Many people insist they simply can’t save for retirement. They say that by the time they receive their paycheck, the money has already been spent – on housing, utilities, car payments, groceries, clothing, etc. However, saving for your golden years is absolutely critical – and even people with small incomes do it. It takes some discipline, but not as much as you might think. The “10% Solution” has helped many people living paycheck-to paycheck amass respectable savings easily.

How?

By Paying Yourself First. It starts by taking 10% off the top of all money that comes your way – whether it’s a paycheck or a birthday check. Skim off 10% immediately and put it away. Some employers make it even easier by offering to automatically deduct 10% and sock it away for you – you don’t even have to think about it. Initially you’ll notice the lower amount on your paycheck, but most people quickly get used to having a new number to play with and they adjust their budgets and lifestyles accordingly.

Through the Magic of Compound Interest, money can grow. It lets you build interest on the interest you’ve already earned.

Here’s an example of what compound interest can look like: Joe and Moe are twin brothers. Joe goes to work as a young man and immediately begins investing in an IRA, contributing $2,000 a year for six years. Then, he stops. The IRA compounds at 12% interest per year. Moe goes to work too, but he waits seven years to start an IRA. Like his brother, he contributes $2,000 a year, but for 37 long years compared to his brother’s six. Moe, too, earns 12% per year.

Who came out ahead?

Turns out, Joe and Moe each wound up with the same amount in retirement savings: $1,200,000.

Joe contributed $12,000 total during his working life. Moe contributed $74,000 – almost six times as much as Joe. How did Joe do as well as Moe? That’s the magic of compound interest.

The lesson here for you?

Start contributing to your retirement as soon as possible and leave the money alone. Don’t touch the

principal and don’t touch the interest. Let it flourish. The longer you wait, the more compound interest you’re forfeiting. Make your money work for you. Put the 10% Solution into action today!