Thursday, December 7, 2006

A penny saved is a penny earned

Ok so the other day, I posted an article on 33 lessons from mom regarding finances. Today, I will make my second post as I go through the list 1 by 1.

Rich M. said,

Why did your mom place so much importance on your piggybank as you were growing up? Because money saved does grow, due to this magic fertilizer called compound interest. Mom’s recommendation - when your paycheck comes in, set up an automatic withdrawal from your checking account so that 10 percent is saved immediately. While the pinch may be felt for a few months, pretty soon it will be replaced by the bulge of the fattening savings account.


I have heard some say that saving a penny now days isn't worth the effort. Wel I disagree. You can save a penny a day doubled everyday and be a millionaire in 30 days. Of course, eventually it isn't practical,unless you already have the million dollars. However, if you save a penny a day at age 15. Then the next year save 2 pennies a day and the next year 4 and so on, along with the compounded interest over the years, you could be a millionaire by the time you are 45 or 50. That is provided that you never dipped into that savings and you always continued to ad more to that savings account. A penny is still worth saving. Perhaps thats why so many aren't wealthy. Well besides all the overspending so many of us do.

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