Best Advice: Wayne Dyer

I've written several "best advice" pieces (see my best advice category for details) and love to hear short takes on what financial "experts" view to be their best piece of financial advice. Over the next several days, I'll share some of these from a Bankrate article on best personal finance advice and give you my comments on them. Today, we'll hear from Wayne Dyer, author of "It's Not What You've Got: Lessons for Kids on Money and Abundance":

The lesson "for me was, first, pay yourself," Dyer says.

"When you get your paycheck, take a percentage -- between 10 percent and 30 percent -- and put that away," Dyer says. "You'll be rich enough to be financially independent within a short period of time."

Think this guy has a way of over-stating things? ;-)

I agree that you should save a good amount of your pay. I've done this for years. I fully fund my 401k and have savings to boot on top of that.

But to say "You'll be rich enough to be financially independent within a short period of time" is an over-statement for sure. I've been saving a ton for a couple decades now, and while I'm doing well, I'm not financially independent by any means.

What about you? What do you think of Dyer's advice?

Click here to read part 3 of this series.

Click here to read part 1 of this series.

Comments

[beastlike]

If a short period of time means 30+ years!

[Saving Freak]

This guy seems to see the world through rose colored glasses. It completely depends on your income level. If I am putting back 10-20k per year financial independence may happen quickly, but if I can only put back 4-5k per year it is going to take longer. The math just doesn't work with his optimism.

[Curtis]

10-30% is great advice if you start there, but for those of us who are digging out of debt, it's a different story.

You just can't tell people to save 30% of their income when they are drowning in debt nowadays. Seems rather pompous.

[Karl]

I agree with Curtis. Comments like, "save 30% of your income" are great ideals to shoot for, but people in dedt or even dedt-free families with children, can't even get close to that mark.

[Eric]

I think this statement has great value. It is the foundation on which all else is built, short of hitting the lottery. I spent 7 months throwing all available cash at debt, and paid off all my credit card debt. The last 8 months have been throwing equal amounts into emergency savings. Next, provided there are no emergencies, is to throw that same amount into stocks and my IRA. This would all be impossible if I did not shoot for 10-30% savings. I've wasted 20 years ignoring this advice and 1 year has changed my life! Not independent, by any means, but who knows what will happen if I stay this course?

[Pop]

This one was my personal favorite from the article:

"Rieva Lesonsky, co-author of "Start Your Own Business," and senior vice president and editorial director at Entrepreneur magazine:

Lesonsky's best advice "was from the owner of our magazine, Peter Shea," she recalls. "He said, 'Housing prices have gone up -- get a second mortgage and pay off your debt.' I did, and I'm debt-free."

I don't think this lady knows what debt free means.

[Chris]

I agree with Karl. Yes, Wayne Dyer makes a ton of money, and it's easy to take his suggestion as "pompous." However, if you continue to do things the same way, it's insane to expect different results. Often times, doing the opposite of what the vast majority of people do is the key to success. It's a mistake to dismiss the idea before giving it a try. We are creatures of habit, all we have to do to be successful is change our habits...

[Toby]

@Curtis and Karl: I've got news for you, I'm "married with children", single income, and yet we are able to sock away 20+% of our income. When I'm up for a raise/promotion, I'm not dreaming of a new luxury car or plasma tv. I'm thinking about how I can save as much of that increase as possible. It takes time and discipline. But once you are down that road, opportunities open up that you would never have thought possible.

-------

Curtis, you are correct that someone swimming in debt won't be able to "save 30%". That should be motivation to get out of debt. Pay off those credit cards and stay away. Only then will you be able to get ahead.

Instead of thinking about saving, how about figuring out how to take 10% of your income and put it towards your debt. Once that's paid off, you should be used to living without that 10% and you can turn around and start saving it.

By simply turning that savings goal on its head, you can turn it into a debt repayment snowball. Just thinking about things differently can make your situation seem less grim.

------------

All nay-sayers need to remember there are two sides to the equation. Income and Expenses. You want your Income to be greater than your Expenses so you can save money. You have two ways to make that happen. Lower your expenses or raise your Income. Better yet, do both!

If you claim you can do neither, then there is no hope for you.

[mysticaltyger]

I do agree that it's a good statement but an overstatement. I would say it realistically takes even the most focused of people 20 years to become financially independent...and to do it in 20 years, you probably need to save at least 25% of your gross salary. You can probably do it in 15 years if you can save 30% of your gross or more in all of those years.

But I would NOT consider even 15 years a "short" period of time....although if you save aggressively from your early 20s, you could ostensibly be financially independent by age 40.

[Toby]

@mysticaltyger: I think you miss the point. If you save 30% of your income a year and get even mediocre returns, you would have nearly a year's salary saved in 3 years. How much more freedom would that allow? Would you be able to weather a significant downturn in your life? Would you be able to consider changing careers and pursue your passion? I wouldn't consider that financially independent, but it's an enviable position nonetheless.

I don't believe that financial independence is a destination, I believe it is a journey. You say it would take someone 15-20 years of saving to be "financial independent". I'd say that their financial independence was growing from day one and that in a relatively short period of time they would have the means to do many things.

Being able to pay cash for a car or a house. Being able to change careers freely. Being able to afford going back to school. All these things are possible when you have savings instead of debt. None of them require 15-20 years of effort.

[Toby]

@mysticaltyger: I think you miss the point. If you save 30% of your income a year and get even mediocre returns, you would have nearly a year's salary saved in 3 years. How much more freedom would that allow? Would you be able to weather a significant downturn in your life? Would you be able to consider changing careers and pursue your passion? I wouldn't consider that financially independent, but it's an enviable position nonetheless.

I don't believe that financial independence is a destination, I believe it is a journey. You say it would take someone 15-20 years of saving to be "financial independent". I'd say that their financial independence was growing from day one and that in a relatively short period of time they would have the means to do many things.

Being able to pay cash for a car or a house. Being able to change careers freely. Being able to afford going back to school. All these things are possible when you have savings instead of debt. None of them require 15-20 years of effort.

[Bronco]

Financial independance is a hurdle, not a journey. Once you leap this hurdle, you work because you want to--not because you have to. At 30% savings rate this will still take a looooong time to acheive. Many, many years. Many millions of dollars.

[Lord]

Saving 30% with a 7% real return, you should be financially independent in 24 years. Quick is a relative term.

[Lord]

Using the definition of financially independent as providing 100% of your income from passive investments.