Get The Most From Your Savings With Interest
Some folks don't save because they think they can't afford to, but many more have another excuse - they don't want to go without. A dollar saved is a dollar you can't spend, right?
But that's not true. A good savings plan isn't about not spending - it's about earning. I'm talking about interest. Whether you stow your cash in a savings account, a 401k, a CD, government bonds or the stock market, you're (hopefully) going to earn a certain level of return. Think about it this way: if you can spend more of your money this year investing in your future - and less paying off debt - you can go from forking over interest to earning interest.
Of course, first you'll have to tackle that annoying debt and come up with a savings plan that's right for you, as we discussed on Tuesday and Thursday. Then comes the fun part - making more money.
In order to make saving worth your while, you'll need to earn more than inflation, or the rate at which money decrease in value - typically 3%. If you put $100 under your mattress today and take it out 30 years from now, its value will be reduced to $40, thanks to good ol' inflation. But invest that same Ben Franklin at 10% interest annually and you're looking at about $750 in 30 years. You can thank the magic of compounding. After the first year, you earn 7% interest (10% - 3% inflation), so you wind up with $107. Then, next year, you get 7% on that $107, and so on. Now say that you invested $4,000 (that's 10% of a 40K salary) instead - now you'd be looking at more than $30,400!
Whether you're saving enough for a car, your first house, a bigger house, a dream vacation, the ability to retire or just to have some financial leeway, know that your sacrifices today will pay off exponentially tomorrow. The more you save - and invest - the more you'll earn.
And if you still can't find the time or money to start saving, even though you know the interest will pay off? Sounds like you're in over your head with debt. Bankruptcy is often the most effective way to affordably lower debt obligations. Learn if bankruptcy can help you trade that debt for a more secure - and stress-free - future when you sign up for a free debt analysis with a Chicago bankruptcy lawyer or a free community financial workshop with DebtStoppers. Why be at the mercy of your money when you can put your money to work for you?