If you would just stop for a second and quit spending money on a few unnecessary items a month I’m sure you can figure out a way to save $200 a month.  I don’t care if you make $10 bucks an hour or $100 bucks an hour.  Start paying yourself first and put some money away every month and you’ll soon realize the magic of compound interest.  Check this out.

If you start putting away $200 bucks a month right now with a 6 percent yield you’ll end up having $32,775.87 in 10 years.  That may seem like a long time, but trust me… once you’re working in the real world 2019 will be here in no time.  

If the stock market does a little better over the next 10 years and you end up with an 8 percent yield you’ll have $36,589.21.  This is after contributing $24,000.00 (which seems like a lot, but it’s only $200 a month).

(10 years later) Now let’s say you stop contributing to the fund and just let that 32k (from the 6% interest scenario above) compound at 6 percent interest for another 10 years... you’ll have $59,632.31.  It almost doubles by just letting the interest work for you.  If you can get an 8 percent yield you’re looking at $72,750.64.

Let’s look a little further out… if you simply put away $200 bucks a month for 20 years at 6 percent interest you’ll have $92,408.18 in 2029.  Seem far out?  It’s not; the only thing far out is your bank account.  Same time frame of 20 years at 8 percent yield and you’re looking at $117,804.08.

Once again, let’s say you save for 10 years and have that $32,775.87 saved up (and 6 percent yield is a very conservative figure)… you stop putting in $200 a month, let it sit for 20 years at 6 percent interest and that 32k will be a healthy $108,494.83.  Bump that up to 8 percent interest over the 20 years and you’ve got $161,480.25.  That 2 percent difference year over year for 20 years ends up being more than $50,000.00!

Finally, imagine you’re able to put away that $200 per month for 30 years in a row.  At 6 percent interest you’ll be staring at $200,903.01 in your bank account.  Don’t tell me that you’re not a little excited.  If you can get an 8 percent annual return then watch out…$298,071.89!  You should now realize the importance of compound interest and how your money can work for you.  Look at the difference between a 6 and 8 percent yield… almost $100,000.00 by the time you’re ready to call it quits.  Think of all the golf courses you could check out with all that extra cash.  

Okay, now take a guess at how much you’ll be making in interest alone if you collect 6 percent on the $298,071.89for only one year… that's $18,384.42 in your pocket… 8 percent yield and it jumps up to $24,739.82.  These returns are very realistic for the savvy investor.  Do your homework and you can end up with an extra six figures in your bank account by the time you retire.  Compound interest is magical.  Be sure to check out The Richest Man in Babylon by George S. Clason for a beginner’s lesson on the power of compound interest.

Remember, pay yourself first.  Start a savings account that automatically takes money out of your account before you even see it or find out if your employer has an automatic savings program.  If you never see the money you’ll never even realize you don’t have it.