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Monday, May 18, 2009

Penny Wise Dollar Foolish

Rushing to a nearby parking spot I exclaimed, “I found a penny!” My friend said, “So?” Woah! Major Buzz kill. People don’t seem to understand how even a penny is huge. Let’s explore the mighty penny and see how as few has 5 pennies equals a dollar.

In very conservative investments, you can earn 5 percent. This means that for every $1 put away for a year gives back 5 pennies. Flipping this around, this implies that for every 5 pennies I find, it is the equivalent of having put a $1 away for a year!!

Think about that. Every 5 pennies you find is the equivalent of locking away a dollar for a year. Because we’ve refined the art of locating free change (finding some nearly every day), in a given month we accumulate around $3 of change. $3 translates into having put away $60 for a year! Multiply that by 12 months and you get $720!! The money we find equates to having put $720 into a conservative investment for a year. That is a staggering amount of money.

When you begin to think this way, every penny you save really means something. This applies not only to finding money, but every penny you save has this power. Imagine what happens when you save $5 or $10 on something. The numbers grow enormously.

Flip the equation. Every penny found or saved equates to interest on money you never had to put away in the first place! (note, we didn’t even begin to talk about this all being tax-free)

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