$10 Can Be Life Changing

I tried out a new stylist this week.  I was long overdue and my regular stylist was booked up.  We started with the normal salon chit chat, where you live, what you do, and in our small town who you know.

She asked about being retired. I try to let people know I did it by saving a lot.

She said her Dad had recently been to a class about personal finance.  I’m hoping it was a legit. one at the community college and not a sales seminar.  But anyway, he was telling her everything he learned that he wished he knew when he was her age.

He told her if she invested $100 a month she could have a million dollars.  Super, seriously, impactful to hear that in your mid-twenties.  Not completely accurate (more about this later) but impactful.  He wished he knew this stuff when he was her age so he was doing his best to pass it to her.

I started gushing about how cool it was that she was having these conversations with her Dad.  How important this was.  What an amazing legacy he was creating for her.  I wanted to nominate him for Dad of the Year–is there such a thing???

And then I came home and checked the math.

If she just invested $100 a month at 7%, she would need to do it for over 58 years to reach $1,000,000.  This gal’s family has a legacy of working their whole lives, but that still seems like too long.

But if she increased that $100 by 3% inflation each year, she would have $1,000,000 in a bit over 53 years.  Hmmm starting in her late 20’s, this still seems too long.

I went through about 10 more scenarios but landed on this one:

$10 a day gets her there in 39 years.  

If she increases it by inflation each year and invests it to earn 7% each year, she’ll have $1,000,000 in just under 39 years.

Now keep in mind, that $1,000,000 in 39 years doesn’t buy what $1,000,000 buys us today.  But it would be worth almost $400,000 in today’s dollars.

That’s serious money.  Using the 4% rule, that $400,000 can generate $16,000 of income, in today’s dollars, for life.  Add Social Security and you should have a decent life.

So each day, she needs to set aside $10.  $310 in January, $280 in February . . .

She can find that $10 by reducing her spending or by increasing her earnings.

If she averages just four clients each day, a rate increase of $5 should get her that $10 after expenses and taxes.

Or she can set aside the first $10 of her tips each day–maybe the first $15 so she can take a day off now and then.

$10 might seem like chump change–throwaway money–buy a sandwich or a couple latte’s and it’s gone.

But that $10 can become the foundation that creates the future she has dreamed of.  It can truly be life changing.

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Author: Ms. Liz

A CPA, I retired at 51 and I am helping people create their fantastic futures!

23 thoughts on “$10 Can Be Life Changing”

  1. Really enjoyed this perspective. It can be overwhelming when you’re looking at just one huge number, but it’s much easier when you break it down.

    The amazing thing is that, in today’s world, pretty much anyone can figure out a way to make and then save an extra $10 per day. For myself, I like to walk dogs or do food deliveries on my bike, and that’s an easy way to pull in an extra $10 every single day without a ton of work.

    1. So great to hear from you FP, thank you for your kind words!

      You’re so right–I didn’t even talk about how easy it is to make that $10 a day. I love your ideas especially dog walking, many of us enjoy walking a dog–why not get paid for it?

  2. That’s a good suggestion about saving tips…I wish I did that when I was serving. You never know exactly how much you’ll make in a day so $15 less won’t be that noticeable. It makes such a huge difference breaking it down by the day. $300 might not be that much but it sounds so much more manageable when you state it as $10 a day, and a lot more motivating to skip that coffee run.

    1. Thanks for stopping by Sarah! I haven’t been in a tipped position in what seems like a hundred years–thanks for the reminder that it is especially easy to pull $15 out of tips.

      For me, achieving FI was a bunch of little, incremental steps. In the beginning it seemed like I was working really hard at it and no progress was being made; towards the end it seemed too easy, like the progress was undeserved. But the most difficult work came on the front end.

      Keep on keeping on!

    1. Oh you just made my morning with this–thank you! Show it to your daughter and help her get started–YES!

      We’ve all made mistakes, most important is where we are headed now. Those choices–good and bad made us who we are. Now you are on the right path, making better decisions and creating a better future for yourself. Focus on where you’re heading rather than where you’ve been and celebrate your successes! I’ll be here cheering you on 🙂

  3. Great post! I think people are not too hesitant to spend $10 a day on an impulse purchase. But if they think about investing that $10, it would be a dig deal since they don’t see the immediate return just yet. If they buy something, however, they will see the product right away. I know because I used to be that person.

    My husband and I just decided to max out our 401(k) and will be able to become millionaires in 25 years when I’m 55 and he’s 60.

    1. You are so right–making a purchase gives you a jolt of happiness and investing for the long term feels so meh. But I got to the point where watching my net worth grow gave me that same jolt so it got easier to skip some of those purchases. Congratulations on maxing out your 401k’s! That’s amazing and something I didn’t do until well into my 40’s–I suspect you’ll hit that million mark before you think.

      Thanks for stopping by FAF!

  4. Eye opening post! Especially to someone nice and young. We are much older are are now making all the necessary adjustments to get things in order to reach FI in about seven years. Looking back…..wait I can’t change the past so I will focus on the now so I can have a better future.

    1. Thanks F&B! Time in the market builds great momentum but hitting it hard for a number of years can work too. Seven years will be here before you know it–great job pursuing BIG goals!

  5. Love it! Little things make a huge difference. Maintenance and momentum can get you everywhere. I love the idea about setting aside her first $10 of tips. What a great way to make it virtually pain-free.

    1. Thanks Erin! Little things, done consistently, can produce amazing results. I only had one tipped position and it was when I was very young–it seemed like free money and it would have been so easy to save it. Wish I had 🙂

  6. That’s a great angle to see how to achieve FI and I would definitely set this as a daily goal. I don’t know if I could get 7% year on year, haven’t been investing well. If I convert it into local currency it’s about 45 and our min wages is ~ 5 per hour. It’ll take some time.

    1. Hi Lyn,

      You raise a really good point–not all of us need to save $1,000,000. Many bloggers have retired early with far less than this because their expenses are low. I wouldn’t work towards a million if I didn’t need that much.

      If you’re interested in learning more about investing (and if you can access US Markets), I recommend reading Jim Collins’ Stock series. That’s a great place to get started on this journey.

      Best of luck to you–thanks for stopping by!

  7. I have been having these talks with my nephew (17) and niece (14). I am doing well having started saving at 28 but they could do a lot better than me by starting earlier!

    1. Best Aunt Ever! How I wish someone was chatting with me about long-term savings and investing at that age–though I’m not sure if I would have listened. Bravo!

  8. For his last birthday, I gave my nephew half of what I usually give him and told him if he wanted the rest he had to open a savings account. Too far?

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