Schwab MoneyWise ®
Schwab MoneyWise®

Why You Should Save and How Much

Save early and often.

Our Two Cents

Think of saving as paying yourself first. Consider setting up an automatic deposit to a savings account each month so you won’t be tempted to shortchange yourself.

Whether you’re working toward a short-term goal or retirement, the sooner you start, the better.

Here's why: The earlier you start saving, the smaller the percentage of your income you need to save. Conversely, the longer you wait, the larger the amount of your salary you're going to have to put away each year to reach your goal.

Start with 10%—and go up from there

Saving 10% of your income can be a good guideline for getting started, especially if you’re under 30. However, the later you begin to save, the more you should set aside

Consider this example:

Let’s say that two sisters, Julie and Olivia, each save $4,800 a year. Julie starts to invest immediately and puts away a total of $96,000 over 20 years. At that point, she stops saving and leaves her money to grow for the future. At that point, Olivia begins to save the same amount for 10 years.

If each sister makes a consistent annual interest rate of 8%, their results, which you can see below, will be very different. What made the difference? The power of time and compound interest.

The value of investing early

Thanks to compound growth, Julie earns more than five times as much as Olivia, who starts 10 years later.

Chart about the value of investing early. Julie and Olivia both invested $400 a month, but since Julie invested for 20 years, she made $237,179, vs. Olivia who invested for 10 years and made $73,666. Chart about the value of investing early. Julie and Olivia both invested $400 a month, but since Julie invested for 20 years, she made $237,179, vs. Olivia who invested for 10 years and made $73,666.
Chart about the value of investing early. Julie and Olivia both invested $400 a month, but since Julie invested for 20 years, she made $237,179, vs. Olivia who invested for 10 years and made $73,666. Chart about the value of investing early. Julie and Olivia both invested $400 a month, but since Julie invested for 20 years, she made $237,179, vs. Olivia who invested for 10 years and made $73,666.

Find out what it will take to reach your goals

No matter what you’re saving for—a car, a vacation, a down payment on a house, or retirement—determine what it will take and how long it will take to reach your goals. Use our Savings Calculator or Retirement Calculator for an easy way to get started.

Make saving a habit

Once you've gone through the budgeting process and understand where your money goes each month, start thinking about saving for the future. People who learn to save when they are young have a valuable head start. But no matter where you are in life, it’s never too late to get on the right path.

Keep learning

Find out more about how compound growth can benefit you over time, and prepare a savings plan with our eight savings fundamentals.


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Investing involves risk, including possible loss of principal.

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