As I was rushing out the door (because we all got up a bit later) with my two grumpy kids – my Juju Bear who was upset because I didn’t place her “bebe” correctly in her stroller and my Adrian who could not find his snow pants and were blaming me for having put them somewhere else…Arg, morning rush joy!! We do have great mornings too…just in case you wonder! Hahah!
This reminded me about the importance of starting early! If I had gotten up only 20 min earlier, I would not have had to rush so much…this applies to so many things in life. If we only started earlier…just imagine how much more and better we could do things. The good news is that it is never too late, and it all depends on what end result you’re hoping for when it comes to finances. I mean, you might want to make some compromises if you have reached retirement age and you haven’t saved much yet, and suddenly, you want to have a 6-figure income until age 90! But you know what I mean…We open RESPs for our kids early, some of us contribute into RRSPs from the first day they start working. (I personally prefer TFSA but RRSP also has its benefits too).
There is also the opposite type of person – the one who doesn’t believe so much in savings and let me be clear, I am not the woman who is going to try to convince you here. Rather, I will show you the effect of starting early. I did this for myself, and without even knowing what the compounding effect was! I just had a goal to buy my first property at 25 and so I took the steps to make it happen…and yes, I compromised a lot…I bought cheap beers in my college night outs..and I DISLIKE beers so much but meh! I also lived a little, and would go shopping from time to time with my girlfriends back then, but mostly studied, worked two jobs and saved money!
Let me show you how starting early can affect the end results:
This is the power of time and compounding interest:
Let’s say you start investing at 19 until age 26 year (8 years – total investment of $9,600) – only $1,200/year or 100/month (10% ANNUAL RETURN) will result in $751,526 at age 67.
On the other hand, if you start investing at age 26 and contribute until age 67 at the same interest rate, your total output would be $49,200 over the years and the total investment would be $590,853 at age 67.
This is 25% less than the person who started early! You are probably telling yourself, well, how do I get 10% return on my investment…the point is not about the interest, but rather start as soon as possible.
Small changes and becoming mindful in where you spend your money …yes dare I say – on useless stuff, like coffees on the go or cigarettes – can really add up if you were to put this money into savings. Want to see how it looks for you and where you can make small adjustments but don’t know where to start? Book a call with us and we’ll be happy to get you some clarity.
Yours truly, Money Mama XO