American Capital Planning Blog

ACP Blog, created by Bonnie Ashby Sewell, CFP®, CDFA™, AIF®

Save U.S. (or US)

Save 300x167Let’s meet two smart ladies, Grace and her best friend Anna. Both 25, they’ve begun working after college and Grace earns $45,000/year while Anna is hitting it out of the park earning $65,000/year. Grace and Anna have a lot of fun together especially when they’re shopping. But recently, Anna noticed that Grace is less fun and doesn’t want to shop like she used to. Neither knows what the other one earns or spends but we do. We can see that Grace spends $2,000/month and lives with an older sister, while Anna spends $4,000/month and carries a balance on one of her department store cards. They’ve each talked about saving more but only Grace has actually begun to do so. She manages to save 20% of her gross income or $750/month. Anna says she’ll start saving in a few years when she hopes to earn even more. Grace misses having new things and shopping with Anna but she has seen her parents struggle with not having saved enough and doesn’t want that experience.

Fast forward to 2020 and Anna is now earning $78,000 while Grace has improved her earnings to $55,000. Anna doesn’t have any savings but is willing to start. Grace has consistently saved $750/month for the last five years, earned an average of 7% on her invested savings and now has $53,699 in savings.

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