As a parent of two adult girls, aged 19 and 21, I know that it is very difficult both mentally and physically for them to save money for their future. Their spending habits have been shaped by their peers as well as the parents. The parents’ attitude towards money, how we spend and save, plays an important part too.
Of course, the worst thing about spending money habits is that it has become too easy to shop online for anything from a cosmetic soap to a smart phone. All we need is a credit or debit card from the bank and this is easily available from the banks.
We all know that we need to save for a rainy day, for a large ticket item like a car, a wedding banquet, a family holiday, the down payment for an apartment. But when do we start? Now or later… let me show you the HUGE difference between the “Now” and “Later”…
Lets look at two people, John and Mary both of the same age…
John started to save and invest $1,000 a year for 10 years from age 18 to 28, then he stopped saving when he married Mary as he had to pay for all the family expenses.
Mary did not save any money from young as she needed to invest in her looks and overall image to find a “good” husband. When she got married at age 28, being a responsible wife she decided to save and invest $1,000 a year for 47 years till she retired at age 65!
John set aside only $10,000 while Mary set aside $47,000 but at age 65, assuming the rate of return was 10% p.a., John would have accumulated $600,000 and Mary would have accumulated $360,000 only!!!There is a HUGE difference of $240,000…Why? It is because of the POWER OF COMPOUNDING INTEREST.
Money takes time to grow, the longer it has, the bigger it becomes!
Now let’s imagine John and Mary as one person, John Mary. If John Mary started saving and investing $1000 a year from age 18 to 65, he would have accumulated $960,000 at age 65. ( assuming 10% p.a. rate of return )
If John Mary procrastinates and delays his savings program a year later, from age 19 to 65, he would receive $870,000 at age 65. There is a big difference of $90,000. He less saved $1,000 but the impact is a NETT LOSS of $90,000 when he reaches age 65. So this clearly tells us not to delay our savings program.
Time is also our asset when we are young. It is never too early to start saving and investing to achieve our lifetime goal of financial security and success.
If you have decided to start saving and investing now, do meet your trusted independent financial adviser or you can contact me for a non obligatory discussion to create a flexible savings plan that will fulfill your financial goals, both short and long term goals.
Have a great day ahead! Cheers!