We’ve all done it.
We decide we are going to do something, or we know its something we need to do, and yet we find a way to put it off. Like many others, I used this approach during university and had to franticly binge study the night before most exams and papers were due. Fortunately, I took my finances seriously at a young age. However, I know this isn’t the case for most people.
Why do you need to start saving today? Well its simple. It will have an enormous difference in your future financials. Seriously. Saving early is the number 1 way to build wealth over your lifetime. I’ll show you an example of why.
Let’s take two twins. Jack & Heather. Jack & Heather are 20 years old today. Heather decides she wants to save $500 a month from the time she is 20 until she is 30. Jack would rather spend his 20’s living and start saving when he is 30. For both of them we will assume their investments earn a net return of 7% for the entire period.
Heather saves $500 a month for every month from 20 years old until 30 years old. By the time she is 30 she has saved up $86,009. Heather stops contributing. She never adds another dollar to her investments. She contributed $60,000 to her investments.