Financial Know-How
Start Saving Now
Right now, your biggest concerns may just be going out, having a good time, not screwing up that first job after college, and finding that special someone. We’d like to suggest one more thing you can easily think about: your financial future.
It’d be great if we could tell you that the future holds flying cars, world peace, and another championship for the Red Sox , but these are all things we can’t predict (except the Red Sox thing, that is never happening again.) What we can predict is that your future will be markedly better if you start saving now.
You’ll probably read this and think “I have student loans and credit card debt, I’m moving to a city with a crazy cost of living, and I’m not going to be making much money, why should I bother even trying to save?”
We’re glad you asked, there are 3 major reasons why you should start saving now:
- The Time Value of money
- Your responsibilities and current cost of living
- You have lots of options for investing and saving
The Time Value of Money
The time value of money is an amazing thing that is most beneficial to the young. Essentially, every dime you invest now is the equivalent of 25¢ when you’re 40 years old, or a whole dollar at 55. So even if you can only find $25 a month right now, that’s the equivalent of the 55 Year Old You putting away $250 a month. You’re basically robbing the Future-You of all that extra money if you don’t find a way to save it now.
Your Responsibilities and Cost of Living
I know what you’re thinking, “My cost of living is the very reason I’m not saving anything!”
You may be looking at things a little too "glass is half empty." Right now your cost of living is probably as low it is going to get. Sure your cost of living was lower when you were 14 years old and only needed money for trips to the mall, but there is no going back to that life. What you can go back to though is some of the basic ideas that have made life so cheap for the last ten years.
For most people, life is only going to get more expensive, so if you can build a savings habit now, it may carry with you when you reach those stages in your life that come with bigger price-tags. If you don’t start saving now, you may never start.
Your Savings and Investment Options
When you start your first real job, you may find yourself in a situation where you have many options for your new money. Just as companies have been helping you find ways to spend money, you’ll find yourself with plenty of options to save and invest money. From programs offered by your company or organization, to private savings plans and investment opportunities, you’ll find you have more options for your future than you could imagine, and hopefully you’ll take advantage of them!
A Final Thought
You might be asking if you’re just going to spend the money eventually, why not just spend it now? Simple, you’ll probably want something bigger or better tomorrow than you want today. Say you live in a res hall right now, and you know you’re probably going to live off campus your senior year. If you start saving now, when you get ready to move you’ll be ready to pay for things like deposits, furniture, and bills, expensive things that you might not be able to cover with just one or two paychecks. Perhaps you’re getting ready to graduate and you know you want to buy a car when you get your first job. By saving money now, you’ll be able to offer a better down payment, giving yourself lower monthly payments, or you might be able to find a good used car you can afford to buy without a loan.
These are just two short-term examples. For a longer view of saving, consider that you’re probably going to want a house of your own some day, and you’ll definitely want to retire sometime; saving and investing are both large parts of making both of these long-term goals possible.
|
