Recently our daughter had the opportunity to participate in a pinewood derby race. When my son and I made one together several years ago we learned most of the fathers spend a great deal of time trying to turn their $10 kit into sound barrier breaking demon on wheels.
Our daughter had no interest though. Later, my wife inquired if I was disappointed. My response… “Heck no, that’s $10 bucks saved!”
The wife was not happy with my response. This was a bonding opportunity and unlike most other sponsored kids activities it was frugal as well.
My daughter is my princess, had she expressed a desire, she would have had a pinewood Veyron!
But our daughter wasn’t interested, the princess had spoken.
Am I disappointed? I was not. There is never enough time spent with family you love. But relatively speaking, we have much more time together than in the past. My daughter and I read, cuddle and play ball like other families. Was it all about the money? No! But given an opportunity, to save $10 is not something I take lightly. In my mind we didn’t save $10, we saved $80!
When it comes to spending money, most people I’ve asked, only think about the expense as it is today. Herein lies the reason, I believe, so many people fail to focus on building their nest egg for retirement. Too often people do not take the time to consider how a few dollars today cost them in the future.
With 30 years left until retirement, saving $10 is not going to make a difference, by itself. How many opportunities can you find to save ten dollars or five or one? Thanks to the power of compounding $10 saved today will become $80 in retirement. Find enough of those $10 opportunities (and all others), compound them over time and you can grow a comfortable nest egg.
Some personal finance pundits criticize sweating over the pennies in our budgets. They say it is pointless to worry about your LatteFactor®. In a vacuum, they are correct. Just like the one time charge of $10 for a pinewood derby car isn’t worth worrying about.
Put all the gourmet coffees, pinewood derbies, stops at the convenience store, prepackaged foods, extra phone services and other, nice to have but unnecessary expenses, together and you will easily spend a couple thousand dollars each year. Two thousand today will be $16,000 in thirty years!
Unless it is a need, don’t think about today’s cost, think about tomorrow’s.
Readers: This perspective of calculating the future value of today’s expense drives my wife nuts! Tell me though, am I the only one? Do you take the time to think about the long-term impact of today’s purchase decisions? If not, why not?
photo by johntrainor
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