We’ve all heard and read a thousand times how we should save on a regular basis and the younger you start the more we’ll have when getting closer to retirement. But as sure as the sun rises there will always be something that happens in your life that will make it difficult for you to part with your money to put into savings. That’s why every paycheck you should have a set portion of your salary automatically deposited into your savings account.
The later you wait to start saving, even a year or two, could mean the difference of up to $200,000 or more! Remember compounding interest? Over time your money will make more money for you.
In fact, if you want to have what we financial literacy fans call ‘fun’ here’s a link to the government’s Securities and Exchange Commission’s handy, dandy Compounded Interest Calculator. GO ahead, plug some numbers in and step back, ready to be surprised!
When you’re young and just starting out in the workforce and lucky enough to be able to join in an employee sponsored savings plan but you’re not sure if you should. Here’s the answer: Yes, definitely, do not hesitate. I hope that’s clear enough. To understand it better let’s take a look at the definition.
A pooled investment account provided by an employer that allows employees to set aside a portion of their pretax wages for retirement savings or other long-term goals (i.e. paying for college tuition, purchasing a home). Many employers match their employees’ contributions up to a certain dollar amount, or by a certain percentage.
If your employer matches all or part of your contribution, that’s like found money! Keep in mind that there may be plans that require employees to remain employed for a minimum amount of time before they are vested and eligible to withdraw employer-matched funds. ESPs can be an attractive and relatively easy way for employees to lower their taxes and save for long-term goals.
April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.