Why don’t we save? It a bit like exercising and eating healthier — we know we need to do it but it just doesn’t happen. In a recent study by Financial Finesse, 58% have not saved enough for retirement and 51% do not have an emergency fund. There are probably as many reasons for not saving as there are people. Some, however, are common.

I don’t make enough money to save.

If you have to choose between feeding your family today or saving for your future retirement, you should choose to feed your family. On the other hand, if your choice is to buy a daily premier cup of coffee or to save for retirement, you might consider skipping the coffee at least some of the time.

I’ll start saving tomorrow.

Procrastination — putting off until tomorrow what you could start today. Many people, when given the option of $100 today, $120 in one year or $144 in two years, will choose the $100 today. Part of it is procrastination but another factor is the struggle between instant gratification and saving for the future.

I’ll start saving when I make more money.

Interestingly, this mindset translates, for most people, into increasing spending to match their income. Choose ahead of time to keep your spending the same and use the extra money from that raise to save or to pay off debt.

Does it make a difference if I save today or save later?

As long as I save the same amount? The resounding answer is yes!

Let’s assume you decide to take that $5 you are spending each weekday on coffee and put it in a retirement account that can earn 5% a year.   You put the $100 you aren’t spending on coffee each month into the account for 10 years from age 30 to age 40. Over the course of those 10 years, you will have put $12,000 into the account. How much will be in that account at age 65 if you don’t put any more money into it? $52,584!

What if you wait until age 40 and put the same $100 a month into the account for 10 years? You will still have put $12,000 into the account. Your balance in the account at age 65 will be $32,282. That 10 years of waiting cost you over $20,000! How can that be? It’s the power of compound interest.

Want to learn more? Contact us: [email protected] or 402-502-0250.

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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