A recent interactive article in the New York Times offered 31 Steps to a Financial Tune Up. Step Number One was to start saving 1% of your salary. This is an excellent idea that is nearly pain free.

If you have money taken out of your paycheck before it hits your bank account, you’ll never miss it. Once you’ve done that, increasing your savings by another percentage point probably won’t hurt a bit. But over time, it could add up to six figures in additional savings.

Flickr image by TheTruthAbout...

Fact is, every year earlier in your life that you start saving for your retirement you will see a greater return on your savings, due to the magic of compounding interest. A person in their early 20s has to save  a fraction of what someone in their 40s has to save to reach the same goal. Suppose you save just one thousand dollars when you’re 20 and don’t touch it until you are 65. If you averaged of 10 percent interest on your savings per year (not an unreasonable figure) that thousand would become nearly $73,000 by the time you reach 65. Saving $1,000 when you’re 50 would only grow to $4,200 by age 65.

The one percent rule can apply to just about everything. Got some money in your wallet, take out 1% and put it in a jar. Do that for a few weeks, and you’ll have an unexpected windfall. Grocery shopping? Put something back and don’t buy it to the tune of at least 1%. Over the course of a year, that’s real savings. Driving down the road? Go just 1% slower and you’ll be saving both gas and the environment and you won’t even notice the difference in your time of arrival. Filling your bath with water? That’s right, fill it just a little less.

You get the idea. Being part of the 1% club means you will keep savings top of mind. The result is that you will probably save more than 1%. How much farther is up to you.