If we could give you a cheque for $196,000, would it change your behaviour?

Published on: November 26, 2019

Written by:

Adam Faulkner

$196,000. It’s a lot of money in anyone’s language. For someone on a standard wage, saving that kind of money is going to take a long time. The challenge with saving is that it takes compromise; you’re not always going to be able to spend money on everything you want.

What is of huge benefit when it comes to saving, is taking incremental steps, that is, small changes that have an effect over time. If you could change something small in the way you behave around money, the accumulative effect can actually be pretty impressive. 

Think about what you spend money on each month, those little purchases, say under $15. It might be subscriptions to services, like Netflix. It might be the daily lunch you buy when at work, or the cup of coffee you grab on the way to the office every morning.

Imagine if you saved that money instead of spending it?

How much is that cup of coffee really? 

Let’s use your daily coffee as an example. The average price for a cup of coffee in a city like Sydney is around $4.50. Times that by 7 and you’re looking at $31.50 a week to buy one coffee per day. 

If you stop that behaviour tomorrow, and instead take that spend and invest it, where will it get you? Well, if you’re 30 years old, and you factor in 6% growth on that money over time, say through to retirement at 65, it will leave you with a whopping $196,000. 

In reality, that’s another $10,000 a year on the average retirement; the compounding effect of making a small change can give you a huge result over time.

It’s not like coffee is a need; it’s a choice. It’s a perfect example of how making a small change in your behaviour can have a big impact on your savings, and give you the ability to live the life you want, later on.

The question is around value: What value do you get from that daily coffee and is it worth $196,000? You might say, ‘yes it is’! So, look at some other area of your life, could you make a small saving there instead? 

Replace it don’t bin it

Our behaviour is up to us. Using that coffee example, maybe the alternative is to drink the free coffee at work, or to buy a coffee machine and make it at home for cheaper. 

Those choices will have a big impact. It also shows that you don’t need to have a ton of money lying around to start investing it. It just takes a shift in mindset towards how you spend your money.

So the question is, how much is $196,000 worth to you? What would you be willing to change?  We‘d love to hear your thoughts, email me at adam@lifemoneyco.com.au.

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Information contained within the blog is of a general nature only. Individuals should not act upon any such information without prior consultation with a qualified financial adviser to ensure that any action meets their personal financial needs, situation and objectives.  No responsibility is accepted for those persons acting on information contained herein and persons do so at their own risk. 

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