I want to debunk the thinking that you need to wait until you have more money to start investing. The reason you invest is to grow your money. Pretty straight forward right? You want to make money on your money. Don’t be shy about it, you want more money. It doesn’t make you a bad person. You know you need money to reach your goals and support the lifestyle you want. That just makes you smart, not greedy. There’s a HUGE difference.
Time is actually the most valuable asset you have when you want to grow your money. When you start making more money you start spending more money. It could be to upgrade certain things in your life for fun or to actually get some things you really needed but were waiting to have the money. So having more money doesn’t necessarily mean you’ll start saving more.
I’m not going to tell you that by skipping the latte or the avocado toast you’ll become rich but I do want you o follow me on this exercise. Don’t worry you don’t need to be good at math, I’m going to do that for you.
My husband and I have a local Thai restaurant that we absolutely love. It’s not a swanky place that you go to be seen, I’m not talking about a $35 entrée, it’s our local spot and we go there at least once a week. Right now we’re doing curbside takeaway b/c we can’t live without it but I wanted to see what a night out there looked in terms of investing.
I checked out an average receipt from there and after 2 appetizers, 2 entrees, plus tax and tip, add in some refreshments that we would normally get when we eat in, we’re looking at about $70-80 for dinner. Damn good dinner I might add. So what if you invested $80 a week into a growth portfolio, 70/30 stocks, conservative estimate that it could grow at 7% / year. After 10 years of $80k a week, you’dd have a little over $60k. Your total contributions after that 10 years would be just under $42k. So you made about $18k by investing.
Let’s say you waited 5 years until you had more money, and you get a promotion and you say okay I couldn’t invest $80 a week 5 years ago so I’ll go ahead and double it to catch up. You invest $160 a week for 5 years so your total investment so your total investment is $42k which is the same total investment as the first example. Only in this scenario after 5 years at the same growth rate of 7%, your total account balance is just shy of $50k. You left $10,000 on the table by waiting 5 years. Is $10,000 going to make you rich, no but it illustrates that waiting is a really expensive excuse and is costing you thousands of dollars.
I’m not saying stop going out to eat, you absolutely can if this sparked an ah ha moment for you, but at a minimum I’m challenging you to invest in yourself at least as much money as you would spend on dinner out. Time even though you can’t see it or calculate it, is a huge asset that you have on your side that you need to start taking advantage of.
You’re always going to have something going on in your life because that’s juts the stage of life we’re in. we’re in growth mode and with that comes extra expenses, extra obligations and we’re always re-prioritizing how we spend our time and energy. So please don’t forget to put yourself because nobody else is going to do this stuff for you!