Issue link: https://read.dmtmag.com/i/147844
Personal Finance By Matt Alden S., publisher of Dividend Monk, courtesy of artofmanliness.com 3 Lame Excuses for not Saving Money I t's common knowledge that if you want to be wealthy, you have to save and invest. But looking at statistics, it seems this knowledge is becoming less and less common. The United States recently recorded a negative savings rate for the first time since the Great Depression. We live in one of the most prosperous times in the history of the world, yet we're not saving. Why? Well, here's a short list of lame excuses that people give to justify not saving. 1. I'll do it later. This is a common excuse among young people and probably the lamest. A young person in their 20s thinks "I've got 60 years to save money. I need to enjoy myself now." If you're in your 20 s, NOW is the time to save. You have plenty of time to let the magic of compound interest grow your wealth. Start young and you can save less and still make more money in the long run than if you started to save later. To give you an example of the power of compound interest, consider two different people- Jack and Jill. They're both 22 years old and both have an extra $2,000 a year. Jack takes his extra $2,000 and socks it away in a IRA Account with a 12% return. Jill on the other hand spends her $2,000. Jack saves $2,000 a year for 6 years and doesn't save a dime after that.� Jill spends her extra $2,000 a year for 6 years, but decides she should start thinking about the future. She finally opens up an IRA account with the same 12% interest that Jack gets. She invests $2,000 each year until she's 65. The chart below shows the value of Jack and Jill's respective accounts when they're 22 years old. Remember that Jack only invested $12,000 while Jill invested $74,000. / OWNER OPERATOR / AUGUST 2013 / / 22 OO 0813 edit.indd 22 7/8/13 11:43 AM