Embrace Prosperity

When I first started to learn about money, I encountered this revolutionary affirmation, “Part of all I earn is mine to keep.” Until that day (sometime in 1976), it had never occurred to me that anything other than earning money, saving it to spend later or spending it immediately were possible. I had never considered the possibility of deliberately achieving financial independence. In fact, I don’t think I even knew what those words meant.

This adult education class also came with a set of instructions about how to start my own journey toward financial independence. It was designed to deliberately focus my awareness on making conscious decisions about money and ultimately having enough money to live comfortably without working.

I chose to follow these simple instructions.

Each time you receive money put it into 4 different savings accounts—each with its own set of guidelines. (This was before the days of outrageously high bank fees. Using this method today probably would cost much less if you use just one account and keep careful records of each pot of money.)

1. Income: Deposit all the money you receive into this account and transfer it from there into all your other accounts. This includes a checking account you use for everyday purchases and the other savings accounts. The rule for this account was “always take out less than you put in.”

2. Financial Independence: Deposit a regular percentage of your income into this interest-bearing account. The rules for this account were “never take out the deposited money but always take out the interest and spend it consciously for your own benefit.” The goal of this account was to eventually have enough interest to live on.

3. Large Purchase: Deposit extra money into this account. The rule for this account is to “spend it all on purchases that bring you personal pleasure.”

4. Investment: Deposit whatever you choose into this account. This rule is “only take money out when it will be reinvested at a higher yield.”

What Happened Still Amazes Me

In the first year I managed to add $1000 to my Financial Independence account and spent the small amount of interest on an ice cream treat. Then, sometime in 1977, I read a book that jolted me into awareness of investing. It was the first book I had ever found that clearly explained the basic mechanics of investing. I was so excited that I read it twice within 3 days of receiving it!

Reading The Joy of Money: The Guide to Women’s Financial Freedom by Paula Nelson changed my life. I very carefully selected a top-rated mutual fund, opened my first investment account and started keeping records.

I made my first $1000 investment in 1978, my second in 1979 and my third a year later in 1980—a total of $3000. I arranged to have all dividends (the equivalent of interest) sent to me. Ten years later I had received checks totaling $6850 and my original investment was worth more than $3000.

I have not made any changes to that original investment account and have continued to receive checks twice a year.