Albert Einstein had a simple advice to the youth to bolster financial security way back in the 20th century. Unsurprisingly, Einstein’s sound word of financial advice is still quite valid today.
As the world eagerly waits the turn of another year, many are in the process of finalizing their New Year resolutions. Needless to say, there’s a strong reason why some of the most common New Year’s Resolutions are financial in nature. Americans are on the verge of racking up a humongous $60 billion in credit card debt this year. Add another $60 billion-plus in 2015 and that sets the stage for a severe financial crisis.
Surprisingly, Albert Einstein had perfected a simple technique that, if religiously employed by the youth, the insurmountable debt could be conquered in few years’ time. According to Einstein, the secret to financial health lay in saving feverishly, while you are young. Surprisingly, Einstein strongly believed if people started saving religiously at the age of 21 and kept up the habit for just 10 years, they would have quite a big nest egg and wouldn’t have to slog hard thereafter. In fact, saving from 21-30 would work better than counting pennies and tightening belts for the next 40 years, advised Einstein.
One of the simplest reasons for the formula to work is compound interest. Unfortunately, financial illiteracy is a common problem among today’s youth. In fact, 60 percent of Americans entirely lack the concept of budget, while almost 20 percent of citizens can be seen splurging way beyond their means through the dark magic of credit cards. Studies have indicated that 56 percent of Americans have no credible savings to speak of, while 30 percent of the U.S. citizens are either forced to or want to borrow money only from shady non-bank institutions like payday or money lenders.
But the worst statistic of them all is that 70.5 percent of parents are confident that their teenage wards completely lack the basic concepts of money management. To these troubled citizens, Albert Einstein asks to put aside a sizable amount of money as frequently as possible in savings for just about 10 years. Though perfect money management is a lifelong pursuit, ensuring you have a bare minimum stockpile of money is at the very core of savings.
Albert Einstein assured that saving just a few thousand dollars each year when you are young have their savings grow by a factor of 22. Einstein further encouraged parents to set up a Savings Plan for their wards as soon as they were born to truly catapult their eventual savings.
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