In this day and age of social media, saving money for your future won’t get you many likes. Advice often heard - urging you not go out this weekend or to skip the Starbucks line tomorrow morning - can only be written so many times. But, taking a hard look at your personal finances can go a long way.
While everyone's financial situation is different, a good place to start is with the old 50-30-20 rule. This goes as follows: 50 percent of your income toward necessities, like housing and bills. Twenty percent toward financial goals, like paying off debt or saving for retirement. Finally, thirty percent of your income allocated to wants, like dining or entertainment.
If you are struggling to fill up that 20% savings bucket or putting it off, I'll often refer to the illustration below comparing saving early vs. waiting and trying to catch up. Showing the power of compounding investments overtime.
Starting at age 30 and contributing $12,000 each year for 10 years and stopping at age 40, with a 7% average return
Waiting until you are 40 and then start saving $12,000 per year for 26 years until age 65, with a 7% average return.