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Young Savers

While saving money might not sound like something you need to think about when you’re young, that’s actually the perfect time to start. That’s because the more time you have to save, the more money you’ll have for your goals.

Saving for Your Goals

When you think of saving money, you might think about a time when you’re much older. The truth is you need to think about saving now! You have needs, wants, and goals just like everyone else. You want to buy clothes, a new computer, phone, car, and prepare for college. Of course, you also want to buy video games, go to the movies, and have fun with your friends! That’s okay. The trick is finding the right balance, so you can save enough to have the things that really matter to you.

Here’s a simple plan to save for the things that are important to you:

  1. Figure out how much it’s going to take to get what you want.
    • Example: Your first car = $2,500
  2. Figure out how long you have to save.
    • Example: “I want it now, but it’s something that will probably take about a year.”
  3. Divide the amount by the length of time.
    • Example: $2,500 divided by 12 months = $210 (rounded up)
  4. Figure out how much would need to be saved each time you get paid.
    • Example: $210 divided by two paychecks each month = $105
  5. Open a savings account and use direct deposit.
    • Example: $105 x 24 paychecks = $2,520

Here are a few things to consider about opening a savings account for your goals:

  • Direct deposit is the best way to save consistently. This means that money from your paycheck is transferred electronically to your savings account. Most employers offer this option.
  • You may have to have a parent or guardian open a “custodial savings account” if you are under age 18.
  • ESL offers savings accounts to help you reach your goals that you can open at any age.

Saving for College

Higher education can open the door to a world of opportunity. If you’re considering going to college, you know it’s going to take money—a lot of money! In recent years, the cost of attending a public university has risen nearly 51%! And, there are a lot of expenses associated with going to college beyond tuition—room, board, books, supplies, food, clothes, entertainment, etc.

Paying for the “little” expenses

Most pay for college with a combination of sources—grants, scholarships, student loans, and saving (visit Saving and Paying for College to learn more). Some students use loans to pay for personal expenses such as laptops, phones, books, etc., not knowing this significantly increases the cost of these items. What’s also important to know is that all the money you borrow for your college expenses has to be paid back at some point. So, the less you can borrow the better. That’s why saving a little to pay for these items makes a big difference. Take a look at the numbers:

Let’s say you had approximately $2,400 in college expenses (laptop, cell phone, supplies, and books).

If you paid for those items with funds from a financial aid loan, it would look like this:

$2,400 loan at 5% interest paid back over for 10 years
Your total would be $3,055.20 (120 months x $25.46 = $3,055.20)

To pay for these items with savings, you could save just $67 each month for 36 months. And your total cost would be $2,400. That’s a savings of $655.20!

It’s clear that saving is the difference maker early on in the college planning game. So, the next big question is “Where’s the best place to save?” We’re glad you asked. Here are some places you can start: