Want $870,000? Richard Quinn
SENTENCES THAT begin with “I can’t” drive me nuts—and I especially dislike the sentence, “I can’t save.” “Pish-tosh,” I say. Every household in America earning at least the median income can save for the future. If they try hard, many lower-income Americans could also save.
Of course, the amount saved will vary, but even small amounts can help over the long haul. If a household earning $40,000 a year can sock away enough to generate $300 or $400 in monthly retirement income to supplement whatever they get from Social Security, that’s significant. Saving early and regularly quickly makes life far less financially stressful.
How can I be so confident that most Americans have the ability to save? Look around at the many nonessential businesses—including entertainment companies—that are sustained by the spending of the average American.
I don’t advocate living like a hermit. But a touch of frugality and a sense of spending priorities wouldn’t go awry. Last year, I wrote about the ways many people waste money. Earlier this year, I suggested “financial fasting” as a way to accumulate funds to start investing. But enough of theory.
Let’s look at some numbers. For the 10 examples below, I assume a 40-year saving period, with those savings earning a 5% annual return.
1. The pause that refreshes. It amazes me how much soda makes its way into shopping carts. Americans consume 39 gallons of soda per person per year. Who needs all of that? Where I live, a case of 12-ounce cans is about $25. Skip one case a month and you can accumulate $38,000 in 40 years.
2. Light up (or not). Yes, smoking is down. But there are still 34 million smokers and they spend an average $6.28 a pack. Eliminating one pack a day will get you $291,000 after 40 years. Do that in New York City, where cigarettes are even more expensive, and you’ll be in a penthouse in Palm Beach at age 65.
3. Your turn. Video games are big business. Americans spend about $43 billion a year on games. The average player is in his or her mid-30s. Assume a player skips buying just two new high-end games each year. That will net about $11,000 for retirement.
4. Ink. A skilled tattoo artist earns around $200 an hour. The cost of a tattoo ranges from $30 to thousands. About a third of Americans, most of them under age 55, have at least one tattoo. Those with a tattoo typically have more than one. Let’s assume a onetime total tattoo cost of $500. Skip that and you’ll add $3,500 to your pot of gold.
5. Fluffy or Fido. Nobody is giving up his or her fur baby to save money. But if you aren’t already supporting that dependent to the tune of $1,000 a year, avoiding the expense could get you $127,000 for retirement.
BE SURE TO READ THE REST OF THE STORY AT THE LINK BELOW … and join the conversation as well.
Source: Want $870,000? – HumbleDollar