How would you like to have an extra 290,000 dollars available at retirement? Well, here’s a VERY SIMPLE way to make that happen. Seriously.
Most of have regular, daily, no-big-deal expenses, right? Well, what if, instead of totally eliminating those expenses, we could space them out, so as to lessen the frequency of those expenses? Could we save some money? How about some BIG money? You bet. Check this out:
|Item||Hair Cut||Sub Sandwich||Disposable Razor||New Book|
|Old Frequency||Every 2 Weeks||Every 3 Days||Every 5 Days||Every Week|
|New Frequency||Every 3 Weeks||Every 5 Days||Every 7 Days||Every 2 Weeks|
|Total Savings Per Year:||$599.00|
By changing the frequency with which we purchase certain items, we can radically affect our long-term savings.
Hair cuts: I pay about 12 bucks for a hair cut. I used to get a hair cut every 2 weeks. Now, I just get a slightly shorter cut, and I go every 3 weeks. Annual savings: 108 dollars
Sub Sandwiches: I used to eat at a local Sub joint 2 or 3 times a week, averaging about once every 3 days. Now, I treat myself once a week, or every 5 days or so. Annual savings: 288 dollars
Disposable Razors: I shave with a “decent” disposable razor. My beard is not all that thick, but I used to use a razor for about 4 or 5 days. Now, I skip a day of shaving once a week, and I make a razor last 6 to 8 days. Annual savings: 21 dollars
New Books: I love to read, and I used to purchase a new book every week or so. Now, I space my new book purchases out and purchase a new book every 2 weeks or so. (I also use the library a lot more!) Annual savings: 182 dollars
Total Annual Savings: Almost 600 dollars
So, how does this make me rich? What’s the big deal about 600 dollars? Well, if you put 600 dollars a year into your retirement account, for 40 years (age 30 to age 70), and you earn a return of 10 percent on your money, you will have a total of over 290,000 dollars. Yep. Over a quarter of a million dollars in “extra” money, just by changing the frequency of certain purchases.
Now, imagine if you ELIMINATED or GREATLY reduced the frequency of such purchases. Can you get a free haircut from a friend? How about a 2 dollar sandwich instead of a 6 dollar sandwich? Disposable Razors? How about a rechargeable electric model? Or growing a cool beard? Books? Who needs to buy books, especially at retail price! Go to eBay or Half.Com, or just hang at the library?
As you can see, NOBODY has an excuse for not having at least a “small” amount in their retirement savings. All it takes is a bit of thinking, planning, and executing, and anyone can save a good deal of money, every day, every week, every year.
(By the way, when I calculated the return on your investment, I used a simple annual contribution and annual compounding. Had I actually taken the time to break down the investment into monthly sums and monthly compounding, your actual end balance would have looked more like 320,000 dollars…!!!)