Robert Berger says that some people seem to manage their finances with ease and build up a sizeable nest egg for retirement. Other people struggle with debt and lack of savings their entire lives. It would be easy to attribute these two divergent paths to income levels, education or perhaps upbringing, but it’s not that simple. There are certainly examples of people from low-income families who manage their finances well, as well as highly paid athletes who end up filing for bankruptcy. Perhaps the secret to financial success is more fundamental.

When building your retirement savings habit, it is important that you spend time working on the principles of building great habits. As with the FREEDOM principles, it is crucial that you start small, in this example, start saving an amount that you can afford to be putting away every month.

Of course with any good savings plan, you need to be consistent. By this I mean making regular, repeated efforts to save is essential. As you start to earn more, you must extend yourself slightly each time you receive an increase or change your job.

There are so many ways to save and invest, never stop learning. You will find that all successful retirees will have studied all the way through, studying new ways to save and invest. Putting the following list together, you will start to see huge benefits. It is the power of compounding.

Successful retirement savers have these in common

1. Start saving early.

Even if they have little money to invest, successful savers begin contributing to a 401(k) at their first job. Many also open IRA accounts as their income permits. But whatever approach they take, they develop the habit of saving at the first opportunity.

This early start has two advantages. First, time is the fuel that powers compounding. By starting early, super savers let compounding work its magic. Second, they develop the habit of saving before the lure of a debt-fueled lifestyle can take hold.

2. Avoid car loans.

A fancy new car is often seen as the first sign of success. As a result, many recent graduates with mountains of student loans still manage to swing the payments on a snappy import. Successful retirement savers avoid this trap. Instead, they continue to drive the same old car they had in college. When it’s time to replace it, they typically buy used and pay cash.

3. Pay off debt slowly.

Some personal finance gurus advise people to pay off all non-mortgage debt before saving for retirement. Many successful retirement savers ignore this advice and begin investing in a 401(k) or IRA even while they pay off school loans and other debt.There are two advantages to this approach. First, with today’s interest rates it’s easy to keep the rates on student loans and other debt very low. Second, by investing early, they can take advantage of compounding for a longer period of time. Those who focus exclusively on debt repayment often miss out on employer matches and can delay retirement savings for many years.

4. Save a sizeable down payment for a home.

It can be tempting to buy a home with a small down payment. This approach enables a family to buy a home sooner. But there are several disadvantages to this approach. Down payments of less than 20 percent typically require the added cost of private mortgage insurance. And smaller down payments can encourage some people to spend more on a home than they should. A larger down payment also reduces the risk that a decline in home values will wipe out a homeowner’s equity.

5. Never stop learning.

Successful retirement savers never stop learning about personal finance and investing. They regularly learn new ways to manage their money. They stay on top of retirement savings options, such as Roth IRA conversions. And they understand basic investing concepts such as asset allocation and expense ratios.

6. Focus on investing costs.

Even seemingly small investing costs can significantly reduce a nest egg. Successful retirement savers ignore those who promote expensive and complex investment products. Instead, the core of their portfolio is in low-cost index funds that track the major stock and bond markets.

7. Ignore market fluctuations.

Successful investors don’t panic when the market is in decline. Through investing experience obtained by starting young, they’ve learned that markets are volatile. They see market declines as an opportunity to acquire more equities at a lower price. As long-term investors, they recognize that bear markets, like a controlled burn of an overgrown forest, strengthen an investment portfolio over time.

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