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.

In this economy, it’s easier to cut expenses than to increase your income. Need an instant budget makeover? These five tips will put money in your pocket nearly immediately. Check it out:

1. Look for little ways to save on discretionary purchases. It adds up over time, so stock snacks or soda in your desk rather than hitting up the vending machines.
2. Slash your monthly bills. Many service providers are willing to offer discounts to keep you as a customer. It never hurts to ask, so call your cable provider or gym membership administrator to see if you qualify for any deals. And while I’m sure you’ve heard it a thousand times from a certain animated gecko, 15 minutes could save you a lot of money on your insurance — car or otherwise.
3. Are you still buying books and paying to rent DVDs? Beyond hard covers and paperbacks, most libraries now have extensive DVD collections. Brush up on previous years’ Oscar winners for free so you can recognize the clips from those montages on Sunday night.
4. Know when price increases go into effect. For example, gas is typically more expensive on Saturdays — when everyone needs to fill up to run errands — than on Tuesdays. Save some of your money by knowing when to find the best deals. Gasbuddy.com can help you find the lowest price in your area, too.
5. Make your money work for you. Shop around for the best interest rates on savings and money-market accounts at Bankrate.com.

Imagine you’re buying a house, and borrowing $200,000 to do it. What is the total cost of the loan? Well 6% of $200,000 is $12,000. But that’s just for the first year. Under a standard payment plan, you’ll end up paying $231,676 in interest – 116% of the original loan amount.

Let’s look at student loans next: The standard interest rate for a PLUS Loan is 8.5% APR. If you borrow $40,000 for college and are on a 20-year repayment plan, you’ll end up paying $43,311 in interest – 108% of the original loan amount.

Do you carry a balance on your credit card? Among American households with credit card debt, the average amount is about $11,000. At a typical 18% APR, if you start paying down your balance with $300 per month, it will take about 4 years, and you’ll pay $5,090 in interest – 46% of the original loan amount.

One more example: two-week “payday” loans usually cost about $15 for every $100 borrowed. So if you get a payday loan for $400, you’ll pay $60 in interest – 15% of the original loan amount.

See the pattern here? Long-term loans generally have lower annual interest rates. But over a few decades, even a low rate can really add up. The best strategy is to pay cash when you can, and only borrow when you need to. And if you have a little spare money at the end of the month, use it to get ahead on your bills and you’ll save big in the long run.

This chart compares the total costs of these different loan types:

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.

We’re now less than two months away from April 15th, the day the tax man gets his due. You may not even be thinking about your 1040 yet, but there are some very compelling benefits to filing early. Make your money work for you!

1. Luck favors the prepared. By not waiting until the last minute, you can spend a little extra time finding all the tax credits you’re eligible for. For example, you wouldn’t want to miss out on the Making Work Pay tax credit, which gives single filers an extra $400 and married couples filing jointly $800 (assuming they meet the income requirements).
2. Get your refund faster. This is the obvious one. If you’ve paid too much in taxes in 2009, get the IRS to cut you a check now before the agency is inundated in April and it may be weeks until you see your money.
3. Pay off bills sooner. It’s tempting to use that refund for something flashy and exciting — because hey, found money, right? — but if you put it toward high-interest credit-card balances or student loans, you’ll save yourself some money and get that much closer to living debt-free.
4. Avoid late fees. If you have the time now, it’s better to file your tax return early than risk filing late, especially if you owe (since you’ll have to pay interest on top of penalties).
5. Bring home a bigger paycheck. Now is a good time to review your withholdings. If you’re getting a whopper of a refund back for 2009, consider increasing your federal withholdings — you’ll get a smaller refund next year in return for a bigger paycheck now. After all, why knowingly give the government an interest-free loan?

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.)

In the wake of the earthquake in Haiti, it seems more important than ever to prepare yourself and your family for the possibility of an unforeseen natural disaster like a hurricane, blizzard, wildfire, or tornado. The American Red Cross offers its advice for the basics of preparedness, but what else do you need to be ready for anything? Read on for our take:

1. Update your homeowner’s or renter’s insurance. If you haven’t done so lately, take a minute to review your policy to make sure any new major purchases — like jewelry or a plasma TV — are covered under your existing policy. And remember that in some areas, flood, wildfire, or earthquake coverage can be extra.
2. Make an inventory of your assets. This is as important for natural disasters as it would be in the case of theft. Take photos of your most valuable possessions and keep records of serial numbers and appraisals in your safe deposit box.
3. Send copies of important documents to someone you trust. Preferably you’ll pick a friend or relative who lives in another state that wouldn’t be affected by the same natural disaster. Include copies of your bank account numbers, birth and marriage certificates, Social Security card, and a CD with a back-up of your most essential computer files.
4. Keep some cash on hand. If you already have an emergency kit (like the kind California recommends in case of earthquakes), make sure it contains enough cash to buy supplies in the event that ATMs are out due to a power outage — $500 should do the trick.
5. Set up an automatic payment plan for your regular bills. When disaster strikes, the last thing you want to worry about is when your bills are due and whether you’ll incur late fees for missing the due date. Set up BillPay for your mortgage, car loans, and other major bills and link it to a bank account that has enough to cover them for a couple of months (that’s what your emergency fund is there for, after all).

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.

MasterCard and Visa each charge a 1 percent “processing fee” for international purchases, and American Express adds 2 percent. On top of that, the issuing bank is permitted to determine its own additional surcharge.

The sneaky fees have been going on for a few years now with most consumers unaware that they’re been gouged. In 2006, the New York Times first reported on the fees and experts advise consumers to know their credit cards’ policies on foreign purchases:

“Consumers will save a lot of money if they think about using the right card when traveling, and think about it in advance,” said Jennifer Openshaw, chief executive of Openshaw’s Family Financial Network and host of “Winning Advice with Jennifer Openshaw” on ABC Radio. “Using the wrong card can add close to 10 percent to the overall cost of a given purchase,” she said. “For example, your bank might charge you 3 percent for a purchase, and the merchant might charge 6 percent to convert the charge to dollars.”

ATMs are a handy way of getting cash out in the local currency (and saves you the hassle of travelers checks). While many banks will ding you there too with an “international cash withdrawal fee” averaging $5 per withdrawal, you’ll typically get the most favorable exchange rates.

Curious how your credit cards stack up? Bankrate.com compiled this chart that compares surcharge rates at 21 credit-card issuers.