Is it Too Late to Start Saving?

To overlook the importance of saving money is to spit in the face of security. You can spend an entire lifetime working to reach your financial goals and achieving financial freedom. If, however, you don't capture some of that invested energy in the form of a savings, you're doing yourself a disservice. Use any of the financial calculators available online and see what even just a little bit of money can turn into.

Your savings and any interest should be seen as a form of safety net. It serves to carry you and any loved ones through times where money is scarcer. If that means later in life, or tomorrow, is irrelevant. Valid reasons to tap a savings account could include any of the following:

* Unemployment
* Death of a family member
* Medical expenses
* Auto repairs
* Other unplanned expenses

A savings should never be tapped for trivial purchases or moments of want rather than need. Wanting a new car and needing another car are two very different things. At it's very core, a savings is there to provide in times of need and to avoid unnecessary debt. Your debt, lest you forget, is an income for someone else.

How much is realistic? How much is enough?

Traditionally, you should attempt to save 10 percent of your net earnings, and I'm assuming you have your other retirement monies taken out before tax. This percentage you save can, in time, be raised as you receive promotions. If 10 percent is too much, then that means you have nothing left at month's end. Either you're spending too much or you're well below the poverty line. If the latter is the case, then this isn't the right place for the advice you're needing. Not yet, at least. If the former is the case, then crunch some numbers, come to your senses and get to saving.

It's also been suggested that one should have enough money for anywhere between three and six months living expenses. That means rent, food, insurance and all your other standard monthly expenditures and bills. This is no small chunk of change, so don't feel discouraged. Start with what you can and let it grow. Month for month.

Save yourself from yourself

You'll hear this message from me time and time again. Good habits are great things, but instead of trying to start one with saving... save it. AUTOMATE YOUR SAVINGS! It all starts with good intentions. Then come the distractions. You forget to transfer some of your money to savings once, twice, three times. Next thing you know you've forgotten the whole thing.

You can have the process of having a fixed portion of your net income transferred to savings by either your payroll department or your bank. Once the paperwork's done, you're more than welcome to forget saving the money. In fact, you'll be doing yourself a favor by forgetting it and thusly leaving it alone.

Just how long are you planning to wait?

Thankfully, these days we have a number of devices in place to make retirement not only possible, but potentially enjoyable. The retirement plans our parents and grandparents knew have been replaced with diversified savings and investment plans.

No one thinks about retirement in their twenties, which is a real pity. To start so young creates an enormous potential for savings growth through compounded interest and continual deposits. Run the figures in our savings interest calculator and compare the results. It'll make you want to cry. For the young people reading this, take my word for it: you think you need all that money for things now but in five years you'll only have maybe between a fifth and a tenth of the things you buy today. Where did that money go?

As one gets older, your income will increase. For those who started young enough, it only further increases your chances of a comfortable retirement. For those not fortunate enough to have already started saving, it's not hopeless. You simply have more to set aside monthly, but the chance to catch up is there. There is a limit, of course.

The choice is yours and you have the control. The amount of money you will end up with is governed by three factors, all of which you can influence to some degree.

* The amount saved you can directly control.
* The interest earned is indirectly controlled through your choice of banks, account, etc.
* The amount of time is determined by you every single day you postpone saving.

Summary

Some important points to keep in mind are the following:

* Try to save 10 percent of your take home.
* Automate the process through your payroll department or bank.
* Keep up with your pay increases. Adjust your savings accordingly.
* When you pay off a car, credit card or house, add that monthly payment to your savings. You've already been doing without it.

To get an amount saved that will guarantee your financial freedom will take time. Starting early is therefore critical for optimal results. Start with what you can and get used to leaving the money alone. Try thinking of it as just another bill to be paid. Best would be to automate the savings to lessen any temptations of spending the money by not having it already in the separate savings account. With time you will come to appreciate the scale of growth and the temptation of spending it will lessen.

Erik Kraemer is author to a small number of articles concerning diverse topics such as personal finance, creative process and travel. You can read more of his work at the savings interest calculator website.

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Erik Kraemer - EzineArticles Expert Author