The Power of Small Dollars for Personal Finance | The Modest Millions Show

There’s this misperception out there that you need to have a bunch of money socked away before you can invest in either a retirement account or taxable account. Some of this advice comes from popular pundits who promote a debt-free-first lifestyle, some of it comes from the legacy model of investment advisors that only work with clients with a minimum threshold of investable funds. The fact is, the sooner you start investing, no matter how small that number is, the more exponential the growth of your nest egg. The math is crazy!


  • How real life impacts average folks you and me and The Modest Millions Show
  • Misperceptions around what you need to get started with investing
  • How debt-free-first philosophies, like Dave Ramsey’s method, can be detrimental to your nest egg
  • How to dip your toe into investing without needing a huge stack of Benjamins
  • A time-value of money example to illustrate the power of small dollars
  • Budget tips to find those extra small dollars


The Power of Small Dollars for Personal Finance

There’s this misperception out there that you need to have a bunch of discretionary spending before getting started with saving or investment.

We thought that too. It held us up from getting started as early as we’d have liked. We thought we needed to have all of the Is dotted and Ts crossed. Similarly, there are some popular philosophies out there (cough, cough, Dave Ramsey) that strongly suggest you need to have all your debt taken care of before your start investing.

The simple fact is that when it comes to personal finance, something as small as it may be, is almost always better than nothing. It’s almost always better to start now then wait one or two years (or longer), or wait until you have all your debt paid off.

Today, i just wanted to illustrate some examples to see how small numbers can really add up when you start now.

It’s not the size of the savings as much as it’s the motion in the savings and investment ocean. For all you perverts out there, I’m talking about the time-value of money. Get your minds out of the gutter.

If you start saving today, even if it’s a small amount, you’re going to be miles ahead of someone who waits a few years.

We’ll take a quick break and come back to look at an example of starting now rather than later.


What I love about small-dollar investing is that you don’t need to pay an investment advisor a hefty 1-1.5% fee to manage your hard-earned dollars for you. It also means you don’t have to have $10K available to plop into a hedge fund because that’s the minimum amount. Instead, you can go to a place like Betterment and drop a few bucks into one of their ETFs and start earning your returns without paying a bunch in fees.

To grab your own FREE account and start investing your small dollars, visit

Time-Value of Money Example

Welcome back.

Let’s run a quick scenario with the Three Stooges. Let’s say Larry, Moe and Curly are 25 years old. All three are diligent savers and they all carve out $1,000 out of their budgets every month to invest in something simple that earns a conservative 7% real rate of return (remember this accounts for inflation so it keeps the value of the dollars constant). All three invest for only 10 years and then stop saving and investing. The only variable is when the start investing. Larry starts investing right away at 25 and continues until he’s 35 and stops. Moe waits a little longer and starts investing from 35 to 45 and Curly waits even longer and invests from age 45 to 55.

All three invested $120,000 ($1,000 per month for 10 years), but when they all reach 65 (and that investment is allowed to grow, untouched), their balances are much different. Curly, the late bloomer, has a nest egg of over $373K. Not bad! In the 10 years since he stopped investing at 55, his nest egg has tripled.

Moe does even better. His money has even longer to grow, and by the time he’s 65, his nut has grown to almost $735K, almost double Curly’s balance.

Larry comes out smelling like a water-filled rose prop. His ending balance is over $1.44 million! Pretty impressive with only $120K invested.

It all comes back to the budget

So, this is where you need to put on your budgeting hat again. Take a look and see if there are any discretionary expenses you could do without for a period of time. Maybe it’s a morning coffee habit or going out for lunch at work. Those are $5-10 expense right there. If you tossed that habit (let’s say it left you with $200 per month that you could then invest into your 401(k) or some other account, and did that for 30 years, you’d end up with a quarter million dollars.

Or, maybe you look at other expenses of you really want to keep that coffee or lunch habit. How about optimizing or cutting your cable or phone bill? Maybe it’s ditching the Amazon Prime subscription or maybe even right sizing your car or house to get rid of or greatly reduce the monthly outflow.

Here’s another idea. When you get a raise our a bonus at work, use those funds to fuel your discretionary spending. Don’t fall into the trap and say that the raise will give you the kick start you need for you to start investing. Outside of your necessities, saving and investing should be at the top of the list. Always.

Point is, these sacrifices are only temporary; think about the big picture and imagine yourself living the retirement of your dreams. That’s far more impactful than that floppy, greasy burger you were going to have for lunch.


That’ll do it for this week’s episode.

What about you? Have you looked into the time-value of money for your situation? What’s been your experience? How has it gone? I’d love to hear from you.

Also, make sure to reach out with your feedback for me or for the show, topic ideas,

personal anecdotes of your own journey or if you just want to say hi. You can always reach me at feedback[at]modestmillions[.]com.

For a recap of the strategies, tools and links that we talked about today, check out the show notes at

Also, while you’re on the site, don’t forget to subscribe to receive email updates when we post new episodes (you can do so at And please, if you like what we’re doing here and you find the information valuable, help us spread the word and show your support by leaving us a five-star review on your whatever podcast platform you’re listening to us on.

Join me next week when we talk about the simple math of calculating inflation in retirement.

Until then, remember to keep squirreling away now to earn millions later!

Thanks for listening; we’ll catch you next time!

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