The Power Of Saving

I love that the term YOLO (you only live once) has become part of the modern zeitgeist. Yes, by all means, carpe diem! The problem, of course, is that the one time you live may end up being a very, very long time.

Members of the financial community take for granted time value of money mathematics. My experience, however, informs me that a striking minority of people really understand it’s power.

If you or your kids have a long time horizon, little spending choices can make a huge difference to long term savings.

Here are some examples to play with to show how saving will reflect in the long run with just a wee bit of sacrifice. Plug them into the savings calculator.

1 latte a day at $3.50 = $105/mo
1 pack of cigarettes a day at $6 = $180/mo.
1 cocktail a day at a bar at $5.00 = $150/mo.
A $300/mo reduction on housing expense

You can think of more (lots more) I’m sure. If I had young kids I’d be pounding this stuff into their brains starting at about age 10 (OK, I have but only with limited success.) You should too.

For any time horizon over 20 years I think 7% is a good estimate for a stock portfolio. Play with it. Then forward it to every kid on the planet.

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