What’s Your Money Multiple?


You’ve earned this. You deserve it.

There are few thoughts more dangerous than this one in the world of personal finance (or anything else, for that matter). I’ve fallen victim to it myself many times in my younger years, and each time I regretted not saving the money instead.

I created this post to short-circuit your brain next time you have this self-destructive thought. When you get the urge to splurge, you’re going to picture your Money Multiple and then weigh that against the thing you’re trying to buy.

What is the Money Multiple? Simply stated, it is the value of $1 dollar today from this moment until you retire and eventually die. As morbid as that is, framing your finances with the Money Multiple in mind is powerful.

Let’s say this thing you deserve is a nice purse or the parts to custom build your own PC. This item, this trinket you adore, this object of your affection that will make your life that much better and validate your hard work costs $2000 today. Using my personal Money Multiple of 7.8x, these PC parts are taking a total of $15,611 out of my pocket!

I designed a spreadsheet to calculate your Money Multiple. You don’t need to download anything or input any information.

The assumptions for this example are below. The calculation is driven by the future value formula:

FV= PV*(1+r)^n.

Future Value = Present Value x (1+rate of return)^number of periods (years)




The table below adjusts the Money Multiple. Are you retiring in 10 years, not 30? You’re covered. Think you can get an inflation-adjusted return of 10% per annum because you’re just that good? I got you too. The vertical figures on the left margin indicate the number of years between now and retirement. The horizontal axis represents the real (inflation-adjusted) growth rate of your money had you invested it instead of spent it.

I made you live to 100 because, for the younger readers here, that isn’t too far fetched. I’ve adjusted for inflation because I don’t want you to give yourself the excuse that “a bazillion dollars when I’m old is like $5 today”. Inflation is very low now but upping it to 3% is a safer bet, given that it’s hard to trust the monkey math on inflation today.

So, what’s your Money Multiple? 

Many times when I see similar material online, it calculates how much your cash would have grown up to the point of retirement. This, however, only tells half the story. Your investments grew in value and now provide you with the cash flow you need to live on until you pass away. Buying that Gucci purse not only screws with the size of your retirement “nut”, but it also steals income that additional nut would have provided.

When I run the calculation, I get a Money Multiple of 7.8x. Those sweet PC parts cost me a total of $15,610!

Frame everything into this context: your daily Red Bull addiction, blowing your tax refund on a huge TV or vacation…you get the point.

The Money Multiple is both a serious downer and awe-inspiring. All the dumb purchases you have made will haunt you. However, it will also inspire you to sock away every last dollar you possibly can because, at least in my case, it’s not $1 but $8!



  1. Miss Balance March 16, 2017
    • Moose March 17, 2017
    • Moose March 23, 2017
  2. Lara Berger April 1, 2017
    • Moose April 2, 2017
  3. Pingback: Social Insecurity | MSoLife.com September 11, 2017
  4. Susan @ FI Ideas January 30, 2018
    • Moose January 30, 2018
  5. Ditching Your Desk March 27, 2018
    • Moose March 27, 2018
%d bloggers like this: