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Five Steps to Saving Your (Future) Life

Saving enough money for your later life—be it retirement or, perhaps, another career entirely—doesn’t have to be as daunting as it seems. There are concrete steps you can take to make it much easier. Here are five ways to help you save more and get where you want to be.

Step 1: Start now.: The longer your investments compound, the larger they will grow. For example: A recent graduate making $32,000 at age 23 needs only to put aside 5% of his salary into his company 401(k) plan in Year One—about $30 a week—and bump the savings rate to 13% within five years to have a $1.2 million nest egg by age 65. (And that’s before adding any company match.) We’re assuming a 7% annual return, lower than the average of the past 40 years, and 2% annual raises, which is probably conservative for someone that young.

Consider: If you were to wait until age 32 to begin 401(k) contributions and followed the same schedule of investments and increases, you would have a nest egg of only $600,000 by age 65—just half of what’s possible if you started nine years earlier. Because the benefits of compounding really kick in after a few decades, every year you delay makes a big difference.

Step 2: Visualize the future.: Don’t just save for a generic state called retirement. Imagine the freedom, and joy, that wealth can buy you once your daily routine doesn’t involve heading to the office. Is moving somewhere new among your goals? Put a photo of that destination in your wallet or on the shelf above your desk. This exercise isn’t about collecting the most green rectangles. It’s about how the sun looks setting over the Caribbean from the balcony of your new home.

The more you think about your ideal life—even though you won’t get there for a couple decades—the easier it will be to skip that shopping spree today.

Step 3: Automate.: If your company sent an email every pay period asking how much you wanted to take out of your check to put in your 401(k), chances are you wouldn’t have much of a retirement account. That’s why behavioral economists urge companies to make 401(k) participation automatic, giving employees the ability to opt out, rather than offering the chance to opt in.

You should follow suit with all your savings accounts. Got kids? Set up an automatic transfer from your checking account to their college savings account. Do the same with your brokerage account, so that every two weeks you are transferring a bit of cash from your operating funds to your wealth-building funds.

Step 4: Get the match.: You wouldn’t turn down free money from your boss if it were going toward your salary, and you shouldn’t say no to extra funds when they’re going to your retirement account. Many employers will match your 401(k) contributions by 50% or 100%, up to a certain percentage of your salary, but 40% of workers in their 20s aren’t taking full advantage of this boon.

There’s nowhere else in the market where you can find a guaranteed 50% or 100% return. You owe it to yourself to jump on this opportunity, especially while you’re young.

Step 5: Make your cellphone your ally.: Your phone can do more than help you order cosmetics from Birchbox or takeout from Grubhub. Apps can help you take the emotion out of managing your finances.

One example, the app Acorns, rounds up the cost of your credit-card purchases and invests that spare change in a slate of exchange-traded funds.

Anything that makes it easier to save and invest in the short term will save you a lot of stress 20 or 30 years from now.