In a recent Smart Women Survey, almost 38% of our readers said that their biggest challenge is money.  Today, I want to share a discussion my hairdresser, Rachel DeMar, and I had last year.

Rachel told me that she was celebrating her 10-year anniversary as a hairdresser.  After congratulating her, I asked her if she had set up the Roth IRA retirement account we had discussed a few years ago.

She hadn’t, so I wanted to show her how much she would have today if she had she set up a savings account when she first started her business.  I asked her how much she could save a day from tips.  She said she could easily save $20.  I said so let’s assume you saved $20/day five days a week for the last 10 years and assumed a 10% rate of return.

I pulled up David Bach’s Latte Factor Calculator on Google and inserted the numbers.  I told her the amount would be $91,000. Now of course, this is just a hypothetical return, but I wanted to make a point.

The other hairdressers in the shop stopped working and gathered around us.  I then asked, “What if we started today and saved that same $100 per week for the next 30 years, or until she was 62 and used the same 10% hypothetical return?”  The total was $940,000.

I told Rachel to pretend she had started that account ten years ago and now had that $91,000 but decided to never save another penny and just let that $91,000 grow in a retirement account while it earned 10% every year for the next 30 years.  Want to know the value of that account upon retirement?  Over $1,500,000!* 

You might be wondering if it’s too late to start if you are 40 or 50 years old. Well, it’s never too late to become a millionaire.  You just need to save more.

Here is a chart that shows the value of starting early as well as how it’s still possible to become a millionaire by age 65 if you start now.  Again, I used the same 10% annual rate of return for consistency in examples, but I suggest you meet with an investment professional to discuss your personal goals and risk tolerance. This chart below is just for illustration purposes and should not be relied upon for actual results:

Age                                                  Daily Savings                                       Yearly Savings
20                                                                  $4.00                                                        $1,460

30                                                                  $11.00                                                      $4,015

40                                                                  $30.00                                                      $10,950

50                                                                  $95.00                                                      $34,675


There are three secrets to building financial security and creating wealth:

  1. Start now and be consistent. Remember, it’s never too late.
  2. Pay yourself first. Create a budget and put yourself at the top of the list.  Make sure you are paying yourself before you spend money on anything else. You should have three accounts as follows:
  • Start with an account where you are saving 10% of your monthly income for emergencies or a cash reserve until you have six months built up.  Keep adding to this because you know you will be dipping into it now and then for emergencies. That’s what it’s for.
  • Set up a second savings account for fun and entertainment.  This includes your long-term goals like big ticket items, vacations, and items for your home.
  • The third is one you will never touch and I would put at least 10% or more (see the chart above).  This is the account you are building for your retirement.  You will want to meet with a financial person about setting this up because the other accounts can be simple bank accounts. This is the one you will want to create as your investment portfolio.
  1. Never give up. No matter where you are today financially, all you need to do is get started.  Get help if you are in debt. There are options for you.  Start saving something every day, every week, even if it’s just $10.  Create a vision board, create a budget, meet with a financial planner, or whatever you need to get motivated and stay on track.  Get help.  It’s out there for you.  I suggest reading a great book about money like Barbara Stanny’s ‘Over Coming Underearning” and listen to some of the financial radio shows on Smart Women Talk Radio.

Finally, if you haven’t checked out our FREE course featuring my signature six-step system called, Unlock Your Financial Power: They Key To Health, Wealth & Happiness, be sure to do that now by clicking here for immediate access!

* Remember, this is using a hypothetical rate of return, and actual returns are based on the investment choices and their actual returns. 


Katana Abbott, CFP® practitioner, is a Life and Legacy Coach™, host of the Smart Women Talk Radio™, founder of the Smart Women Companies with over 1 million subscribers globally, inspirational speaker and author of several books.

She began her financial planning career in 1987 and became a Certified Financial Planner™ practitioner. In 2003, Katana created Smart Women’s Coaching® to offer financial coaching and educational workshops for women in transition who are dealing with caregiving, death of a loved one, divorce, retirement or looking to create or grow a business.  She founded Smart Women’s Empowerment in 2008 to bring free financial empowerment resources and programs to women around the world through her team of Contributing Experts.