The Art of Saving

One out of four American families have no savings at all


It seems as though everywhere we turn we hear of another financial advisor saying we need to save over a million dollars for retirement. It is very easy to give up without ever starting, if you are one of the many who haven’t saved anything at all. Before most people can find success with any sort of long-term comprehensive financial plan that an advisor recommends, they need to feel the success of their own day-to-day financial efforts.


Saving is best accomplished by forming new habits – the less disruptive and more automatic they are, the more successful they will be. It is also important to tackle only one or two changes at a time, so you are not overwhelmed. Taking one small step at a time and turning it into a financial routine is much more achievable than trying to implement a long list of time-consuming ‘recommendations’ that most people give up on.


It is important to start the routine of saving any amount of money, even if it is with no interest. Saving money takes discipline, so practise it any way you can, even if it is simply putting all your loose change in a jar every day. Once comfortable with a saving habit and seeing your money start to grow, you will become confident enough to move on to investing. Of course interest is important and makes a huge impact on wealth accumulation, but for right now it is more important to just get started. You don’t need to immediately jump from not saving a dime to investing in the stock market, just because a commissioned financial advisor said so.

The 30 Year Daily Saving Habit


In case you think that small amounts of money, or a few bad spending habits don’t make a difference, check out this chart. When that money is invested instead of wasted, it can add up to hundreds of thousands of dollars in 30 years. The Daily Savings column represents a dollar figure that is saved and invested every single day for 30 years. The 1% interest rate is what you could earn on a savings account, and 7% is the historic rate of return on the stock market. Inflation is not included in any figures.


While $5 may not seem like much when you are spending it every day, it adds up to $150 a month and $1825 a year. If you put it in a savings account, you will have $63,817 after 30 years. If you can handle the ups and downs of the stock market from one year to the next and just focus on the long-term outlook, a 7% return would grow to $185,533.


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