FOX 5 I-Team: The Rule of 752 - KMSP-TV

FOX 5 I-Team: The Rule of 752

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We always hear that small expenses can really add up, but sometimes that's hard to visualize. So, we've found a way that just might do the trick: The Rule of 752.

What's that? It's about helping you save for retirement by using some simple math. Sounds boring, but really, it's a bit exciting. The Rule of 752 gives you a ballpark idea about how cutting back on a little spending can turn into big savings.

But first a little background: This formula was created by a man who runs a money-saving blog called, "Mr. Money Mustache."

He's used this to keep himself on the budgeting track. This is a man who retired -get this- at 30.

Let's see how it works by starting with that morning, to-go coffee. If you buy a latte every day, that's about three bucks. Every day. But what would happen if you invested that money? I mean, it's only $3, right?

This is really simple. That $3 you spend turns into $21 week. This is what we're going to boil down for you - finding out what that $21 a week would look like if you invested it instead - assuming an eight-percent return on that investment - over 10 years.

$21 X 752 = $15,792 for retirement.

Let that sink in.

Now, let's try it again.

Everyone looks at their cable bill and thinks about how to cut it back. The average cable bill is $80. Let's see what happens if you invested that money instead.

Weekly it's $20, so -- $20 X 752 = $15,040 in retirement savings.

Now here's the key: If you cut an expense, you have to save it. Take that $21 a week and move it to your 401K.

Have fun with this. Start doing some math. Take that monthly checking account fee. What would that look like invested? How about the interest on those credit cards? Remember that $3 latte and that $80 cable bill, if invested, would be about $31,000 in retirement savings.

And here are two more budget blogs to put into your mix of daily reading: Mr. Money Mustache and Dough Roller. 

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