If you’re like me, you generally have a few coins in your pocket at the end of the day.
You might either keep them on the kitchen table and take them to work next day to spend them. Some of us systematically flip them into a jar of some sort and save up until the jar is full. Then they spend it.
But what if we didn’t spend it for a while? How much could it add up to? We’ve done the exercise to not only show you how much they can add to after a year, but also after 5 years and 10 years.
And because inflation will start eroding the purchasing power of your money after a few years, we’ve also worked out what the balance would look like if you invest your savings (we simply assumed you invest your yearly savings into an average index balanced fund, at the end of every year).
How much could you have after 15 years? The results might surprise you…
Let’s be conservative and assume you put away only $2, every working day (5 days a week).
After the end of the week = 5 x $2 = $10.
52 weeks in a year = $520 at the end of the first year. Not bad. Good budget for a night out, but not if you save it.
After 5 years, this adds up to $2,600 (5 x $520) and using a simple math, we end up with $5,200 after 10 years and $7,800 after 15 years.
That’s a lot of money. But let’s take this further…
If you invest your $520 at the end of every year, you could accumulate up to around $15,000 after 15 years!
By simply saving $2 per day and sticking to the concept – the concept of a positive money habit.
What if you can save more than $2… a day?
The main point here is to emphasise the power of ‘habit’. Not to showcase an amazing investment or a complex investment scheme. It’s never about that. It’s about simple but effective habits which form a positive money behaviour and a positive relationship with money.
Can’t be bothered mucking around with change? Use technology to do the trick for you. There’s a number of apps and software you can use to automate your savings plan. Just don’t get lost in the choice. The best one is the one you will use. The power is in doing.
Do you have a friend who you can buddy up with in our $2 challenge? We’d love to know how you went.
If you need some help with getting started
Why not make a booking to speak with one of our finanical planners, together we can work on taking care of your finances - either book a coffee meeting or call us to arrange an appointment on 02 4229 8533.
Article by Michal Bodi | Senior Financial Planner
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.