A Penny Saved is Twopence Dear - Money Saved is Money Earned

Poor Richard Almanack

"A penny saved is twopence dear" proverb from Poor Richard Almanack is often mis-quoted as a penny saved is a penny earned. The wisdom in the concept no matter which quote you use is a good financial stewardship principal.

The idea is to save money so you can invest that money and it will grow. It is something you teach your kids from an early age. "Save your money, put it in a bank savings account and it will grow more money." (via interest) Although the interest banks are paying out at the moment are dismal, it is a good tool to teach your kid the basic principle.

Little Change That Adds Up

As an adult you have a tendency to forget the wisdom you learned as a child. That doesn't make it any less valid or valuable. On the contrary a basic truth can be applied in more advantageous ways. The basic truth is if you save money you can invest money, if you don't have money you can not invest something you don't have.

If you save money you can invest in stocks that pay dividends. (Right now many are paying more then interest on a savings account and you have the added benefit of owning a small part of a company.) Perhaps you can save enough money to purchase a house.

The above examples are nice. I would suggest there is more we can get out of the saying "a penny saved is a penny earned". Money saved for a rainy day is insurance for the unexpected. This also provides earnings if something happens.

My example of this is saving enough money to raise your deductible on your car insurance. When you raise your deductible you save money over the long haul (long term thinking). This is an investment in your future. Money represents hours worked. If you save money from paying less on insurance you have freed up the need to work those hours in the future or you can work those hours and invest/spend the money elsewhere.

Saving money is an insurance policy against future loans. If you have money saved you don't have to get a loan out for a purchase whether it is for an emergency or otherwise. It is amazing to me the people I see who will drive all over town to save 5% on a sale and use a credit card with 20% interest This is just paying 15% more had you just saved the money. This doesn't even include the gas to go to the store in the purchase.

If you save money you can have the ability to self insure long term purchases like a house or a car. (Personally I don't think you should buy a car on credit; or at least make every effort not to. I realize many people do for varying reasons so my example is below:)

You purchase a new car at $26,000 value, the depreciation in the first two years is about  20-30% so you would need to put down at least $5,200-$7,800 to cover that loss.

By saving the 20-30% down payment you self insured against the depreciation of your car during those first two years keeping the deal from being upside down. Being upside down on a loan just means you owe more then you can sell the car for.  Saving up at least for a depreciation size down payment can eliminate risk of owing on a car you may sell. Also the down payment cuts down on the principle of the loan which saves you money in the long run.

If you can save 20-30% why not eliminate that by buying a two year old car at $18,200-$20,800 and save up your $5,200-$7,800 any way and finance only the remainder which is about half of the original cost of the new car. If you can save enough for 50% of a car why not save more finance charges by saving for 100% of the purchase and earn the finance charges back to your wallet....

See: a penny saved is a penny earned (sometimes two pennies earned).
  
    

How Much Is a Human Being Worth?

 $2,909,130

Upon seeing the web site HumanForSale.com I was able to value myself at $2,909,130. I felt like a cheap discount at a 1 dollar store. How can they just value me at such a low price? According to the web site the highest male was just over 4 million dollars while the average male was worth $2,106,266.  I guess I'm a little above average but, not quite top commodity material.

I live in the United States where the average income is $40,000 per year. If the average person works 30 years they would have generated $1,200,000 just being average. If they invest in themselves they can increase income. If they invest some more wealth will be generated.

10% of $40,000 is $4000 per year. If I take that $4000 and invest it for 10% return on investment compounded annually I would realize $793,571. Then the average American person's worth is then $1,993,571 after 30 years. (Calculating this way a human being is not worth much.) Maybe there is a different way to value human beings, maybe there are some factors missing in this way of calculating.

 Betty Grable

Zig Ziglar had stated on one of his recorded lectures the value of Betty Grable's legs were worth $1,000,000 (they were insured for $1,000,000 by Lloyds of London around 1940). That got me wondering if there were other celebrities with body parts valued.

Troy Polamalu

Troy Polamalu of the Pittsburgh Steelers football team has his hair insured for $1,000,000 by Lloyds of London  (The same company who insured Betty Grable's legs) Hedi Klum had her legs insured for $2.2 Million. I wonder what the difference is from Betty Grable's legs? I think Betty's are worth more than Hedi's after you account for the value of 1940 dollars in today's dollars. (1940-->$1 Million = 2012-->$16.5 Million in real price)

It was kind of a tongue-in-cheek joking around with the celebrities insurance policies, but still you have to think these people are insuring what can be lost if these parts of their bodies are lost. Betty Grable was making about $300,000 a film when she was insured. So basically she was insuring herself for three films and some poster sales.

Really Betty was selling herself short, I'm pretty sure she wouldn't trade her legs for 1 million dollars. They are worth more to Betty than 20th Century-Fox who insured her legs. While the studio was only looking at the revenue side of what they would lose if Betty lost her legs, I'm sure Betty herself would be looking at the quality of life and her loss of mobility.

This makes the point you are worth more to yourself then others think you are worth. It also points to the idea people are worth more then meets the eye. What a human being is worth is directly related to the impact they had on others. Even Betty Grable's legs was worth a lot to many G.I.s in WWII, some who may have kept their moral up enough to make it home alive. Betty's legs motivated some moviegoers to buy tickets to see her movies which provided jobs for many people in the movie industry. How many movie industry people supported their families because of those ticket sales?

It is like the proverb "For Want of a Nail" but, in a more positive way Betty Grable was able to impact many people by having kept nice legs. Something like nice legs is relatively small but, think of the impact.

For want of a nail the shoe was lost, for want of a shoe the horse was lost; and for want of a horse the rider was lost; being overtaken and slain by the enemy,

all for want of care about a horse-shoe nail. 

-Benjamin Franklin

(The Way to Wealth 1758)

You don't just have to be some movie star or celebrity to make an impact you just have to add value to someone's life other then your own. Your value depends on the value you are to other people. Think what a parent is to a child.

Priceless is what a human being is worth because you can always add value to someone else's life.        

Wealth and Time - Time Is Money

 "Time Is Money" - Benjamin Franklin

Often it is said "time is money". Many people don't know where the phrase comes from. It comes from an letter by one of the Founding Fathers of the United States, Benjamin Franklin. There is much wisdom that comes from the past. I have outlined the highlights for me here:

My Highlights (look for your own highlights after reading what Ben Franklin wrote) : 

• Time is money - Time spent not working loses the money that could be earned and the money spent
• Credit is money - Interest on a loan is lost money to the borrower
• Money can create more money - Interest on savings creates more money
• Use your savings and end the ability to earn compound interest
• Small sums wasted over time add up to big sums wasted
• Be on time and truthful in business - people don't like to do business if you are late and dis-honest
• Little perceptions can have a big effect on your credibility
• Pay back loans on time and in full - keep your word with promises
• Keep track of what you owe - it helps keep you honest in business
• Have debt and you don't own the things in your possession - true ownership is debt paid in full
• The way to wealth is use industry and frugality, therefore wasting neither time or money
• Have faith in God's wisdom whether he blesses you or not with being wealthy