Budgeting Saving

The Savings Habit: Why Getting Started is Better Than Doing Nothing

One of the common excuses that people have for not saving money is that they don’t have enough to get started. It’s common to think that it’s not “worth it” to set aside money when you have a small amount to start out with. However, even if you don’t think that it’s worth the trouble to start saving, the reality is that you could benefit in the long run from developing a savings habit now — no matter how much you are able to set aside.

Compound Interest Magnifies Your Savings Over Time

Over time, your money makes money. You are paid interest when you save and invest. Even a small amount can make money over time. You might be surprised to discover that $5 per week ($20 per month) can turn into more than $9,000 after 30 years if you put it in a savings account. If you invest it in stocks, you could potentially see more than $44,000 after 30 years (of course, the hope is that over time you will begin to set aside more money than $5 per week).

With compound interest, you are paid for your initial investment, but you also receive interest payments on your accumulated earnings. Over time, this starts to add up, allowing you to earn more as your account balance grows. While it might not seem worth it to set aside so small an amount, you could be losing out over time.

Develop the Habit of Savings

Another reason to get started — no matter how little you think you have to save — is because it gets you in the habit of saving money. Good money habits require that you get used to turning these choices into regular practice. Even though you might not be able to set aside 10% of your income for saving and investing right now, getting in the habit of looking for ways to set money aside is valuable. It helps you set the tone for your money management. Make saving money a priority now, and it will remain so after you start earning more money, and you can increase your savings contributions.

The reality is that if you say you will start investing when you “have enough money,” you will never have enough. There is always something else to spend your money on. If you don’t decide to put saving money at the top of your list, you won’t make it a regular part of your finances, no matter how much you make.

Step Up Your Savings Over Time

The important thing is to get started now. Put aside some money in a high-yield savings account or an investment account each week. Even if you can only start with $5 or $10, it’s a good habit to develop.

Once you are comfortable with setting aside a few dollars a week, start looking for other ways to save money. There is a good chance that you are wasting as much as 15% of your household income each month.

This means that you can probably find ways to cut back on your spending and divert some of that wasted money toward saving and investing.

Once you develop the habit of saving, it becomes easier to make that choice. It can also become a point of pride. Make it a goal to work up to saving 10 percent of your income. Even if you can only save two or three percent right now, get started.

As you make saving a priority, you will find new ways to trim the fat from your budget and put more of your money toward your future. And, as compound interest helps magnify your efforts, you’ll be surprised at how quickly your savings can grow.

About the author

Miranda Marquit

Miranda is a freelance journalist specializing in topics related to personal finance, investing, entrepreneurship, and small business. Since receiving her M.A. in Journalism from Syracuse University, her work has appeared on a number of web sites including Wise Bread, U.S. News & World Report, Forbes, AllBusiness, and Huffington Post. She writes for the Equifax blog and the Quizzle blog, and has written extensively about credit, retirement, insurance, and taxes for a number of other corporate blogs and web sites. Follow Miranda on Twitter, @MMarquit, and check out her personal finance blog, Planting Money Seeds.


  • The stock market is too dicey for me looking forward into the immediate future. Savings accounts and CDs barely pay out any meaningful interest.

    What I’ve found that pays real returns has been to invest in crowd funding as a lender.

    The 1st is The Uhaul Investors Club, which has been reviewed by The Wall Street Journal and Money Magazine amongst others. There, individuals give hard money loans in increments of $100.00 on hard assets such as Trucks, Trailers and corporate owned real estate. This fund has over 100 million dollars in investments at the moment. Depending on the collateral and loan term the APR paid ranges from just over 3% to just under 8%.

    The second crowd funding investment I partipate in The Lending Club. The lending club makes secured and unsecured loans to individuals with anywhere from fair to excellent credit. The investor picks which borrower and loan suits them in terms of risk,term and reward.

  • Nice article if you in your early 20’s. I’m 56 and due to unfortunate events have not been able to save much at all. I’m one of those who will be working until he’s dead.

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