At what age should I start or stop saving money?

Question

I am around 24. I've never saved money. I don't know when I should start or stop saving money.

Is there an age where I should stop saving money?
Is there an age when I should start saving money?

Here's a simple formula. Take your current age and divide it by 1 to get the age you should start saving money. — JohnFx, Nov 29 '10 at 16:10
I started saving money in my single-digit years old range, allowance and quarters I earned from cleaning out the fireplace. — DarenW, Nov 30 '10 at 00:04
Last seen May 13th 2010. I was about to ask OP how the decade went. I guess we'll never know.... — JTP - Apologise to Monica, May 22 '21 at 11:51
Start as early as you can; compound interest is a wonderful thing. Continue saving until you have at least enough money to retire on based on you cost-of-living estimates at that time for the lifestyle you want to maintain. Then continue to save whatever you don't have a good reason to spend; more savings means you can do more later. Obviously balance this against legitimate quality of life spending in the meantime... but there is never a reason not to save if you don't have a reason to spend. — keshlam, Dec 27 '23 at 04:35

score 18 · Answer 1 · answered Mar 09 '10 at 11:17

While there is no age limit, bear in mind that saving money makes sense only if it doesn't delay your paying off expensive debt. If you have credit cards or expensive loans you would be best placed to focus on paying them down before saving a lot. If you save and keep debt, you'll effectively lose money as the interest on your debt will usually be higher than you can earn on savings.

Having said that, it's worth saving a small amount anyway to have as an emergency fund. As you pay off your debt, start saving the money you no longer have to pay out and it will soon pay dividends.

Oh, and don't use credit cards or expensive loans as a way to avoid saving while technically following this advice. — user253751, Nov 28 '19 at 17:46

score 16 · Accepted Answer · edited Dec 03 '10 at 20:09

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As AskAboutGadgets notes, there's no lower age limit. You current age (24) is a pretty good one; you'll have four decades or so for your money to grow and compound, allowing it to become a veritable fortune when you're ready to retire if you invest it fairly aggressively.

edited Dec 03 '10 at 20:09

CrimsonX

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answered Mar 09 '10 at 07:35

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The stock market has an average real (inflation-adjusted) rate of return of around 4 to 4.5%. That means your savings double roughly every 16-18 years. – Mar 10 '10 at 18:27
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@fennec That doesn't sound right. You shouldn't inflation-adjust for savings amount. I think you are confusing savings with spending power. Savings still double roughly every 10 years but it won't buy as much as it used to. – tp9 Sep 25 '12 at 07:52
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@tp9 - Excuse me. I am not confusing anything. I have quoted an average real rate of return (I should have added in "annualized" as well, but whatever) of 4.5%. By definition and mathematics, that means a spending power doubling in around 16 years. I then refer to this as "your savings [doubling]" instead of "the spending power associated with the contents of your savings account doubling", and I contend that it makes perfect sense for an individual pondering the potential of "hmm, savings!" to think of it in those terms (and ignore the numbers on the accounts). Please deal with it; thanks. :) – Sep 26 '12 at 01:03

JTP - Apologise to Monica · Answer 3 · 2023-12-26T21:06:06.220

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Are you working? Does your employer offer a 401(k) and if so, is there any match?

Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending.
Good luck.

As an example, I'm opening a Roth IRA for my 12 year old daughter, a 10 year head start on her retirement savings.

2010-Nov: She made good money this summer baby sitting.
2013-Jan: She's 14 now. Three deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college.
2017-July: Age 18 and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal.
2019-Nov: She turned 21 last month. Third year of college. The Roth is just shy of $45K, 2018 ended with the S&P down 4.4%, but the deposit was more than this, so the account still grew. And YTD, S&P up 28% really helped. 2020/21 deposits point to a balance over $50K by graduation even if the next 18 months are flat to down a bit.
2021-May: age 22.5 graduated last week. The Roth is at $65,300. We rode out the Covid crash and bounce back. The S&P has continued to be kind in the long run. We haven't made the 2021 deposit yet. She just got a summer job, and I now know we can make the full deposit this year. A jump to $71K with that.
2021-Dec: age 23. Total Roth bal is now $69,721. The deposit for '21 made in March '22 was another $3374.
2023-Dec: age 25, Roth balance now $109,586. Depositing the maximum allowed each year.

Note: As long as she is in the 10 or 12% marginal bracket, we will keep her retirement acct deposits going 100% to Roth accounts.

edited Dec 26 '23 at 21:06

answered Mar 09 '10 at 19:06

JTP - Apologise to Monica

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If you're not using the full 401(k) benefit, you're losing more money on taxes than you would otherwise. – Mar 10 '10 at 16:55
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Oh, and if you're not using a 401(k) match then you're just ignoring free money. – Mar 10 '10 at 18:27
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@JoeTaxpayer, time for an update to your answer! – Rocky Jul 27 '17 at 18:37
@JTP another update? – AfronPie Nov 28 '19 at 06:32
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@AfronPie - done. Fun for me to see a 9 year old post like this. Happy to update the story. – JTP - Apologise to Monica Nov 28 '19 at 15:22
@JTP-ApologisetoMonica Just curious: In that age, wouldn't have a 529 or something have made more sense? Or did she have that already? – glglgl Nov 28 '19 at 15:25
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@glglgl - yes, by age 12, we were set with college savings, the only account getting new deposits was a 529 directly funded with 2% cash back from our main credit card. This was intended to give my daughter a head start on retirement savings. – JTP - Apologise to Monica Nov 28 '19 at 17:20
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Another update!!! @JTP-ApologisetoMonica – AfronPie May 20 '21 at 11:01
@JTP-ApologisetoMonica Wow I am nearly the same age as your daughter. I wish I looked into this earlier. Guess starting 2 years ago is better than never! – AfronPie Jun 08 '21 at 02:40
@JTP-ApologisetoMonica Another update:))) It's funny because I think back to this post every time I think about investing. This gave me motivation - I am now gonna make my 3rd Roth deposit this January 1st. – AfronPie Dec 23 '21 at 05:27
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Hasn’t been long, but done. I’ll update again closer to tax time. – JTP - Apologise to Monica Dec 23 '21 at 11:27

gyurisc · Answer 4 · 2019-12-06T10:01:34.110

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There is no age limit in fact, the sooner you start the better - the sooner the money starts to compound.

There is an old Chinese proverb that I find really motivating:

The best time to plant a tree was 20 years ago. The second best time is now.

edited Dec 06 '19 at 10:01

answered Mar 09 '10 at 07:10

gyurisc

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score 3 · Answer 5 · answered Nov 28 '10 at 19:29

As all said, the age limitation thing is nothing, and saving money not necessarily means to live poor nor Skimpy, spend your needs and try to get what you need instead of what you want, the 24 years old is a good start for saving money, the whole life still in front of you

Good luck!

score 3 · Answer 6 · answered Dec 02 '10 at 13:57

It's nearly always a good idea to save for your future, if you don't already have sufficient funds to see out the rest of your days. The hardest part of the saving decision is knowing exactly what portion of your funds to save.

If we save too aggressively, we risk having an adverse impact on our everyday life and, of course, there's always the possibility that we'll never make it to old age. But if we don't save, we risk the prospect of a poverty stricken retirement.

It's not always easy to find a balance. The best solution is to make so much money that we cannot possibly spend it all!

score 2 · Answer 7 · answered Nov 28 '10 at 21:20

You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something.

In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day.

Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it.

The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway.

Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right.

score 0 · Answer 8 · answered May 21 '21 at 15:13

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"Savings" are economic form of deferred gratification, and deferred gratification is the key to success in almost everything in life.

Thus, start deferring gratification now.

answered May 21 '21 at 15:13

RonJohn

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At what age should I start or stop saving money?

8 Answers8