Anytime Is The Right Time To Start Saving For Retirement

By Chris Neiger | January 25, 2012 AAA

When you're a kid, being an adult seems like a long ways off. As we get older, we realize that time moves much faster than we once thought. When it comes to retirement, we need to have this perspective more than ever. If you're just getting started on saving for retirement, great! If you haven't started, then right now, meaning today, is the right time for you to start. It may seem like an impossible task no matter where you are in the process, but if you make a plan and keep to it you can start building your retirement right now.

See: It's Never Too Early To Start Saving

If You Eat out Twice a Month, You Probably Have Money to Save
The global economy is still not doing well, but many of us continue to buy products, go out to eat and splurge on small purchases. There's nothing wrong with this, unless you're spending this money and saying you don't have enough money to save. According to a report from The NPD Group, in 2008, the cost for eating out for dinner was about three times as much as cooking dinner at home. (To learn more, see Eat Healthy And Save Money.)

Building up your savings account can start with deposits as small as two trips to your local fast food restaurant. If you eat out every day for lunch, you can pack your lunch a few days a week and put that money into your savings. Don't think that will make a difference? If you cut out $8 a week from lunches each week for five years, you would have over $2,000 in your savings account. That's not a lot of money for savings, but it's a lot of money when you consider that you're not giving up much to keep that extra money.

Banking Tools Make it Easier Than Ever
Banks are all about savings right now; at least they talk that way. There are a lot of bank commercials that tell you how to automatically save money with your debit card or through automatic savings plans.

Online tools and automatic savings plans have made it easy and almost painless to put money away. Does your bank have a plan where you can round your purchases up the nearest dollar, and put the additional money into your savings plan automatically? If they do, and you find it hard to save, this may be the best way for you to save.

If you'd rather control how much money is going into your savings account, then set up a simple automatic deposit each month from your checking account to your savings account. It may sound like a no-brainer, but this simple step will add up if you stick with it year after year. (To learn more, check out Saving For Retirement: The Quest For Success.)

Compound Interest is Your Friend
If you're putting money in a low interest savings account, that's fine for getting started. However, after a while you should consider moving you money into an investment account where you can earn more money. Investment and retirement accounts will allow your money to grow through compound interest.

The more money you have in an investment account, the more it can be invested to make more money. When your initial investment earns capital, it can then be automatically reinvested to make even more money. This is the basic principal of compound interest.

Let's say you put your money into a 401(k) retirement plan. Instead of having your money sitting in a bank account earning less than 1% a year, you can put it in a 401(k) where it could earn much more. There's much more to 401(k)s than we can get into in this article, but keep in mind that the best way to build your savings is to let the savings build on its self through compound interest. (To learn more, see How To Get The Most Out Of A 401(k) Program.)

Anything is Better Than Nothing
Whether it's an automatic draft schedule, debit purchase roundups or whatever savings path you choose, always remember that anything is better than nothing. You won't have a dollar in your savings account later if you don't start putting in some change now.

Saving money is not for rich people. The wealthy can be just as bad with money as anyone else. Saving money is something we all should try to do, if we're able, and something we should all make a top priority with our personal finances.

The Bottom Line
Think of an amount you know you can handle each month and commit to saving that amount for six months. Use your online banking tools or other resources to do it automatically, so you won't have to think about it. At the end of the six months, adjust your amount if you know you can save a little more.

If you're consistent, you'll start seeing your savings account grow. With a little discipline, you'll be on your way to saving real dollars for retirement. (For more strategies to help you save, read 5 Ways To Trick Yourself Into Saving Money.)

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