Louise Greally Coaching

Compound interest.. now to most people that brings back memories of sitting in the class room thinking of ways to make it go quickly.. harmless day dreaming to faking sickness and for some going to the toilets to set off the fire-alarm

When in reality, its one of the only really useful concepts we were taught at school to actually make money for us rather than us work for it til were 65-75!!

Let me explain how compound interest, as little as $50 per week and 24-35 years (interest from 20% to 11.4%) can make you a millionaire.

‘From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year ‘(source: www.standardandpoors.com). So taking that example of an average interest rate return of 11.4% lets look at what we can do with $50 and some time..

Using the calculators at http://www.dinkytown.net/java/CompoundSavings.html

If you save $50 per week your savings may grow to $1,030,653 after 35 years. This includes a starting balance of $0 and a 11.40% annual rate of return.

So that’s $50 per week which is 10% of the earnings of a household earning $500 per week or 5% of a household earning $500 per week.,, Manageable for most people eh?

Lets look at $100

If you save $100 per week your savings may grow to $1,181,367 after 30 years. This includes a starting balance of $0 and a 11.40% annual rate of return.

Make compound interest sound a little more interesting now.

So some questions to ask yourself..

Assuming most 30 year olds are paying $50 into the super/pensions per week until age 65.. why aren’t the people who are earning the average wage of $580 per week (paying super at 9%) millionaires when they retire and draw their super/pension?

In fact why aren’t most people earning double this by the time they retire??

I don’t know about you but it makes me think that we cannot rely on our super/pension.  We must take action ourselves and teach others too.

And that even if we don’t learn to generate wealth from property, shares, business or the Internet we can become millionaires and enjoy our golden years from as little as $50 per week with this method.

That also means that most people drawing the dole (incidentally in most western countries drawing the dole puts you at the top 10% of the most wealthiest people in the world) can become millionaires by age 65!!

So if you don’t see yourself running a business or investing, this is your chance.

Don’t become one of the 50% of the population whose retirement plan is to win the lottery.

95% of people are dead or dead broke by age 65.. What can you do today to be in the 5%?

Finances create wealth, finance, Finances, wealth

Increasing your savings/ mortgage repayments can be easy for lots of people yet painstakingly difficult for many too.  This usually has very little to do with how much we earn but rather the habits we have around money.

Realistically most of us buy far too many things we don’t need and often waste thousands of dollars per year… (think of all those shoes/outfits/magazines/books/cosmetics/food items you don’t use)

This article is for anyone who is at the stage where they need to cut back some bad habits and keep more money in their pocket- here are some ideas.

• Shop once a week and in a supermarket or even better a low price one (many of these are brilliant quality). This can reduce your bill by up to 50%.
• Plan your weekly meals to avoid having to go back to the shops or buying take out.
• For food, clothes or any type of shopping write a list first and only buy what you need.
• Don’t buy something just because its on sale!  This is false savings unless you purposely set out to buy it!
• Shop around to see if you can get a better deal on your phone, electricity, interest rates etc.
• Turn off your water heating system during the day or at times when it wont be used.
• Learn to do your own nails, hair etc.
• Go on holidays low or mid season.
• Put loose change into a money jar until its full.
• Cancel any subscriptions you don’t use- gym, magazines, tv.
• Go to the cinema on cheap Tuesdays.
• Use money off vouchers.
• Buy your petrol during the week or on the days when its lowest.
• Plan your money in advance so you avoid having to use another banks atm and the $2-$5 charge.
• Change your mortgage repayments to weekly or fortnightly.
• If you cant afford something, save for it- don’t put it on the credit card.
• Join the library instead of buying books.
• Don’t open a new packet or box of an item if you still have some left in another box/packet. Ie use your bread, sauces, food items, cosmetics until they run out.
• Invite friends over for dinner/drinks instead of going out.
• Fill your water bottle before leaving the house so you avoid having to buy one.
• When you get a pay rise, instead of upgrading your debt by upgrading your car/house etc- upgrade your savings!!
• Shop around for the best insurance for your home, car etc.  Don’t cut necessities but make sure you’re getting the best deal.
• Instead of buying a new outfit, mix n match accessories or buy new accessories instead of a new outfit.

The important thing we must learn about money is that its not how much you make but how much you keep.  Like health and anything in life there’s a discipline and consciousness required regarding money that needs to be learned in order for it to work for you rather than the other way around.

Finances create wealth, finance, Finances, Personal development, saving, wealth