I WAS INTRIGUED by the title of an article "The Road to Riches is this Simple -- Drive a crappy car". The article's conclusion is that it's the big financial decisions, not the little ones, that will determine whether you win with personal finances. I don't entirely agree.
Yes, buying an expensive car/truck doesn't make financial sense when you're still getting out of debt, building your emergency fund, and stashing all you can for college/retirement. The money saved by purchasing a $15k car instead of a $40k car could be used to do any of the things I just mentioned with debt-elimination, emergency funding, and investing.
However, even the little things CAN make a big difference.
Consider these two examples:
1) switching from $6 coffee 5 days a week to 1 day a week and making coffee at home 4 days/wk would save you $20 a week or $80/month. Using an online investment calculator, you can see that by investing that $80/month from age 30 to 60 with a yield of 6% would give you $80,000 when you're 60! That's pretty good for just making that small change.
2) Instead of eating dinner out 3 times a week at $50 a pop, cut it back to 1 time a week. By investing the savings of $100/wk or $400/month from age 30 to 60 at a low 6%, would give you $257,000! At 8% yield, you would have almost $600,000!
What?! That's amazing! With the basics I've just shown you, how is it that so many people have next to nothing saved for retirement or a medical emergency? How are they going to survive?
Before you start investing, consider applying those small (and large) savings toward your debt and emergency fund, but you can see how small changes can yield BIG results in investing. But t's all about priorities, mindset, and action -- you actually need to be investing the money that you're saving if you want to see those results. And, yes, you may not have 30 years, but I recommend starting now with the time you've got and letting all your younger friends/kids know about this so they start as early as possible!
Small adjustments now, as well as large ones like buying a financially responsible car, as the article says, will give you more fuel toward your financial goals, so that you can not just survive but thrive with a financially hopeful future.
What small changes can YOU make to invest in your financial future?
Bottom line is that YOU are in control of your finances, and YOU get to decide not just how you want to live now but how you want to live later. What are your priorities and your mindset on this? Because YOU get to make the decisions for YOUR life now and for your future.
Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.
As a certified Personal Finance coach (and homeschooler of 15 years), Kathleen has worked with people of all ages, but her passion is to help kids/teens/young adults take control of their finances early, learn entrepreneurial skills, generate multiple income streams, and get on a path to Financial Hope & Freedom so they can live into their passions and purpose. (Free Webinar on how to Empower Money Smart Kids with Financial Literacy & Entrepreneurial Skills)