Lead the Way, Launch Your Future
A rocket going to space needs fuel to get there. In our lives, money is that fuel. The more fuel we have, the farther we can go. Since life is a journey, we want to make it all the way to our destination without crashing and burning. You may need to refuel along the way, but by planning ahead, you can make your fuel last a long time. With the right tools, you can launch your future by building good savings habits now.
Why Save?
There are a lot of reasons to save money. You can save immediately, or in the short term, by setting aside money for a specific purchase. This is a good way to understand needs vs wants. You can save for future things like retirement or a long-term goal, by putting your money into certain accounts or even investing. The way you save is determined by your needs, and often, it’s helpful to save for short-and long-term goals at the same time.
How to Save?
If you have a job or get a weekly allowance, set aside ten percent as savings. You can save more, but ten percent is a good place to start. When you put that amount in your savings account, it can grow and earn you more money, thanks to something called Interest.
àWith savings accounts, interest is basically extra money. The credit union pays you a certain amount over time for keeping your money there. The more money in your account, the more money you can earn. Remember: Interest on savings is good; interest on loans is not.
Types of Savings Accounts
A regular savings allows you to deposit however much money you can or want over any length of time and. This type of savings is a good way to reach your goal of buying new Airpods or having an extra cushion for emergencies. Club accounts, such as vacation clubs or Christmas Clubs, allow you to save all year long for a specific purpose. Club accounts are great for saving money for that fun vacation or for Christmas shopping.
When you know what you’re saving for, you can choose the best account for your needs. This can also involve more than one account. Some people keep a regular savings and add a little to it each paycheck, then open a Christmas Club and add $50 each month so they can have $600 to spend on gifts at Christmas.
Real-World Example
Sam just got $50 for her birthday. She already has $50 from last Christmas, which makes an overall total of $100.
She wants a new pair of sneakers, a Pop-It keychain, and a new Nintendo Switch game. The keychain costs $10, the Switch game is $50, and her sneakers are $60, which makes her total $120. Based on her current savings, Sam comes up $20 short. Unless she waits and keeps saving, she is going to have to choose, because she won’t be able to buy all three items at once.
Sam could buy the game and the keychain for $60, which leaves her with $40 to put toward her sneakers. Or she could choose the keychain and sneakers for $70, with $30 leftover. This is a way for Sam to have something now while saving for the rest of her wants. Thanks to interest, she can earn more money on top of her $30 or $40 left over, which lets her ‘make’ money between now and Christmas, when she’ll get more money.
In life, you may have to choose or wait for what you want. The important thing is to remember WHY you’re making that choice. Learn all you can and practice healthy money habits now. With the right practice now, you can successfully prepare yourself to reach all the way to your destination!