Every Quarter Counts

Some people are not comfortable talking about money. I am actually a very private person and often don't like talking about anything about myself, money included. However, I am learning that this is not always beneficial in the long run. How do we figure out how to do things or what to do if we do not seek the information and advice from others? How do we avoid the mistakes that others have made if not to talk about them? I am not saying that I am going to put my taxes online for everyone to see them, but maybe if I did someone would give me some tips to do them better! Actually, if you can give me some tips to do them better (I do them myself; your first tip is probably to hire someone else!), please let me know! 

Due to worries about finances surrounding COVID and the economy in general lately, I think this is a good time to share tips about money, be it saving, spending or investing it. I was always taught to save it, but as I have gotten older, I have learned a little about spending what I have saved! But today I will not talk about the spending portion, only the saving portion. I have heard many mind boggling stats about Americans, such as that less than 30% have more than $1,000 in savings! 

Today I want to discuss three pieces of advice I have been given and the things I have learned over the years because of them. If you know something that I don't know, please let me know. 

Never throw away free money.  I had just landed my first college job and was filling out all of the HR paperwork, including 401k documents. I had no idea what half of the terms meant and I asked a friend of my parents to tell me what boxes he though I should check. He told me that it did not really matter what fund I put my money into; what mattered what that I should put at much as I could from each paycheck into the 401k and most importantly, should at least contribute the amount the company was willing to match, otherwise I would be "throwing away free money." For example, I believe my company at the time would match dollar for dollar up to 3%. He told me that I should try to put in 10%, but if I didn't feel that was possible, that I should at least put in 3%. I did what he said and by the time I left that company after eight years, I did not miss the amount I had been putting in each month, I was fully vested and I walked away with that extra money "in my pocket" (technically it is in my retirement account, but it's still mine). 

A side note or addition to the above is that if your company has a 401k, you should put money into it. Some companies have an automatic contribution (i.e. they will put 2% of your paycheck in unless you opt out) but many require you to sign up on your own. Currently in the U.S. you are allowed to put up to $20,500.00 per year into your 401k before taxes and your employer match does not count towards this number, so it could be even more than that once the match is added. I will talk more about this specific topic in a future post but the takeaway for this post is that you should contribute something. 

What does this mean? Even if your contribution is pennies or dollars, if the company is willing to match it, you should put as much as you can! It can also be beneficial to implement some sort of similar plan with your kids to teach them to save some of their hard earned money instead of spending frivolously. For example, you can suggest that they put half of their babysitting money in an account and you will match whatever they put in there dollar for dollar. 

Compound interest is your friend. This is not a new concept, but I think it is one that is not fully explained to people in the early days, when it is the most pertinent. Did you know that if you started putting $50.00 per month into a account yielding 2% when you were 18, and then stopped putting money in at age 40, by the time you were 67, you would have about $30,000.00. Your total investment would be about $14,000.00 in this case. 

If you only starting saving your $50.00 when you were 30 and you kept putting $50.00 per month in your account until you invested $14,000.00, or were 52, then let it sit until you were 67, you would end up with about $23,000.00, over 20% less. Think about that. I used $50.00 and a low rate of 2%, but imagine your interest rate was 5%. In this case, the gap gets even wider ($100,000.00 vs $54,000.00) and if you double your total investment to $28,000.00 and assume a 5% rate you would end up with $198,000.00 vs $109,000.00. 

I think many people feel that they only have a few dollars and it is not worth it, or that they don't have any extra cash, but even if you are only putting in $5.00 or $10.00 at the beginning, it will add up eventually and I do think every penny counts. I think in most cases, you won't miss it if it's taken out beforehand, and to go back to my point number one, if you are putting in $10.00 and your employer is matching $10.00, it will add up faster than you think. 

What does this mean? Start saving as early as you can! Even if your contribution is pennies or dollars, when put in an interest bearing account early, you can reap the benefits of getting interest on your interest. But wait, what if I am already 40? In this case, it still makes sense to put as much as you possibly can in as early as possible, as you will still be able to take advantage of compounding!

The Latte Factor. This is an old concept and one I have written about several times. Basically the gist of it is that if you skipped your daily latte purchase, you could save a lot of money. The end. But seriously, if you bought a coffee from Starbucks every weekday, that would be approximately $20.00 - $25.00 dollars per week you would save. Using the example above about compounding, instead of $50.00 per month, you could be putting away $150.00 per month just by making your own coffee. The item does not have to be coffee; it could be a salad or a sandwich or a fill-in-the-blank. The bottom line is that the little things add up and probably many of them are unnecessary or frivolous and the savings now will pay off in the long run. 

What does this mean? If you think that you don't have enough extra money to put in a savings, here is where you can reassess. I am not saying that you need to give up all things good in your life. Even if you skip one latte a week (or one McDonalds hamburger, or one Uber ride or....etc.) you will now have that $5.00 a week or $20.00 a month to put into your interest bearing savings account! As you can see, each little bit counts. 

So now we have talked about three ways to save money. Do you already use some of these methods? Do you have other tips or tricks that you use to save money? Are you a spender or a saver? 

Disclaimer: The information above is solely an opinion based my own personal experience. You do you. I am not a tax and/or financial advisor; nothing in this post should be taken as investment advice. I have no fiduciary responsibility to anyone reading this post. Please consult a financial advisor for investment advice.  For my other posts regarding money, go here


  1. Great post! I wrote something similar years ago as part of my Finance Friday post. The compounding interest thing is always surprising to people! I have a hard time talking about finances at times, too, because I don't want to come off sounding like I have it all figured out. I am lucky to work in a well-compensated industry. If not for that, we wouldn't have our house paid off! But like you said in your comment last week, we have made decisions that allowed us to do that.

    I was raised to be a saver and to spend responsibly so it's in my DNA. And my parents also told me to sign up for the 401k when I started working after college. I am glad I had parents to talk to/other people in my life to advise me! That stuff can be overwhelming so it's good to have people to help you out - or to read blog posts like this! I got a lot of advice from my coworker/mentor Paul. He told me to max out my 401k and to use my bonuses to pay off my student loans and then to just keep chipping away at any debt. Our industry is just so unstable so we love the freedom of not having a mortgage payment. Now if we didn't have daycare expenses then we really would have a low level of spending but at least we won't pay that forever!!

  2. Great post, Kyria. I always love when people talk and share information about finances. I think it needs to be talked more often. Not necessarily in actual numbers, but concepts (like the ones you presented here). I think starting early is something that needs to be drilled into people's heads over and over... while I am a "saver" by nature (I never had any debt), I also didn't start saving as early as I wish I had (mainly because I didn't have much money and nobody told me to do it. In my - or my parents' - defense, retirement works a little different in Germany and the concept of investing has only become of an issue in recent years for most people).


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