{"id":514,"date":"2020-04-14T00:13:25","date_gmt":"2020-04-14T00:13:25","guid":{"rendered":"https:\/\/moneywithkatie.com\/turning-small-savings-into-thousands\/"},"modified":"2025-09-05T19:54:59","modified_gmt":"2025-09-05T19:54:59","slug":"turning-small-savings-into-thousands","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/turning-small-savings-into-thousands\/","title":{"rendered":"Turning Small Savings into Thousands"},"content":{"rendered":"
\n

October 2018<\/h4>\n

This isn\u2019t an article for people making $150,000\/year and casually going about their lives with an inexplicable six-figure income\u2014it\u2019s for the people who will get there one day, but hope to make better decisions now<\/em> so their savings in 10 or 15 years look more like that of someone bringing home $150,000 now.<\/p>\n

Ever since I went to the Money Diaries book tour, I’ve become even more obsessed with saving, investing, and general money shrewdness\u2014catch me on my lunch break chatting online with my phone company asking for discounts. Pick up a copy of the book here.<\/a><\/p>\n

There are two major changes I\u2019ve made recently that have made a pretty minor impact on my daily life and enjoyment but (I anticipate) will majorly affect my long-term wealth.<\/p>\n

This is what I call the Sweet Spot for Savvy Savers (SSSS\u2014had to throw in that extra S to avoid any callbacks to Nazi-era Germany): that intersection where a seemingly small change actually has a huge financial impact.<\/p>\n

We\u2019re going to talk about two types of money drains\u2014frequent, tiny purchases, and infrequent, larger purchases.<\/p>\n

I honestly hate the \u201cstop buying lattes\u201d approach to fiscal responsibility because I\u2019ve been #ThatBitch in the drive-through line at Starbucks every day for two years. I understand wanting nice coffee that makes you feel warm, fuzzy & motivated in the mornings.<\/p>\n

In fact, I always justified my daily purchase by saying, \u201cThe productivity and ideas this coffee enables within my job is an investment.\u201d Drug addiction, anyone? Anyone?<\/p>\n

Here\u2019s the thing: you don\u2019t have to suck all the joy and splurging and fun out of your life to make better financial decisions<\/strong>.<\/p>\n

I\u2019m an advocate of merely understanding how much those decisions actually cost you, and weighing if that reality is worth<\/em> the cost to you.<\/p>\n

In some instances, the convenience or pleasure a purchase may grant you IS worth the money, especially if you can afford it with ease. Paying for convenience is a very real thing and if something will make your day substantially easier or more enjoyable, it may be worth it. <\/p>\n

Other times, the payoff may not be that significant. <\/p>\n

The main message I want to get across in this post is that little things add up<\/strong>, and that\u2019s both good and bad. <\/p>\n

I\u2019ll use an anecdotal example that\u2019s TOTALLY not reflective of my actual habits: spending $2.44\/day on Starbucks at least 5 days a week. <\/p>\n

Every swipe of the credit card became so habitual that I almost didn\u2019t even notice or care anymore. It\u2019s only, like, 2 bucks, right? Who cares? <\/p>\n

That\u2019s $634.40<\/strong> per year, not including fancy weekend coffees. <\/p>\n

But you know how bad it was? Even that number didn\u2019t really dissuade me from my habit. To be frank, I didn\u2019t really care about how much it cost, because it felt like a non-negotiable expense\u2014like productivity rent. <\/p>\n

But while little purchases can add up, so can little savings. Although a small daily purchase may feel like pocket change that won\u2019t make a difference whether you save it or spend it, let me introduce you to my little friend compound interest<\/strong>. <\/p>\n

This is a very clich\u00e9 and predictable exercise for a post about saving, but it\u2019s become so commonplace because it\u2019s powerful and real.<\/p>\n

Let\u2019s revisit that $634.40 figure, which is, candidly, conservative for my coffee costs considering I usually buy it 7x\/week (not 5) and sometimes spend up to $3.70 at specialty shops\u2014but we\u2019ll keep the figure, because let\u2019s say we\u2019re allowing some splurge coffee purchases on the weekends. <\/p>\n

Now let\u2019s say I invest that $634.40 (stick with me) into an index fund that averages an 8% annual return, and I invest that same amount every year. By the time I\u2019m 30, that\u2019ll be $7,200.73. <\/p>\n

By simply not buying a $2.44 coffee every day and drinking the free coffee in my apartment lobby or at work instead (a relatively small tweak) I\u2019ll be $7,200 richer in 7 years!<\/p>\n

See? Little things add up. <\/p>\n

When I think about my daily coffee in that way, I think I\u2019d much rather have 7 G than wait in a line at Starbucks. <\/p>\n

Ok, and just for shits, let\u2019s do this same exercise for 40-year-old Katie (ugh, middle age *compulsively reaches for SPF 50*). <\/p>\n

Same thing\u20148% annual return index fund, $634 of saved coffee money annually, and ultimately a $2.44 foregone daily weekday purchase. <\/p>\n

Ok, you ready?<\/p>\n

By the time I\u2019m 40, that\u2019s $25,471.33.<\/p>\n

That\u2019s a down payment on a damn house!!!!<\/p>\n

I\u2019m not saying never buy coffee, this is merely an example that (I hope) illustrates how even a little purchase you make frequently affects your long-term wealth<\/strong>. <\/p>\n

For the record, that\u2019s only $12 per week. So maybe my Starbucks crack addict example doesn\u2019t resonate with you, but you easily spend $12 per week on an extra lunch or dinner out when you could eat at home. Maybe you don\u2019t even really find joy or LIKE that meal you\u2019re eating out, but who cares? It\u2019s $12.<\/p>\n

I hope we\u2019ve learned by now how much little things matter. <\/p>\n

Your $12 sandwich and Coke that you eat while absentmindedly scrolling through your phone, or that fancy martini you drink with a friend you don\u2019t even like that much but feel obligated to say \u2018yes\u2019 to drinks with (when annualized) could be $25,000 when you\u2019re 40 if these are habits you engage in weekly.<\/p>\n

To be abundantly, excessively, annoyingly clear, I\u2019M NOT TELLING YOU TO SUCK ALL THE FUN OUT OF YOUR LIFE! Just be aware of the sneaky money drains in your daily spending and try to re-prioritize.<\/p>\n

Rather than always agreeing to go out for a drink, hopefully you\u2019re close enough with your close friends to suggest buying & splitting a bottle of wine and hanging out at one of your places instead.<\/p>\n

(I\u2019m not telling you to never go out for drinks, but maybe that shouldn\u2019t be the default\u2014again, this is for people with normal young adult salaries trying to boost savings, not people who are pushing $200k already. Y\u2019all can do whatever the hell you want.)<\/p>\n

So aside from the obvious like daily coffees, there\u2019s one other area of my life that I used to spend a pretty substantial amount of money (when annualized), but infrequently\u2014so it didn\u2019t feel too egregious.<\/p>\n

Ladies, you know where I\u2019m headed with this: manicures and pedicures. I\u2019d average one of each per month, which, after tip, was typically around $80.<\/p>\n

$80 per month x 12 months per year = $960. Yikes.<\/p>\n

At the risk of sounding like a pleb, I\u2019ve started doing my own nails. It\u2019s kinda janky at first and it may look like an elementary-aged boy took a paintbrush to your feet, but I was pleasantly surprised at how long my toenail polish lasted before it started chipping.<\/p>\n

There\u2019s a weird side-effect of getting your nails done regularly\u2014once they start to grow out, it almost becomes a source of stress until you can get them redone (especially with dip or gel) because they start to look really grown out and unsightly.<\/p>\n

You may not even really care to get them redone (or want to pay for it), but you can\u2019t remove gel or dip powder yourself (without destroying your nails) so it\u2019s tempting to pay a professional to keep them up.<\/p>\n

In short, it\u2019s a trap!<\/p>\n

I\u2019ve just been doing plain fingernails (trimmed but unpainted) and painting my own toenails every couple weeks. It only takes about 7-8 minutes of sitting on your bathroom floor like a broke bitch and crouching over your toes to get the job done.<\/p>\n

To reiterate, I\u2019m not saying never get your nails done. If you\u2019ve got a big event coming up (assuming you don\u2019t have events monthly) or you\u2019re stressed and you think paying a stranger to rub your feet would help, just do it. I\u2019m not saying don\u2019t spend money on things that make you happy, I\u2019m merely emphasizing avoiding habitually expensive practices that you engage in mindlessly without realizing how much it\u2019s actually costing you.<\/strong><\/p>\n

Now that I\u2019ve been foregoing the nail salon for a few months, I realize I prefer just painting my own toes in the comfort of my own apartment and leaving my fingernails blank. It sounds lazy, but it\u2019s honestly easier than driving there, finding parking, waiting for someone to become available, figuring out how much to tip, and waddling out in the flimsy flops trying not to stub your toe on your brake.<\/p>\n

Not to mention the amount of time, money, and annoyance it\u2019s saved me to not be a slave to the fickle timing of my gel manicure and bare nail beds.<\/p>\n

(I hope by now you\u2019re beginning to identify areas in your own life where you could explore cheaper or free alternatives.)<\/p>\n

To drive the point home, let\u2019s do the same exercise above with the nails. Averaging $80 per month on one pedicure and one manicure (double if you go biweekly) is $960 (or $1,920) annually.<\/p>\n

If you\u2019re 23 like me and invest that same money in the same 8% index fund each year instead, by the time you\u2019re 30, you\u2019ll have $10,896.43<\/strong>.<\/p>\n

Let\u2019s do 40 now, for fun:<\/p>\n

$38,544.25.<\/strong> Shit.<\/p>\n

And let\u2019s say you\u2019re going for that double monthly mani\/pedi, or every two weeks.<\/p>\n

That same money in our index fund when you\u2019re 30 would be\u2026 (drumroll please.)<\/p>\n

$21,792.87.<\/strong><\/p>\n

Any of you ladies hope to get married when you\u2019re 30? Do you think $21,792 could be helpful at the time? What about those of you who want to buy a home when you turn 30? Start doing your own nails (that\u2019s ONE change) and there\u2019s your down payment at 30.<\/p>\n

Ok, and for the scariest figure of all: you \u201cdouble monthly mani\/pedi\u201d peeps at 40 years old (if you drop the habit now) could have:<\/p>\n

$77,088.50.<\/strong><\/p>\n

GUYS!<\/p>\n

I didn\u2019t pull these numbers out of my booty. If you want to mess around with your own calculations and spending, you can find the compound interest calculator here<\/a>.<\/p>\n

Little things add up. Say it with me!<\/p>\n

The key is finding things you can do yourself. As expensive as my hair is every three months, I simply can’t highlight and cut it myself. Being blonde is intrinsic to my personality now (sad but true) so it’s an expense I’ve weighed carefully and accepted. Pedicures? Not so much. <\/p>\n

Order a copy of the book and play with the interest calculator and find some ways you can stack that paper, too! (That was lame, I’m sorry.)<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

October 2018 This isn\u2019t an article for people making $150,000\/year and casually going about their lives with an inexplicable six-figure income\u2014it\u2019s for the people who will get there one day, but hope to make better decisions now so their savings in 10 or 15 years look more like that of someone bringing home $150,000 now. 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