$10 a Day Keeps Uncontrollable Debt Away
For decades, young children have been told that eating an “apple a day keeps the doctor away.” Although this daily advice about healthy eating habits is vital to their development, it is becoming increasingly important for parents to also provide their children with daily advice about how to save money. According to Project Home, 549,928 people living in the U.S. spent a night without a home in January of 2016. Among them were around 50,000 young adults (18-24) and around 35,000 children. These statistics highlight the importance of learning the valuable lessons for financial success that NuVision Federal Credit Union promotes. NuVision financial advisors encourage everyone– both young and old –to adopt strong saving habits and to make wise investment decisions.
The most valuable financial lesson that NuVision provides is the importance of saving– a habit that everyone should start early in life because saved money is necessary for retirement, as well as for emergencies and major purchases. It is estimated that today’s young adults need around $2.5 million in savings in order to retire, and although this large amount may seem unattainable, it is very manageable with adequate planning and saving. One important step of reaching this goal is to save some money each day, as these daily savings add up and can have major payoffs. For example, according to NuVision, saving just $10 a day– the equivalent of
2.65 lattes, 5 Powerball tickets, or 2.5 Big Macs –makes it possible to save nearly $450,000 over 30 years; increasing the amount saved each day can add even more to this major payoff at the end. The amount each day placed in savings could come from the money saved by buying clearance sale items at a retail store, using coupons to get lower prices, or staying home instead of going out at night. These minor adjustments in life may seem like they have only a small immediate financial impact, but they add up over time and can have a substantial effect after several years. Furthermore, they may seem unnecessary to young adults who have a long time before retirement, but waiting too long before starting to save could be just as costly as not saving enough each day; NuVision notes that 5 years could cost $266,000, with additional years costing even more. This financial cost of waiting emphasizes the need for all young adults to start saving as soon as possible.
Although daily savings help earn money, they are largely affected by the investment strategies used to save them. One of the primary reasons why it is important to invest money into savings is that the value of the deposits will increase over time. Money placed in a retirement account will earn interest based on where it is invested and the amount earned will increase as additional money is placed into the account. This interest can have significant payoffs, and it can even double or triple the amount of money placed into the account (dividing 72 by the interest rate percentage gives the number of years it takes to double the money).
These lessons about savings have encouraged me to consider my own plan for saving and investing. The engineering degree I plan to earn in college will allow me to pursue a career that makes it possible to save a large amount each day without making it difficult to live. To save, I plan to invest a significant portion of my earnings in a 401K plan that will help me be able to retire at my goal of 65-years-old– something that is becoming increasingly rare in recent times – and in an emergency fund that could help me avoid debt when faced with any unforeseen circumstances.
The assistance that NuVision provides is crucial to all young adults’ long-term financial planning. With so many people facing financial hardship in today’s society and with the average age of retirement increasing rapidly, saving a few dollars is becoming as much of an important part of each day as eating an apple.