Who wants to be a millionaire?
Of course you do! The next question is: Can you save $25 a week? Most people, even cash-strapped college students, would say yes. It might mean occasionally skipping happy hour or not buying that new pair of jeans, but it’s doable. Well then, if you save $25 a week and get a 10% return, you’ll have $1, 028, 034 in 45 years. Now stop and think about that. You’ve only invested a TOTAL of $58,500, but it turned into a cool million. Behold the power of compound interest.
I know, I know, saving for retirement is something that you do in your 30s after you’ve bought a house and filled it with a couple of kids. The only problem with that strategy is that if you start saving 10 years later you’ll only have $387,565. Yikes!
I’m always amazed that inside the largest free-market economy the world has ever seen we can still graduate from reputable colleges completely ignorant of basic financial matters. In light of our educational system’s failure to shape us into intelligent capitalists I’m going to discuss some of these issues over the next couple of weeks, and I’ll start with the ultimate societal taboo: my salary.
Tags: investing, IRA, Money, retirement, salary, saving
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March 19, 2008 at 4:17 pm
I feel so enlightened after reading about how I could potentially one day be a millionaire! I think I can save $25 a week, but we’ll see how that goes. If I do make a million i’ll be sure to give you a cut of it since you’re the one that shed light onto the idea!
March 29, 2008 at 3:49 pm
I have always been amazed at the fact that if you start saving at around 20 years old, your money is significantly more valuable than if you start even 10 years later. And it is a SIGNIFICANT amount as you state. Great post!
April 7, 2008 at 3:56 pm
wait, really? i mean, obviously it makes sense but i really never thought about it. then again, i guess there’s not too many people that would tell you to start considering your retirement fund around 20 years old. this is a really great post, and something to think about.
April 28, 2008 at 1:52 am
[...] 3 Simple Rules to Save Money Let me start by saying that saving money before you have a regular, dependable paycheck is very difficult. No one is going to fault you for not saving money when your only income is that 2 night-a-week waitressing gig. However, once you get that first job, you should immediately start putting money away. Most analysts recommend saving at least 10-15% for retirement. Now, I know this may be difficult if you have student loans, car payments, or credit card debt to pay off, but you really can’t afford to wait. [...]