Now imagine that same amount of money invested over 40 years making a 5% annual rate of return. Would you care to guess how much money you would have at the end? $164,892.00. Go crazy and dream that you could make a 10% rate of return and you would have $632,907.00. (For an easy online calculator click here.)
Now if you don't think this applies to you because you don't eat out every day I challenge you to find the financial stalactites in your life? My wife realized that hers was a cell phone. She had an iPhone and by the time we paid for the talk time, texting and data plan it was $43 a month. That breaks down to almost $10 a week which if invested could be from $65,957.00 to $253,163.00. (Stay tuned for a future article about how to save money on cell phone bills.)
As you look for these wealth killers remember that the average person makes over $1,000,000 in their 40 years of working (35,000 per year * 40 years = $1,400,000). The challenge is that the money doesn't get delivered in one lump sum, it trickles in drop by drop. What are you doing with your drops?
Happy Savings,
Jimmy
P.S. Feel free to post your thoughts and comments on the blog.
I am curios what the numbers would be if calculated with today's savings rates of 0.01%
ReplyDeleteDo you have the time to figure that one out?
Karoleana's savings on the cell phone would be $20,681.25 after 40 years. The key is that savings is for short range goals and an emergency fund. Investing is the way to increase your money in the long run. Of course, you can expect to see a posting about that sometime.
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