Excerpt from How to Get Rich; Wealth Building Guide for the Financially Illiterate, by Barbara Friedberg
Small Money Changes Lead to Big Money Rewards
“As a volunteer tax preparer for lower income folks, I was amazed at the frequency during which the clients came in with a convenience store snack; small pack of cheese crackers, a soda, a candy bar, or another quick item. In contrast, before my three hour shift, I packed a drink and snack for myself at home and brought it with me.
Now, I’m not saying this to gloat, but to inform that the money lost is substantial by buying snacks out instead of bringing from home. Slap together a few bad money habits; smoking, buying lunch out, playing the lottery and you’ve needlessly spent thousands of dollars over the years.
Look at the daily cost of convenience store snacks:
Coffee from a shop: $2.00
Sweet roll: $2.00
Pack of crackers and cheese: $1.25
Compare that with snacks brought from home:
Cereal or donut: $.75
A few crackers with some peanut butter or cheese on them: $.75
Soda (can from home): $.25
Swap out store bought with snacks from home and you $4.70 per day.
Multiply $4.70 by 365 days and that’s $1,715 wasted in a year. Invest the $1,715 each year in a stock mutual fund averaging 7 percent return per year. At the end of 20 years, the $1,715 annual investment is worth $70,307.
Is it worth planning and spending a few minutes each day to pack some snacks and a lunch, in order to invest for the future?
What’s the Money Saving Plan?
Stock up on low cost snacks at the grocery and leave them in the car or at work. We leave a flat of waters and coke in the car so we don’t have to pay $2.00 for a can of soda. If you think it takes too much work and planning, ask yourself if doing a bit of planning is worth $70,307. In The Difference, Jean Chatzky found that 55 percent of the self-made rich attributed habitual saving to their financial success.”
Saving Builds Wealth-How to Turn Small Change into Big Bucks
It’s possible to get rich on an average salary. Start small and make a change for a few days. Go to Wal-Mart and stock up on the snacks you typically buy when you’re out. Leave the snacks in the car. Instead of hitting the snack shop near work, take a soda or granola bar from the car. Make coffee at home and bring a thermos full to work. If you must buy coffee out occasionally, get it at McDonald’s for a buck instead of a pricey coffee shop.
Next, you have to make sure that savings goes into the investment account. If you do not already have an account at a discount broker, open one up at Charles Schwab.com. They have low minimums for initial account set up. Set up an automatic transfer of $140 per month from your bank account into the investment account. Direct the investment company (by phone or online) to invest those funds each month into a diversified stock index fund.
That’s it, you’re done. Continue the fund transfer and investing through market ups and downs and do not touch the funds. Over time, if history is any guide, your funds will multiply.
Caveat; Please consult your own financial adviser before making any investment decisions. This article is for information only and not designed as a recommendation to buy any specific financial products. Charles Schwab is a good discount broker for those with a small amount of cash. If you can meet higher minimum cash requirements, Fidelity, TD Ameritrade, or most of the discount brokers will get you started investing just fine.
Get more wealth building strategies in How to Get Rich; Wealth Building Guide for the Financially Illiterate, by Barbara Friedberg
Do you frequently buy snacks while out and about? Have you ever tried to cut back and bring lunches and snacks from home?
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