By Craig Erwin, Ph.D.
I usually keep cars and phones until they no longer work, but my friends have to have the newest phones and cars, so they buy new ones each year. Suze Orman, a famous financial advisor, says buying a new phone each year and a cup of coffee each day can make us broke. The opportunity cost stings. Investing the $3.50 daily coffee expense could amount to $106,000 in 30 years. And that’s just for the coffee. If you upgrade your iPhone every year, it will end up costing you about $12 per month. If instead of buying new iPhones, you saved those $12 per month and invested them in a retirement account, in 30 years you could have about $25,161. Got it? If you save a little here and a little there, and invest it for decades, you may end up with a lot of money. We deserve to be spoiled, but we can do it without spoiling our retirement. Saving for retirement is simple. Cut your expenses where possible, invest the money you save, and keep doing it for decades. As you see, you can accumulate over $100,000 in 30 years just by saving pocket change. Imagine how much more you can accumulate if you save and invest real money over decades, say 10% of your paycheck. If you do that, you won’t have to worry about money after you retire – you’ll be on easy street.
Do you have habits that enable you to save money? Are you confident that you will accumulate enough to retire? Do you buy new phones, cars, or other devices when a new model is released?
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