Starting your savings sooner

The common mistake that many investors make is neglecting to take advantage of retirement accounts because of their enthusiasm to spend or invest in
non-retirement accounts. Not investing in tax-sheltered retirement accounts
can cost you hundreds, perhaps thousands, of dollars per year in lost tax savings. Add that loss up over the many years that you work and save, and not
taking advantage of these tax reduction accounts can easily cost you tens of
thousands to hundreds of thousands of dollars in the long term. Ouch!
To take advantage of retirement savings plans and the tax savings that
accompany them, you must first spend less than you earn. Only then can you
afford to contribute to these retirement savings plans (unless you already
happen to have a stash of cash from previous savings or inheritance).
The sooner you start to save, the less painful it is each year to save enough
to reach your goals. Why? Because your contributions have more years to
compound.
Each decade you delay saving approximately doubles the percentage of your
earnings that you need to save to meet your goals. For example, if saving 5
percent per year in your early 20s gets you to your retirement goal, waiting
until your 30s to start may mean socking away 10 percent to reach that same
goal; waiting until your 40s, 20 percent. Beyond that, the numbers get truly
daunting.

If you enjoy spending money and living for today, you should be more motivated to start saving sooner. The longer that you wait to save, the more you

ultimately need to save and, therefore, the less you can spend today!