"Never measure the height of a mountain until you have reached the top. Then you will see how low it was." ﾗ Jacqueline Kennedy Onassis, U.S. First Lady.
Over the past week, "50 Cent" has been on the lips and mind of Bahamians everywhere. When you turned on the radio, you heard "50 Cent." When you read the daily newspapers you read about "50 Cent." No matter where you went or what you engaged in, you soon heard the expression "50 Cent." On the job – in the food store – in church – on the bus or walking the street you heard "50 Cent."
Nothing has affected The Bahamas in recent time like "50 Cent." Both young and older Bahamians in one way or the other are excited about "50 Cent."
If "50 Cents" was able to grab the attention of a nation, then what about the power of two-50 cents? That's right two- 50 cents. Have you ever considered the power of a dollar?
To us a dollar does not seem much and that is the way we handle it as if it is not of much value ﾗ especially if it happens to be in change. But when it comes to retirement, saving just a dollar makes meeting your retirement goal earlier because every dollar not spent is a dollar that does not have to be replaced at retirement. Every dollar saved today reduces your needed income in the future.
I am always fascinated by the telephone commercials, which run on the various U.S. television stations. In them, you would see a dollar bill lying on the ground or being held and all of a sudden there is this burst of interest in this dollar bill. The one I like most shows a man and a day wrestling over the bill. In these commercial the expression "it's just a dollar" is constantly heard. The ads depict the true value of a dollar when it comes to saving on your telephone bill and everyone then becomes excited about it. What is the value of a dollar to you? Is it just two- 50 cents?
If we can appreciate the power and value of a dollar, then we would realize that we have within our grasp just what it takes to start saving and continue saving on a regular basis ﾗ maximizing the potential in a dollar.
Let's look at that potential. Let's assume that at the end of the day the change in your pocket adds up to about a dollar and you place that into your piggy bank ﾗ Remember those? That dollar a day will become $7 in a week and $30 at the end of the month if you continue to empty your change into your piggy bank each day. At the end of the month, you take this $30 and place it into your bank account, which earns 3.5 per cent a year. That dollar a day will be worth close to $24,000 in 30 years and that's just pocket change. If you were to invest this same $30 and earn 10 per cent a year, this dollar would be worth about $68,000.
By making a few adjustments in your spending habits, you would be surprised at the results. Just by taking this concept to save small amounts of money daily can produce significant savings for you over time.
I'm sure that if you put some effort into it, you can easily raise your savings to $2 a day. By doing this you would have yourself another $24,000 or $68,000 dollars and find yourself $136,000 richer in 30 years.
If you drove your car less each week or made lunch in the morning instead of buying it, you can add another $136,000 to your account. Do those simple things plus empty your pockets each day and you will have over $400,000 in 30 years. It's all in the way you look at the money you are about to spend. It may be just a dollar right now, but for every additional dollar you can save and invest each month, it can add up to more that $2,200 in 30 years. That's $1100 for every "50 cents" you save and $22 for every extra penny you can squeeze out in savings each month.
This exercise I feel, is the key to raising the standard of living for our family and us because even the youngest child can be taught this lesson. A lesson that will enable them to start saving today. Therefore, ensuring them a financially independent tomorrow.
The bottom line: The act of saving is as important as the return on savings and since you were already expecting to spend the change anyway, you didn't have to find extra money to save.
Once you put the elements of money, time and compound interest together you would be more than surprised at the power of two-50 cents. When it comes to saving for your retirement don't underestimate the power of two 50 cents!
"It's not just how much you save, it's how little you're used to living on while you save."ﾗ Author unknown
By Glenn Ferguson
Glenn Ferguson is a financial planner who specializes in retirement coaching
