Big Amounts Of Money Are Small When Broken Down

One Dollar Bill

Every month we have big bills to pay. Some of them are planned like the mortgage. Others are unexpected like a car repair. Those amounts of money can seem big if you think of coming up with it at one time. But if you save over time, and break it down to what a small amount it is per week or even per day, it seems like pennies. In some cases it actually is.

Let’s say your car gives you problems once a year. If that repair is $500 it will seem like a lot at once. But if it’s only giving you problems once a year then that $500 is only $9.62 a week. Or broken down even more that would be $1.37 a day. You probably spend that much on coffee or soft drinks in a day (or maybe much more). Instead of letting that $500 repair sneak up on you every year, get an envelope and write the words “CAR REPAIR” on it. Then simply put about $9.62 a week in it and you’ll have the cash when that repair comes up.

Do you have a kid who is right now just a baby but someday will be a teenager who may need braces? That Orthodontist bill for $3,000 will seem steep if you’re not ready. But if when that baby is born you write the word “BRACES” on an envelope and put just $5.00 a week in it, then when they need braces at age 13 you’ll have more than that. $3,380 to be exact. It works the same for everything your kid may need from prom dresses and team uniforms to cars and college. Though you’ll want to invest your kid’s college money instead of just putting it in an envelope. Just $150 a month in a decent college fund from birth to age 18 will accumulate to over $100,000. That may seem like a lot per month but it’s only $5.00 a day. Five bucks a day to send your kid to college with no student loan seems like a good deal, huh? If you then encourage your kid to save that same $5 a day from when they graduate until age 65 and invest it in a decent mutual fund that averages 11% interest (the stock market average for over 80 years), they will be able to retire with just under 1.6 million dollars!

This method can work for everything in life. An envelope with the word “VACATION” on it can be filled with over $2,000 if you save just $40 a week for a year. Do the same with Christmas, home additions, new furniture or whatever you need that seems unaffordable when you think of the big price, but pretty darn cheap when you break it down to just a dollar or two a day.