Start Saving Young

Thanks for checking out The Rich Moose! I started writing this blog earlier this month after teaching myself WordPress and designing the website last fall. I enjoy writing (thanks Raymond Welch!) and I really want this blog to share my personal experience with money. I don't care about search engine optimization, ad revenue, marketability, or any of that stuff. When you share this content, with your help I hope I can inspire other young Canadians to actually care about their financial future.

Your Facebook and Instagram feeds scream spend money, have fun, and live for now. I'm saying yes... but living large now is going to bite you in the ass hard down the road.

Government benefits for seniors are alright. One way or another you will have $17,000 a year to live on if you're older than 65, but $1,400 a month means couponing, basement suites, and stay-cations.

The Time Value of Money

Who is going to have more money when they're 65?

  • Sarah who graduated at 23, lives frugally for 10 years putting away $1,000 a month during this time and then never adds to it or touches it again, spending her whole paycheque from the time she's 33 to 65? or...
  • Matt who graduated at 23, parties for a few years, settles down and gets serious, and puts away $1,000 a month starting at 35 years old saving diligently for 30 years? or...
  • Jake who also graduated at 23 who decided to save a steady $500 a month for the entire 42 years?

They all end up with the same actually. About $1.1 million if their money compounds at 6% returns. However, Sarah only actually contributed $120,000 while Matt contributed 3x as much. Jake was right in the middle at around $250,000. Because Sarah started saving early and put the magic of compounding gains to work for her, she got nearly $9 in investment returns for every dollar she contributed!

The key to wealth and financial stability is investing money as early as possible, keeping your investment costs low, and avoiding investing mistakes by following a good investment strategy. While it's ideal to save tonnes of money when you're young like Sarah, it could mean sacrificing the things you want to do. Matt had all the fun he wanted, but ask anyone in their 40s how easy it is to begin saving money. It's not, especially when you spent your 20s and 30s splurging on everything in sight, maybe racking up some debt in the process.

Steady and consistent investing at a young age, while shunning debt, is the easiest path to long-term wealth. Save and invest as a habit and let the markets do the rest of the work for you.

Realizing the Benefits of Saving

I read about the time-value of money a long time ago—probably when I was in my early teens. Looking at that compound interest curve, I was instantly hooked. Yeah I am a nerd...

I grew up in a family where money was not always plentiful. I distinctly remember there being no money for groceries numerous times. The stress of bad financial decisions is intense and consumes everything. I swore back then I would never put myself in a similar situation as an adult.

Next week I am planning to share my first Investment Asset post. I'm think I'm a pretty humble, down-to-earth, boring guy so don't take this the wrong way as I don't mean to be a braggy pants. I hope that by seeing our real numbers, you can see it's possible to accumulate wealth at a young age.

The market value of our investment portfolio goes up and down quite a bit from day to day, but it should land somewhere in the range of $460,000 (not including work pensions). Saving this amount of money with our own two hands took a lot of work, some sacrifice, and we've said "no" to more things than I can remember.

While I certainly regretted some things looking back, overall I can't say we're really missing anything. We've got a long life ahead of us and we're way ahead of the game.

I'm happy to say, despite some mistakes and being in our mid-twenties, my wife and I don't have to save a nickel anymore and we'll be filthy rich. At 50 years old we'll have over $1.75 million. At 65 over $4.2 million. That's inflation-adjusted dollars without adding another penny... ever.

At this point living prudently is a sort of lifestyle for us. We're both happier when we have less crap to worry about. It's psychologically freeing to confidently be able to say "no" and only do the things we really want to do.

A much better writer than I, Jim Collins, calls it F-You Money and I'm proud to have it.

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