By The FoolProof Team
What's the key to future financial success? According to most financial planning experts, saving money. And the earlier you start, the better. Not only can you save now for short-term goals such as purchasing a car or other big-ticket items you'd like to have, but you can also save for college and more long-range goals.
Establishing savings goals early gives you maximum opportunity to take advantage of the power of compound interest and other tools in saving and financial planning.
The following strategies can help you begin to build savings.
Pay Yourself First.
Plan to set aside regularly a portion of your income from any source--allowance from your parents or money earned from doing chores, traditional teen moneymakers (pet sitting, babysitting, lawn maintenance, snow shoveling, etc.), part-time or summer jobs, or your own entrepreneurial business. Deciding what percentage or how much to save may be clearer if you determine your goals for saving: a car, college, computer system, educational travel, etc.
Select the savings instruments that will most effectively meet your goals.
Should you open a regular savings account or would some other savings instrument such as Certificates of Deposit (CD), Savings Bonds, Money Market Account (MMA) or a Coverdell Education IRA be a better choice for your purposes?
You will want to select the method of saving that will give you the greatest yield for the amount and term you plan to save. Check out the various savings plans offered by this credit union. Some of the savings plans for higher education generally used by parents may also be appropriate for students who are saving for college.
Expand your earning potential.
The more you earn, the more you can save. With some analysis and imagination, you may discover creative ways that you can earn more money if you wish in order to meet your goals. In addition to sharing tips on saving from experts and teens, Ways to Save and Make Money from the Motley Fool describes a wide-ranging number of jobs for teens and other moneymaking ideas.
Consider beginning an investment plan.
Many financial planners recommend beginning to learn about investing while you're still in high school or even middle school as a good way to get a head start on "growing wealth" for your future. Many schools have investment clubs that offer a good introduction to investing. Most of these investment clubs actually practice hands-on learning by managing real or simulated portfolios. Here's a website that provides information on investment and financial planning for teens:
- The Motley Fool
Many educational resources specifically on investing.