Learning to save is an important life skill. The earlier you develop a habit of saving the more benefits you’ll be able to capitalize on later in life. Savings is one of the fundamental building blocks to your financial success. Saving is a key to financial independence and building wealth. Think of saving as giving a gift, or paying a reward, to you!
The money you save gives you so many benefits:
- peace of mind
- purchasing power
- investment growth.
You’ll have security and peace of mind if you are ever faced with an emergency or unplanned expense. You’ll also have ready access to your cash when you need it. Having a savings reserve can help you can manage through any financial situation with less stress. A savings plan can also provide you with potential collateral and/or purchasing power when it comes to major financial purchases over the course of a lifetime. Whether it’s buying your first bike, first car or first home, if you have a substantial reserve of savings developed you have more options and will be able to position the terms of those potential loans in the most favorable light possible. You may not even need a loan and could simply buy them out-right with your own cash reserves.
However, building up huge savings amounts won’t happen overnight. Start early and develop a disciplined habit of paying yourself first and your savings will grow over time. Most banks offer some sort of automated savings option, which is a great way to keep your reserves growing without having to take any extra steps.
Savings accounts grow and provide a return on your investment through the interest they pay. There is little to no risk on the money in your savings account compared to other types of investments. Most banks compound interest, which allows your money to grow faster. It means the bank pays you interest on the amount you originally deposited and then eventually on the interest you earn over time. The amount of growth you will experience will depend on three factors:
- the amount of money you contribute
- the interest rate
- how long you keep the money in your account.
Challenge yourself with securing your own destiny. Interest income is a powerful way to put your money to work for you. Even the IRS thinks it’s a powerful income tool and will eventually tax the interest income you earn once it exceeds a certain level. So if you’re thinking about additional income streams or a second job, this is one you don’t need a college education to take advantage of! There are no age requirements or limits on when you can begin to save.
Sharon T., Banking Center Manager