How important is it to begin saving money when you are young?

Asked by todd

6 Answers

Log in or sign up with email
By submitting you agree to our Terms of Service
Answered by Christopher Nesbitt, Insurance Agent in San Clemente, CA
Hi Todd. It's not just that it's important, which it is; but also it's incredibly advantageous. For example, beginning at age 25 and retiring at 65, the appropriate savings rate is 15.4%. In other words, you'll need to save $15.4% of your income to retire at 65. But starting just FIVE YEARS EARLIER, you could reach the same goal by saving just 11.1% each year. Starting EARLY is more important than saving MORE. | 01.17.15 @ 01:48
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
Todd, I was in the military and in the first week they said set some aside. I didn't do it then (but I did later). Had I done it then, I would not have missed it. Had I done it then, I would have had more "free" money later. Free? Yes, that is because compound interest converts time and principal into more cash. When you lose time, as we are all doing over days and months, we can never get it back. Time is a key ingredient in compound interest that, if removed, would make compound interest not possible. Do you have time? Do you have some money? Do you have a desire to have more money? If the answer is yes to all of these questions, then start as soon as possible. The habit will hopefully become hard to break, and you will have more money later.
| 02.11.15 @ 17:59
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
Answered by Arin Moradian, Financial Adviser in Glendale, CA
Einstein said it best, one of the greatest discovery in finance, Compounding Interest.

Start early, and let your money work for you. | 03.04.15 @ 00:22
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
L
Answered by Lidia
Todd, one of the reasons most people don't start saving for retirement at an early age is because they think they don't make enough money to afford saving. Also, they don't think that small contribution amounts can add up over the years - thanks to compound interest - and really make a difference in their retirement outcome.
It's much easier to start early and let compound interest work for you. If you wait until you're older, you'll have to set aside a much larger portion of your paycheck every month. That's why experts recommend starting at an early age.

To give you an example of how important it is to start early, here's my personal story:
I started saving 10% of my salary at age 25 when I was making $9.25 per hour and today I have over $400K in retirement savings. It wasn't easy to take 10% out of my paycheck when money was so tight, but I had to keep reminding myself that this would payoff in the end. And it did.

My personal story was featured on Vanguard.com | 01.11.16 @ 21:00
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
Answered by Caroline Gerardo, C G Barbeau in Newport Beach, CA
If employer gives matching 401(k) then do the max. Increase number of household members by one and try to net same check. Don't buy things that depreciate fast- the new car, the new fancy what's it. Make coffee at home rather than visit Starbucks. Try while you are young. | 05.31.16 @ 22:23
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
Answered by Larry Gilmore, Insurance Agent in Marysville, WA
The biggest importance to saving money while you're young is creating a saving money habit. Making it part of your routine. The next question is usually "what is the best place to save money for retirement?" and the answer is "YES". ;) The reason being is while you wait to find the perfect retirement savings device, the clock is ticking away from you. You are losing the one thing you cannot really replace without greater cost, that is "time". Time is a wonderful tool for saving for retirement, the more time you commit the less money you have to put away.

So start saving now, doesn't need to be much and while you're saving (just a bank savings account for now) research what will work best for you. When you find it, transfer the money over and you're started in saving for your retirement. | 06.21.16 @ 21:55
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 08:00
Log in or sign up with email
By submitting you agree to our Terms of Service
Free MoneyTips Membership!

Get FREE, full access to MoneyTips.com

Related Questions