The Ten Percent Solution

 

ings program, I asked him how he was struggling along without the two hundred dollars a month. He said, 'Geez, I'd forgotten all about that.'

"The significance of that reply can't be overstated. He'd forgotten he was even doing it! Over the years I've taught dozens of people the pay-yourself-ten-percent-first rule. Not one has noticed a dramatic change in his or her standard of living . . . until they're sipping martinis on their boats, that is," Roy reported, with a satisfied grin.

"Ask your dad, Dave. He'll tell you. It really is amazing. You know how quickly you adjust to your raises? Well, this is pretty much the same thing, but in reverse."

"I don't make a lot of money and I didn't start saving until fifteen years ago. But today I'm not only looking at a boat; I'm looking at a pretty darn good retirement overall. If you three start at your age, the sky's the limit." Clyde beamed as he gave Tom an encouraging pat on the back.

"I want to make something clear here," Roy proceeded. "At different times in your life, you're going to have to save for various things—a house, a car, a trip, whatever. A house, in particular, is a major expenditure. There is no way to achieve some goals without sacrificing your current standard of living ... I mean, let's be realistic. But the ten percent saving is different. It's regular. It's a constant. You don't even see it. It comes right off your paycheck or out of your bank. You won't believe how easy that makes it."

"I can see that saving ten percent of your income shouldn't be too hard, especially if you pay yourself first. But I'm still curious about those fifteen percent rates of return," Tom persisted. "Last time I looked at my savings, which I admit are pitiful, they were earning a paltry five percent."