I have a confession to make.I really do wish, now, that I had paid better attention to certain subjects back when I was in school. Math is one of them. Real talk, I graduated high school in 1988 - but it wasn't until 1996 that I was made to understand how percentages really worked. It was work-related & I really had a good "business" teacher. In a nutshell ... if you're kid - or even you if your still in school - asks "How is math going to help me make money in the future?"
Well here are a couple examples of how that question can be answered!
Would you like to put an extra $1000/year in your pocket? If the answer is "yes" the solution is really simple and does not require an kind of fancy investing or multi-level marketing.
All you have to do is just stash $38.46 every payday! Most of us are paid every two weeks for a total of 26 paydates for the year. Well $38.46 x 26 paydates = $1,000 (actually $999.96, but are we going to split hairs over four cents?).
So, what if you were to stash $38.46 EVERY WEEK?! $38.46 x 52 paydates = $2,000 (actually $1,999.92, but are we going to split hairs over eight cents?).
Don't believe it can be done? Why not? Does that $38.46 per week, or every other week interfere with your leisure money? How much do you spend on lunch every day? How much do you spend at the club on the weekends? How much did those Stacy Adams or latest basketball shoes cost & how often do you buy a new pair?
Recently, a friend of mine asked me, "With the current state of the economy do you think The Rule of 72 still applies?" For those who don't know what "the Rule of 72" is, it is a method for estimating an investment's doubling time. The number in the title is divided by the interest percentage per period to obtain the approximate number of periods (usually years) required for doubling. You'll see how it works in how I answered his question.
My answer was as follows:
It certainly does apply! In today's economy it shows you how you're NOT going to make any money by giving your money to a bank. You're lucky if you can get 2% on an 18 month CD nowadays! So by the Rule of 72, 72 divided by 2 = 36. That means if you put $500 in a CD, it's going to take THIRTY SIX YEARS to turn that $500 into $1,000.00.
But if you take that $38.46 every two weeks and put it wherever you like, in 6 months you've gone from $0.00 to $500; and in just anonther 6 months, you've doubled THAT!
So here's the "TWENTY THOUSAND DOLLAR" QUESTION:
What if you disciplined yourself to open up an "untouchable stash" account and put that $38.46 in it every two weeks - not touching it for 20 years? The key words are "discipline" & "untouchable." It will seem hard, but in time you will see the dollars just stack up and stack up ... AND ... if you do put the money in a bank, you'll make up that four to eight cents difference in interest!
Simple math. That's all this is. I used "$38.46" because that exact number gets you closest to $1,000.000 for the year; however, what if you can afford to stash $50 per paycheck? That's $1300 for the year, and $26,000 over 20 years! ALSO ... Since this money is already coming from your take home pay, there are no taxes to pay over the years because you've paid them already!
Look, there are no secret formulas here. Nothing to sell. This is just the application of simple math and implementin the discipline within yourself to follow the "First Rule of Gold" ... "PAY YOURSELF FIRST!"
Ever since I first posted this article on my own blog (www.HRJR.blogspot.com), I have friends who have taken this advice, opened up "Untouchable Accounts," and by putting in the amounts that worked for them; in just five weeks, were able to put away between $200 - $500! I have also encountered people who have played the role of skeptic or bubble-buster, and have done nothing. As a result, the only thing extra in their pocket is lint!
If anyone else has a better plan to put $20K -$26K CASH MONEY in my hands in 20 years time ... I'm all ears!
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