Start small and make a difference

If money earned today is more valuable than the same amount of money earned years down the road, you should start to save and invest as much of today’s money as possible. Compound interest is your friend, so take full advantage of it. But the only way for you to invest more is to save more money, and this is a difficult task for many.

There are always new “must-have” items on the market every day, that LCD TV or an iPhone. No wonder more people are chalking up huge credit card debts and defaulting on debts.

Keep in this mind, key to any financial plan is to start small and do the little things which will bring a huge difference in your finances years later. You can start by saving an additional $25 or $100 per week. The amount does not need to huge but you got to start. Once started, you are likely to continue to keep going as long as you keep everything on autopilot.

A good target will be 20 to 25% of your monthly income. Your saving rate will come into play when you retire. The success of retirement plans will be based on the various rates of saving. If one who has 40 years to retirement, he is likely to replace all their current income when they retire if he save 20%, but he will only generate less than half his current income during retirement if he only save 5%. So your savings rate really matters.