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Go open a savings account at a credit union without a lot of branches, a bank that’s far away from your home and job, or a small financial institution that doesn’t offer ATM cards. Your goal is to have a “hands off” account where it’s somewhat difficult or inconvenient to access your money. This way, you won’t constantly withdraw it. Also, have your employer set up automatic payroll deductions from your paycheck to go into that “hands off” account. Even if it’s just a small amount, start your automatic savings plan immediately. If you don’t get your hands on the money, you won’t miss it as much! The earlier you start saving and investing, the better. If you save $150 a month, then invest it and earn 10% annually, here’s how it will grow:
| Your $ w/interest vs. | $ Saved at each year-end | |
| Year 1 | $1,800 | $1,980 |
| Year 2 | $3,600 | $3,967 |
| Year 3 | $5,400 | $6,267 |
| Year 4 | $7,200 | $8,808 |
| Year 5 | $9,000 | $11,615 |
| Year 10 | $18,000 | $30,726 |
| Year 20 | $36,000 | $113,905 |
| Year 30 | $54,000 | $339,073 |
See the power of compounded interest?
Note: Compounded interest can work for or against you. When you have credit card bills, you pay lots of compounded interest instead of collecting it!
Next – Day 30: Prepare to Become a Positive Financial Role Model
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Lynnette is a personal finance expert, author and speaker.