In the present economy, often the idea of being able to set aside money seems unrealistic, but in truth saving money can be simpler and less straining than it first appears. The best way to begin is to open a savings account in a bank of your choice. Different banks have varying policies and initial deposit requirements, so talk with bank representatives to be sure you understand all the specifics of your account. Keep in mind that the IRA—Individual Retirement Account—is a tax-free savings option. There are a number of different types of IRAs, and once again it is important to consult a bank representative about which choice is best for you.
Once you have a savings account, the best way to increase savings is by using the banking system to your benefit through interest. When a person puts money into a bank account, they agree to allow the bank to use that money for its purposes. However, the bank must pay a small fee for this privilege, and this fee is called interest. Interest is always a percentage of the amount of money in a given account, though the actual percentage can vary.
An account with interest gains money even without new deposits being made. For example, if a person deposits $10 into a savings account that has an interest rate of 1% per year, after 10 years, that person will have a little over $11 in their account. However, to use a savings account to best advantage, it helps to deposit even small amounts over time. For example, if the same person adds $5 every quarter, after a decade that person has about $220 in their account. The interest, as a percentage, starts small, but builds as the amount of money in the account increases.
Saving money does not have to break your budget. A great way to determine how much money to save can be by creating a monthly budget and keeping track of spending. If, at the end of the month, you find that you have spent less than you budgeted for the month, deposit the extra money in the account. Another option is to set aside a small amount each month, for example, $5, that you add to your savings.
Building wealth does not have to be a burden: small deposits can go a long way towards saving!
Feenberg, Daniel and Jonathan Skinner. Sources of IRA Saving. Cambridge, MASS: National Bureau of Economic Research, 1989.
Jessica attended high school at Ravenscroft School in Raleigh. She participated in swimming, cross country, and track and field. In track, she was Conference champion her junior and senior years in the 100 meter hurdles. In school, her favorite topics were History and English, and in the summer after her junior year, she studied abroad at Cambridge University in England, majoring in European History and English Literature. That summer, she also attended the Tar Heel Girls’ State educational program, and completed the course that enabled her to become a lifeguard.
Throughout high school, Jessica had worked as a swim instructor for the A. E. Finley YMCA in Raleigh, but during her senior year she began to also work as a lifeguard. At the beginning of the year, her article on the development of the Gothic architectural style in France was published in the Concord Review, a national history periodical. In the spring, she made her decision to attend the University of North Carolina at Chapel Hill the following year. Later in the spring, she worked as a research assistant to Professor Michael McElreath of Meredith College. She researched and offered recommendations on potential reading assignments and textbooks for a future course on American Intellectual History.
The summer before beginning college, Jessica worked again as a swim instructor and lifeguard for the YMCA. She began school at UNC Chapel Hill in the fall of 2008. In the spring of 2009, she began work on an article about the changing social and economic roles of women in Mali, a sub-Saharan African nation.The following summer, she completed work on her article while again lifeguarding for the YMCA.
She is now nineteen and a sophomore at UNC Chapel Hill, hoping to major in History with a concentration in non-Western civilizations and a possible minor in Women’s Studies. She enjoys reading, writing, playing the piano, researching, and drawing, and hopes one day to become a professor.