-minute guide to budgeting to look over. It can be a pain, and it's something I've avoided when I was making a good salary, but as my oldest is getting ready to drive and college for 3 isn't far off, my wife and I are trying to dig in and rebuild a budget to be sure that we can enjoy life for many years to come.
Most of us won't get rich, but hopefully we'll be happy no matter where we end up. With the changes I've seen in companies in my lifetime, there's one thing that I'm sure you can count on. Your company won't take care of you in retirement, so be sure that you that you take care of yourself.
Steve Jones
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