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At 18 begin to save $2.30 a day and be a millionaire by 65! That probably equals a piece of pizza or a soda and chips. This comes to about $78 a month. If you wait until you’re 25, you will have to save $158 a month to become a millionaire by age 65. AND wait until age 45 – it becomes a staggering $1,317. When you are young you have the TIME VALUE OF MONEY ON YOUR SIDE.
Can I REALLY Do This? HOW?
How can you find that extra money – that $2.30 day?
We all have a few “black holes” where money seems to disappear. Tracking your spending will help you discover the holes, and plug them up. Are you aware of your “black holes?” The “The Case of the Disappearing Dollars” can help to you identify the most common. Commit to changing just one or two and you’re on your way to being a Millionaire. Will it be the soda and piece of pizza, the two bags of chips, or maybe the Smoothie or cappaccino? Or maybe the new outfit you buy each month, the concert, or several CDs or DVDs? Or it could be a combination of these.
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Solve this Savings riddle!
David is 25 years old.
He begins saving $2,000 a year for ten years (until age 34) then stops. A total of $20,000 has been invested.
Katie, age 22, plans to wait until age 35 to start saving and will invest $2,000 a year until age 65 at a total investment of $62,000.
Who would you expect would have more money at 65?
If you guessed David, you were RIGHT!
David’s initial investment of $20,000 in stocks (at an average interest of 10%) would be worth $545,344 at age 65.
Katie’s initial investment of $62,000 ($2,000 X 31 years) in those same stocks would be worth $352,427 at age 65.
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DOES THIS MAKE SENSE?
Only if you understand the time value of money. Although Katie invested much more, she waited until she was 35 years of age.
Place savings as a priority as soon as you can. Even starting small but starting early, can result in more money for future needs.
Hey – what if you were David and you never stopped.
Brett decided to do this. He began saving $2,000 a year at the age of 25 and continued without stopping until he was 65.
He invested a total of $82,000 and this was worth $897,771 by the time he was 65.
The time value of money is a powerful tool for creating WEALTH. See all this on the chart - How Time Affects The Value of Money!
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