Thursday evening, my son and I went to a local restaurant for supper. After eating, my son asked for some chewing gum – you know, the little round gum that you get for a quarter from one of the machines at the front of the store. He’s three, so he wanted gum for our whole family – Mommy, Daddy, Sister, and himself. I had four quarters, so we loaded up on gum and headed home.
When we got home, I opened up a spreadsheet and began playing around with a few scenarios. What if, instead of spending that dollar on gum, I had saved it? And, what if I saved a dollar, every day, for a year? for a decade? for 50 years? Also, what if I save more than a dollar, say, two dollars, or five dollars or even 10 dollars, per day?
Check out this chart I created -
Note, the following numbers represent the total amounts contributed to savings (w/ no accounting for interest earned).
| 1 Day |
1 Month |
1 Year |
10 Years |
50 Years |
|
|
|
|
|
| $1 |
$30 |
$360 |
$3,600 |
$18,000 |
| $2 |
$60 |
$720 |
$7,200 |
$36,000 |
| $3 |
$90 |
$1,080 |
$10,800 |
$54,000 |
| $4 |
$120 |
$1,440 |
$14,400 |
$72,000 |
| $5 |
$150 |
$1,800 |
$18,000 |
$90,000 |
| $6 |
$180 |
$2,160 |
$21,600 |
$108,000 |
| $7 |
$210 |
$2,520 |
$25,200 |
$126,000 |
| $8 |
$240 |
$2,880 |
$28,800 |
$144,000 |
| $9 |
$270 |
$3,240 |
$32,400 |
$162,000 |
| $10 |
$300 |
$3,600 |
$36,000 |
$180,000 |
If I save $1 per day, for 50 years, I’ll have $18,000.
If I save $10 a day, for 50 years, I’ll have $180,000.
But, as I mentioned before, this chart represents contributions – and doesn’t calculate interest earned.
So, let’s kick it up a notch and do some calculations, assuming a 5% annual return.
| Yearly |
10 Years |
20 Years |
30 Years |
40 Years |
50 Years |
|
|
|
|
|
|
| $360 |
$4,754 |
$12,499 |
$25,114 |
$45,662 |
$79,134 |
| $720 |
$9,509 |
$24,998 |
$50,228 |
$91,325 |
$158,267 |
| $1,080 |
$14,263 |
$37,497 |
$75,342 |
$136,987 |
$237,401 |
| $1,440 |
$19,018 |
$49,996 |
$100,456 |
$182,649 |
$316,534 |
| $1,800 |
$23,772 |
$62,495 |
$125,569 |
$228,312 |
$395,668 |
| $2,160 |
$28,527 |
$74,994 |
$150,683 |
$273,974 |
$474,801 |
| $2,520 |
$33,281 |
$87,493 |
$175,797 |
$319,636 |
$553,935 |
| $2,880 |
$38,036 |
$99,991 |
$200,911 |
$365,299 |
$633,068 |
| $3,240 |
$42,790 |
$112,490 |
$226,025 |
$410,961 |
$712,202 |
| $3,600 |
$47,544 |
$124,989 |
$251,139 |
$456,623 |
$791,335 |
If I contribute $1 per day ($360 per year) for 50 years, at 5%, I’ll have more than $79,000!
If I contribute $10 per day ($3600 per year) for 50 years at 5%, I’ll have more than $790,000!
(Please note, I used a very simplified formula to calculate interest, based on annual contributions. In reality, if you made deposits throughout a calendar year, you would earn even more interest!)
Isn’t that cool? I like to look at charts like these. I am motivated by “what if”.
As a side note, my son will only be 4 once, so I’m still going to buy him the chewing gum! But, I’m also going to pocket some additional savings, so that when the time comes, I can buy my grand-kids a warehouse full!
If you want to get really “pumped” about saving money – checkout what happens if you max our your 401k and Roth IRA contributions.
February 2nd, 2008 
NCN 
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