By FinanceBuddy Staff Writer
Planning for retirement is a very important step in a person's life, and it should begin as early as possible. No matter what stage of your career you find yourself in, putting a little money away can go a long way for later in your life. Most people prefer a traditional Individual Retirement Account for this purpose, but a normal savings account could serve the same purpose
Let's say you have a wage of $15 per hour. If you work nine hours per day, 20 days in a month you will be making $2,700 per month. With that, you have to pay housing and food. Let's approximate food at $400 a month and housing at around $1,000, but that depends on where you live. That leaves you another $1,300 to spend that month. If you're looking to save money for retirement, you can take 20 percent, so $260 dollars every month, and put it into some sort of a savings account. You can allow that money to gain interest, not withdrawing any of it until retirement. Using the above scenario, you will gain around $3,120 after the first year, earning more each year you continue to contribute to it.
The key to this formula is pretending this money does not exist, because it will not gain any interest or added value if is removed from the account. Unless you go on some sort of ruthless spending spree, you should have plenty of extra money upon your retirement. This retirement plan all depends on your wage.