Thursday, December 19, 2013
It's time to change the way you think about what savings are worth
When discussing large amounts of money (tens or hundreds of thousands of dollars) you will often hear people refer to how many years' work it is. If somebody makes 30k a year, they would consider a 90k windfall to be worth three years wages. Not bad right?
But it's actually worth much more than that.
Consider the average savings rate in America: Personal savings have averaged 6.85 percent from from 1959 until 2013. So an American earning 30k a year and saving the average would have $2055.00 at the end of the year. At that rate It would actually take them about FIFTEEN YEARS to save 30 grand. So a windfall of that amount would replace the savings effect of HALF of their working life!!
So for most people a penny saved is worth about 15 times a penny earned!
Think about it!
-The Money Monk