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You Can Save, Top Money Expert Says

By Linda D. Kozaryn
American Forces Press Service

WASHINGTON, Sept. 12, 2000 – Even when you're sure you can't afford to, you can save money, according to financial planner and best-selling author Ric Edelman.

Speaking at the DoD Family Readiness Conference in Phoenix, Ariz., in late August, Edelman shared ideas on how service members can create wealth without really trying.

Author of "The Truth About Money" and two other best- sellers on investing, Edelman is also a radio and television personality, newspaper and Internet columnist, and a personal finance instructor at Georgetown University here.

"We've got to get people excited about the notion of investing," Edelman told the 800 DoD family program specialists in Phoenix.

Often, people don't save for the future because they "just don't think it's an exciting thing to do," he said. "They rate financial planning about as highly as going to the dentist, cleaning the bathtub or any other chore that's got to be done. It's something they'll put it off as long as they can."

Rather than worry about the near-term future, people should focus on long-term investment performance, he said. The crash of the waves excites surfers, but has no impact on the tides. That's what we have to understand, and that's how you get people excited about the market."

So how do you get the money to invest in the first place if you're living from paycheck to paycheck? Simple, Edelman said: "Pay yourself first" and take advantage of automatic payroll deductions.

"You say you're going to pay yourself whatever money's left at the end of the month, but there is no money left. Pay yourself first. Write a check for $25, or whatever, and send it to your mutual fund before you pay your rent, mortgage, the phone bill, or the gas and electric. Why? Because you're not going to have any money after you pay those bills. But by sending the $25 to a mutual fund first, you're still not going to have any money at the end of the month, only now you're going to have 25 bucks in the mutual fund."

He recommended mutual funds, considering them one of the safer ways to invest. Using automatic payroll deductions is "an incredibly painless way to save," he stressed, because you never even see the money in your paycheck.

"The next time you get a 4 percent pay raise, take that entire pay raise and send it to the mutual fund," he advised. "You won't notice it's gone because you never had that money in the first place."

Another money-saving tip: Never spend coins. Spend only paper money. "My big brother Brad taught me this when I was eight years old," Edelman said. "I still use the peanut can he gave me back then."

Use only currency and collect the change every day, he advised. "When you get home throw it in the peanut can or the piggy bank. Sit down once a month, roll the coins up, cash them in at the bank, send the money to your mutual fund. You'll save money without even trying."

If your bill comes to $6.01 and the store clerk asks, "Got a penny?" Edelman said to reply, "Hey man! You're messing with my financial plan. Here's a dollar. I want 99 cents."

"If you'll only spend paper currency, you're going to accumulate, on a monthly basis, $20 to $30 in coins," he said. "If you get your spouse and kids involved, you'll double that -- 40 or 60 bucks a month."

Does saving pennies or a dollar here and there really make a difference in service members' lives? "Consider this," Edelman said, "if a 20-year-old recruit saves $3 a day and puts it into a mutual fund that earns an average annual rate of return of 10 percent, when that recruit reaches age 60, he or she will have $1 million."

It doesn't take a lot of money or a lot of effort to make money, he said. "All it takes is a little bit of money over long periods of time. That is how you create wealth."

To find Edelman's Web site, point a search engine to "ricedelman."

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