Spending Calculator - Figures True Cost To Own
When you spend money instead of invest it you choose consumption today over a lifetime of interest income. The total amount of money you spend on consumption plus the forgone interest earnings adds up to the real cost of spending. Warning! This number is much higher than you might expect because of compound interest. Using this calculator encourages thrift and wise spending choices by looking at the lifetime, true cost of a one-time expense today.
Below are a few things to keep in mind:
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The True Cost Of An Expense
If you believe the cost to buy something is just the money you spend on it, then read closely because you’re in for a surprise.
The true cost to own a new car, gadget, or other item is much higher than you might initially imagine.
Why? Because the real cost is the forgone interest that could have been earned over your lifetime had you invested that money instead of spent it.
Some people spend money the moment they receive it. Others, save as much as possible to build a brighter future.
These spending patterns are usually ingrained early in life by your family upbringing – children mirror their parents’ spending habits. Money-handling habits are based on training and the money management lessons we learned as kids.
Whatever your views and attitudes are toward money, it is important that you understand the real cost of spending. For example, when you buy a can of soda for $1, the true cost of the soda is not only $1. If you were to have invested that dollar instead of spent it, you could have earned interest over time.
This cost calculator will help you understand how much interest you could make if you skip an expense and invest instead.
Curb Your Spending Habit
If you’re a compulsive spender, you probably can’t wait to pay a visit to the local shopping mall after receiving your paycheck. With cash in hand, it’s difficult to resist the urge to spend it instead of saving it. This is the reason why you don’t have any savings in the bank.
Before you bury yourself in debt, you should slowly curb your spending habit. But how do you start? The time to start cutting costs is now. Below are some simple ways to curb your impulse to spend:
The Spending Calculator is a great way to realize the true cost to own of just about anything. Calculate a few items you’ve been thinking of purchasing, and find out how much those items will really cost you. You’ll be shocked at how much interest you’d miss out on if you were to purchase those items.
The forgone interest is the true cost to spend and usually exceeds the purchase price of the thing you want buy.
What Is Your Spending Habit?
Are you saving enough for your future or are you a compulsive spender? No matter how you view money, it is important that you keep saving for the future. Review your budget and cut back unnecessary expenses. The earlier you start saving, the better!
Spending Calculator Terms And Definitions
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