The Proof is in the Numbers

So let me tell you how I figured this out. I live in a small town where we tend to know too much about other people living in the same small town. I had people come in to ask about investing and telling me they couldn’t afford to save/ invest money – they were living paycheque to paycheque; there was no money left to save!

So here’s the big advantage/disadvantage of living in a small town. I could clearly see the new car they were driving; hear about the trips they took; see how often they ate out; knew if they smoked or drank, etc. I don’t want to judge anyone and it is YOUR money so there is no need to be accountable to me or anyone else as to what you choose to do with it. However, they weren’t able to see that they could afford to save/invest by putting that money away first – not last!

I am a HUGE believer in “Pay Yourself First” or as I prefer to call it “make loan payments to my future self”. That brought me to the realization that the very best way to accomplish that was to adopt the mindset of a smoker! And how did I know how a smoker's mind worked? I knew BECAUSE I use to be a smoker! And yes I QUIT years ago, but honestly, when my husband and I quit, we both smoked a package and a half a day! I fully understand that as a smoker, you will always find the money to buy cigarettes. I know of NO smoker who quits for a day or two because they can't afford to buy the cigarettes. We resort to all kinds of odd things to pay for those cigarettes:

Dig through jacket pockets, return beer empties, sell something on Kijiji, borrow from a friend, bum cigarettes, stop eating for a couple of days, and leave the hydro bill unpaid (they aren’t going to shut it off until you are 3 months in arrears, right?).

“Borrow” from the kid's piggybanks (if you don't believe that, ask anyone that has worked at a gas station if they’ve had someone come in and dump a bunch of change on the counter to buy cigarettes) ……. the list is endless!

So here is what I figured out – if you could just THINK like a smoker (I don’t recommend you start smoking to prove this theory) and invest that money instead of smoking it, how rich do you think you could be? The answer shocked me! I used a typical smoker for the length of a typical career (40 years) and INVESTED vs SMOKED the money. I was pretty conservative with my numbers, i.e the increase in the number of cigarettes smoked from year to year, the increase in the price of cigarettes from year to year, and the rate of return on the money.

I am not going to give you the answer in this post. I want you to think about it and make your best guess. In all the years I worked in this industry, I presented this scenario many times and you know what? NOT ONE SINGLE PERSON CAME CLOSE TO THE CORRECT ANSWER.

And while you are thinking about that, keep in mind, that we are not all smokers. This post was never meant to target smokers but it's just one of the easiest habits to work with for this particular exercise. We all have crutches and ways we mindlessly spend money so I also challenge you to think about the things in your life that your money is strongly attracted to – books, magazines, restaurants, bars, old cars, quilt fabric (that’s me) designer clothes, black shoes (although you already have 20 pairs), musical instruments, motorcycles, wine, coffee – the list is endless!

Leave a comment below with your guess! And while you are working on that, did you take the time to START? If not, please make an appointment with an advisor, go online, go to your bank – JUST DO IT! You will thank me someday.

Coming Next Nov. 4 – The Shocking Proof

Are you shocked? Did you guess anywhere close to this number?