The Long-Term Effect of Saving, and How Can Help

The Long-Term Effect of Saving, and How Can Help

How much do you need to save from your pay for your retirement?

You've heard it in the past. The early you start, the more you will save. But it's not always that straight forward. It depends on a number of factors and starting early can help you in more ways than saving more. Compounding plays a part in savings and will offer a long-term benefit, and budget software can really help manage all that.

The Benefit of Starting Early

When you start saving for retirement early, you will be able to put less in the nest egg each year but come out with more in the end. Compounding has a lot to do with this. Compound interest is applied to the end of year rate, so it will apply to the actual rate and not just on that rate that you started with.

For example, a savings account with $1,000 at the end of year one with a 20% compound interest will end up with $1,200. If nothing was added into that account by the end of the second year, the 20% interest would be applied to the $1,200 amount and not the original $1,000 amount, so in the end the balance would be $1,440.

Save Less but Gain More

If someone started saving at the age of 24 (as soon as they graduated from college) and saved just $1,000 per month, the compound interest would mean that someone who started saving 20 years later would need to save a lot more each year - or spend an extra 20 years saving. It could mean saving five times the amount than the first person just to catch up.

High amounts of saving just aren't realistic. However, not saving soon enough and benefiting from the compound interest will mean not having as much money in retirement to comfortably live or not being able to retire on time. Someone who starts early could even find that they're able to retire early without any financial stress.

You'll be surprised how much you gain thanks to compound interest if you just start now!

So How Does Help?

The question is how could possibly help you with saving and
compounding? Budget software is important to assess your long-term goals and make sure you stay on track. With you can see all your accounts at a glance, and just how much money is in that retirement pot.

It gives you the ability to look ahead to see how long it will take you to save based on the amount that you are saving right now. You will also be able to the math and work out what you will gain if you increase your monthly installments into your retirement nest egg.

At the same time, budget software lets you check your checking about, other savings accounts, debts and investments to make sure you never put too much pressure on your finances.

It's time to become a long-term saver. By starting early, not only do you get to save more but you will gain more through compound interest. You will get the financial future of your dreams, without putting too much pressure on your current financial situation. offers budget software that is perfect for helping to reach your savings goals.

Alexandria Ingham is a freelance writer with experience in technology, internet marketing and personal finance.