Whats your takeoff point? The moment youve saved enough for retirement – The Dallas Morning News

Posted: September 30, 2020 at 1:50 am


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Knowing where you spend your money has gotten easier and easier, thanks to programs like Quicken and websites like Mint.

The late economic historian W.W. Rostow had long-term roles in the administrations of two presidents. But hes probably best remembered for his 1960 response to the challenge of communism.

It was a book titled The Stages of Economic Growth: A Non-Communist Manifesto.

In it, Rostow identified five stages of economic development. The stage most people talked about was the "takeoff, the moment when a nation saved enough that the savings per capita began to grow.

Thats also when income began to grow. And when new opportunities appeared. Its when a nation could get off the Malthusian treadmill with population growth exceeding any increase in savings. Rostow looked around the world. He saw getting to that moment as a challenge and an opportunity.

I loved that book. It set a great mood of possibility and mission.

But if entire nations have a takeoff point, so do we as individuals. So do family households. Better still, if we reach our takeoff point, were on the way to getting off the payday treadmill. Were on the way to a secure retirement at least, or early financial independence at best.

The sad part is that so few get there.

Many never reach their takeoff point. Instead, they buy a new car, take an expensive vacation or decide their 4,000-square-foot house desperately needs an outdoor kitchen. They borrow to spend. They guarantee they will be repaying debts rather than starting to save or adding to savings. They choose to own things that decline in value rather than appreciate. They collect things that consume income rather than create it.

Were not talking about the clueless here. An abundance of survey evidence shows that millions of people live in a financial condition that can only be described as precarious.

An amazing number of people missed the takeoff point memo.

So lets answer a simple question: How do you reach your takeoff point?

Spend less than you earn.

Its that simple.

Trouble is, no one wants to figure out how they spend their money.

Let me repeat that. NO ONE.

Ive been writing a personal finance column since 1977. I still havent run out of fingers for counting the number of people who can immediately say, Last year I spent this much on (insert category), spent this much on taxes and added this much to my savings.

But heres a blunt reality: If we dont make positive decisions about where and how we spend our money, well never control our spending. Well always be the victim of an impulse or a particularly effective advertisement.

Is there any good news here?

Yes! Knowing where you spend your money has been getting easier and easier. It doesnt require taking up permanent residence under a green eyeshade.

If you want to be detailed and fastidious, you can use a computer program such as Quicken. In a few months, youll know exactly where your money goes.

If thats too much bother, you may be able to do it through the services that run automatically on your bank account, your debit card and credit card. You can also put it all together by using Mint, a free online money tracker.

The important thing isnt how you do it, but that it gets done.

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Whats your takeoff point? The moment youve saved enough for retirement - The Dallas Morning News

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September 30th, 2020 at 1:50 am

Posted in Retirement