The earlier you start, the greater the reward in the future!
If you put in $1 into a savings account at age 20, it has the opportunity to grow into $88.35 by retirement! This is why we recommend you save as much as you can early on in your financial journey. The further you age, the lower your wealth multiplier becomes.
Where should I focus on saving, and how much?
A great way to start the savings process is to open a high-yield savings account, so that your cash can do the work for you. Beyond that, we recommend contributing to the 3 tax buckets, in order to have the most flexibility:
- Taxable – Regular bank accounts, brokerage accounts
- Tax-Deferred – 401(k), Traditional IRAs
- Tax-Free – Roth IRAs, Roth 401K, HSAs
Which of my financial goals should I prioritize above others?
Depending on your age and how far along you are on your financial path, you may want to prioritize certain things above others. If you under 40 years old, you may want to consider investing over paying off debt, because the return that your army of dollar bills can get at a younger age is simply too strong to pass up. If you are starting your journey at a later age however, you may want to consider becoming debt free as quickly as possible, before beginning to save for retirement and those financial dreams.
Here are a couple of videos to explain more about saving and prioritizing:
Video: How Much You Need to Save Each Month to Become a Millionaire! (By Age)
Video: Financial Planning 101 (By Age) 2023 Edition