Living for the moment and craving immediate satisfaction may have some merit under certain circumstances but when it comes to your money, planning and looking down the road can have immense benefits. Although this doesn’t specifically pertain to college, Millennials, Gen Zers (and even Gen Xers and beyond) should heed this critical advice from Seth Godin. Forgo the latte and have money for later down the road. Trust me, you will be thankful. Money does buy you choices.
The $37,000 latte
If you live in the city and grab a coffee or a snack every afternoon for about $4, it’s a vivid example of the cost of debt.
You’re either a little behind or a little ahead.
Over ten years, if you’re funding that daily purchase with ongoing credit card debt, at $1,000 a year, it’ll cost you $24,408.40, and you might never find the means to repay the debt.
On the other hand, if that same $1,000 went into a low-cost investment fund that paid about 7% a year, you’d end up with $13,816.45 in the bank.
That’s because interest compounds. It’s because banks like to charge more than they pay out. And it’s mostly because we’re very aware of the short-term and happily ignore the long term.
Do you have questions about the college admissions process or the above information? Don’t hesitate to contact me at firstname.lastname@example.org or by phone, 845.551.6946.