This week we’re covering a happier topic: how the same principle can help you build serious wealth for the long haul.

You already know it’s important to save for retirement. But if you are going to do it right, you need to remember two key points:

• Start saving as soon as you can: compound interest can make anyone rich, given enough time.
• Investment fees are not your friend: Even small ones will cost you big bucks down the line.

Let’s assume you plan to retire at age 65. If you start your retirement fund when you’re 25, your contributions have a full 40 years to grow. If you put $100 into your account every week, with a modest 6% return you’ll end up with about $867,000. Not bad, considering you’ll only have actually deposited $208,000.

But if you start at age 35, it’s very hard to catch up. Even if you deposit the same amount of money (by increasing your weekly contribution to $133) you’ll end up with only $583,260. Think about that: In both scenarios you put away the same amount of money, but delaying 10 years will cost you $300,000.

Now that you know when to start investing, how about where?

If you’re like most investors, you’ll end up with a managed fund, probably a mix of stocks and bonds. The most important criterion for choosing a fund is not its past performance. If you want to maximize your long-term returns (and who doesn’t?), pick a fund with low fees. Otherwise, your returns are going to pay for a money manager’s house in the Hamptons, instead of your own retirement.

For example, Vanguard is one of the biggest investment groups in the world, with over $1 trillion in managed assets. They also offer some of the lowest fees around. According to their website, Vanguard charges an average fee of 0.2%, compared to an industry average of 1.2%.

Now 1% may not seem like much, but remember, little differences add up over time. If you have $100,000 in your retirement account, that 1% is a thousand dollars – every year. In the example above, saving $100/week for 40 years will give you $867,000 (assuming a 6% return). But if you were paying 1.2% fees the whole time, your effective rate would only be 4.8%. Because of the magnifying effect of compound interest, that little fee would cost you a whopping $230,000.

Remember, no matter how old you are, the best time to save for retirement is right now. Check out Bankrate.com’s handy calculators to see how your money can work for you.

For the most part, the new rules will just stop problems before they start – like cracking down on so-called “universal default,” which previously allowed lenders to raise your interest rates if you were late on an unrelated payment. So if you pay your gas bill late, you don’t have to worry about your Visa interest rate going up (though late payments will still affect your credit score which may change the rates you’re eligible for on your next credit card).

Some of the most visible changes will affect teens and college students. If you’re under 21, you’ll need one of your parents to co-sign your application for a new credit card, for instance. And you’re unlikely to see credit card sales reps offering free t-shirts in the student center – the new rules prohibit banks from soliciting new business within 1000 feet of a college campus.

If you carry a significant balance on your credit card, the new rules could be a big help. Before your bank can raise your interest rate, they’ll need to give you 45 days written notice. And if the increase is big, you now have the option of closing your card and paying off the balance at the current rate.

And for those of you who only make minimum payments, you’re going to reminded monthly of the cost of that mistake. Starting this month, expect to see a “Minimum Payment Explanation” laying out exactly how long it will take to pay off your balance. For example, a mere $2000 on a card with an 18% APR will take 15 years to pay off if you only chip in the minimum each month. We’ve told you this before, but now you’ve got no excuse! From our perspective, this kind of transparency is what gives the consumer power.

Last but not least, watch out for annual fees on cards that used to be free. All these restrictions mean less revenue for lenders, so you can expect them to try and make up for it with annual fees. Unless you are getting some really amazing benefits, it’s probably not worth paying a fee for a credit card. Remember, it always pays to shop around for credit cards, bank accounts, and everything else.

If you own a smartphone, you’re familiar with the phrase “there’s an app for that.” Whether you have an iPhone, BlackBerry, or ‘Droid, you will want to make space for one of these useful money-minded apps to keep you on budget while on the go.

1. Mint.com Personal Finance for the Apple iPhone or iPod Touch. While not available for other phones yet, this highly-rated app offers the same range of functions that the popular money-management website does. And it’s free through the iTunes Store.
2. USAA Mobile for the iPhone and Google Android. One of the coolest features of this free app is how it lets you take photos of checks and deposit them electronically into your account.
3. Ascendo Money Personal Finance Manager for the BlackBerry. At $29.99, this is the most expensive of the bunch but it comes with software for your desktop PC that will help you make the most of its functions, including budget analysis, graphs, and bill reminders.
4. BillTracker for the iPhone. This interactive database app will remind you when your bills are due and the amount you have to pay. At only 99¢, it’s cheap for peace of mind.
5. Google Finance for the Android. Exclusive to the ‘Droid, this free app gives you real-time stock quotes, finance news, and syncing with any financial data you’ve input to Google Finance (such as your investments).

In a nutshell? Stop pretending that you’re rich because it’s getting in the way of your ability to save.

Among his findings:

• More than 86 percent of all luxury cars are driven by people who are not millionaires.
• The preferred shoe brand of millionaire women? Nine West. Their favorite clothing store? Ann Taylor. (Neither of which is sold at Neiman Marcus.)
• The average millionaire pays $16 (including the tip) for a haircut.
• Forty percent of millionaires typically spend less than $10 on a bottle of wine.

“[Y]ou must take a cold hard look at your balance sheet and at your life, and determine if you would be wealthier if you would stop acting rich,” he writes.

In other words, the best way to save money is not to spend it – as hard as that might be. (And for someone who goes by Shopaholic Suzi, trust me, it’s hard.)

Personal finance writer M.P. Dunleavey at MSN Money tackled this issue in her recent column:

Rather than view this state of affairs as a curse or a failure, accept that this is, to some degree, an occupational hazard of being human (and embarking on relationships with other humans).

Acceptance alone could reduce frustration levels and prevent finger-pointing and blame.

Let yourself be balanced. If you find yourself partnered with your annoying fiscal opposite, consider that, on some level, you probably admire something about that person’s way with money (and dislike aspects of your own spending style).

In other words: You probably crave some balance from each other.

Speaking from personal experience as a newlywed, I find a kernel of truth here. My husband and I are both savers at heart, but I’m more willing to splash out for things like vacations, dining out, and fun. He keeps me accountable and I make sure we periodically reward ourselves for our good budgeting habits.

Curious if you and your mate are compatible moneywise? Try taking this 5-minute financial stress test.

Have you broken your New Year’s financial resolutions yet? If so, today’s edition will help you get back on track by pointing out the most common banking mistakes people make — and how to avoid these money pitfalls.

1. Not checking your statements. It’s easy enough for a glitch to cause an automatic debit — like a gym membership or gas bill — to post twice. If you no longer receive paper statements, do yourself a favor and check your account balances and transaction history online at least once a month.
2. Failing to balance your checkbook. In the age of online banking, balancing a checkbook may seem like something you do with a chisel and stone tablet. But if you don’t know how much money you have in your checking account, you’re far more likely to get dinged by ever-increasing overdraft fees.
3. Using automatic bill payment carelessly. Spinning off from the previous point, don’t sign up for BillPay or similar programs if you don’t know how to balance your checkbook. And on top of that it’s a good idea to keep a significant cushion — say, $200 — to protect you from mindlessly overdrawing on essential bills (and potentially wrecking your credit).
4. Relying on out-of-network ATMs. When in need of cash and miles from your preferred bank, you may think “eh, it’s only three bucks” to withdraw money from an out-of-network ATM. But do that once a week and it’s sucking $156 from your bank account per year. No longer chump change, is it?
5. Forgetting to account for cash purchases. Even if you are a champ about using Quicken or Mint.com to track your spending, keeping a tab on cash purchases still requires your attention because there’s no electronic record of it. Either keep your receipts and record your cash spending manually or keep a close eye on whatever you withdraw from the ATM.

Overall, 46.1 percent of American households reported holding debt on credit cards. But a look at who is holding that debt yields surprising results.

In the section that breaks down debt by income bracket (Page A40), the report shows a peak of debtors in the 60 to 80th percentile of income (with a median salary of $71,500), with 62.1 percent of households in this bracket carrying a credit-card balance — well above the average. The bracket with the lowest percentage of debtors was the 20th percentile and under (earning a median salary of $12,300 and a debt rate at 25.7 percent). In other words: the very poorest among us.

This trend may seem counterintuitive — you would expect the poorest people to be the most in debt, and those who make more than the average household to be better financially situated — but it actually makes perfect sense.

Debt peaks among households just above the median income level because these are the people most likely to live beyond their means to try to keep up with the Joneses. And those in the 20th percentile and under are the least likely to carry credit-card debt because they don’t qualify for as many credit options in the first place (and are unlikely to qualify in the future given the new, stricter lending standards).

As for the people in the top decile of income, they are, essentially, the Joneses. And as such should really work on shedding that debt — with a median salary of $206,900, a debt rate of 40.6 percent is still too high when they’re the ones most able to afford life’s luxuries.

The four biggest carriers levied a holiday air-travel surcharge  – labeled “miscellaneous surcharge” on your e-ticket receipt — of $10 each way on all domestic flights on December 19 and 26-27, and again on January 2-3, 1010. (Southwest is the only major airline that has elected not to impose the fee.)

It’s probably cold comfort that this practice has a lesson to teach in supply and demand. The Official Airline Guide estimates that available seats on domestic flights in November and December have dropped 3.3 percent this year, meaning competition for the seats that remain is stiffer over the heaviest travel months of the year.

As Newsweek reports, “A surcharge is a lazy way to make sure airlines rake in big bucks this year. It’s easier to slap a $10 surcharge onto every ticket than doing the complex calculations needed to raise prices by various amounts on thousands of routes ($8 more on one route, $18 on another, and so forth).” But flying surely beats driving if you live in Atlanta and your family’s in Boise.

If you’re up for a laugh, watch Louis C.K.’s comedy bit on how air travel is a miracle and yet nobody’s happy:

Click here to view the embedded video.

The terms of the tax credit have been expanded to include current homeowners who meet the income requirements (up to $125,000 for singles and $225,000 for marrieds) and have lived in their residence for five consecutive years out of the past eight. And the credit can’t be used to buy property that costs more than $800,000 — not that many homebuyers in this income bracket are eyeing that kind of real estate.

If you’re a low-income house hunter, there’s even more good news about programs that make homeownership more attractive. Bank programs like HSBC’s First Home Club are currently offering to match every dollar an eligible participant saves on a whopping 4-to-1 basis, up to a grant of $7,500. So that means if you saved the maximum of $1,875 over a 10- to 24-month period, you’d walk away with a sweet housing grant of $9,375.

That particularly generous program is valid only in New Jersey and New York, but you can search for other matched savings programs (also known as individual development accounts) by state in this database.

In honor of the newest addition to Econ4U’s Money Matters section, today’s tips center on how to make — and stick to — a realistic budget. If you don’t have a budget or if it’s been a while since you’ve updated the one you do have, here’s the easy way to get yourself on the right track:

1. Get yourself some goals. Ideally, these will be things you want more than the things that make you fritter your money away now. Think short term (like saving for the new television or laptop that you want to buy in the next few months), mid term (up to three years in the future, so things like cars or a down payment on a home), and long term (such as retirement or college tuition for your kids).
2. Review your income. For most people this is easy to determine – what is your monthly takehome pay after taxes? It gets trickier if you run your own business, have some freelance income, or work on tips or commission, but ultimately it should be your best estimate of the total income that comes into your bank account each month.
3. Examine your financial commitments. Now that you know what you’re taking in, what are your monthly obligations? Categories that belong in this column would include not just the essentials like your rent or mortgage, insurance premiums, groceries, and utilities, but also entertainment (like movie tickets and dinners out), shopping, hobbies, and travel. Honesty is key here — ignoring money spent on the things you enjoy is a guaranteed way to torpedo your budget’s usefulness.
4. Identify areas where you can save. This probably isn’t as hard as you think. Clearly you have more control over your spending in some of these categories rather than others. For example, shelter and utilities tend to be fixed expenses, while entertainment and cash tend to be variable expenses – things you can control in the short term. Ask yourself whether you’re too often withdrawing cash from out-of-network ATMs and getting dinged with fees every time. Or if you’re spending too much on taxis or gas instead of relying on public transportation.
5. Pay yourself first. Put the money you plan to save each month in a separate bank account and make a promise to yourself not to touch it. Don’t approach your monthly expenses with a “save whatever’s left over” mentality. Often at the end of the month, there isn’t anything left. The easiest way is to transfer money directly from your paycheck or out of your checking account — if you don’t see it, you won’t miss it as much.

It really is as simple as this, folks. A little planning goes a long way toward financial freedom.