Today at TILE we talked about saving money. What really comes to mind when you think about saving? Why is it a good thing to do? Is now a good time to start?
For many young adults in the TILE community, saving is kind of hard to get your head around. You know you should save, but you probably don’t have a lot of experience doing it. Maybe even the most basic components of savings, such as yield, risk, and time horizon, make you feel like a social psychology major in advanced physics or an English-only speaker in mainland China. It’s really not as hard as you think, though. We narrowed down the process to three steps: First, have money to save. Second, set up an account. Third, make a commitment to start saving now.
Step One: Have Money to Save. Admittedly, not as straightforward as it seems. To start saving, you need money to set aside for the future. But this money can come from anywhere. Whether it’s income from a job, a percentage of a birthday gift, or the bit from your regular allowance that doesn’t go to buying another iPhone app (a.k.a. “being frugal”), you can always find a way to stash a small part of what you’ve got.
Step Two: Set Up an Account. This shouldn’t be too hard. Between financial institutions with big marketing budgets and Madison Avenue ad agencies fighting for your attention, there are a ton of firms that would absolutely love to open an account for you. The tricky part is deciding where to go. If you aren’t lucky enough to already have access to a SpendGrowGive account, look for a financial institution and/or advisor that is interested in building a relationship with young adults. When you’re setting up the account, make sure there aren’t any hidden fees that will eat up all the value you are creating.
Step Three: Make a Commitment. This step is totally up to you. Some of you might wonder whether it’s really worth it to start saving now. And you wouldn’t be alone – according to the National Foundation for Credit Counseling, nearly two in five (39%) Gen Y adults (more than any other age group!) report having no savings. Interest rates are at a historic low and the stock market is really confusing. But remember your mother’s advice about wearing clean underwear every day: You might be hit by a bus. In the world of finance, the habit of saving is like the clean underwear habit. You don’t have to do it, but it’s really going pay off if you’re hit by a bus, you max out your credit cards, or your parents decide to cut you off. In other words, don’t get caught with your pants down.
So what does this mean for the TILE Community? A recent Pew Study on Millennials said that the Gen Y demographic ranked “Being a Good Parent” (52%), “Helping Others in Need” (21%), and “Owning a Home” (20%) as much more important to them than “Having a High Paying Career” (15%). Clearly, many of you will need to depend on savings to make those dreams come true. It only takes 6 to 8 weeks for saving to become a natural habit, especially if you figure out a way to save automatically. Those first few weeks will be a bit of an adjustment, but keep the long term rewards in mind and you’ll do fine.
- Amy