[footfootfoot]

From Solvency.org:

How many would like to become a millionaire on a nickel?

It seems such a silly question, but very few people make the choice.

Why did I choose the amount of $1000 in the previous chapter for the illustrations? Yes, of course because it is an easy round number. But there is another rational.

Let's do some simple math. If we used the amount of $32,000 at the age of 55 and left it at 10% until age 65, it would double. The next three years would also have a chance to double. Now suppose we continued to save $1000 for every year thereafter we would have those amounts following close behind. Using a financial calculator with a monthly amount of $83.33 ($1000/12) for a total of 552 months (age 19 to age 65 equals 46 years times 12) we come up with the amount of $966,021.54. If we also include the lump sum we put in at age 19 we have over a million dollars.

Invariably at this point I have someone say, "What about the nickel?"

Have any of you had jobs? What did you earn? There is always a braggart that claims over twenty dollars an hour doing welding or construction work. I then ask how many think they can make at least $10 an hour when they graduate from high school. "Okay, then ten dollars an hour is a conservative number?"

How many hours a day do we want to work? The eager ones say ten hours a day. I congratulate them and say let's just use eight hours for the illustration. How many days a week? Would you think five would be okay to use for this example? How many weeks in a year? (It always amazes me that there are high school age guys that don't know the answer to that question.) I tell them I am going to take a two week vacation just to make the math simple.

$10 times 8 hours times 5 days times 50 weeks equals how much in one year? (Give them a calculator for this one, because they will need it. Those over forty might do such a problem in their head, but the newer generation is stupefied by such a problem.) "Okay, how many nickels in a dollar?" (You might need to coach by asking how many dimes and then suggesting doubling that.) "So, if I saved a nickel from every one of those twenty thousand dollars, how much would I save in a year?"

I tell them to save what they want out of the other 95 cents for a car or a big screen TV or even for a down payment on a house. Spend all of those 95 cents on taxes, groceries and just having a good time. But save that nickel for the future. You are not saving that nickel for college or a car. That comes out of the 95 cents.

There is every possibility that they will make more than $10 and hour. There is even the possibility that they can save a dime for every dollar instead of a nickel. It they do that, they can retire early and still be a millionaire.

Why didn't I start saving a nickel when I was 19? It would have been so much easier than trying to save a quarter or fifty cents now. I think that if I would have seen this earlier I just might have.

For many of us it is too late to become a millionaire. But it is never too late to start new habits and improve our financial situation.

It is imperative that we begin saving even before we begin paying off our past debt. This new way of looking at things gives us a hope for the future and establishes a fiscally responsible way living.