When I started my very first summer job - lifeguarding - my father simply laid down the law. He told me that I had to save 10% of every paycheck, and we opened a checking and savings account at the local bank. My dad was the resident expert: a former CPA and manager of the family’s finances, so I just assumed this was how everyone handled their paychecks. By the end of that summer I’d saved up enough money to last me through the first part of the school year. I was completely surprised when my friends had to keep their jobs going into the academic year. What happened to their 10%? I was even more shocked to hear that none of them had saved any of their summer money – or even thought to do so. That one lesson has been invaluable to me over the years, and I’m here to spread the word!
Establishing a savings cushion is a goal of many, and it’s so much easier to do than you think:
Start small – but start! Even 10% of a summer of 1991 lifeguard’s paycheck adds up. If all you can manage now is $10 a week – do it! As an adviser, I like to recommend my clients start with a number just beyond their reach because it is easy to pull back, but really difficult to increase. If you think you can do $10 a week, try $15.
Make it habit. If you don’t trust yourself to sock money into savings at regular intervals, set up an auto-deposit from your checking account to your savings account.
Save even if you have debt. Debt should be a priority, but it should not stop you from saving a few dollars every week.
Online banking makes it easy. There are so many benefits to online banking. You get a higher interest rate than is offered at most “offline” banks; transferring money back and forth between your checking account couldn’t be easier; establishing a separate savings account apart from your checking will keep the funds even more separate in your mind – which cuts down on the potential to use the money; and you typically won’t receive an ATM card with an online account. This last benefit eliminates the 2AM cash run you know you’ll regret later.
Check out Geezeo’s new marketplace which makes selecting an online bank even easier. Compare rates and minimums and get to it! Open your savings account now – and strive to save that 10%.
- Michele Steinberg, FinanceGrrl
Add New Comment
Thanks. Your comment is awaiting approval by a moderator.
Do you already have an account? Log in and claim this comment.
Add New Comment