1. Headline
  1. Headline
By John W. Schoen Senior Producer
msnbc.com

Q: I am currently taking a speech course and I will be presenting on the topic of money management. If you could please lend me a hand and tell me three major reasons why it is important to save now!Nadia, McAllen, Texas

  1. Stories from
    1. Woman Dressed as a Zombie Arrested Twice in Three Hours for Drunk-Driving
    2. Jake Gyllenhaal, Mila Kunis, Ryan Gosling Reveal Their True Screen Passions
    3. Watch Our Editor Transform for the Day of the Dead - & Steal Her Halloween Look
    4. Tulalip Tribe Denounces Washington School Shooter's Actions
    5. Pittsburgh Doctor Heads to the Streets to Treat the Homeless - and Finds Them Homes

A: Here are my three favorite reasons to save money:

1) The sooner you start saving, the longer you have to build wealth that you can use to generate income when you retire. That’s because interest compounds over time; which means you earn interest on your interest. So your first dollar of savings earns much more after the 20th year than it does after the first year. (Extra credit: Do the math.)

2) Americans have never enjoyed more ways to save with someone else helping them out. Individual Retirement Accounts let you earn money faster because you get to defer taxes while all that compound interest of investment gain is accumulating. Company sponsored 401(k) plans are even better because you employer matches your savings. You get paid to save. It’s truly “free money.”

3) In all likelihood, the Social Security system that has provided for the retirement of past generations will be insolvent (broke) by the time your college class is old enough to need it. Without private savings, you’re looking at a bleak retirement.

© 2013 msnbc.com Reprints

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

More on TODAY.com

  1. Brittany Diaz via Facebook

    Brittany Maynard to her husband: 'My heart is so full of love for you'

    10/30/2014 8:27:16 PM +00:00 2014-10-30T20:27:16
  1. TODAY

    video Celebs guess: Who will TODAY be for Halloween 2014?

    10/30/2014 7:32:19 PM +00:00 2014-10-30T19:32:19
  1. Courtesy of Erica Hill

    Why I run: Erica Hill inspired by dad’s battle with cancer

    10/30/2014 7:08:23 PM +00:00 2014-10-30T19:08:23
  1. Samantha Okazaki / TODAY

    At Home with TODAY: Jenna Wolfe shows the love in Harper's nursery

    10/30/2014 11:37:28 AM +00:00 2014-10-30T11:37:28
  1. @msjennafischer via Instagram

    Working from home: 'Office' star Jenna Fischer shares selfie with baby

    10/30/2014 11:01:20 PM +00:00 2014-10-30T23:01:20