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 can 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.
The Advantage of Saving Early
It’s never too soon to start saving for retirement! As a matter of fact, the earlier you start, the better off you’ll be when you reach those Golden Years. Or better yet, maybe even retire early! Unfortunately, it’s all too common that retirement savings are not made a priority by most young adults. It’s understandable to see young adults hesitate about saving money for retirement at a comparatively early age, given that all they see are the many working years ahead of them. With the idea of retiring so many years away, 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 commodity 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. Starting the habits of saving money as early, as often and even…as much as possible will have tremendous impact on the health of your financial future.
“It is never too early to encourage long-term savings.” – Ron Lewis
One of the main reasons why 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 you earn returns on past investment returns as well as on your own original capital investment. The compounding effect of returns can really grow in the long term – especially the extremely long term. The sooner you realize the effect that compounding has on the ability to make your money grow, the sooner you can reach your financial goals.
That’s the advantage of having time on your side by starting the good money habits of saving and investing early on in your life. Starting to save and invest as soon and as often as possible, with as much as you can during your working life is the best thing you can do for your financial future. It will ultimately be the foundation for your financial freedom. The thing with compounding is that it takes a long time to produce its best results. So even though patience will be needed, saving and investing on a regular basis to keep building your investment capital will help to accelerate the advantages of compounding. Take advantage of what time has to offer when it comes to compounding and watch your money grow!
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