Something interesting that happens when you stop spending every dollar you make and you instead save for the future is that you start taking a "long view" approach to money. I was thinking about that last night as I heard the Democratic response to Governor Walker's new budget proposal. Almost to a person, the Left was saying that the proposed income tax cuts included in the budget will "only mean a couple hundred bucks to middle class families" and how that will "hardly make a difference".
Well let's take a look at how much of a "difference" $200 less in taxes to my middle class family. Because my wife and I already budget for pretty much every expense already, that $200 will go into our retirement investments. The mutual funds in which we invest have an average annual return of 10.2% over their "lives". That means a one time investment stands a pretty good chance of growing to $2,167 by the time we reach the age of 65 (25 years). Barring runaway inflation and devaluation of the dollar due to our profligate Federal spending of today, that should cover five to six months of groceries for a retired couple.
But keep in mind that the above example is based on paying $200 less in taxes for just one year. If we are allowed to pay $200 less every year until our retirement--again putting that money into our mutual funds--that investment would grow to $24,606 by the time we are 65. That would be almost an entire extra year of work (net income) for my wife. And I'm sure she would like to be "rocking the retirement community" one year earlier.
And taking the long view works in the other direction as well, if you will. When you hear politicians talk about paying "just a little bit more" for this program or that for that project that means the same amount that we were adding to our future security is coming out of that potential nest egg.
This approach doesn't apply just to income or property taxes. Is "unlimited minutes, data, and messaging" right now worth having to put in an extra year on the job? Or is a Tall Venti Mocha Half Caf Chai Latte every morning now worth being only able to afford Sanka after you can't work anymore?
Yes, taking the long view requires a great deal of patience and discipline. And in today's "I want it all and I want it now" society, it's much easier to just vote for politicians who promise to provide you all the "security" you need--at the greater expense of everyone behind you.