I’ve mentioned the famous Mr. Money Mustache many times on this website. He is a pretty obvious inspiration for my content. He and his wife retired at 30 while raising a kid. His entire blog was revolutionary at the time. Savings rate vs. spending rate = retirement age.

I’m not going to completely rehash his already excellent math and definitely would recommend reading his own posts: Here is “The Shockingly Simple Math Behind Early Retirement.”

He covers a little more than we have gotten to so far, especially when it comes to retirement numbers themselves. A key reminder for when I – or other people discussing FIRE (Financial Independence, Retire Early) – use the word “retirement” is that we mean work becomes optional. With a good budget and appropriately sized withdrawal rates, you could live off your investments without working again.

I’ll go over the 4% rule next time, but for now, I want to cover what I’ve had written in my budget spreadsheet for over a decade: the MMM (Mr. Money Mustache) Magic Numbers. These numbers are a monthly expense times 173, and a weekly expense times 752.

These numbers aren’t taken out of thin air; they are derived from the average 7% return post inflation from the S&P 500. Take what you spend in a week on something, and in 10 years, if that same weekly amount was instead invested into $VOO or $VTI, it would be 752 times larger.

The best example is obviously monthly expenses, as those can be so much easier to track. I’ll start with simple subscriptions and pretty standard “treat yourself” examples.

Monthly Bill	Price	Multiplier	Total Potential
Netflix	$8.99/m	173	$1,555.27
Netflix no ads	$19.99/m	173	$3,458.27
Starbucks 1 coffee 5 days	$5 x 5 $25/w	752	$18,800
Dinner for 2 1 day a week	$50/w	752	$37,600

Remember, those totals are 10 years of compounding. Is eating out at $50 a week, for either lunches or date nights, worth almost $40,000? It might be worth it for you. While Mustachianism would face-punch you for wasting that money when you could cook at home, make coffee at home, and enjoy free TV from Pluto instead of flushing money down the toilet on Netflix, these numbers are meant to be a guiding splash of water in the face.

These are choices, not necessities. I chose to spend $5 or more at Starbucks every single day for almost 10 years. Instead, of I could have had $20,000 in my investments. If we go back to our Rule of 72. That would be $37,600 now — 10 years after I stopped — without continuing to add the $25 a week to investments.

18 Year Old What Starbucks Costs Them

$5 a day 5 days a week

$25 per week

$1,300 per year

Time	Added/Grown	Total
10 years of compounding (28)	$18,800	$18,800
20 years of compounding (38)	$18,800	$56,400
30 years of compounding (48)	$18,800	$131,600
40 years of compounding (58)	$18,800	$282,000
50 years of compounding (68)	$18,800	$582,800

In case the math above doesn’t make sense: We know that the weekly cost compounded for 10 years is $18,800. We know from our Rule of 72 that a 7% return will take 10.2 years to double in value. Since the wise 18-year-old in this scenario continues to invest a small $25 per week into the S&P 500 for the second decade, the result is $18,800 x 2 + $18,800. This continues until “retirement”. Obviously, the average US retirement age is 63, not 68, but the point stands.

Investing $25 a week instead of getting a morning coffee over a standard adult lifespan has a true cost of over half a million dollars. Is your Starbucks worth $500,000 to you?

This doesn’t mean don’t spend money on what is important to you; it means budget clearly, pay yourself first so you can reach Financial Freedom as soon as possible.

~~Miniwing~~
Investor, Stoic, Pseudo-Mustachian