You might think that leaving a substantial financial legacy is reserved for the wealthy – those with hefty stock portfolios, sprawling real estate empires, or six and seven-figure salaries.
But what if you’re working with a more modest income? Can you still make a lasting impact on your loved ones’ financial futures?
The answer is a resounding yes.
Even without deep pockets or vast assets, you can build a remarkable legacy for your family and community.
It’s not about how much you earn, but how wisely you manage what you have.
Below are five powerful strategies to leave a solid legacy, even on a modest income. Read on to also discover two inspiring individuals who created a lasting financial impact with ordinary jobs and extraordinary financial habits.
Embrace Frugality as a Lifelong Practice
Living below your means isn’t just about making ends meet; it’s the cornerstone of building long-term wealth.
By consistently spending less than you earn and funneling the difference into savings and investments, you can accumulate a surprising amount of money over time.
Take inspiration from Oseola McCarty, a washerwoman from Hattiesburg, Mississippi.
McCarty left school in the sixth grade to care for an ailing aunt and spent her life doing laundry for a living. Despite her modest income, she lived frugally and saved diligently.
When she retired in 1995 at the age of 87, McCarty had amassed over $280,000 in savings – the majority of which she donated to the University of Southern Mississippi to fund scholarships for African American students.
McCarty’s secret? She avoided unnecessary expenses, banked her earnings regularly, and let compound interest work its magic over decades.
“I start each day on my knees, saying the Lord’s prayer,” McCarty once said. “Then I get busy about my work. You have to accept God’s gift and use it.”
Leverage the Power of Compound Interest
Albert Einstein reportedly called compound interest the “eighth wonder of the world.”
Whether you’re investing in the stock market through low-cost index funds or maximizing returns on high-yield savings accounts, starting early and staying consistent can turn modest contributions into significant sums over time, all thanks to the power of compound interest.
Prioritize Insurance and Estate Planning
Even with a smaller income, proper insurance coverage and estate planning are crucial. Term life insurance can be surprisingly affordable and provide a substantial safety net for your loved ones. If you’re a non-smoker in good health and are a non-smoker, for as little as $50 to $100 a month you can likely buy a term policy that pays your heirs $500,000 in the event of your death.
Additionally, creating a will and designating beneficiaries ensures your assets – no matter their size – are distributed according to your wishes.
Invest in Education and Skills
Sometimes, the most valuable legacy isn’t purely financial.
By investing in your own education or skills development, you can increase your earning potential and set an example of lifelong learning for your family. Consider community college courses, trade certifications, or online learning platforms to boost your value in the job market.
Give Back to Your Community
Leaving a legacy isn’t just about money – it’s about the impact you have on others.
Volunteering your time, sharing your skills, or making small but consistent donations to causes you care about can create a ripple effect that extends far beyond your immediate family.
Real-Life Legacy Builders
I’ve already mentioned Oseola McCarty, whose story of generosity and financial discipline made national headlines. But she’s not alone in proving that modest means don’t preclude leaving a substantial legacy.
Consider the remarkable tale of Ronald Read, a Vermont gas station attendant and janitor who shocked his community by leaving behind an $8 million fortune when he passed away in 2014 at the age of 92. Read’s story, as reported by CNBC and The Wall Street Journal, is a testament to the power of frugality, long-term investing, and compound interest.
Read lived a quiet, unassuming life. He was known for his flannel shirts and old Toyota, and few suspected he was quietly amassing a fortune.
His secret? A combination of extreme frugality and a knack for picking stocks. Read invested in blue-chip companies with strong dividend yields and held onto those investments for decades, allowing compound interest to work its magic.
“I’m sure if he earned $50 in a week, he probably invested $40 of it,” said his stepson, Phillip Brown, in an interview with CNBC.
Read’s fortune wasn’t just for personal gain. He left $6 million to his local library and hospital, ensuring his legacy would benefit his entire community.
Lessons from the Legacy Builders
Both McCarty and Read demonstrate key principles that anyone can apply, regardless of income level:
- Live below your means: Both individuals were known for their frugal lifestyles, avoiding unnecessary expenses and luxuries.
- Start early and stay consistent: McCarty began saving as a young woman, while Read started investing in his 30s. Both maintained their habits for decades.
- Let compound interest work for you: By reinvesting dividends and interest, both were able to grow their wealth exponentially over time.
- Think long-term: Neither sought get-rich-quick schemes. Instead, they focused on steady, consistent growth over many years.
- Give back: Both chose to use their wealth to benefit others, leaving lasting impacts on their communities.
Your Legacy Starts Now
You don’t need a high-powered job or a windfall inheritance to leave a meaningful financial legacy. What you do need is discipline, patience, and a long-term perspective.
Start by living below your means and saving consistently, no matter how small the amount.
Invest wisely, prioritize insurance and estate planning, and consider ways to increase your earning potential through education and skills development.
Remember, a legacy isn’t just about the money you leave behind – it’s about the values you instill and the example you set. By adopting smart financial habits and a generous spirit, you can create a lasting impact that extends far beyond your bank account.
As Oseola McCarty wisely said: “A smart person plans for the future. You never know what kind of emergency will come up.”
Start planning your legacy today, and you might be surprised at just how far your modest income can take you – and those you love.
