Saving for the Future? Start now!

Piggy_Banks_red_xxlThe earlier you start saving, the more you’ll benefit from compounding interest. This is the interest earned on interest payments already built up in an investment fund. The earlier you start, the larger your nest egg will grow.

Here’s an example for you. Two friends – Tracy and Jason – had different savings strategies. Tracy saved $1,000 a year for 10 years, starting at age 25. Jason saved $1,000 a year for 25 years, starting at age 40. Both earned the same 8 percent return.

Who ended up with more money at age 65? It had to be Jason, right? Wrong…Tracy benefited from her early start and the power of compounding. Here’s the breakdown (totals assume $1,000 savings is made at the beginning of each year):

Tracy: Began saving at 25 and saved for 10 years. She’s now 65 and has saved $10,000. Her savings grew to $157,437

Jason: Began saving at 25 and saved for 10 years. He’s now 65 and has saved $25,000. His savings grew to $78,954.42.

Need to talk to a financial counselor about saving money? As a member of our credit union, you can take advantage of the GreenPath program, a free financial education and counseling program. Call GreenPath at (877) 337-3399 or visit GreenPath counselors are available Monday through Thursday from 8 a.m. – 10 p.m., Friday from 8 a.m. to 7 p.m., and Saturday from 9 a.m. to 6 p.m. (EST).

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