*Before I start- the disclaimer thing- I am not a financial expert, banker or related in any way to Elon Musk.
I have done my research-go do yours.
Your money should matter to you- because it is the key to your financial freedom-AKA- your freedom.
If you happen to be one of those unicorns and actually love your job and see yourself applying to HR for a special permit to work after you reach 90, well then.
You are blessed.
And I’m not being a cynic bitc& here- I envy people that see purpose and meaning and love going to work every day, and are generally content with whatever life rains on them.
If , like me, you are a class A introvert, that likes doing the work itself- but finds the whole workplace politics thing unnecessary(at best) and intimidating (or worst), then- learning how to well manage your money should become a top priority for you.
For 2 reasons, by the way-
The obvious one- saving money=earlier retirement +
The less obvious yet valid 2nd reason- in order to retire early you need to save, but you also need to learn how to adapt to a low budget -as a constant- not as a sporadic few months of enthusiasm thing.
Saving needs to become a true habit of yours, in order to maintain it for life. in other words- much like a healthy diet -saving needs to be sustainable.
Because there is a limit to how much a person can save before slamming the door and storming out of his-her cubicle, and the amount you save corelates directly to the monthly sum you need to sustain yourself in early retirement.
And please don’t say things like:”when I get to the bridge I’ll cross it” or whatever.
I can tell you early retirement can present multiple “justifications” for spending money- and on a daily basis too.
I find it hard to believe a person who is used to spending x when working all day , will adapt -and be content(!) with spending x/2 when you have all the time in the world to do whatever you want.
This post is supposed to be on the topic of saving-even if the amount of money you can put aside looks minimal to you.
So back to the subject.
A few weeks ago I had this conversation with my 24 year old son (The cool one who won’t take the water bottle -read here how and why-
He is renting a place with a roommate, and working as a courier on a motorcycle.
Even when he was a child, he had really good taste in food and clothes, and going shopping was- and still is- a hobby of his.
But- for the past year or so- I think my constant money lecturing got to him.
Or maybe he figured out by himself that spending money earned in sweat isn’t the same as money that just happened to reside in your wallet.
So I was talking to him -again- about saving money – when I suddenly realized he must be thinking there isn’t much point in saving when he barely makes it to the end of the month.
So I told him that I was under the same impression until we moved from the big city -where our rent and other expenses left me with absolutely no extra money, To the distant village we live in, where I could afford buying our small house, and discovered I can put aside a little money in a savings account for my 3 kids.
Mind you I didn’t have much to put there- but I kept going and going. and the money was invested in the bank (I had absolutely no idea what the stock market was back then, therefore feared it immensely. ).
The thing is- the money was left there, untouched no matter what, for more than 10 years. and apparentley a miracle happens if you let your money sit tight in a savings account -even when initiallly the amount of money you can divert to that direction isn’t that huge- and even if it’s only a small amount.
The miracle is called compound interest.
I personally find that giving an example gets you to the point much quicker than any other way- many times quicker than the explanation itself.
if, for example you can put aside 100$ each month, and the interest rate you can haggle is 4% a year , you would think that after 10 years you will end up with 12,480$ (100*4%*120 months)–
The correct answer would be 14,555$, which means that while you were working- your money wasn’t sleeping -it made you an extra 2000$, on a 100$ a month savings.
Here is the link to the calcultor.
If , by any chance, you can save even more- the more the merrier in this case- the compound interest will reward you with even greater benefits.
If -by any chance- you can manage to put 500$ aside each month-
then after 10 years -untouched- you will end up having 72,776 $.
And so on.
Another way to attack this would be to start saving early- and leave the money for 20 years– not 10.
Going back to our 100$-
After 20 years you will have 35,952$.
And with 500$, you will have -hold tight- 179,764$!!!
Now this is something to consider I believe.
Enjoy- the cooliflower.