National Savings Day is Monday October 12, a good reminder to spend some time to think about your saving and spending habits and what you can do to improve if you’re not saving quite enough. Don’t think of saving as something painful. We all save in so many ways: memories, our children’s artwork, concert t-shirts, socks, pennies, the list is endless. We’re all pretty good at saving. Now, just apply those skills to saving a part of your paycheck every pay period.
Time is the key to saving
The key to saving of course is time, the earlier we begin the better so why not start today. Time of course is key to taking advantage of what many consider the eighth wonder of the world – “Compound interest is the eightth wonder of the world. He who understands it, earns it. He who doesn’t pays it”.
Remember the example from high school math, that asks, would you rather have a penny today, that doubled everyday for a month, or $1 million today as a way to explain compound interest, well that example is as true as it was then – the penny becomes $5,368,709.12, keep in mind that it’s all about the power of doubling. Same scenario but we reduce the 30 days to 27 days of doubling that penny and we end up with $671,088.64. The point is if you dedicate a percentage of your income to savings and leave it to grow over time you will have a supplemental source of income when you retire.
A good way to get started is to review your credit, request a credit report and check it for accuracy and if there are any inaccuracies have them corrected. If debt is what is keeping you from saving take advantage of a free debt counseling service. They can help you create a budget and negotiate with your creditors. Your budget should include a dedicated amount of savings that you have auto-deposited into a savings account, IRA or into your school district’s 403(b) Plan. The more difficult you make it to get access to these savings the better to take advantage of that eighth wonder of the world.