This entry is the first of a series that highlights simple, quick personal finance hacks. Hacks are tools to help you achieve financial independence. You wouldn’t build a house with your bare hands, would you? Of course not! Why would building your future be any different?
(Spoiler Alert: This post is NOT about laundry!)
Riddle me this – how much would you say you spend on entertainment over the course of a weekend? And not some bang-up, blow-out weekend, but an average weekend – what I’d call a “Spin Cycle Weekend”. You know, the one you’ve rinsed, washed, and repeated a hundred times before?
Yeah, that weekend.
Have a number in your head? Good. Let's get hacking.
PF (Personal Finance) Hack #1 – There’s a FORTUNE to be made by pausing the Spin Cycle.
Let me explain. For my wife and me (combined), a Spin Cycle Weekend is about $150, broken down like this:
Happy Hour: $25
Dinner Out: $70
Misc. Activity: $40
Coffee & Such: $15
If we were pause the Spin Cycle once a month – only twelve times a year – and not spend that $150, we would save $170,000 over the next thirty years.
That’s right. Two days a month. One hundred seventy thousand dollars.
It’s that easy.
And guess what - the math’s that easy too. $150 twelve times a year – that’s $1,800. If you invested that $1,800 in the S&P 500 once a year (under the symbol SPY – my favorite ticker), you’d have $170,000 at the end of 30 years. That’s because the S&P 500 has grown at an inflation-adjusted return of about 7% per year since its inception (on average). So (on average) that initial $1,800 is worth $1,926 after one year ($1,800 multiplied by 107%), $2060 after two years ($1,926 multiplied by 107%), and so on!
So take a walk. Or read a book. Maybe even write a book. Binge on a Netflix show (might I recommend Black Mirror?). Meet up with your friends and make a potluck out of last week’s leftovers. Spend just one weekend a month with your wallet buttoned shut. That’s the funny thing about not spending money – it might just make you rich ;)