If investing $10,000 a year feels like a long shot for you, you are not alone. According to a recent CNBC and Momentive survey, about 70% of Americans feel stressed about their finances because of inflation, the possibility of recession and rising interest rates. And 58% say they are now living paycheck to paycheck.
But do you think you are capable of figuring out how to set aside $28 a day? If the answer is yes, then investing $10,000 in a year is not as far off as you think.
Reverse Engineer Your Money Goals With A Curious Mindset
When most Americans think about how to come up with an extra $10,000, it can be overwhelming and even feel discouraging because of how big that number feels. Rather than think of that huge number, reverse engineer how to get there in incremental ways.
The idea of reverse engineering is often cited in technology or innovation, but it’s also a great approach to achieving your money goals. Reverse engineering is the process of deconstructing or dismantling a product to learn how it works. It requires you to have knowledge of what you’re dismantling, a good amount of patience, and also a sense of curiosity.
My husband, who studied mechanical engineering, would often take apart electronics to figure out how to fix them when they broke down. As I watched him, he enjoyed taking them apart, just as much as he liked putting them back together.
Similarly, I’ve shared this same concept with thousands of my financial education students, and they find so much encouragement in reverse engineering the goals that once seemed impossible for them to reach.
Break Down Big Numbers Until You Feel Like It’s Possible
When I started my personal finance journey to pay off $72,000 of student loans, I employed my interpretation of reverse engineering. I broke down the steps I needed to take little by little to overcome this huge amount of debt.
I started with a deadline for my debt that felt unachievable — paying off all $72,000 in two years so I could quit my corporate job and start a new business. Rather than throwing out the idea altogether, I reversed into it:
- $72,000 in two years would equal $36,000 (that’s still too overwhelming)
- 36,000 a year would require $3,000 a month (that’s more than I make in income)
- $3,000 a month would be $750 a week (feeling less panic, but not confident)
- $750 a week would mean I would need to save or make an extra $100 a day
Figuring out how to save or produce an extra $100 a day to put toward my student loans still felt challenging, but a lot more feasible than the original $72,000 in two years. I could think of a lot more ways to come up with an extra $100 and was able to get the momentum going a little at a time.
If the numbers aren’t working out how you hoped, give yourself some flexibility on the timeline. I concluded that even if I failed at reaching my goal of paying down my debt in two years, I would still likely be far ahead of the normal timeline for average student borrowers who take 20 years to pay off their student loan debt.
$10,000 Of Extra Investments Requires Investing Just $28 A Day
If you were to invest an extra $28 a day starting today, by this time next year, you will have invested $10,220. The math for $10,000 in a year actually equates to $27.40 a day but rounding up to $28 gives you a few days off. The simplicity of investing $28 a day can be as easy as:
If you’re getting caught up in analysis paralysis on where to invest the money, pick the one account that would help take the most weight off your shoulders if you knew an extra $10,000 allocated toward it.
The idea of reverse engineering into your money goals is less about perfection, and more about the consistency of your actions and your attitude toward the goal. When it comes to money goals, the first time you reverse engineer, you may have to try a few different paths before you find a path that works for you. Don’t give up on the first try.
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