Are You Capable Of Figuring Out $28 Of Saving A Day? Here's How To Invest An Extra $10,000 A Year
Key Highlights :
For most of us, investing an extra $10,000 a year feels like a long shot. But with a bit of reverse engineering and patience, it’s not as far off as you think. All it requires is saving $28 a day.
Reverse engineering is the process of deconstructing or dismantling a product to learn how it works. It requires knowledge, patience, and a sense of curiosity. This same concept can be applied to achieving your money goals.
Rather than think of the huge number of $10,000, reverse engineer how to get there in incremental ways. Break down big numbers until you feel like it’s possible. When I started my personal finance journey to pay off $72,000 of student loans, I employed my interpretation of reverse engineering. I started with a deadline for my debt that felt unachievable — paying off all $72,000 in two years.
Rather than throwing out the idea altogether, I reversed into it: $72,000 in two years would equal $36,000 (that’s still too overwhelming) 36,000 a year would require $3,000 a month (that’s more than I make in income) $3,000 a month would be $750 a week (feeling less panic, but not confident) $750 a week would mean I would need to save or make an extra $100 a day
Figuring out how to save or produce an extra $100 a day to put toward my student loans still felt challenging, but a lot more feasible than the original $72,000 in two years. I could think of a lot more ways to come up with an extra $100 and was able to get the momentum going a little at a time.
If you were to invest an extra $28 a day starting today, by this time next year, you will have invested $10,220. The math for $10,000 in a year actually equates to $27.40 a day but rounding up to $28 gives you a few days off.
The simplicity of investing $28 a day can be as easy as: transferring $28 each day to an existing investment like a brokerage account; increasing your 401(k) contribution to equate to $28 a day on your paychecks; paying down $28 a day on your student loans (your education was an investment); paying $28 a day on your credit card debt (you’re saving even more by saving on the interest rates that are now more than 20% ); or saving $28 a day into a high-yield savings account to capitalize on current interest rates .
If you’re getting caught up in analysis paralysis on where to invest the money, pick the one account that would help take the most weight off your shoulders if you knew an extra $10,000 allocated toward it. The idea of reverse engineering into your money goals is less about perfection, and more about the consistency of your actions and your attitude toward the goal.
When it comes to money goals, the first time you reverse engineer, you may have to try a few different paths before you find a path that works for you. Don’t give up on the first try. With a bit of patience and the right attitude, investing an extra $10,000 a year is not as far off as you think.
