The best time to start socking money away by opening a savings account is now, even if you have to economize to do so. Why? The sooner you begin, the sooner you can harness the power of compounded interest.
Depositing money in or opening a savings account can be the first step in accumulating money you want for a car, a house, education, health care and your retirement.
How compound interest works is simple: You earn interest on your principal and your interest. Over time, you earn interest not only on any additional deposits you make but also on the interest that the deposits earned. And that helps your savings snowball.
Obviously, the more time you have to let your money sit, the more powerfully this principle works. That's why people who start saving aggressively in their youth enjoy such a powerful advantage. But even if you come late to a formal savings program, you're better off depositing your first dollar now than a week from today.In a recent Ally interview with George Barany, director of financial education at AmericaSaves.org, a non-profit organization that promotes saving, said first-time depositors often are surprised by how the process works: "Even people able to save only $10 to $30 a month are surprised at how much they have. It's easier than they think."
Finding the wherewithal to make deposits can be easy—if not always painless. Do you really need that cup of coffee? That taxi? That restaurant meal? Could you survive for a year without the premium cable-television service? Do the accounting yourself: you could let all that money grow by opening an online savings account at Ally Bank.