Open a Savings Account this Summer
It’s probably not news that we think a savings account at your credit union (or bank) is one of the best places to put some money away for a rainy day – because it is!
- Why open a savings account?
A savings account is better than your piggy bank because your money is safe federally insured, plus your money will earn more money thanks to interest. Interest is a percentage rate that a credit union sets for its savings accounts. So, it the interest rate is 5%, your $20 deposit will earn $1! And if you leave that money in your savings account, your interest will even start earning interest! Can your piggy bank do that?
- What’s the best way to save?
The best rule of thumb to go by, not just now but when you’re an adult too, is to save 10% of what you earn. That means if grandma gives you $40 for your birthday, you’ll want to put at least $4 into your savings account.
- How does it all work?
There are two ways to easily understand how a savings account works. One, ask your parents to take you into their credit union to open a savings account and have the member service representative explain the process. Or, you could have your parents show you their statement (or yours!) and show you how it all adds up.
- What should I save for?
Only you can really answer that question. You probably already have a long list of things you’d like to buy. However, there are a few other approaches you could take when setting a savings goal.
- Save for an emergency. This is a good habit to learn now and continue as you grow up. You never know when something will break or get lost – so leave a chunk of your savings alone, just in case.
- Save for gifts. You’re not the only one you should be spending money on. Holidays and birthdays creep up on you fast, so make sure you save some money to buy the perfect gifts for your family or friends.
- Save for college. Sure, it’s a long way away and mom and dad are probably already saving for your college education, but it never hurts to save some of your own money to help them out. Tuition, room and board, textbooks and laptops aren’t cheap. Start saving now and you’ll have a nice nest egg when you’re college bound.
There’s no right or wrong way to save. Just remember, the sooner you start saving, the more money you’ll have!