For long-term goals, the compounding of money can make a big difference. The more years you have to reach a financial goal, the more you can plan for your money to compound.
The chart below shows a 22-year old who saves $2000 each year for nine years. This person will have more money at age 65 than another person who starts saving $2000 per year at age 32 and saves for 35 years! The sooner you start, the more time you have for interest to accumulate.
|Age||Contributions Made Early||Contributions Made Later|
|22-30 (9 years)||$2,000 annually||$0|
|31-65 (35 years)||$0||$2,000 anually|
|Amount Available at 65||$579,471*||$470,249*|
|*Assumes money earns 9% return|