“Take Care of Your Chicken”: Are you taking care of yours?
“As the great Marshawn “Beast Mode” Lynch of the Seattle Seahawks would say “TAKE CARE OF YOUR CHICKEN”. Save your money. This concept is something that is taught by every parent or adult around the world. And it is always easier said than done, if you are like me, trying to live your best life it goes in one ear and out the other. (Sorry Mom I’ve learned I promise)
Throughout my career this area of “saving” was one major area that I began to realize, successful financially stable people understand much better than the rest of us. But it was not simply saving the way we naturally think. They understood that saving just to save loses you money over time and compounding interest is ESSENTIAL. Stacking up your hard-earned dollars is very important and is something that we should all have a process around but where we put our hard-earned dollars after is just as important.
We are all familiar with the phrase “make your money work for you”, but no one explains what that actually means or even why that is actually EXTREMELY IMPORTANT. So here goes a very simple example:
Putting in a $5,000 lumpsum and saving for 5yrs:
1. 0% (Cash) — $5,000
2. .1% (National Savings Account Average) — $5,025.05
3. 1% (Bank of America 5 yr CD) — $5,520.40
4. 2% (Government Inflation Target) — $5,520.40
5. 3% (Cash Management Program) — $5,796.37
*All options have very low minimums if any
The Federal Reserve (the people that control the US money supply) say they WANT to keep inflation at 2%. Inflation can be explained as the price of goods going up or the purchasing power of cash GOING DOWN. So it is safe to say that if you have money “under your mattress” for over a year and every year after you are LOSING MONEY. But of course, most people don’t just have money under the mattress they use their bank’s savings account. But with bank savings account rates being where they are today you are still LOSING MONEY!
A very simple concept: make sure the money you save is making more than 2%. This is a major change many of us can easily do to make sure we take care of our chickens so they can take care of us! There are pros and cons to everything but understanding the options will allow you to gather the pros and cons to make better decisions and have better outcomes aka LIVE YOUR BEST LIFE. So the premise remains the same KNOW YOUR OPTIONS! Or talk to someone who can help.
PS: Mom I hope you are proud :)
Benjamin Hazel
