Saving for the future may not be the first thing you have in mind as a young person. But the fact is that it is wise to start as early as possible, even for those who do not have the opportunity to put away as much money at a time. We give you some tips on what to keep in mind when saving money as a youth.
Get started with your savings
As with all savings, the sooner you start, the better. Regularly saving money as a youth, for example, monthly, is also a good routine that hopefully will accompany you throughout your life.
As a youth, you probably do not have the opportunity to put aside a huge amount of money per month, but if you have an extra job, for example, that gives you an income, a weekly or monthly allowance or study allowance, a small part of it can go to savings. How big that part will be depends on you but make sure that as far as possible you always put something away every month. See it as a fun challenge to try to cut small expenses and spend that money on your savings instead!
Make a plan
Saving money is always easier if you know what you are saving for. Maybe it’s for a trip with your friends next summer or a new mobile phone? Or do you save for a little longer term, for example to a home when it’s time to move away? No matter what your goal is, it is good to think about how much you need to save to get there and how much time you have when planning your savings. Once you know it, it’s easy to determine how much you need to save per month.
Choose the saving form depending on what you save for
Once you have set a goal for your savings, it is time to consider where to place your savings. If you save for different things, it is good to divide your savings into different parts and choose the saving form depending on what you want to save for. For example, it is good to have a buffer saving for expenses such as travel and gadgets. A buffer saving usually takes place in the relatively short term and should therefore be placed in a savings form that involves low risk and where you can quickly access your money. That type of savings can be good to have in a savings account. Although the savings are probably not going to grow that much there, in any case, you do not risk it decreasing and you miss that trip to Greece with your friends.
In the longer term, five years or more, you can instead choose to take a little bigger risks, since you do not have access to the money until later.
Then you can instead choose to invest in, for example, funds, shares or loans. What you should choose depends, among other things, on how much time you want to invest in your savings and how much risk you are willing to take. A good and relatively easy start that also suits you as a youth is to have a fund savings in an investment savings account. Such an account is taxed on a yearly basis and therefore you do not need to remember that you have to pay tax if you sell funds with profits in the future. Even if you are not yet legal, you can open an investment savings account, as long as you have the custodian’s permission. An easy way is also to invest your money in loans with Nancy Drew, which is a good complement to savings in stocks or funds. By investing in an additional asset class, you increase your overall risk spread and get a safer portfolio.