How much will you earn in your lifetime & how leaky is your bucket? | Pete Wargent

One of the jobs we used to earn pocket money for as kids was from car washing.

That might not sound too bad if you grew up on the Sunshine Coast or by the beach in Noosa, but if you grew up in Yorkshire you would know that for most of the year it’s not a particularly pleasant task.

The general goal was to get the job done as quickly was possible before your hands froze.leaky bucket

We had a nearly naff old bucket at our house with a couple of small holes in it which only re-emphasised the need for demonstrating great speed between the tap in the garage and the car – you had to get to the car before all of the water leaked from the bucket.

Naturally, a huge amount of water was wasted and by the time you reached the car you’d only have a small amount of water left. The net result was making many more trips back and forth than should strictly have been necessary.

Deep down, I guess it was pretty obvious that if just a little time and effort had been spent at the outset plugging the gaps, then the whole enterprise would have been far more efficient and the entire car could have been washed ‘spick and span’ with the use of only a few buckets of water.

Lifetime earnings

How much do you think you might earn in a lifetime? Thanks to inflation, it’s much more than you might think.

NAB provide a lifetime earnings calculator here. If you type in your age today as 21 and weekly earnings of, say, $17 an hour or $650 per week, you will see that NAB’s tool shows that with a 5% per annum salary increase, your lifetime earnings will be more than $5 million!

So, when people wonder “can anyone be a millionaire?”, it’s not really so much a question of whether you can earn $1 million, it’s rather a case of whether you can keep $1 million.

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The trouble in today’s consumer-focused world, that most of us have personal finances and an investment plan which resembles a hole-filled bucket.

By the time the end of the month comes around, most people don’t seem to have enough money left to do anything at all, let alone invest in a portfolio of wealth-producing assets.

If you want to see how productive your investment plan has been to date, first calculate your net worth (all assets minus all debts and liabilities).

Then divide that number by the number of years you have been in the workforce.

If the number is substantially less than your salary, where did the rest go?


Tax would be some. What about the rest?

I’ve read some fascinating case studies where effective investors have used the power of compound growth to earn more money from investment in a few years of retirement than they did from the entire working lifetimes.

An arresting thought!


As a child, on really long and dull car journeys (essentially anything more than about 20 minutes) I would sometimes amuse myself by asking my Dad how much money he earned.growth

The amounts seemed huge to me then (like most children, the real yardstick of money for me was how many lollies it could theoretically buy) and yet today those sums represent a salary that would be illegal as they would not even remotely constitute a legal minimum wage.

The NAB figures we looked at above show that a 21 year old who earns $650 a week might expect to be pulling in nearly $300,000 per annum by retirement age thanks to the compounding effect of the assumed salary increases.

It’s exactly the same principle which investors use.

Compounding growth accelerates wealth creation, which each increase in value being greater than its preceding equivalent.

The challenge

The great challenge today is to maintain the discipline to invest a healthy portion of earnings into assets that produce a wealth-producing rate of return before you spend.

The first step is to plug the holes in the bucket.

After you have done that you’ll be ready to invest. You might even be able to splash out a few bucks for a coffee at the Car Wash Café while someone else does the car washing for you!


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Pete Wargent


Pete is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. Using a long term approach to building businesses, investing in equities, & owning a portfolio he achieved financial independence at the age of 33. Visit his blog

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