People who make a habit of saving regularly, even saving small amounts, are well on their way to success. It’s important to open a bank or credit union account so it will be simple and easy for you to save regularly. Then, use your savings to plan for life events and to be ready for unplanned or emergency needs.
Why should I save?
You need to save money to ensure that you are able to afford important things in life like a home or a car. Saving is also important for you long-term financial security, in the event that you encounter any health problems, and for your retirement.
How can I save?
A basic rule of thumb is this: Save what you can. Even a little bit here and there can add up over time. Especially as you save in your younger years of life, you will have more later on given the power of compound interest.
What is a savings account?
A savings account is something your bank will offer you. It typically pays a modest rate of interest. Make sure your bank is FDIC insured. This means that even if the bank runs into trouble, your small savings will be safe.
What is debt?
Debt is money you borrow today and pay back tomorrow. For instance, going to college may require you to spend money you do not have today in the hope that you will land a job tomorrow that will pay you more than you would have otherwise made. Be prudent when taking on debt as it can pile up quickly and the interest charged on it can often dramatically raise the total amount you owe.
How much money should I be willing to borrow for college?
You should borrow prudently, which means that you should only take on an amount that you feel you can reasonably expect to pay back over time. College can be a great investment, but only if you make the most of the opportunity to learn what you need to learn to have a successful job and career path. You will need to make a good income post-college to pay back your debts.
Actions You Can Take
- Start saving, form a savings habit, and pay yourself first!
- Open and keep an account at a bank or credit union that meets your needs.
- Track your savings and investments, and monitor what you own
- Plan for short-term and long-term goals
- Build up emergency savings for unexpected events
- Consult with a qualified professional on investments and other key financial matters
- Save for retirement, children’s education and other major items
Hints and Tips
- An easy way to save is to pay yourself first. That means each pay period, before you are tempted to spend money, commit to putting some in a savings account. See if you can arrange with your bank to automatically transfer a certain amount from your paycheck or your checking account to savings every month.
- People who keep track of their savings often end up saving more, because they have it on their minds. New phone apps are available to help people pass up purchases they don’t really need – you might want to try one!
- If you are making investments, it’s good to consult with a qualified professional about your plans. Before you purchase investments, be sure to build an emergency savings fund to cover your needs for at least three months. Keep the savings in an insured bank or credit union account that you can access if you need it.
- Many professionals call themselves “financial planners.” Before you hire one, ask for a description of the services offered. A good place to check the credentials of an investment advisor is your State’s consumer protection office, the State’s Attorney General’s office, or the issuing agency for any professional licenses or certifications.