The power of the number “one”. It’s amazing the impact that the number "one" can have in your life and on your finances.
Take a home mortgage, for example. If you financed $150,000 over 30 years, and one person qualifies for a 4% interest rate while the other qualifies for a 5% interest rate. The borrower who ends up paying “one” percent more ends up paying $32,080 more in interest. So that additional 1% interest rate, in fact, cost them 30% more in interest payments versus the other. So, it’s important to take care of your credit score.
One percent can have an incredible impact for investors as well. If you are saving 5% a year for retirement versus someone else who’s saving 6% a year, the one who is saving “one percent” more in this example will have a nest egg at retirement that is 20% more than the other.
Commit to saving 1% more now. Then next year, increase it by 1% again. An easy way to do this is to save part of your raise or sign up for an “Automatic Increase Feature” with your 401k. If you do this for 10 years, your savings rate will go from 5% a year to 15% a year.
I’ll bet you won’t miss a 1% change in pay each year. But you will be thankful, at retirement, that you chose to employ the power of saving 1% more.
A little really can go a long way. Listen to my podcast below for more about the power of number "one."
Date Posted: 07/05/2016 Advice provided in this article is meant for educational purposes only and financial education is important to us. Before making decisions regarding your personal financial situation, please consult an advisor or conduct your own due diligence. If you would like to discuss your Retirement Income Plan with an HCM Wealth Advisor, please give us a call – 513-598-5120. Located in Cincinnati, Ohio, we serve clients in 28 states, and we’d love to help.