Question: I am fourteen and began babysitting for a few families. I want to put some of the money I've earned away to start saving for a car when I am old enough to drive. Where is the best place to put money for a couple of years and maybe earn extra in interest? If I need to earn a few thousand dollars then how do I know how much to put away from my earnings each month?
Answer: Making plans now for a future expense is a very wise decision. By thinking ahead you are already ahead of the game! To reach your goal, the first thing you’ll want to do is decide how much you would like to spend and then set a date you’ll want to reach that goal. Begin by researching what you can realistically afford for a vehicle and make it visual. Look at pictures, read reviews for safety and reliability, and even create a dream board or a visual aid that you can see every day to motivate you and keep on track.
Once you’ve decided on the dollar value of your goal, be sure it will be attainable in the time frame you have set to make the purchase. Now, let’s work backward and set milestones. The goal right now (to save for a car in two years) may seem far away and as time progresses you may feel yourself losing steam, so set some periodic milestones to get you to the finish line because that two-year mark will be here before you know it. As an example, if you want to save $5000 toward a vehicle in a 2 year time period, set a milestone goal that you should save $1250 every 6 months, or set the goal to save at least $210 each month. If you strive for those smaller goals first, the big goal won’t seem so far away. If you fall off track one month, that’s ok, just get back in the game the very next month.
Now, where do you put it?
It’s easy to borrow from your secret stash if you’re keeping it in a shoebox under your bed and before you know it, after a few innocent withdrawals for those impulse decisions, you’ve depleted your hard-earned money right back to where you started. Not having the temptation of your cash available at your fingertips is a smart choice.
Keep your money in a savings account and let the bank do the tracking of your progress for you. Make a point to deposit your babysitting money often to limit the amount of money you have hanging around. By depositing the money in your bank, you will be able to track your progress by viewing your monthly statements sent to you in the mail or that you access online. Maximize your savings by earning a little interest too! There’s nothing better than free money!
With every goal, be sure to keep your eye on the prize. Before you know it, you’ll be behind the wheel making your bank deposits at the drive-thru window. Don’t lose sight of your goal and let your bank be your partner in helping you get there!
Part of the fabric of Lewiston-Auburn since 1887, Auburn Savings provides financial products and services for individuals, families, businesses, and the shared community we call home. Visit us at auburnsavings.com
