The High Cost Of Waiting

By Cheryl Sperling

"Pay yourself first!" Maybe you have heard this a lot of times. But have you done this or followed it every time you get your salary? This is one of the secrets of how to save. (I will discuss soon all the secrets to save money.) Again, we emphasize the concept of "Salary minus Savings equals Expenses". If you do so, then you will be able to build up capital which will earn you passive income in the future. 

"Money working for you!"

In the following chart, I will show you the outcome of saving early and the effect of waiting longer. As you can see the first person , whom we shall call as Mr. Start Early and the other person as Mr. Wait Longer.

Both of them saved P20,000- (about P55- a day or P1,700- a month) per year for 6 years.

Mr. Save Early at age 22 years old opens an account at 12% interest (this interest yield is more likely if invested on equity mutual fund and not on bank interest rate). He invests P20,000- a year for six years and then stops investing. 

Mr Save Later at age 22 years old spends P20,000- a year on himself, maybe buying the latest gadgets, phones and laptops, and maybe partying often with friends. Then at age 28 years old, or after 6 years, he realized to start saving and opens an account at 12% like Mr. Save Early and invested P20,000- as well per year for six years. 

From the chart, at the age of 43, Mr Save Early will have his first Million. Take note his total investment was only P120,000- about 20 years ago. While Mr Save Later, has only half the money Mr Save Early has with the same amount invested.

Then at the age of 62 years old when both will retire, we will notice that Mr Save Early will retire with P9.597 Million compared to Mr Save Later of P4.82 Million. 

Option I: Sacrifice Now ... and Enjoy Later!

Option II: Enjoy Now .... and Suffer Later!

Well the verdict is staring us in the eye .... Save now, save often ... and Enjoy when you retire!!

                 *courtesy of IMG