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My father always impressed on me the importance of investing. For years I have known the great power of compound interest and yet have not fully taken advantage of its awesome potential. Let’s face it, life is expensive. Sometimes there is money to save and other times bills eat it up.

Just recently I was reminded of how simple and amazing putting aside a few dollars a week can really add up. But where do you come up with the money?  Times are tough man, the economy is slow, profits are down, income is a roller coaster ride for many.

Every week, you spend money on necessary things like food and clothes, getting from point A to point B. Then you have the little things – a bag of chips here, a coffee there, an array of choices and flavors and sizes to satisfy every need.  It’s those little things we spend money on, almost unconsciously, every day that represent an opportunity to find money to invest.  Some call it the “Latte Factor“.

What if you took the money  you spend on coffee or snacks, $2 here, $4 there and invested it? Can you imagine what that might mean to you in the future? I think the reason most people don’t think about it is they truly have no idea just how the numbers multiply. It’s amazing! If you took $10 per week and invested it at a 10% rate of return for twenty years, you would wind up with almost $33,000. If you stretch it to forty years, your looking at over $253,000, over a quarter of a million dollars! And that’s just $10 a week…forty dollars a month essentially. It’s really not much when you think about it. Heck, give up cable and your there!

Let’s say you can do even better than that and spare a few lattes, etc. each week and save twenty bucks. When you take that $20 savings and invest it in the same scenario above, check out these results: just over $65,000 in 20 years and over $506,000 in 40 years. Over a half million dollars! It’s pretty exciting, and definitely something anyone can do. Once you take the first step, you’ll be hooked.  If someone paid you $506,000 to give up your daily cup of coffee would you do it?  I know I would jump on that offer!  Could you switch from bottled water to tap water for the same amount of cash?

Keep track of EVERYTHING you spend money on and you will notice the small things you could substitue or eliminate to “find” money to save for your future.

So here’s the challenge, over the next week, if you are not already doing this, designate a fixed amount of cash you will spend for your weekly expenses. Factor in the usual money for lunches, snacks, transportation, entertainment, etc. Put that amount of money in your wallet on Monday and see if you can make it until the weekend, with ten or twenty dollars leftover. It’s not necessary to change your lifestyle or make huge sacrifices. Pay yourself what you normally would during the week. The key is to be more conscious of the little things you spend money on. At the end of the week, put the cash in envelope to invest.

Then, ask yourself, “was that difficult?” Perhaps it was easier than you thought. Do it again the following week. I’ll bet it is slightly easier. And the week after that. And the week after… You might find you could do a few dollars more. No matter what the amount is, get in the habit of doing something on a regular basis.

Get started now and you’ll stay fit both physically and financially, and most importantly…

Be Free!

Ken Budka
Speaker

PS – If you want to see the magic of the numbers and experiment with different amounts, interest rates, and time lines, check out: http://www.finishrich.com/free_resources/fr_lattefactor.php where you can utilize a basic amortization calculator and see your results.