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Financial Planning

4

min read

September 15th, 2020

You spent $300,000 at Chipotle?!

What’s the easiest way to save?

Automatically.

Just like you can set up a direct deposit for your paycheck into your checking account, most brokerage firms will set up automatic deposits for your paycheck into your brokerage account.  From there, it is easy to transfer into an IRA or taxable account.

The motto here is “out of sight, out of mind”.  The less control we give ourselves, the less enticing it is to spend the money on something we really do not need to buy.  The more automated the process, the easier it becomes to adapt to living with less disposable income over time. Setting an appropriate budget is the key to success here as the goal is to automatically set aside an amount that does not need to be accessed.

Plain and simple - the earlier you begin to invest, the longer your money can go to work for you in the market.  Over time, even small but steady contributions will add up.

If you save just $23 per week beginning at age 25, by 65 your account should be over $300,000.  To put this in real terms: Chipotle burritos and a sub from Jersey Mike’s both average around $7.50.  If you eat lunch out five days per week during the work week, you’ll spend at least $35. If you go to the store and buy the same ingredients, you can spend $3 on bread, $8-10 on deli meats, and a few dollars every few weeks on condiments.  Here’s the $23 to save each week. Now set up an auto transfer for that money to your brokerage account and let the interest accrue.

Who knew Chipotle cost $300,000?

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