It is important to start saving now! Don't think about it anymore, and get started today. There is nothing worse than procrastinating on anything in life.
The concept of building wealth steadily depends on when you start saving. If you need the money within the next few months, then you are already too late to save money. However, if you want to save money for your retirement or education 15-20 years from now, then you should start saving now.
Firstly, you need to give your savings some time to grow. To get a high return on your saved money, you will need to buy a fixed deposit account. GICs, Bonds, and stocks give high returns in the long run. GICs and Bonds require you to secure your deposits for at least 1 year.
This means that you need to start saving today, to get the benefits of it the next year. If you buy a longer-term GIC or bonds, then you can earn higher interest rates as well. If you buy stocks or GICs that provide a return on investment of 10% per year, then you will make a lot of money.
If you secure $2,000 today in a 10% ROI account, ten years later you can have $4,000. This is only assuming simple interest. If the interest rate is compounded on yearly basis, then you can have much more than $4,000. If you delay by a few years, and start late in life, then you will miss out on a lot of money.
Compounding interest means that the interest you earn on yearly basis, will be calculated as follows:
- Interest Rate already earned will be added to the principle and then multiplied by the interest rate. So, $2,000 + $200 multiplied by 10% will give you $220 in the second year. Every year, your interest earned will keep on increasing.
If you delay saving by one year, you will lose one year's worth of interest earned, and also delay your compound interest earnings. As you can see, saving right now is very important.
In addition, there is a recession these days and it can get much worse. If you start saving today, then you can avoid bankruptcy during a depression. The economic cycle is unpredictable, and it can either go into a depression or prosperity.
Many people are depending on social welfare these days because they did not save money for difficult economic times. You may lose your job next year, and you need to start saving now to prepare for any downfall.
Downfalls are a part of life, but if you start saving, your downfall won't be as devastating as it could be. So, start saving as soon as possible!