It’s never too soon to start saving for retirement! Unfortunately, it’s all too common that retirement savings are not made a priority by most young adults. The hesitation to start saving at a comparatively early age for retirement is understandable, given that as young adults we see so many working years ahead of us with the idea of retiring so many years away, that savings and retirement goals either get put off or not even thought about until it’s almost too late. Time is one of, if not the most precious commodities we have! Every second and every minute that goes by is time we can never get back and when it comes to money and saving, it’s the biggest advantage we have to reap great financial rewards for our future by starting good money habits early on. The habits of saving money as early, as often and even…as much as possible!
One of the main reasons why we, as young adults should start saving and investing as early as possible would be to reap the rewards of what would be sometimes known as the “magic of compounding”. Compounding is when we earn returns on past investment returns as well as on our own original capital investment. The compounding effect of returns can really grow in the long term – especially the extremely long term. That’s the advantage of having TIME on our side by starting the good money habits of saving and investing early on in our lives. Starting to save and invest as soon and as often as possible in our working life with as much as we possibly can along the way is the best thing we can do for our financial future. Compounding takes a long time to produce its best results. So, saving and investing on a regular basis to keep building our investment capital will also accelerate the advantages of compounding.
The challenge as a young adult is seeing and understanding the value of time and compounding when it comes to our financial future. When we’re young, we have our whole life ahead of us to not have to worry about it now or we feel like we don’t have the extra money to save! Often times it’s when we’re young that we are able to better make the sacrifices that (at the time) we’re not willing to make, but with a goal and a plan those sacrifices become challenges and those challenges can be met and overcome with the right attitude. It’s at that point in our lives when it is most advantageous to start saving early and often. How great would it be if by the age of 40 we could say that we could retire if we wanted to, instead of saying at age 40, I’m not sure if I’ll be able to retire in the next 20, 25, 30 years! The more aggressive we can be with how early, how often and how much we save, will determine how soon we will be able to reach our financial goals and secure our financial future.
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