When I was 19 or 20, I read that if you can’t save 10 percent of your current income, no matter how small it is, you’ll never save 10 percent of your future income no matter how big it is. Why? Because regardless of how much money you make, if you don’t create the right habits you’ll never learn to invest in yourself and your future.
I’ve seen it time and time again. When people get a raise, they raise their standard of living as opposed to saying, “Wow! I’m ok with how I’m living. This time, let me take that raise and start building for my future so I have some sort of retirement or investment plan.”
I know saving sounds hard. I talk to families all the time that are living paycheck to paycheck. At one time, that was me. And even then, I put 10 percent of my check away even when it was very tough to do. I treated it like a bill I had to pay every month. Instead of paying someone else, I was paying myself. Banks can make that easier with auto deductions straight to a savings account. Even still, saving money is hard to do.
I appreciate how hard saving is for people today. That’s why I make sure to offer a very generous 401K plan to my employees. I reward those who save something by matching that savings. And I’m surprised there are still some who don’t take advantage of that—it’s free money and an investment in yourself.
A secure future does not depend solely on raises. Any employer can give raise after raise after raise, but if you don’t change your thought pattern, you will still have no savings. You get a paycheck every two weeks, you pay this and buy that and it’s gone by Monday. You will be no closer to any of your goals if you are at zero again at the beginning of the week. You have to break the cycle by learning how to make saving money a habit.
Truth be told, happiness is not about how much you make. True happiness is about how much you keep—how much you don’t need.
I have friends with very modest incomes who are the happiest people I know. To me, they’re the wealthiest because they have what they need. Their happiness is not measured by materialistic things or fancy cars. In fact, I see rich people with all sorts of objects who are very unhappy.
You can create your own wealth. Start by taking advantage of a 401K program and work up to putting away at least 10 percent of your income. With a 401K, your contributions are pretax saving you even more! You will miss the money for a little bit but trust me, you’ll adjust like you do when you get a raise.
A 401K is like winning the lottery on a smaller scale. You pay fewer taxes, you get a matching contribution (free money!) and you build your future. You win every time! Start saving today.
This article originally appeared on Tom Lyons on LinkedIn.