There’s a little-known fact about investing that most people don’t appreciate until they really think about it. That fact is this: if you give yourself enough time, the amount you have to save in order to end up with a large sum of money is actually very reasonable.
Perhaps nothing can open your eyes to how much you really need to save than to look at a concept like the Latte Factor. This thought experiment says that if we forego small, daily expenses and instead save and invest that money, we’ll end up with a large sum of money given enough time to let it grow and let compound interest do its thing. It’s basically a lesson in opportunity cost – if we choose to use our money one way, we lose what we could have gained from using our money in another way.
But another thing that I think the Latte Factor teaches us is that small sums matter – and especially so when combined with time and consistency.
For example, if you can save just $5 per day for 30 years, you’ll end up with over $180,000. To be sure, 30 years is a long time, but $5 per day over 30 years isn’t an unreasonable goal. Most of us probably can do this if we try.
When you do the math, it looks like this:
- Saving $5 per day means that in one year, you’ll have $1,825 ($5 x 365 days).
- Invest $1,825 per year for 30 years in low-cost index funds and you’ll end up with $184,458, assuming a reasonable long-term rate of return of 7%.
If you could do this starting at age 30, by the time you’re 60 years old, you’d have a good chunk of money saved up, likely without even noticing it.
It gets even more eye-opening if you can start earlier and give yourself more time to let your money grow and compound. Start saving $5 per day at age 20 and at age 60, you’d have over $389,000. That’s a lot of money from doing something that’s very reasonable.
The $30 A Day Retirement Strategy
Knowing what $5 per day adds up to over the long term means we can extrapolate with even larger sums and with different lengths of time.
Here’s a chart with how much you can have if you start saving pretty reasonable sums of money per day from age 30 until age 60.
| Amount Saved Per Day | Total In 30 Years |
|---|---|
| $5 | $184,458.30 |
| $10 | $368,916.60 |
| $15 | $553,374.90 |
| $20 | $737,833.20 |
| $25 | $922,291.50 |
| $30 | $1,106,749.80 |
If you can do the same thing, but start doing it at 20 years old instead of 30 years old, you end up with what I think are pretty ridiculous sums of money.
| Amount Saved Per Day | Total In 40 Years |
|---|---|
| $5 | $389,837.46 |
| $10 | $779,674.93 |
| $15 | $1,169,512.39 |
| $20 | $1,559,349.86 |
| $25 | $1,949,187.32 |
| $30 | $2,339,024.79 |
To me, the magic number I recommend people aim for is $30 per day. That’s $10,950 per year or $912.50 per month. If you can start aiming for this goal in your early 30s and keep doing this for 30 years, you’ll comfortably be a millionaire in your 60s, all just from saving what seems like not that much money (and start doing this in your 20s and you’ll end up a multi-millionaire).
This isn’t to say that saving these amounts – even as little as $5 per day – is going to be easy. Doing anything for 30 or 40 years is a long time. It’s going to take an amazing amount of consistency to hit any of these long-term goals.
But any amount can make a huge difference to your future self. And importantly, the amounts I’m asking you to save here aren’t unreasonable. I think that’s the most important thing.
Saving $1 million or $2 million might seem impossible. But saving a few dollars per day, every day – that’s totally doable.
How To Implement The $30 A Day Retirement Strategy
When it comes to implementing the $30 a day retirement strategy, you have two mains options: (1) save $30 a day or (2) earn $30 a day.
Saving $30 per day is what most people naturally gravitate towards. I think it’s because most people find it easier to conceptualize saving $30 by cutting something in their budget.
But to me, the better option is to figure out ways to earn an extra $30 per day. The power in this is that any extra money you earn is money that you otherwise wouldn’t have had. That means you can save all of it.
Years ago, bringing in extra income was more difficult, but with phones, the internet, and the gig economy, bringing in an extra $30 per day is entirely possible for most people, even if you have a full-time job. Indeed, if you can figure out how to earn an extra $30 in an hour (which is very feasible for many people), you only have to dedicate 1 hour per day in order to hit this goal.
The beauty of the gig economy is that you can combine money-making opportunities with things you’re already doing (or should be doing). I call this strategy monetizing your life.
An easy example of this is with my favorite side hustle – on-demand food delivery. Over the years, I’ve regularly earned extra income by delivering food using my bike with apps like Postmates, DoorDash, Uber Eats, and Grubhub. Through a combination of experience and good strategies, I’m able to average around $40 per hour most weeks. At the same time, by doing these food deliveries with my bike, I’m earning extra income while exercising, which is something that I always try to dedicate time to do.
Spending an hour a day exercising is not an unreasonable thing to do. Getting paid while I do it can literally make me a millionaire.
Where To Invest Your $30 Per Day
Once you figure out where you’ll get your extra $30 per day, the next thing you need to do is figure out where you’ll put this money so that it can grow over the long-term. Years ago, it was much more difficult to invest small sums of money given fees, commissions, and account minimums. But today, we have a variety of options for low-cost investing even with small sums of money. It makes the $30 per day retirement strategy very possible.
One very good option is to invest our extra daily earnings using a robo-advisor like M1 Finance. Here’s why M1 Finance works for this strategy:
- No management fees.
- You can buy partial shares of low-cost, well-diversified ETFs.
- The minimum balance to get started is $100 for taxable accounts or $500 for retirement accounts, which means it has a low barrier to entry.
- You can automate your savings, which makes it easy to set and forget.
In order to give us the best chance at good long-term returns, we’ll want to create a portfolio that’s low cost and well-diversified. There are three ways you can do this with M1 Finance:
- Create your own low-cost, diversified portfolio. You’ll only want to do this if you know what you are doing. Investing isn’t difficult, but if you want to end up a millionaire with this strategy, you have to invest correctly for the long-term.
- Use M1 Finance’s “expert pies.” These are well-diversified, low-cost portfolios that are created and vetted by M1 Finance. Pick an aggressive pie that you can use for long-term investing. The retirement pies, for example, are great options. A 90% stock/10% bond portfolio is also a great choice.
- Invest everything into VTI. The Vanguard Total Stock Market Index Fund ETF (VTI) is an excellent choice. You could invest all of your daily earnings into this one ETF and do great over the long-term. This is what I personally do.
The important thing is consistency. If you take the $30 you earn each day and invest it with any of the above strategies, you’re very likely going to end up a millionaire. It really can be that easy.
Final Thoughts
Saving a million dollars or more can seem daunting, if not downright impossible. But saving small amounts on a regular and consistent basis is very possible. It makes becoming a millionaire seem very achievable.
If you can start while you’re in your 20s, it’s amazing how little you need in order to end up with a million dollars or more. $15 per day starting at 20 years old gets you to a million dollars by the time you’re 60. That’s really not a lot of money to save (or earn) each day.
Even starting at 30 years old and saving until age 60 doesn’t require much. $30 per day isn’t nothing. But it’s not that much money to save each day either.
You can cut things out of your budget to reach these savings goals – and that’s what most people do. But if you can think about what you can do to earn an extra $15 to $30 per day, then you can essentially have your cake and eat it too.
It takes work to earn that extra income. But it’s not that much work. We just have to be willing to make some time for it. If an hour a day and $30 per day can make you a millionaire, I think that’s well worth it.
More Recommended Ebike/Scooters
Check out these other ebikes/scooters I've had the chance to do a review for:
- GEN3 Outcross Bike – The GEN3 Outcross is a solid, affordable fat tire ebike that does a good job of doing what I need it to do. It works great for city riding, giving me a smooth ride in all conditions. It’s works really well as a winter ebike since the fat tires give it good traction over snow and ice. Check out my GEN3 Outcross Review.
- Himiway Escape Bike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Bike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($10) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $10 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with $100 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Moomoo (5 free stocks) – Moomoo is a free investing app currently offering 5 free stocks (usually worth around $75-$100) if you open an account using a referral link and deposit $2,000. Read my Moomoo referral bonus guide for more information.
- Webull (5 free stocks) – Webull also gives you 5 free stock valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free stocks using Webull.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- Digital Federal Credit Union ($100) – Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $100 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a saving account that gives you 6.17% interest on your first $1,000. Check out my in-depth post on how to set this account up.
- Upgrade ($100) – Upgrade is a free checking account that’s currently offering a $100 referral bonus if you open an account and complete three debit card transactions. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Importantly, this bonus says that it’s now scheduled to end on January 31, 2023. As long as you get your account opened before January 31st, you should be eligible. Here’s a post I wrote with more details: Upgrade $100 Referral Bonus – Step By Step Directions.
- SoFi Money ($275) – SoFi Money is a free checking account from SoFi. They’re currently offering a $25 referral bonus if you open a SoFi account with a referral link and deposit $10. You can also make an additional $250 as well if you complete a direct deposit. This is a good bank that is also 100% free, so you won’t have to worry about managing this account. Here’s a post I wrote with instructions on how to earn your SoFi Money bonus: SoFi Money Referral Bonus: Step By Step Guide.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link.Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Fairwinds Credit Union ($100) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- OnJuno ($60) – OnJuno is a fintech/neobank that is currently offering a $10 referral bonus if you open an account using a referral link and make a deposit of $50 or more. You will also get 1000 JCOIN. The 1000 of JCOIN is cryptocurrency. At the time I'm writing this, it'll be worth about $50. Check out my OnJuno referral bonus guide here.
- Varo ($30) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $30 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Albert ($150) – If you can manage to do a real direct deposit, Albert is an easy account you can use to earn a referral bonus. Here’s a review about Albert I wrote. And here’s a step-by-step guide on how to earn your Albert referral bonus.
- Netspend ($20 + 5% Interest Savings Account) – Netspend is a company that provides 5% interest savings accounts. If you sign up using my referral link, you’ll get a $20 signup bonus once you make your first deposit into your Netspend account of $40 or more. That means you get a 5% interest savings account and a free $20 to start! Make sure to check out my in-depth guide on how to set up these accounts.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $250 if you complete a direct deposit.
- DCU. Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $100 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a savings account that gives you 6.17% interest on your first $1,000.
- Novo Bank. Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. It’s the business checking account I currently use for this blog.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $10 for opening an account.
- Personal Capital. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
This is a fantastically simple approach – in a way, if you could save an hour’s pay everyday – that’s not asking for much, is it? That’s actually 12.5% savings rate (1 hour / 8 hours).
And if you saved 2-3 hours pay, that’s a savings rate of 25% – 37.5%.
Inversely, saving an hours paycheck implies spending the remaining 7 hours paycheck. Sometimes that can’t be helped, its difficult to save when your income isn’t very high to begin with. But for those who make a decent income, if you’re only saving an hours pay, that maybe is something to dig into.
This is lovely stuff FP.
Thanks! The way I see it, even if you aren’t making much, instead of 8 hours, add in another hour somewhere else in your day, make $30, then put it away. That’s 7 hours a week of side hustling, which isn’t a crazy thing to do. An hour a day can literally make you a millionaire!
I love it when someone can communicate fairly sophisticated mathematical concepts with simple to understand language. Great job! Something amazing will happen to young people who adopt this plan. They will start out saving $30 a day but then over time they’ll start saving a portion of their raises and bonuses as well and they’ll probably end up with twice as much as in the examples because the savings behavior should compound too, when something is working you just tend to turn it up a notch.
That is true. I know that I save much more than that per day now and will continue to do so.