Managing Your Money


Resources/Tools



Saving

If you’re like most adults, you’re looking for the key to successful saving. Here it is, boiled down to one simple phrase—start now. No matter what stage of your life you’re currently in, make it a priority and a habit to save for your future, big-ticket items and emergencies.

There are two ways to look at saving. Saving can mean putting money aside and investing, but it can also mean living a more frugal lifestyle and cutting back on your spending. Both are important pieces of the puzzle if you want to watch your savings account grow.

Saving for your future can’t be overlooked if you want 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 you can on a regular basis and work your way up from there. It’s making savings a consistent action that matters.


::What Should You Save For?::

Let’s say you purchase a TV on credit for $1,000. If you made only the minimum payment—based on 3 percent of the outstanding loan balance—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::

Now that you know what you’re saving for, let’s look at ways to increase the amount you can put back by evaluating your expenses. Trimming back spending on wants and other unnecessary items helps us get one step closer to our savings goal. Living a more frugal lifestyle doesn’t have to mean going without. If you’re married or in a committed relationship, sit down and talk with your partner about your financial goals. Do you want to retire and travel at 55? Do you dream of 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 when interest earned on your savings is added to the principal—your initial investment—and you continue to build interest not only on your principal, but also on the interest you’ve already accrued! 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.


::Savings Chart::


Chart shows how much money you'll have by age 65, thanks to the power of compounding interest. Chart assumes a 5% 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 delaying 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! So, start saving now and continute to make it a habit.


::Cost of Delay Chart::


Chart shows how much money you'll lose by waiting a year to start saving. Chart assumes a 5% 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::