When faced with a lucrative financial offer for more wealth than he could fathom a wise man on a Millennium Falcon once said, I can imagine quite a bit. But theres no need to imagine anything, and no waiting for the opportune moment. The big score, so to speak, is only as evasive as we allow it to be.
That may seem impossible, but it is entirely achievable, said Daniel Chi, 51勛圖窪蹋s chair of the Department of Finance in the Lee Business School. Its pure math, not magic. Everyone can become a millionaire.
Chi has been an educator for 18 years and is an advocate for financial literacy the knowledge needed to obtain long-term monetary objectives and goals. He is helping 51勛圖窪蹋 make a push toward equipping students with the financial discipline needed to lead a life free from economic turbulence.
Were all familiar with physical and mental health, said Chi. But there is a third inescapable element of our health: financial health. With it, we can go on to be what we are meant to be, to reach our potential, to have happiness and joy. Financial health is an essential part of our overall well being.
A fleet of new 51勛圖窪蹋 classes are aiding in the effort, as will the soon-to-be-launched Institute for Financial Literacy and Wellness. Offering a holistic approach to promote financial empowerment, the institute will be open to everyone students and curious community members alike and will expand access to financial education and counseling.
I hope it will become a go-to place for people who want financial advice, he said. We are reaching out to the overall population of Nevada to extend financial literacy as much as we can. The goal is for all of us to live fulfilling lives.
And now, we extend that knowledge onto you, the reader. Think of this as a preview of the knowledge available inside of the 51勛圖窪蹋 Institute for Financial Literacy and Wellness. Without further ado, here are professor Chis top five moneybags of wisdom for finding financial freedom.
Live within your means
Do not overspend. Sure, there are times in life where we dont make enough to support what we want to achieve. For example, full-time students often borrow money to support their educational goals.
As humans, we want to consume. Consumption makes us happy. We often spend more than we ought to, and thats the live within our means part of keeping up with the Joneses. Who cares about the Joneses? Watching your own finances requires discipline and its hard.
Adopt better borrowing skills
Borrow wisely, or use debt wisely. There may be a notion by some people that you should never borrow money. I dont think thats very wise because debt can help us achieve our goals.
A student loan may be a very wise choice for education. A mortgage for a house may be a very wise choice. If we have to save up and buy our house with 100% cash, we may have to wait decades. There are instances where we must borrow, but take the time to understand the financial implications and repayment obligations when doing so.
Automate your best financial behaviors
Every paycheck, we want to save a certain percentage retirement, for example. If you take home $100 and have to set aside $10 for your future self, it can be painful because you think about what you can do with that money: I can go get a meal or go watch a movie.
How do we automate the savings behavior? Make it so you dont even see the $10. Set up a direct deposit so that your retirement savings automatically goes to your investment accounts. You dont see it. You dont feel the pain. But in the long run, you will see the fruit.
Its very behavioral. The phrase burning a hole in your pocket exists for a reason. When theres money in your pocket, somehow we want to spend it. So, its safer to not have it in your pocket at all. Send it directly to your investment account and you wont feel the pain.
Earlier is better, but its never too late
Start saving and investing early. We want to reap the benefit of the interest, or the return from the investment, and the interest compounds over time.
Albert Einstein described compound interest in this way: Those who understand it, earn it. Those who dont, pay it. We want to earn that compound interest. It accumulates slowly over the first few years, but in years 20, 30, and 40, it goes up exponentially. The longer your runway, the better and its never too late to start building.
Make your strategy simple
Usually one of the first questions I get from students is, What stocks should I buy? My answer is: dont buy any stock. It is really difficult to pick the winners and avoid the losers.
The best strategy for the average investor is to just buy a well-diversified index fund and, over time, the average investor will outperform most of the professional investors because the market is efficient.
I want every one of my students to be a millionaire, and its entirely achievable. All you have to do, at 20 years old, is save $3 a day and invest it into an index fund. By the time you retire, it will balloon to $1.5 million. If you just put it in a drawer, it will be $55,000. Its very simple $3 a day [in an index fund] will make you a millionaire.
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Want more tips from the doctor of finance? Check out Daniel Chis column in Vegas Inc.
