I was running low on funds, I had 20 bucks in my account, and I was craving a morning coffee. Needing a way to get to school, I decided to spend $15 on gas and get myself a coffee at a 7/11 before class. I got my gas, proceeded to get my cinnamon, dark roast coffee, and waited for the cashier to ring me up. I swiped my card confidently and without hesitation, only to see a big “Declined” on the PIN pad. My heart dropped and I sheepishly looked up to cashier to see the look of pity on her face; $1.69 for a coffee and my card had declined! Turns out my bank had charged me a $12 maintenance fee- and now I had a -$7 balance! I didn’t even know that banks charged maintenance fees! The best way to avoid this is by staying informed on your bank account’s fees and charges. Every bank and every account has different maintenance fees and policies. You can check online to get general information, but the best thing to do is call your bank and inquire to get specific information on your account. Yes, I know talking to people on the phone is awkward, let alone your bank, but, hey- it will be way less awkward than explaining to your local 7/11 cashier why your card declined while trying to purchase a small coffee.
Before I actually gained some knowledge on what investing actually consists of and what types of investments there are, even the word freaked me out. I instantly thought the Wolf of Wall Street: crazy men in suits running scams. When I started my business in Financial Services, however, I realized investments aren’t all that dreadful, but rather beneficial.
Major types of investments include stocks, which are shares in ownership of a company. You like to Netflix and Chill? Why not buy a share and get some money back while you do it? Netflix and Amazon stocks have reached an all time high this year, and you can get in on the game as well!
There’s one investment, however, that always pays off and yet is rarely thought about when you’re under 30; retirement. Yes, I know how you feel: “Why think about something as boring as saving for retirement? I’m in the prime of my youth!” Many people don’t even know how to put money into it. Interesting fact is, some jobs offer a 401(k) plan, which is a tax-deferred savings plan that companies can offer their employees as a retirement account- they’ll do the work for you! The contributions for the plan are taken from your payroll check. Let’s say Ashley works at X-Y-Z Coffee and has a 401(k) plan set up. Her pre-tax paycheck is $1000 and she decides to make a 10% (or $100) contribution to her plan from each check. These funds are directly placed into Ashley’s plan. This is a decent start on retirement planning, but something gives you even more bang for your buck. Instead of having your retirement funds taxed all at once when you withdraw them, like a 401(k), you can choose what’s called a Roth IRA. With a Roth IRA, you pay taxes on the money you put in up front and get to pull out the money on both your contributions and investment growth. If your income is lower now than it will be later as most of us may expect; you’re locking in at lower tax rate! This means you’re paying a small amount of tax now, rather than much more later.
When you’re running on 4 hours of sleep and surviving off frozen meals, saving can seem to be completely out of the question; but what if I told you I bought my first car at only 18 years old? In full and- wait for it- in cash. It took a lot of willpower and discipline, that’s for sure, but also some strategy. Did you know that most banks can set up regular transfers from your checking to your savings account? With that, I set up a regular transfer of $40 to my savings every Monday. At the time it didn’t seem like much. A year or two later, however, and I was thankful to see the results. Regular transfers are a great way to save without having to go through the pain of actively moving funds around on your own time.
Another great option that many banks have is a spare-change automatic transfer as well. Let’s say I spent $4.87 on some sweet socks (the ones with the rubber duckies on them), and I use my debit card. My account will automatically round up to the nearest dollar. Where does the remaining $0.13 go, you ask? Why, it goes straight into my savings account! Way better than finding it under your car mats, for sure.
But even when all this is said and done, one thing was CRUCIAL to get myself that car; spending my money wisely. I created a $60 budget per week for personal use. It was a pain, but walking into the bank the day I finally reached my financial goal and asking the teller for $4,000 in cash from my account was pretty awesome, I must admit. Luckily, we’ve got some great tips on how exactly to handle your money in an efficient way, over in “Do I Really Need It?”, an article by the Cypress Chronicle’s own Cristy Rodriguez!