The Cost of Spending

Hi everyone.  J.G. Wentworth here. 

In my last post I talked about a subject near and dear to me:  financial literacy and laid out the basic building blocks. 

Now I want to talk about one of those building blocks – budgeting – in a little more detail. 

Really, budgeting is all about controlling expenses.  When you limit your expenses, you free up cash to do other things, like invest.  Over time, this can have a huge impact on your overall wealth.  Here’s just two examples. 

·         Taking your lunch to work, and saving $5.00 per day works out to about $1,250 per year. But, if you invest that money and assume an 8% return, $1,250 per year invested over 25 years adds up to $91,382, before taxes.

·         Purchasing a commuter mug and making coffee at home instead of stopping for a $2.50 cup on the way to work adds up to $70,802 after 30 years of savings earning 8%.

So spending a little time budgeting and making some small sacrifices can have a big impact later on in life.  And if that’s not enough to get you think about budgeting, think about this:  small sacrifices now that add up over time can prevent you from having to make big sacrifices later on. 

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