# Visualizing Monthly Savings With Tiny Circles

Pretend this tiny circle represents \$50 in monthly savings:

It looks insignificant by itself. But if you consistently save that same \$50 each month, you can save \$600 over the course of a year:

That’s pretty good. Not life changing.

If you save \$50 each month and invest it at a 7% interest rate for 10 years, it will blossom into nearly \$8,300:

That’s a decent chunk of cash.

Do this for 20 years and it will turn into \$24,600:

Okay, that’s actually pretty exciting.

Do this for 30 years and these savings will transform into an impressive \$56,700:

That’s a significant amount of money.

# The Math

### The 10-year savings timeline

There’s some cool math behind these numbers. Assuming a 7% interest rate, your monthly savings will be worth about 166 times as much in 10 years.

For example, if you save \$50 per month, you can save \$600 per year. Invest this \$600 each year for 10 years straight and you’ll have roughly 166 times as much as your monthly savings:

Monthly savings: \$50

Total Value in 10 years: \$50 * 166 = \$8,300

This works for any amount of monthly savings. Suppose you save \$200 per month instead:

Monthly savings: \$200

Total Value in 10 years: \$200 * 166 = \$33,200

### The 20-year savings timeline

The same type of math applies to a 20-year savings timeline. Your monthly savings will be worth about 492 times as much in 20 years. Here’s an example of saving and investing \$50 per month for 20 years:

Monthly savings: \$50

Total Value in 20 years: \$50 * 492 = \$24,600

### The 30-year savings timeline

Again, the 30-year savings timeline can be boiled down to one number. Your monthly savings will blossom into a total value of roughly 1,133 times as much in 30 years. Here’s an example of saving and investing \$50 per month for 30 years:

Monthly savings: \$50

Total Value in 30 years: \$50 * 1,133 ~ \$56,650

# Knowledge is Power

Knowing this math helps us understand the importance of monthly savings. Even tiny adjustments to monthly savings can make massive differences over time.

Suppose you currently save \$100 per month. If you can cut your spending by \$100 each month and use a side hustle to earn an extra \$100 each month, you can start saving a total of \$300 each month.

The difference between saving \$100 and \$300 each month doesn’t sound life-changing, but over the course of two decades it can be. Here’s what a \$100 monthly savings invested at 7% interest will be worth in 20 years:

Compare that with a \$300 monthly savings, invested at 7% interest over 20 years (brace yourself):

That’s almost a difference of \$100,000.

Don’t underestimate the power of increasing your monthly savings even by a few hundred dollars. 🙂

My favorite free financial tool I use is
Personal Capital. I use it to track my net worth, manage my spending, and keep an eye on my monthly cash flow. It only takes a few minutes to set up and it makes tracking your finances simple and easy. I recommend trying it out.