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. Is Behati Prinsloo Starring in Adam Levine's Latest Music Video?
    2. Missing College Student Found Dead in His Car a Week After He Went Missing
    3. See Kate Moss & Cara Delevingne Pose in Trench Coats (and Nothing Else) for New Ads
    4. Black Tiger Cub Tries to Terrify, Looks Purr-fectly Precious Instead
    5. Joran van der Sloot Films Video Inside His Peruvian Prison

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. Kirsty Grant / Kirsty Grant

    See why this baby is smiling... and why his dad is cringing

    9/2/2014 5:26:01 PM +00:00 2014-09-02T17:26:01
  1. Dan Hallman / Dan Hallman/Invision/AP

    Joan Rivers remains on life support, her daughter Melissa Rivers says

    9/2/2014 5:59:58 PM +00:00 2014-09-02T17:59:58
  1. Report: ISIS kills second American journalist

    SITE Intel Group, a jihadist monitoring organization, announced on Tuesday that the Islamic militant group ISIS has killed American journalist Steven Joel Sotloff.

    9/2/2014 5:34:24 PM +00:00 2014-09-02T17:34:24
  1. Another American doctor infected with Ebola

    Another American missionary doctor has tested positive for Ebola, an aid group said Tuesday.

    9/2/2014 5:15:35 PM +00:00 2014-09-02T17:15:35