I moved recently and as a result somebody must have stolen my hair trimmer that I use to give myself haircuts. I know this because I am a man we lose nothing! Therefore, it is only logical that there is a thief among us, but I digress...
As a result I was forced to exchange cash for the services of a barber in the suburb south of The Villages (formerly known as Leesburg). This cash outlay got me thinking about how much I've saved over the years by doing this myself. Or what would be even more fun would be how much would I save over my entire life!
So here are the assumptions: haircut $10 plus $2 tip, buying a $35 hair trimmer every 5 years, to be conservative assume no inflation for the cost of a haircut, assume a rate of return on your saved money of 7%. Also, I will assume that you have an employee retirement plan that will match your $144 each year that you contribute (up to age 65 when you retire). To be more conservative you will not save or contribute any of the tax benefit from contributing to that retirement plan ($36/yr).
So far I have saved almost $8,000 since high school by doing this. Here are the 10 year increments of accumulated wealth from this one action.
Age
30: $ 5,685
40: $ 15,351
50: $ 34,366
60: $ 71,771
70: $ 144,466
80: $ 286,226
Death at age of 85: $ 402,333
Note the power of compounding interest. The ages aren't displayed here, but you will accumulate more money from the age of 75 to 85 then it took you in the previous 57 years of your life!
The whole point of this is not to make you look like Uncle Si off of Duck Dynasty, but rather to point out how seemingly mundane low cost items when given enough time and repetition will grow to incredible numbers. How many $12 transactions a month do you do and don't even realize it?
As a result I was forced to exchange cash for the services of a barber in the suburb south of The Villages (formerly known as Leesburg). This cash outlay got me thinking about how much I've saved over the years by doing this myself. Or what would be even more fun would be how much would I save over my entire life!
So here are the assumptions: haircut $10 plus $2 tip, buying a $35 hair trimmer every 5 years, to be conservative assume no inflation for the cost of a haircut, assume a rate of return on your saved money of 7%. Also, I will assume that you have an employee retirement plan that will match your $144 each year that you contribute (up to age 65 when you retire). To be more conservative you will not save or contribute any of the tax benefit from contributing to that retirement plan ($36/yr).
So far I have saved almost $8,000 since high school by doing this. Here are the 10 year increments of accumulated wealth from this one action.
Age
30: $ 5,685
40: $ 15,351
50: $ 34,366
60: $ 71,771
70: $ 144,466
80: $ 286,226
Death at age of 85: $ 402,333
Note the power of compounding interest. The ages aren't displayed here, but you will accumulate more money from the age of 75 to 85 then it took you in the previous 57 years of your life!
The whole point of this is not to make you look like Uncle Si off of Duck Dynasty, but rather to point out how seemingly mundane low cost items when given enough time and repetition will grow to incredible numbers. How many $12 transactions a month do you do and don't even realize it?
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