This thought saved my retirement – 11/03/2023 – From Grão to Grão

In 2000, a little more than 2 years after finishing college, I remember talking to a friend from college and he criticized me: “Man, what’s the point of worrying about saving now. What you earn is barely enough to pay your bills. Better take advantage now and when you’re earning more, you’ll save.” Without doing the math, and thinking about the well-being that immediate consumption brings, the argument is not completely wrong. But the fact that I didn’t follow that thought made all the difference today.

At that time, 40% of my salary was consumed by rent and household expenses. Of the rest, the postgraduate course and leisure activities consumed almost everything. There was something close to R$200 left to invest.

It really seems like very little to keep. When you think about an investment of R$200 alone and what interest it yields, it can be demotivating. At the same time, consuming these R$200 can bring you a boost of instant satisfaction. For example, using this feature at a party, at a concert, or something similar.

However, one cannot think of a single isolated application. Frequent savings are made up of a set of investments of R$200 per month and the power to compound them over time.

After all, a forest cannot develop with a single seed. Just the systematic planting of these seeds and time will lead to great transformation. The same goes for money.

Do not be deceived. If you don’t develop the habit of saving when you earn little, you will have difficulty saving when you earn a lot. When I say little, I’m mentioning whatever your current income level is.

I know that many will criticize here that the average Brazilian cannot save money. But it’s not just this guy who can’t do it. Most high earners don’t make it either.

Without a doubt, it is more difficult to save when you earn little, as spending on basic needs consumes a lot of your income.

However, as incredible as it may seem to some, the concept of basic needs expands when you earn more.

Most individuals who earn more than R$30,000 a month are unable to save 10% of their income. For those who earn R$3,000, it seems strange to say that someone who earns 10 times as much does not have the ability to save.

However, the more fortunate will also justify spending only the basics. The level of spending usually rises with income. Sometimes even faster than the latter’s growth.

The big problem is not just how much you earn, but how you form the savings habit. This discipline is difficult.

So, if you don’t develop the habit of saving when you earn little, you will realize that the difficulty continues throughout your career and you continue to postpone starting over time.

Speaking of time, this is the critical element in creating savings. The power of compound interest is the great difference in creating a fortune.

When talking about developing a forest, it is better to plant several small seeds and wait a long time than to plant many seeds at once and wait a short time.

So start today, even if it’s small.

In 2000, there were no personal finance influencers like there are today, nor was it common to find people in newspapers talking about the importance of saving. I don’t know exactly what motivated me.

Maybe the desire not to have to work all my life. It’s possible that my discipline was instinctive or came from a childhood habit of collecting. No matter what motivated me, you must find what would motivate you today to create this habit.

The thought that I needed to save, from the beginning, was one of the biggest differences in creating what I have today.

Michael Viriato is an investment advisor and founding partner of Investor’s House.

Speak directly to me via email.

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