You may not realize it but your money right now is worth much more than you could imagine. What if I told you it was possible to turn $14,000 into $1,400,000 with no effort? No, this isn’t a scheme and this isn’t some trick. It’s called the time value of money and the time dimension of investing. If you want to know how normal people retire and live the great life then perhaps you should read on.

Let me first ask this: no matter who you are, where you work or how much you make, could you save an extra $2,000 each year? If you answered no that might be an issue. Think about your monthly expenditures. Where could you save a few bucks? For many they could give up that cup of coffee every morning. Think about it: $4 x 5 days a week x 4 weeks a month x 12 months a year = nearly $1,000. Do you have any idea how much that $1,000 is really worth?

Say you’re young like myself and plan on another 45 years to retirement (assume age 65). If you dropped that $1,000 into a Roth IRA today (assume 11% growth) you’d end up with nearly $110,000 when you retire! Can you imagine the possibilities? That’s just one year; that’s just $1,000. Compound interest is a beautiful thing and if you’re smart you’ll start saving as soon as possible.

Unfortunately Americans like to deficit spend. We’ll spend the money we don’t even have yet. Sure, in college that’s understandable- but it shouldn’t become habit. Credit card companies reward us for borrowing money that we may never have. People live paycheck to paycheck and ultimately have no money to save. Don’t fall into this trap. Always find the money to set aside. You’ll depend on it later in life.

How about this: assume you’re 20 again and you save $2,000 each year for the next 7 years. Would you believe me if I told you that money could turn into over $1.2 million dollars by retirement? Wow. You only invested $14,000! Raise your hand if you don’t think it’s worth saving a few thousand dollars each year.

Personally, I’ve already invested $7,000 in my IRA to date. I don’t have a salary- I’m a full time student. Yet, the money I’ve been able to save is already expected to be worth well over half a million dollars in 45 years. I don’t know about you but I’m going to keep investing as much as I can as soon as I can.

Just some things to think about. Maybe you don’t need a brand new MacBook? Perhaps you could get a pre-owned vehicle rather than a brand new one? In any case, I’m not a personal finance expert. Here are two excellent resources that could certainly help you a bit more as you accumulate your wealth: