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. Django Unchained Actress's Battle with LAPD Heats Up
    2. Julianna Margulies & Jimmy Fallon Play School Principals on Tonight Show (VIDEO)
    3. Get the 'Taystee' Truffle Mac 'n' Cheese from OITNB's Danielle Brooks's Birthday
    4. How The Stars of The Big Bang Theory Forged Incredible Friendships
    5. Who's Due Next? Countdown to the Birth Dates of Celebrity Babies (PHOTOS)

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. TODAY

    Generation stress? How anxiety rules the secret life of teens

    9/17/2014 12:17:58 PM +00:00 2014-09-17T12:17:58
  1. Everett Collection

    Ginger or Mary Ann? 'Gilligan' fans still ponder question

    9/17/2014 12:45:37 PM +00:00 2014-09-17T12:45:37
  1. TODAY

    video Vikings bar Adrian Peterson from team

    9/17/2014 11:51:37 AM +00:00 2014-09-17T11:51:37
  1. From Kate Hudson to Robert Duvall: Watch our Orange Room Roulette videos

    When celebrity guests visit TODAY's Orange Room, we have them play a little game called "Orange Room Roulette," where they draw a question from a fishbowl and then give an answer.

    9/17/2014 1:02:23 PM +00:00 2014-09-17T13:02:23