I’ll be honest: there isn’t much money in my savings account. I’ve got some quarters in a piggy bank, and probably a cache of dollars in the back of my car; but honestly, saving isn’t a huge priority.
Not because I don’t want to save or I blow money, but I really can’t afford it. I’m in grad school, working part time, and living off loans. But that’s not going to do me any favors financially, and there’s a lot of reasons why my generation needs to start making savings a true priority.
1. We’ve seen joblessness
Many of the Gen-Y kids saw their parents lose jobs — their qualified, educated, hard-working parents. They lost their homes, cars, and retirement funds.
Now it’s our turn and we’re competing for too few jobs that we are all over-qualified for, and many of us with degrees are taking low-paying jobs because that’s all there is out there.
We don’t like to think about it, but unemployment marred many of our lives. It’s crucial that we start saving now because the economy and job market are still recovering, and even though we might be living paycheck to paycheck now, we’re aware that it could be paycheck to no paycheck in the blink of an eye.
Saving ten or twenty percent of what you make can help you prepare for a loss of income, and if you’re lucky enough to weather that storm, it’ll be a nice little nest egg.
2. It’s in our best interest
Okay, okay, forgive the play on words, but interest rates really make a difference. We know; we watched the interest rates on our student loans steadily increase, but interest can work for us, too.
A regular, plain old savings account isn’t going to do much for this, but if you can talk with a banker about an IRA, or your employer has 401(k) benefits, you can make money for free. That’s what interest is, after all.
If the money is in the account, it accrues interest, then the new (higher) balance also accrues interest, and then the money just grows on itself. Remember in Grey’s Anatomy, when Izzie got an $8 million inheritance from her dead lover and she wouldn’t deposit the check and Bailey told her she was losing out on thousands of dollars a day of interest? Yeah, it’s like that.
Moral of the story: Get your money into an account with high interest rates now, and it will continue to pay off in the long run. (And if you have an $8 million check, don’t stick in on the fridge for months.)
3. It’s okay to do it your way
There are many accounts of people who grew up in the Great Depression with a huge distrust of banks, and kept their money stuffed inside mattresses or shoe boxes or coffee cans.
Gen Y hasn’t had it as hard as those in the Depression, but it’s true that we caught a pretty short stick. I remember the day when my parents lost a huge amount of the money in their 401(k) because of the market crash. And I thought, I’m never having my money in an account where I can lose it all.
Remember that banking is a hugely complex process, and there are places where your money is more secure than elsewhere. Some people live by the “no risk/no reward” mindset, but that’s up to you. Some employers match 401(k) contributions every month, and that’s a big draw for some people.
Other people just want to keep their money in the shoebox. There’s no right or wrong way to save, as long as you’re making a concerted effort to do it in some way. Some of us save up in quarters and then cash in the quarters and put them in a safe deposit box. That’s just an example. Consider downloading the Valpak Mobile App to your Android or iPhone for money saving tips.
As long as we are saving, that’s what really counts.