In 2015, I wrote an article titled, “A Little is Better than none”, in which I talked about how having an attitude that it’s only worth saving or investing or making good financial decisions if it was a substantial amount of money. The thinking was that I noticed a lot of peers at the time (and even sometimes myself) feeling like the small gains we were making weren’t really worth it in the long run. Like I’m saving $50 this month…is it really worth me saving that money vs. spending it on something I can enjoy now? I worked to dispel this rumor with 2 points: how saving even a little can build good habits and how with compound interest even a little can be worth a lot in a few years.

I’ve enjoyed this year (10 year anniversary!) doing some ‘look backs’ on previous articles. I started this blog in 2023 and it’s cool to look back and see if what I was thinking about when I was in my mid-20’s has held up or not. It turns out that most of what I said was good, although there were a few things I laugh at now – like how I tried to only buy groceries once per month.

Let’s look back and see how “A Little is Better than none” has held up!

I’ve basically made this my main core truth in my personal finance

In reflecting back on this post, I realized that a mindset of forward progress, no matter how little has become such a main focus of mine. Out of all the financial truths that I hold, I probably hold onto this one the most. Each month I do a net worth check and find myself laser focused on growing that overall number, even if only by $1. I continually work to save and invest, and at the end of the month (or mid-month but that’s been less common) I’ll move over a few dollars into my savings account. For a while I had a goal of buying one share of $VTI each month (trading anywhere $180-$220), all focused on small but steady growth. I get excited about getting a few dollars in interest each month in my savings account, and I love watching dividends (even a few dollars worth) get paid into my account each quarter from my stocks.

For better or worse this mentality is very much at my financial core!

Habits are hard to break

I had a good laugh at myself the other day at work. I remember when I first started in the working world around the time when I was 23, I had this hope whereby when I was 33 that I would not still be worried about finding cheap or free parking at the office and that I wouldn’t be packing a lunch in with me. It seemed like a fair goal, hopefully I would reach a point in which I could pay the few dollars to park in the company parking garage and could afford a $6-$10 lunch. I remembered this as I was walking the 10 minutes to the office from the spot where I had just found free parking for the day, all while I was carrying in my lunch! Fast-forward 10 years and making a higher salary, I’m still stuck in those old habits of trying to save a few bucks each day!

Habits – both good and bad are hard to kick, and I guess I’m just always one to try to save a few bucks where I can – even at the expense of my own comfort or time! I definitely thankful that I got into some pretty good habits when I was 23 in terms of how I spend my money – those habits have in theory helped me throughout the years and 10 years later they are still helping me!

Photo by S’well on Unsplash

Compounding…well yes but kind of no

Let’s run a simple math exercise. Let’s assume that over the past 10 years I ate out 3 times per week, spending $10 per lunch. Now, let’s assume that instead, I packed a lunch and instead put that $10 in a savings account once a month for 10 years. Let’s assume an interest rate of 3% – which over the last 10 years it’s been higher and it’s been lower but we’ll assume 3%. According to this interest calculator, had I put $120/month away for 10 years at 3%….I could now be looking at $16,507.99. WOW. Ok that feels like a ton of money – I’ll admit I didn’t expect it to be that big when I did this exercise.

Compounding interest (which means your money continues to grow – i.e. you reinvest the dividends/interest) is a powerful tool over a long period of time, there’s no doubt there. However, that feels very ‘click-baity’ – something that a personal finance blogger would title their article, “HOW PACKING A LUNCH FOR 10 YEARS LEAVES YOU $16,000 IN THE BANK”, when in reality there are some nuances there.

Firstly, packing a lunch isn’t free, and the peanut butter & jelly with 3 carrots, a bag of chips and a little Debbie treat (long time friends will get a laugh out of that because that’s literally what I had for lunch everyday) a) isn’t healthy and b) isn’t free. I should re-run this calculation using $5 per day, as I probably was spending a few bucks on packing a lunch. Secondly, inflation is real and that $10 in January of 2012 when I started working is actually $13.32 in today’s dollars. Link to this source. That 3% interest rate probably didn’t keep up with inflation some years when inflation was higher (i.e. the last few years). Thirdly, I think packing a lunch might have some hidden mental health costs that I didn’t consider. I did always try to eat lunch with colleagues in the break room – but that assumed they were grabbing lunch to go. Also it could have been really good for me to go on that 15 minute walk to grab lunch, and to get outside in some fresh air rather than just cramming away at my desk during that time.

So, yes compounding interest is real and a dollar saved today can be worth a lot more in the future, but don’t forget about the hidden costs and benefit of spending money today. We’ve only got one life, tomorrow isn’t guaranteed so find a way to balance enjoyment of life both now and later!

Sometimes you need to take a step back to take two steps forward

The major flaw that I’ve realized in myself and in this mentality is that forward progress no matter what isn’t necessarily the ideal path, and that life will throw curveballs or there will be opportunities that mean you have to take a step back first.

In my relentless pursuit of constant forward progress, I may have missed some opportunities in life. I’ve known plenty of friends that have quit their jobs and gone back to school to get a new degree and later on a new job. Or what about investments that may be slower growing at first or may require larger up front cost? Thankfully I didn’t pursue forward progress with 100% focus, and there were times that we slowed down our growth to make investments in our family or ourselves!

TLDR

So! 10 years later do I still think a little is better than none? Absolutely. Developing good habits now are important and if you can’t manage a little bit of money you probably won’t be able to manage a lot as hopefully you’ll find yourself in that situation when your income grows. Compounding interest is also a very real thing, and although $16,500 is probably too high and unrealistic of a number, maintaining a healthy budget with a good mix of saving/investing and spending can pay off in the long run. Find ways to achieve balance; and enjoy life now all while having a solid plan to enjoy it in the future! Saving a little now is (in my mind) better than having to save a lot later!