Why should you think about saving if your business isn't making much money to begin with? Because of the time value of money. Let's take a look:
Let’s say you save $2,000 every year for 20 years, and your investments earn 8 percent annually. If you start at age 25 and contribute until age 45 and then save nothing further, by age 65 you’d have roughly $426,000. But if you wait until age 35 to begin saving $2,000 a year for 20 years and then retire at 65, your kitty would amount to about $198,000. In both scenarios your out-of-pocket contribution is $40,000. In other words, the sooner you start saving and letting your money work for you, the more you'll have when it's time to retire.
Though I use my income for current living expenses, I'm also very serious about taking advanatage of the time value of money and maxing out how much I can put away for retirement. It's not always comfortable putting a chunk of change away in a retirement account where I can't touch it without penalty, but I've done it each year since I started my business 11 years ago and now I do it without thinking. It's become a habit--one I like very much now that I can see the results of a decade of saving.
If you're not saving, now is the time to figure out how you can. Start with $10 or $20 per week. But start. You'll be glad you did!
Financially Yours,
0 comments:
Post a Comment