This Friday marks the end of America Saves Week, an annual celebration started in 2007 focused on encouraging financial literacy and helping Americans achieve their goals.
To commemorate the occasion, I want to share why saving is so important for those young and old alike. After all, saving is the foundation of financial independence and allows us to achieve our dreams.
Saving is essential when you are young
I'm sure you have heard this many times, but saving when you are young is essential. The reason is that your money will compound over time, meaning that the interest and growth you earn will also earn interest and growth. Thus, you don't have to save as much as those who don't start until later.
While the next step of deciding how much to save can quickly become difficult, aiming for a 15% savings rate of your take-home pay is a great place to start if you don't have high-interest debt. Those with debt should first focus on consolidating and paying anything above a 10% interest rate. However, if you have a company match, you should take advantage of it while making debt repayments.
Saving still matters for late starters
While some people may not have had the opportunity to save when they were young, that doesn't preclude the ability to catch up later in life. Therefore, instead of focusing on missed opportunities, research or meet with a financial planner to determine a saving and investing strategy to help you reach your retirement goals.
In my previous job, I worked with many people who hadn't started saving until later in life, and many could still retire. But determination was vital! Yes, you will have to save more aggressively or modify your goals, but precluding the chance for success is a mentality you must overcome.
Saving makes us more prepared - young or old
In addition to allowing us to achieve our goals, saving also enables us to be more prepared for when things go awry financially.
Sudden expenses, such as a new furnace or vehicle, are no longer stressful. Instead, we have ample financial reserves set aside, allowing us to focus our mental energy on more pressing matters.
It all starts with a plan
Our goal at Lundeen Abrams Advisors is to help you achieve your various ambitions, which all start with financial stability. The first step to success is ensuring you have the right plan in place. If you have yet to create a retirement plan or are unsure how well you are tracking to achieve your dreams, please contact us to set up a financial consultation today. We will look forward to meeting with you soon!