Save Your Money

From The New York Times:

Here’s what you really need to hear as you start your adult life: Save your money! If you want to buy a house – and not live on ramen noodles in your 60s - you’d better start saving now! In fact, saving while you’re young is critical. For example, if you bank $250 a month in an IRA starting now, in 40 years you’ll have about half a million dollars. However, if you wait to save until you’re 45, you’ll have to set aside over a thousand bucks a month to reach that same retirement goal. Also, you should be saving 10% of your paycheck on top of your IRA payments. That way, you’ll have money for fun and can save for a house.

So, how can you possibly afford to put away that much? Well, if you’re making $40,000 – which is a typical starting salary for a college-educated professional in a big city - you’ll end up with $561 in take-home pay after taxes. So 10% is only $56. You easily frittered that away last week on things you can’t even remember. If you simply save that amount instead, you’re nearly set for life. So, here’s how to cut a few corners:

• Make your own coffee. Say you spend $3.50 a day on lattes. Try the free workplace brew instead. In 10 years, you’ll have $11,000 in the bank.
  
  
• Learn to cook. A twice-a-week habit of pizza or Chinese takeout could easily cost you $10,000 in 10 years.
  
  
• Brown-bagging your lunch could save you about $23,000 a decade.
  
  
• Also, if you’re a smoker, quit now. You’ll save about $25,000 over a decade, and add years to your life, as well.

Total savings from just coffee, cooking, lunches and cigarettes over 10 years: $69,000! Enough to put a down payment on a house. One final money-saving tip: Every time you get a raise, pretend you didn’t – and bank all of it.