Advancement: Opening a Savings Account

Who knows the power of money? I know that I do, and I value it! That's why at the age of 14 (still a freshman in high school), I begged my dad to take me to the local bank to open a savings account. I really wanted to be able to write checks, I thought it was so cool, but wasn't old enough! So, one day after school my dad took me! I felt so important and encouraged, I couldn't wait to tell my friends.

That savings account ended up being to my benefit, as I started my first job that summer as an accounting intern for a very well-known company, worldwide! I planned to get my first car the same day that I passed my road test, and at that point I realized that I needed to save. So for the next 7 weeks of my internship, I made $320 a week! That is a great amount of money for a 14 year old believe me! I couldn't wait until payday, so I could march through the bank and show the tellers how I was spending my summer!

Anywho, enough about my experience as a first time account holder. Let's talk about the importance of a savings account in a realistic, teenage perspective!

Regardless of how much money you make, there is room to save! Even if it's only the change that you collect from your pockets at the end of the day. Now as an accounting major, I like to do calculations! So I'm going to provide you with an example of how much you could save, and what you could do with your savings.

Let's say, at the end of the day after all of your purchases, you accumulate at least $0.85 in change. With 365 days in a year, you can save $310.25! Without thinking, that is a nice amount of money to have as a teen, starting the year off on a good foot! Now if you could just manage to not touch it starting at 13 years old, by the time you're 18 you'll have $1,551.25 saved up!

Now, I mention a savings account, and not a piggy bank, because a savings account is more secure. There is less chance of you using the money for reckless expenses, like ice cream, CDs and friendship bracelets!! There is someone monitoring your savings, and with a parent involved it's even easier! The simplest thing to do is, take a jar or the piggy bank you've had since a child, collect your change every night. Hide the money somewhere where you rarely look, like under your bed... unless your room is a mess and you frequently check under your bed for shoes and whatnot! Then you may need to hide it under your parents' bed! At the end of each month, take your jar to the bank (I know a lot of them now have 'Coin Star' like machines that members can use for free. If not, make use of the coin wrappers that they give you for free to save the bank teller, and yourself, some time).

Some banks even offer (good) interest on savings accounts. Let's say (yes! another example) your bank offers 4% monthly interest for savings balances above $200. Once you reach $200, your account will look like this:

Month 1: $200 x 0.04 = $8, which means your account balance is now $208!
Month 2: $208 x 0.04 = $8.32, which means your account balance is now $216.32

This may be a little unrealistic for some institutions. The interest rate may actually be .4%, you never know!

In essence, the just of this post is to encourage you to save. Whatever the reason may be... you may want a car, pay for your first year of college, buy your parents a nice anniversary gift, or your boyfriend a hat! If you put your mind to it, YOU CAN DO IT!

Advancement: Credit 101

LISTEN UP!!!

I know a lot of you guys out there aren't exactly concerned with credit right now; however, I would like to give you all a sneak peek of what credit really is and the risks you take obtaining it!

In simple terms, your 'credit history' is what people refer to when assessing your credit worthiness. Employers, loan agencies, car dealerships, credit card companies and many other organizations may access your credit history for offers.

Why am I telling you this now? Because once you reach the tender age of 18, sometimes months before your 18th birthday, you'll begin to receive credit card offers out of the hoo hah! You will be targeted because you are now a part of the 'real world' in so many words. You are now legal and can make your own decisions about purchases and your financial stability toward the future. You have become another entity that they can market to. Look at it this way, credit card companies are businesses too. Just like your local grocery store or nail salon. They are out to make money! So how will they make money off of you?

Yes, it is true. Having a credit card does sound like 'free money' or 'emergency cash', but once you have that power in your hands, for some it's hard to turn back. Those 'emergency' purchases turn out to be splurges at the mall, lunch for your best friend and you at your fav restaurant, or a pair of designer shoes that you probably wouldn't have bought with your 'real' money!

Let's see what a credit card really does to your pockets! Let's say that you want to purchase a new digital camera but can't exactly afford it right now and you just don't want to ask your parents to spot you the cash. So you're sitting in your room, alone and bored! You take out your credit card, go online and shop around for the latest, coolest, flashiest model you can find. Whhhhhooooooooaaaaaa! It's $299! Definitely not in your price range, but you figure if you put it on your credit card, you can pay it off a little at a time. True enough, you can! But how long is too long?

Your credit limit on your card is $350!!! And the percentage rate on your card is 12.7% a month... You buy the camera and receive your first billing statement from the card issuer. Your current balance is $299 bucks! Ok, you already knew that lol! But what's it gonna take to pay this off. Let's do the math:

$299 x 12.7%= $37.97 in interest

This means that on top of you paying $299 for the camera, you are also paying $37.97 in interest, on top of shipping costs and any hidden fees that they charge upon purchasing! This camera could actually run you $340+ dollars. Was it really worth it? Maybe, but as a college student you'll be scrapping pennies from every couch you sit on! So can you really afford it? Probably not. But there's still hope! RETURN THE CAMERA, GET YOUR 'MONEY' BACK, AND USE YOUR CARD ONLY WHEN ABSOLUTELY, POSITIVELY NEEDED!

As you pay your bill down, GUESS WHAT?!?! Creditors will begin calling you to offer you higher limits on your cards for paying on time! Sounds good, right? Yeah, I'd have to agree that it sounds good. But do you know what higher limits provoke?

They provoke IMPULSE BUYING, which I like to define as purchases that you really don't need, but you do it in the heat of the moment (kinda without thinking about the consequences). Impulse buying is OK when you are using your own hard earned cash, but not when you are utilizing the creditors for this money. My advice would be to decline the offer, and maybe even consider lowering your limit, or getting rid of the card altogether.

I hope I haven't scared you! Because, realistically, there is also good credit! Student loans are considered good credit because you are working towards something that will ultimately pay off: HIGHER EDUCATION! And your chances of being able to pay off a student loan with an education is much higher than paying one off without one!

I'm going to keep this one short today, but look forward to more lessons from Advancement: Credit 101!