Saving and investing are two very important tools that can enable you to achieve the life you dream about in the future. Right now, you are in your “learning” years — the time of life when you are preparing to enter the workplace and launch a career. Soon you will enter the “earning” years of your life, when you will begin supporting yourself, building a home, and advancing in your career. After about 40 years, this earning period will end and you will enter retirement. Who will pay your bills then? If you want to enjoy your golden years, it is very important to set aside money during the earning phase of your life so that you can live comfortably when you are no longer working.

“But I’m just a high school student,” you say. “Why is it so important to start saving and investing money now? I’ll have plenty of time later when I’m more established in my career and earning more money.” 

Along the road to financial independence, you’ll see lots of travelers with all kinds of theories about when and how to start saving for the future. But there is one key truth you should know: The earlier you start, the less money you will need to save or invest in order to reach your long-term goals.

It’s all because of a little bit of magic known as compound interest. When you put money in a place where it earns interest (or return on investment), the principle of compounding causes your money to grow faster and faster as the years go by. Even a very small amount of money — such as the $20 or $30 a month you put in vending machines — can build a huge nest egg for your retirement.

Saving Savvy