Saving money is difficult. Even saving 1% of your paycheck can be a challenge. However, this percentage can have a huge impact on your ability to retire or become debt-free.
For example, let’s say you are 25 years old, make $40,000 a year today, and never get a pay increase from that salary. 1% of that would be $400 a year / $33.33 a month / $7.69 a week. To save this amount it could mean eating out one less time a week, skipping buying a few articles of clothing a month, skipping one night on the town a month, or many other options.
So, instead of spending that one percent of your paycheck you invest the money in the stock market.
On average the stock market has a return of 8% per year, or 10% if you
reinvest the dividends. Dividends are a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). Assuming you get a 10% return on your investment, by the time you are 65 the 1% you save monthly would be worth roughly $195,000. All from 1% of your paycheck. Continue reading Here’s What Saving 1% of Your Paycheck Could Do…