Saving

Are you looking for the key to successful saving? Here it is—start now! No matter what life stage you’re in, make it a priority and a habit to save for emergencies, your future and big-ticket items.

Saving can mean putting money aside and investing, but it can also mean living more frugally and reducing your spending. Both are important if you want your savings account to grow.

Saving is critical for financial security and independence for your family. Many experts recommend saving at least 10-15 percent of your income; if that doesn’t seem doable, start contributing as much as possible on a regular basis and work your way up from there. Making savings a consistent action is what matters.

 

::What Should You Save For?::

Imagine you use credit to buy a TV for $1,000. If you made only the required minimum monthly payment and your credit card charges an 18 percent annual interest rate, it would take eight years to pay off that debt, and you’d pay an additional $684 in interest!

::Cut Back, Move Forward::

Trimming spending on wants and other unnecessary items can help you get one step closer to your savings goal. Thankfully, living a more frugal lifestyle doesn’t have to mean sacrifice. If you’re married or in a committed relationship, talk with your partner about your financial goals. Maybe you’d like to retire and travel at 55 or you’d enjoy paying cash for your next car or home. These goals will take dedication and planning. Once you’ve determined your joint financial goals, ask yourselves:


::It All Adds Up::

The more money you save and the earlier you begin saving, the more your money will grow with the help of compounding interest. Compounding interest is free money! It’s what you get when interest earned on your savings is added to the principal and you earn even more interest on that larger amount. The longer you save, the more compounding interest works in your favor.

The chart below shows how large your account can grow by age 65, depending on the age you begin saving and the amount saved weekly. For example, if you start saving $50 a week at age 30, you’ll have nearly half a million dollars by age 65. Imagine how much you’d have if you saved $100 a week!

::Savings Chart::


This chart shows how much money you'll have by age 65, thanks to the power of compounding interest. It assumes a 5 percent return, compounded annually, and assumes the saver will continue to save the same amount each week until age 65.
Age
$10

each week
$25

each week
$50

each week
20
$85,143
$212,859
$425,176
30
$48,154
$120,385
$240,768
40
$25,445
$63,614
$127,227
50
$11,504
$28,761
$57,522


This cost of delay chart shows how putting off saving, by just one year, affects the overall total in the account. For example, if you start saving $25 a week at age 21, instead of age 20, and continue to save $25 a week until you're 65, you'd lose $11,406 by waiting one year!


::Cost of Delay Chart::


This chart shows how much money you'll lose by waiting a year to start saving. It assumes a 5 percent return, compounded annually, and assumes the saver will continue to save the same amount each week until age 65.
Age
$10

each week
$25

each week
$50

each week
20
- $4,562
- $11,406
- $22,811
30
- $2,801
- $7,002
- $14,003
40
- $1,719
- $4,299
- $8,597
50
- $1,055
- $2,639
- $5,278


::More Saving Strategies::