However, there are clear advantages to saving early that aren’t always obvious at first.

Although the current economic climate can make saving difficult, even small amounts set aside regularly can make a big difference over time. When it comes to savings and investments, time is your greatest asset. The number of years before you need to access your savings has a huge impact on how much you’ll need to save each month to achieve your goals.

For example, someone who begins saving at 25 will need to contribute far less than someone who starts at 40, to reach the same target of £350,000 by age 66 (the current pension age). As shown in the table below, the later saver would need to put away nearly three times as much each month.

A final future value of £350,000 (in today’s terms) is a solid starting point to aim for in retirement planning. While a larger pot will naturally allow for a more comfortable and flexible lifestyle, this level of savings can support a reasonable standard of living. Ultimately, your ideal target depends on when you want to retire and how you want to live.

The difference in savings contributions is due to the power of compound interest. Compounding works by generating returns not only on your original contributions but also on the returns those contributions have already earned. Over time, this creates a snowball effect meaning that your money grows faster the longer its invested. As demonstrated from the graph below, the longer your time horizon the greater the overall compounded value, compared to your actual savings.

Recent studies have demonstrated that the average worker is not saving enough to fund their desired retirement lifestyle. By contributing early, you give yourself much greater chance of meeting your goals, without having to make much larger sacrifices later in life which could force compromises to your standard of living.

With rising living costs and economic uncertainty, it’s more important than ever to ensure your money is working hard. Where you choose to save your money can have a major impact on your long-term results. Compared to a traditional savings or cash account, investing generally offers superior returns, providing a better chance of protecting or even improving your buying power in the long run.

By using the tools and resources available, such as your workplace pension scheme, you can keep things simple while building a solid foundation. Most schemes offer a choice of preselected options or individual funds which have been reviewed by a board of Trustees with the assistance of an investment consultant, making it easier to invest with confidence.

Pensions also usually include employer contributions and come with valuable tax benefits, effectively adding extra money (for free!) to your savings each month. Looking at the table above, at age 25 saving £165 might feel like a big commitment, but taking advantage of your employer’s matched pension contributions can significantly help you reach or even surpass this amount. Taken together, these features make your pension one of the most powerful and accessible ways to build long-term wealth.

When choosing an investment there are a few different asset classes to choose from, each with its own balance of risk and return. The right mix will depend on your own circumstances, goals and how long you plan to invest. The basic principle is that risk and return move together, so riskier assets such as equities generally offer higher returns.

It is important to remember that over a few months or even a year markets can fall sharply but have historically trended upwards. This means, a younger investor has a powerful advantage over later investors – time to recover. A longer investment horizon and greater time in the market, smooths out short-term volatility and gives compounding time to work. By taking on a sensible amount of risk early through an increased allocation to growth focused funds, you give your money the best chance to grow.

Building strong financial habits has made a big difference in how I manage money and plan for the future. I started by tracking my monthly spending, which helped me understand where my money was going and what I could realistically save. From there, I set up automatic transfers into my savings and investment accounts. This small step removed the need for constant decision-making and made saving feel more effortless.

I also make the most of my workplace pension, the tax relief and employer contributions are a huge boost. On the personal side, I keep my savings in ISAs to benefit from tax-free growth, and I regularly check in to ensure am receiving competitive interest rates, useful features (e.g. cashback), and efficient long-term growth.

To stay prepared, I keep three months of essential expenses in cash as an emergency fund. Everything beyond that goes into growth-focused investments aligned with my long-term goals. This routine has helped me feel more in control and confident about my financial future.

Saving and investing early may not always feel achievable, but it is one of the most powerful financial decisions you can make. Even modest contributions can grow into something meaningful, reducing the pressure later in life and helping you build financial security.

Ellie Williams, Investment Analyst – Quantum Advisory