My Future Nest Egg! Or a P.A.R Cycle Stalemate?


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Growing up, I had dreams of one day ruling the world. Then I discovered that I wanted to be the first person to find the cure for H.I.V AIDs, as that was one of the most pressing world issues of my age. Like many around the world, all of us have different dreams and aspirations that seem to metamorphose into something completely different as we grow older.

I never used to really worry much about money growing up. However, I learned to start saving at a very early age -- I was very grown up for my age -- because I had had enough of people telling me no when I saw something I really wanted in the store. But like those dreams and aspirations I had growing up, life seems to have thrown a curve ball at how I manage my finances.

Currently, my bank account probably would not measure up to those of individuals featured in Forbes “100 richest people in the world”. But, I know that what I have in common with those individuals is a P.A.R cycle. You are probably wondering what the P.A.R cycle is! Well it is simple; P.A.R (aka the financial life cycle) is a process that majority of us are going to undertake.

I personally am the “P” in the cycle. What that means is that I am at the stage 1 of the cycle; the wealth “protection” stage. I make enough money to get me by, but since starting college having a budget has prevented from spending money that I don’t have. It has meant keeping track of my income and expenses to be able to help me differentiate my needs from my wants (Note to self: Creating a budget is not an easy task to undertake the first go around; yet once you get into the groove of things it makes life very easy and helps you avoid temptations). By having a budget, I have been able to start saving money to cover enough of my expenses for 6months and any emergencies that I might have not foreseen (aka my dead car battery last month cost me a whopping $189). I am almost reaching stage 2 of the cycle!

The “A” in the cycle is what stage 2 signifies. This is where not only your parents come in, but some of my younger friends featured in Forbes; the wealth “accumulation” stage (I see myself reaching this stage in the next 2 years). This is by far the most enthralling part of the cycle; in this stage, interesting things happen to money through the process of investing (aka Captain T. V.M). The process of investing requires utilizing the “Time Value of Money (T.V.M)” to your advantage. The T.V.M concept is as easy as: “More Money, Longer Time and Higher Interest”; all you have to do is invest to see your money grow. Making money has never been easier -- I have never been paid for just sitting around-- than deciding to invest.  

You are probably wondering why I would want to invest money when I could spend it right now. My dreams of someday travelling the world when I retire are not going to pay for themselves. This where “R” in the cycle throws a spanner in the works and the fun begins. Stage 3 is not only the last stage, but it is the most thrilling part of the cycle; the wealth “retirement” (distribution) stage. This is where you many chose to live like a king after years of frugal living, or retire on an island far, far away (with your own little piece of “your nest egg”). This is where your grandparents (and some day you) seem to be living a rather hip and enjoyable life.

The cycle sounds very simple, but the important key to its success is to plan in advance. Unlike life which we all sometimes seem to have no control over; here, the power is in our hands as we control the destiny of finances through the our daily decision. I am well on my way to developing my future nest egg. How about you?

Student Editor: