Small expenses can sneak up on you when you’re not paying close attention to your budget, but here’s a simple way to get yourself back on track.
It’s called the Rule of 752 and it reveals the cost of weekly expenses over a decade.
Explaining the Rule of 752
Simply multiply any weekly expense by 752 to see the real cost of that expense over 10 years — had you invested the money at a 7% compounded rate of return.
Check out these examples to see how small purchases can add up over time!
Morning Coffee: $20/Week
As you head into your favorite coffee shop five days a week, you may not think twice about the $4 a day tab. But take a look at it this way:
Rule of 752: $20 x 752 = $15,040
Fitness Class: $30/Week
If you supplement your regular gym membership with one of those fancy spin classes, you could easily be paying $30 a week or more! See how that adds up:
Rule of 752: $30 x 752 = $22,560
If you don’t bring your lunch to work, you’re probably running to a quick service restaurant, perhaps spending $40 a week. That’s a lot of money over 10 years:
Rule of 752: $40 x 752 = $30,080
We aren’t exactly sure who came up with the Rule of 752, but blogger Mr. Money Mustache wrote an article about it in 2011, and the math seems to work out.
For monthly expenses, he says you just multiply by 173 instead of the 752 used for weekly expenses.
If you want something to compare it to, plug your numbers into a compound interest calculator to see how your investments can grow over time.