Save a Little

2009-11-15T17:56:00.000-08:00

It only takes a little savings each month to help you get ahead. The chart below shows how much you can have in your bank account if you save each month in a bank or credit union. The amounts shown are for a month and you may think that $100 is a lot, but $100 per month is just over $3.00 a day!

Today’s interest rates are very low, which is great when you borrow but not when you save. But, the discipline of saving is often the difference between financial independence and financially struggling. The money you save earns interest, which compounds over time. Compounding is when the interest you have already been paid also earns interest.

In a few years, banks will probably be paying higher rates as the economy grows again. Here’s another example with a rate of 3%:

Remember that it is important to save even when interest rates are low. The habit of saving is much more important than the interest rate. Also, notice that the difference in the charts above is much smaller when it is just a few years. Over the long term, becoming a disciplined saver combined with compound interest will help you get ahead.