3 Reasons Why Saving Money Matters

You have to save money for it to compound, savings gives you flexibility, and the more you save, the less you need to save.

Chuck Saletta
Chuck Saletta
Apr 22, 2014 at 6:33PM
Investment Planning

We all know that saving money is an important financial goal. In this brief video, Fool contributor Chuck Saletta spells out three of the most important reasons why saving is such a critical part of each and every financial plan. Those key reasons are:

  1. You have to save for your money to compound for you.
  2. Having savings gives you flexibility when you need it.
  3. The more you save, the less you need to save.

What 20 years of saving/investing can get you

Monthly Savings0% Annual Returns3% Annual Returns6% Annual Returns9% Annual Returns
$0 $0 $0 $0 $0
$100 $24,000 $32,830 $46,204 $66,789
$250 $60,000 $82,075 $115,510 $166,972
$500 $120,000 $164,151 $231,020 $333,943
$1,000 $240,000 $328,302 $462,041 $667,887
$1,500 $360,000 $492,453 $693,061 $1,001,830

Table from author's calculations.