Smart Savings for Youth

Posted: November 16, 2006 in Blogs I'm reading!, Budget, Consumer Issues, Credit, Family, Finance For Youth, Friends, Jobs, Life, Relationships, Saving, School, Spending, Working

As promised, a couple of simple things young people can do that will provide them better protection than dependence on credit cards.

  •  Carry a $100.00 bill in your wallet. 
    • I heard this idea when I was a very young new accounts rep at a bank.  It has stuck with me since then, and I do keep that money.  The idea behind this is very simple:  If you were stranded on the side of a road, you could probably get a place to stay for a hundered dollars.  You could definitely get a meal.  You may even be able to fix your car.  Remember, hard as it may be to believe, not everybody takes plastic yet.
    • Keep the money with you, but try to forget it is there, or else you will wind up spending it.
  • Along the same lines, buy a pack of traveler’s checks, and put them somewhere safe in your car.  Especially with older, used cars (the ones I recommend), they have a tendency to break down in a place that is not near anywhere.  Use these as a sort of hazard insurance like the Benjamin!
  • Get a small checking account without checks, and put a fixed amount in there every week.  You can use your debit card anywhere you would use a credit card, and you don’t have to pay interest on the money you may take out.
  • Plan ahead.  Things are less expensive if you can plan ahead, for instance, think of how much it would cost to repair a car.  Now think about the price to do preventative maintenance.  Just don’t go nuts with it!
  • Ask a trusted family member to hold on to some money that you are saving for a specific reason.  Don’t ask about the money, and when you get your monthly satement, just review long enough to see that there are no unnatural transactions.  After that, put the statement away and resume your savings plan.
  1. As obvious as these tips may seem, its amazing how so many people don’t put these ideas in action. My only question is: Is there an advantage to opening a small checking account without checks, when I already have a savings account (as emergency fund) in ING?

  2. Wil says:

    Thanks for the comment. I agree that these tips are obvious. I checked out your site, and I noted that you were a double major in economic fields. My audience is the teen or young adult that doesn’t have this type of background, and is positioning themselves for frustration because they never received this type of advice from school or home.

    As to your question about an emergency checking account, many “professionals” will advise that young people get a credit card for use in case of an emergency. My belief is that this is not the best advice. I think you get the same benefits of having a credit card as you do with a debit card, but you don’t have to pay back interest. I advise against getting checks so this account can be specifically for emergency usage. I think your confusion might be in my usage of the word emergency. I also advocate an ’emergency fund’, which should be about 3-6 months normal expenses. The account in question is truly ‘EMERGENCY’, such as paying for repairs to an auto, or getting a place to sleep if you find yourself stranded in an unfamiliar place.

    Hope this clears it up, but if not, feel free to keep posting, and definitely keep reading! I truly appreciate the fact that you are thinking and challenging rather than accepting blindly.


  3. Thank you for your comment, Wil. I define emergency just like you do, such as unexpected auto repairs, or getting a place to sleep if I find myself stranded, etc. So, I understand from this, that having a savings account for an emergency fund is indeed the same as a checking account without checks since you are only going to use the latter as an emergency.

  4. Wil says:

    But don’t go closing out the ING account yet. I have one of those and a couple at other online banks. This is a good place for the ’emergency fund’, since they earn much better interest than brick-and-mortar banks and maintain their liquidity!

  5. I think those are great tips and the savings for youth are one very important issue because our children depend on us and our money after all.

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