Maximizing Savings for Your Future for Young Adults

[WolfpackPride]

Hey,

I'm not exactly sure if this is the right place to ask this but there's no harm in trying. I am 19 and an engineering major. I've heard people older than me talking about how they are losing their pensions/retirement and that they wished that they would have started started saving money when they were my age. That got me thinking that I should start saving (or at least thinking about how I should go about it) as soon as possible. I have a savings account of course, but I've heard that I-bonds/EE-Bonds (because of interest rates) and RothIRA is the way to go. Does anybody have any suggestions or comments to perhaps point me in the right direction.

Thanks

 

[fatra2]

Finish your studies, get a job, and then you can think about your retirement.

How do you want to make an stable investment fund, when you earn what students do. Unless, you have some kind of fortune somewhere. Then the problem is solve, use your fortune money for your old age pension. Stash it somewhere under your pillow and wait.

I kidding about the pillow part.

Cheers

 

[Topher925]

I think saving money now is a good idea, not necessarily for retirement though. When you graduate with what ever degree you have you want a little bit set aside in case you have to move somewhere or maybe buy a new house or car. Unless you have student loans or other debt I would start putting a little aside in a money market savings account.

 

[turbo]

Hey,

I'm not exactly sure if this is the right place to ask this but there's no harm in trying. I am 19 and an engineering major. I've heard people older than me talking about how they are losing their pensions/retirement and that they wished that they would have started started saving money when they were my age. That got me thinking that I should start saving (or at least thinking about how I should go about it) as soon as possible. I have a savings account of course, but I've heard that I-bonds/EE-Bonds (because of interest rates) and RothIRA is the way to go. Does anybody have any suggestions or comments to perhaps point me in the right direction.

Thanks

There is no time like now to start. I started saving for college when I was about 12-13 (paper route) and though it was very little money, steady savings of small amounts eventually add up. All through my teen years, I worked all summers and saved almost all of the money. The reason that I mention savings first is that it's a good way to establish financial security. Let's say that you have an unexpected need for a couple of thousand dollars - if you have savings, you can use that and start re-building your nest-egg without borrowing money, paying interest, etc.

Bonds and other investments that either need to be held to maturity or incur penalties when you cash them early are not a good choice for someone who may need the liquidity that savings can provide. When you're young, transitioning from HS, to Uni, to a career (perhaps with a companion involved) it is really nice to have liquid assets. Once you start making enough money to comfortably save AND invest, then you can start building long-term tax-favored investments. I hope this helps. Warning: I am not a tax/financial guru - this advice comes from personal experience. I came from a family of very modest means and my parents grew up during the Great Depression, so frugality is in my blood.

 

[JasonRox]

I think it's great that you plan on saving now. A good direction for now is probably just do basic saving until you actually acquire a considerable amount.

Once you're over $3000, then I think you can start thinking about investing money and such. The $3000 can sit in a high interest bank account for now that doesn't charge you to take it out, hence it is liquid. For the reason turbo-1 said, "it is really nice to have liquid assets".

 

[Moonbear]

Definitely start saving as early as you can. I would suggest not yet locking the funds into a retirement account that has any penalties for early withdrawal, but any other sort of investment fund is a good start. A good place to start is to go to your bank and talk with them about how much you have, how much you think you can save each month, and what the best option they can offer for earning interest would be. If they think there's enough there to talk to their investment bankers and not just a CD or interest savings account, then you'll have an indication it's time to shop around for financial planners for more serious investing.

When you're young and still in school, usually the savings goals are more short-term, because you don't have huge amounts of income to set aside for the more long-term goals like retirement. You basically want to ensure you are at least saving enough to cover things like a few months rent if you suddenly couldn't find a job, then working your way up to things like car purchases or a down payment on a house. If you end up not needing that money after you get a job and earn more, then you can always shift your investments to take advantage of a longer term strategy.

Once you have a job, then you really do want to start putting money away more seriously, some for retirement every month and some toward other savings for short-term expenses...major purchases of car or home, annual vacations, emergencies, etc.

 

[waht]

Saving money should be part of life. As a college student if you earn a few bucks more than your expenses then SAVE, and get in the habit of saving throughout your life.

 

[bleedblue1234]

Warning: With such a long term outlook and the current US debt debocal and insuing inflation looming, I would STRONGLY urge you to look elsewhere than the US (commodities or foreign currency, with hard assetts preferred)

Just a warning...

 

[CRGreathouse]

Warning: With such a long term outlook and the current US debt debocal and insuing inflation looming, I would STRONGLY urge you to look elsewhere than the US (commodities or foreign currency, with hard assetts preferred)

I don't know that this is good advice. Through these recent economic troubles, my (miniority) US investments have performed better -- fallen less -- than the balance of my investments.

Of course diversifying your funds is a good idea, so if you're all in US investments you should probably buy some others.

 

[Civilized]

You won't find too many logical arguments against saving money, but watch out for these people, who are literally taking their message to the streets in the city where I live:

no way man, be a hippy, saving money is for suckers, you know man, one of these days the whole banking system is going to collapse man, and then all these people who have been slaving away at their jobs and stuffing their bogus money into the bank are going to be screwed man

but seriously, in these uncertain times it takes more effort than ever to save for the future.

 

[Redbelly98]

Warning: With such a long term outlook and the current US debt debocal and insuing inflation looming, I would STRONGLY urge you to look elsewhere than the US (commodities or foreign currency, with hard assetts preferred)

Just a warning...

But the current financial crisis is worldwide.

 

[JasonRox]

But the current financial crisis is worldwide.

I think it hit the US the hardest.

Everyone is deep in debt I hear.

 

[lisab]

I think it hit the US the hardest.

Everyone is deep in debt I hear.

Not even close...I'm not in debt (well except for a modest mortgage). I use credit cards all the time, and pay them off at the end of the month.

I am worried about my job, though. I've survived two layoffs so far...c'mon, recovery! Lots of my friends are like me, and I suspect many PFers are, too.

 

[JasonRox]

Not even close...I'm not in debt (well except for a modest mortgage). I use credit cards all the time, and pay them off at the end of the month.

I am worried about my job, though. I've survived two layoffs so far...c'mon, recovery! Lots of my friends are like me, and I suspect many PFers are, too.

Awesome!

Although I used the word "everyone" in a figure of speech for saying "a lot of people".

 

[lisab]

Awesome!

Although I used the word "everyone" in a figure of speech for saying "a lot of people".

Well then, I'm afraid...that would be true .

 

[junglebeast]

I've heard that I-bonds/EE-Bonds (because of interest rates) and RothIRA is the way to go. Does anybody have any suggestions or comments to perhaps point me in the right direction.

Let me know how you are feeling when you find all your savings tied into an account that cannot be withdrawn from as you watch inflation begin to climb and climb and climb making your money worthless and unable to re-invest in response to changing economic times.

 

[Vanadium 50]

I would be wary of taking financial advice from a bunch of people on the internet. Particularly those who spell words "assett" and "debocal". That said...

At this stage in your life, getting into the habit of savings is more important than the particular investment. Also at this stage in your life, your options are limited - you're unlikely to be investing in real estate for example. Still, there's nothing wrong with a high yield CD or savings account. I'd also look at TIPS, which pay inflation + 1.25% or so.

 

[Redbelly98]

I have a savings account of course, but I've heard that I-bonds/EE-Bonds (because of interest rates) and RothIRA is the way to go. Does anybody have any suggestions or comments to perhaps point me in the right direction.

Yes, an IRA is definitely a good idea, and I'd recommend the Roth type.

Do you know about mutual funds?

 

[WolfpackPride]

No, I don't know about them at all. Could you fill me in on what they are?