Saving & Investing

Saving & Investing

Figuring out how to secure your financial well-being is one of the most important things you can do.

For many people, the path to financial security is with saving and investing. As a student, these topics may not yet be on your radar, but saving is a key concept for financial well-being. If you make saving a regular habit, even a small amount, you are building a foundation for financial success.

Tips on Getting Started with Saving and Investing

• Pay yourself first: This means that for every paycheck you receive, commit to putting an amount (even a small amount) aside in a savings account. An effective way of doing this is to have a set amount of your paycheck directly deposited into a savings account, separate from what you use for everyday expenses. You will be surprised how quickly your savings can grow.
• Keep track of your saving: People who track their savings tend to save more because it is on their mind. With online and mobile banking, there should be no excuse not to know exactly how much money you have.
• Set Goals: Setting financial goals is crucial. As a student, you may only have a few financial goals, but this is the perfect opportunity to hone your skills. Think of this scenario: You want to pay off a student loan before graduation, how will you accomplish this? How much do you need to work? To save? The better you do now, the easier accomplishing future goals will become.

Thinking Ahead

Even now there may be long-range financial goals that you start saving for. Here are some tips for investing in your long-term financial goals.

• Plan ahead: As with any endeavor, advance planning is a way to figure out what you want, when you want it, and what you can do to achieve it. The sooner you start planning, the sooner you start accomplishing it.
• Understand the time value of money /compound interest: This is the principle that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received. The longer the time frame for investment, the more you can increase the income potential of your investment. On the flip side, waiting to invest can make it more difficult to achieve your financial goals. Discover how much waiting to save could cost you with the SEC compound interest calculator.
• Understand your objectives: As a rule, the shorter your time frame for investing, the more conservative you should be. For example, if you are in your twenties and trying save for a down payment on a house, you are going to want to put your money in a vehicle that ensures the least risk of losing your principal investment. When your time frame for investing is long, you can consider fewer conservative options. Retirement savings are an example. Starting young allows you to save for a longer period and allows time to make up for potential losses in a less conservative environment.