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, assuming a 10% annualized growth rate. 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. Covering your highest insurance deductible should be your first savings priority. After that, contribute enough to your employer-sponsored account to get any employer match, then contribute more to your high-yield savings account to build a full emergency fund. Once that’s done, maximize a Roth IRA and HSA, and then you can contribute more money to your employer-sponsored account.
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 low-interest 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.
Check out the clip below to learn how to increase your savings rate without feeling broke.
