Making Some Small Adjustments to your Shopping Habits can Pay off Long-Term
By Donna Kline
It’s a snowy Monday morning and the kids have a two-hour school delay. You make a cup of coffee, and turn on the television. It’s a little early, so in lieu of HGTV, you catch an infomercial. “Flawless coverage!” boasts the host. “Our new Miracle Powder will camouflage any blemish. All your friends will notice about your face is your glowing skin! For just two low payments of $29.99, this amazing makeup set can be yours. But wait …”
You know the drill. Be careful, or you’ll be subscribing to repeat orders that will take three phone calls and lots of aggravation to cancel. You’re too smart for that one. So you log on to Amazon to see if the product is available without the games. Sure enough, there it is—and it’s only 40 bucks! Click, and you’ve ordered it.
That two-hour delay just cost you $40.
It may seem harmless enough, but those impulse buys could disrupt your financial future. What if, instead of spending that $40, you saved it? Would the product make a real difference in your life in the future? Does $58,000 sound like it would make a difference?
Here’s the math:
- $40 per week, four weeks per month, equals $160 per month
- $160 invested every month equals $1,920 saved per year
Of course there are no guarantees. Markets have good years and bad years. But let’s just say you earned an average 4% annual net return. In 20 years, your account could be worth over $58,000. Assuming the balance continues to earn an average of 4% net annual return, you could withdraw income from that account of over $300 every month for the following 20 years. You’ve just created your own little pension—and just by paying yourself forty dollars per week, instead of the TV huckster.
It is important to set up your monthly savings via automatic deposit. Don’t tell yourself you will “write a check every month.” Odds are that it won’t happen on a consistent basis. And, if the money is automatically withdrawn from your checking account, you probably won’t even miss it.
Some factors will affect your returns, such as taxes, market volatility, your risk attitude, and so on, which is why it is important to consult a financial advisor to help increase the likelihood that you will achieve the results you want. But whatever you can save, four, forty, or four hundred dollars a week, your efforts will reward you and your future handsomely.
The discussion above is for educational purposes only, and is based on numerous assumptions which are necessarily uncertain in nature and may not accurately reflect the actual outcome or future. As such, they cannot be relied upon as any type of promise or guarantee of future results. If one or more of the assumptions is not accurate, the results of your situation may be materially different than that presented. Any investment involves some degree of risk, and different types of investments involve varying degrees of risk, including loss of principal. It should not be assumed that future performance of any specific investment, strategy or allocation will be profitable or equal the intended result. Past performance of any security, indices, strategy or allocation may not be indicative of future results.
Investment advisory services are offered through HBK Sorce Advisory LLC, doing business as HBKS Wealth Advisors. NOT FDIC INSURED – NOT BANK GUARANTEED – MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPAL – NOT INSURED BY ANY STATE OR FEDERAL AGENCY