What can $100 really get you?
One hundred smack-a-roos! I could pick up two cases of beer, or fuel up my car, or have a dinner for two at a nice restaurant. There are plenty of things $100 can buy these days, but a lot of people would think that amount of money isn't enough to "do anything useful" with.
Remember when you were young and your parents used to say to you, "Back in my day I could fill up the car for $20", or, "That carton of milk was 50c in 1979"? I'm sure we all remember stories like that. Some of you might even catch yourself saying these things to your kids (makes you feel old doesn't it?).
We all know that the value of $100 today is worth far less what than it was 30 years ago thanks to the lovely wonder of inflation. But what if I told you that there are a few things you could do with $100 that would make it worth so much more for your future self? Don't believe me? Here a 3 every day examples for you to ponder on.
1. Throw that extra greenback at your house
I don't mean literally throw that hundred dollar bill at your house. That would be weird. And you'd look like an idiot. Instead, use the $100 to make an extra repayment on your house.
The length of your home loan and its interest rate play a big role in how much your monthly repayments will be. But for the sake of simplicity we'll use a pretty standard example of a 30yr, $200,000 mortgage at 4% interest rate.
If you paid an extra $100 at the start of your loan and didn't make any further extra payments, you will save over $200 in interest over the life of the loan! That's a 200% return on your money! Pretty cool, huh?
This technique is especially powerful early in your loan as you are paying a lot more interest than what you would be near the end of your loan. Regardless of the timing, an extra payment to your mortgage will knock a bit of time off your loan and save you some cash.
2. Contribute to your retirement account
Whether it's your Superannuation if you're in Australia, RRSP if you're in Canada, or 401(k) if you're in the US, all of these accounts are known as "retirement accounts". Most of us have one of these, and if you don't, you should! They are a great wealth building tool.
With the "normal" retirement age being 65, let's say you put a one-time extra contribution of $100 to your retirement account at age 30. Assuming an average annual return of 6%, your $100 has turned into $574. Thank you, compound interest!
The kicker? That extra payment you made can be from "pre-tax" dollars, meaning before taxes are applied to your paycheck. So you won't notice $100 "missing" from your pay, rather it would be more like $70, depending on your tax rate. $70 to make $574 in the future? Not bad in my books.
3. Buy a coffee machine
What? Buy a coffee machine? How's that a good use of my $100? Hear me out people.
The typical cup of joe can range anywhere from your $1 McDonalds brew, to over $8 if you MUST HAVE that Starbucks White Chocolate Mocha Frappuccino on almond milk with two squirts of specialty syrups.
So you could buy 100 Macca's cups, or 12 of your favorite Starbucks drinks. Here's the other option; spend your hundred bucks on a coffee machine. Whether it's espresso, drip coffee, or the pod machines, you can pick up plenty of well known brands of coffee machines for under $100 these days. There are - quite literally - too many choices out there.
One thing all of these budget friendly options have at least one thing in common; the price per cup is cheap! I'm talking as low as 20c a cup. That's 5x cheaper than our Macca's option or 40x cheaper than our fancy Starbucks brew! "Yeah but I only drink iced coffee", you say? Throw a few ice cubes in a glass, chuck in your fresh home-made brew, and top it with your favorite creamer. Voila! Perfect iced coffee every time.
$100 might not stretch as far as it used to, and with the value of our hard-earned becoming less and less as the years go on, it's even more important to be savvy with every dollar we earn. Don't be fooled into thinking an amount of money could be considered as "not enough" to do anything of value with.
There are plenty of ways to make your money work for you, however what I outlined today are just some simple everyday examples of different ways you can spend your $100 that will end up being worth far more than your initial investment.
Blake - FIRE with a family