The world set us up for failure from the minute we left the house at age 18. I joined the US Marine Corps ten days after high school thinking I would eventually live the American dream.
I got married at age 25, had my first boy at age 25, and bought a house at age 28. I was living the American dream, except something happened. I got into massive debt.
We didn’t live outside our means, and we don’t have lavish dreams of living on the beach of an island. However, nobody told us the truth about the world—it’s freakin’ expensive.
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Reality bites. I have been writing articles for two years, with over 900 articles published on my blog. After reading 110 books, I have finally started honing in on the financial frustrations we all feel.
Yesterday, I was writing an article titled “Series I Bonds vs. Roth IRAs,” and it finally hit me. I put a number on our stress and anxiety—$5 million.
When you left the house at age 18, you needed to prepare to earn, spend, save, and invest over $5 million. Did you understand the magnitude of this number when you left?
People are buckling under the enormous pressure of this number. Couples are getting divorced because they never knew finances would play a massive part in their relationships. Society taught them that “love conquers all.” Nope.
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Run the numbers. Before I go further, I want to run the numbers so we are all on the same page. Once you see the numbers, it will instantly make sense why you are underwater in life.
As much as you would like to deny or resist these numbers, they are spot-on. Even worse, I think I am underestimating them. I don’t think there is a need to break down these numbers individually because you know they are true.
I am 41 years old, and I can easily see these numbers for what they are. Yes, kids are that expensive. Yes, owning a house is that expensive. Once we accept the numbers (after denial, anger, bargaining, and depression), we can move on to the next stage—overcoming.
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Parents beware. For parents, this will not be flattering to you at all. As we have our children, we need to keep this number in our heads. Their number will be much greater than ours.
We struggled so much because our parents never got ahead enough to help us with our numbers. They were just trying to make ends meet because their parents were trying to make ends meet.
At some point, we have to work our butts off to get ahead of the power curve. For these reasons, I have continued to stay in the military for the past 23 years. My military retirement ensures my wife and I are good to go.
The military will ensure that I can offer free college to one of my sons. For the other, I can use real estate to pay for their college or other methods I read about in “Debt-Free Degree.”
Financial Independence through Real Estate 2
I also have saving bonds and brokerage accounts for my kids, and they each have a house I can give them. Finally, we will leave them massive dividend portfolios and royalties from my books.
The true gift for our kids. The most important skill I can give my children is telling them about their $5 million number. My oldest son is 15 years old, so his number by age 65 (with 5% inflation) will be closer to $50 million.
So, as he prepares for manhood, he can evaluate himself as he decides to marry. He will understand the total costs of marriage, cars, homes, pets, vacations, and college. This can assist him through the decision-making process.
He can also ensure he has multiple streams of income before getting married. He will be more likely to work with my wife and me to ensure he sets the right ideas in motion.
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Knowing these numbers is essential for love, marriage, success, and wealth. We all went into the world thinking a job would be the answer to living the American dream—NOT!!
A quick look at jobs. Your family would need to average about $110,000/year in salary from age 18-65 (47 years) to get near the $5 million mark. There is no room for error, no mistakes, no breaks, no years off, no taking off for having children, etc. Your life will be “priced for perfection.”
That’s why it is so vital that we learn the ways of passive income. We also need to understand how to budget our money from the start. The book “All Your Worth” has the best simple budget I have seen.
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It calls for a 50/20/30 budget consisting of 50% mandatory costs, 20% savings, and 30% optional expenses. If you can understand and implement these numbers from the start, you’ll have a better chance of achieving these numbers.
Make money in your sleep. To have a chance to get ahead of your numbers, you’ll have to make money while you sleep. The chances of you working your way through having two kids, paying for their college, and retiring with $2.5 million is slim to none. You would have to become a C-Suite employee or CEO.
However, we can all start making money in our sleep. There are many ways to use the power of compounding to grow our wealth. The most common are royalties, rents, dividends, interests, and automated businesses.
Please use my free resources if you do not understand these terms or ideas. You must read, read, read, and then go and implement these powerful ideas into your life.
What Gets Rewarded Gets Repeated
Parents get on the ball. Parents, this is a call out to you all—including myself. We have to get our finances together and put our kids’ money in motion as well. Yes, it will be challenging, but once you understand the principles of compounding, it’ll do all the work for you.
For example, I give my child a $100,000 dividend portfolio at age 18—paying him $6,000/year or $500/month in dividends. By age 65, The portfolio would be close to $2 million and pay him $10,000/month.
We need to give our kids financial education and starter portfolios so they can continue our work. Plus, giving them a house will cut their numbers in half.
Parents, I know it’s tough. We all want to attend baseball and cheerleading events with our kids. But we have to ask ourselves the tough questions today while our kids are still in the house.
“Am I doing anything to help my kids towards their $5 million number?” “What can I do today to give them a better chance at happiness tomorrow?”
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It is an unpopular idea to grind away at passive income while your kids are in the house. However, they can leverage tomorrow with every dividend, rent, and royalty you earn today.
Do you want to be the best parent from age 0 to 18 and send your kids out with $0 towards their number? Or do you want to sacrifice time with them today to send them off with $1 million towards their number tomorrow? It’s a tough call.
Conclusion. I want to explore this concept more in the future. I believe I am just touching the surface of how to prepare ourselves and our children for financial success in this world.
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Looking back to 1999, when I was an E-2 in the military, having this $5 million number in my head would have helped me put things in perspective.
Instead of buying so many video games and going out every night, I might have learned more about finances and budgeting. I believed that the American dream would naturally come to all of us.
Sadly, the American dream is out of reach to most people because they don’t understand passive income. Let’s work to change that and get our families on the best path possible.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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