At a time when Michigan's unemployment rate is up again, climbing to 7.5% in January, saving money may seem like a luxury. After all, many are trying to make ends meet today.
No matter what you're saving for -- a rainy day or a retirement that may be decades away -- even the small moves you make today can have a huge impact on your quality of life.
Amina Madden just finished nursing school and is a mother of two girls, ages 4 and 6. It's a lot of hard work.
"Their whole life I've always been in school," she said.
That whole time, even during a pandemic, Amina has managed to put money aside for a rainy day and retirement. Starting her new nursing job nursing was a great time to reassess.
"I definitely looked at everything and looked at what I wanted to save, how much I wanted to save when I wanted to maybe have access to that money," she said.
Many have had to take on debt to stay afloat. With historically low interest rates, consider refinancing debt, certified financial planner Bob Ingram said, "to create more opportunities to save money in the long run on finance costs and also maybe free up some cash flow."
"Then really you can focus on how to have that long-term approach."
The longer the term, the more powerful those savings become, thanks to compounding interest. That's when interest you've earned is added to your savings, and that interest begins to generate more interest.
"Even a small amount -- a couple hundred dollars -- can add up to literally tens of thousands of dollars over the course of 20 years," Ingram said.
Here's an example. If you can save your proposed $1,400 stimulus check and add $50 a month, at a conservative 7% interest rate your $13,000 contribution becomes $30,000.
How do you get started? If your company has a matching 401K, start saving right away. Lots of companies match 50 cents on the dollar to encourage savings.
Savings apps are another way to make it easy. Apps like Acorns and Qapital round your purchases up to the nearest dollar and invest that money.
Digit analyzes how much you have coming in and going out every day and saves what you can afford. Trim and Truebill analyze your spending looking for ways to save.
No matter how much you save, Madden says, the best method is to set it and forget it.
As Ingram was saying, it doesn't take a lot of money to grow your savings. The most powerful tool is time, so start saving today.