Banking on the Youth – Five ways young adults can learn to start saving now
By: Spencer Hagaman
Life is full of huge expenses. College. Cars. Houses. It takes smart planning and saving to be able to afford any of these things. For young adults, that can be hard because they have such little experience in the real world. Here at RevReck though, we are here to help with a list of five tips and ways to learn how to budget and to start saving for the future now:
1. Get a part-time job or a summer job.
You can’t save when there’s nothing to save. The best way to start saving money is to start earning money. Businesses and restaurants are continuously looking for young employees to work part-time and summer hours. Those whose schedules don’t have room for a part-time job can find freelance work where they have better control over their hours like babysitting and dog walking. With a little research and networking, young adults can find a plethora of different ways to start earning.
2. Create a budget. Stick to it.
There is a reason why every successful business and organization has a budget: they are extremely useful in managing money. They help to prevent overspending and to set aside a portion of income to save. Start with your bills: rent, cell phone bill, car loan, etc. Then, ask yourself how much you want to spend on food, entertainment, etc. Make sure you are not spending more than you are earning and that you saving a portion of your income. A budget is only as useful as you make it, so make sure you stick to it.
3. Open a savings account.
A savings account offers young adults the opportunity to deposit a portion of their income and grow it. Savings accounts pay a larger interest rate than a regular checking account does while being less risky than investing in the stock market. However, some banks do require a minimum account standing (sometimes several thousand dollars) to hold a savings account, so it is vital to consider interest rates as well as minimum deposits when opening a savings account.
4. Start a small investment account.
While savings accounts are a more conservative and safer way to grow money, they offer interest rates often below 1.2%. Investing in the stock market can elicit bigger gains when investments are made wisely. The stock market fluctuates though and can be very volatile. Instead of growing your money, you can lose it just as easily. My mother works for a stock brokerage and has always told me: “Don’t invest more than you’re willing to lose.” While you can create your own stock portfolio, there are many firms and companies that create a portfolio for you that matches your investment strategy and desired level of risk; all that is left for you to do is to invest. This can be a very smart for beginning investors just starting out. You can learn more about one of the trading platforms I use in my article about the Acorns To Oaks: Investing With The Acorns App.
5. Get a credit card. Build your credit.
Credit cards are good for two things: emergencies and building your credit score. Credit cards allow you to buy things on credit (hence, the name) and pay for them later. Buying small things like a cup of coffee with a credit card and paying it off immediately can help establish a credit score so that when you go to take out a loan for a car or a house later on in life, you can get a better interest rate on the loan. However, credit cards are a major responsibility and can lead to major debt if used unwisely, creditcards.com is a great place to compare credit cards.
Spencer Hagaman is a content writer for RevReck.com. Want to read more from him?
Follow him at @hagaman_spencer to see more of his work.