How to Save Your First $1,000 Like Me
There’s nothing quite like seeing the amount of money in your bank account grow to four digits for the very first time. Sure, it might seem intimidating to save up that initial $1,000 — especially when your main sources of income probably still consist of birthday cards from Grandma and the minimum-wage gig you landed on weekends — but it’s actually a lot easier than you might think. In fact, if you try, you can easily save your first stack in a year or less. And who knows? This may just be the first step on your way to earning $10,000, $100,000 or even $1 million before you know it. The key here isn’t so much focusing on how much you save (although that’s important, too) but how you get there. The sooner you can figure out the savings strategies that work for you in the short-term, the sooner saving money will become second nature, like brushing your teeth in the morning or tying your shoes.
There are basically two main strategies when it comes to saving your first $1,000: First, you’ve got to find the cash. And second, you’ve got to save it in the right place. Here’s how to do both.
How to find the cash:
Save 10% of every paycheck. If you are working and get a steady paycheck, ask your company’s payroll department to set up your paycheck to automatically siphon a small amount into your savings account each pay period. It can be $5, $50, or even a percentage like 5% or 10%. The key here is that you’re less likely to miss money if you never have a chance to spend it.
Link your checking account to the Digit app. If you don’t have a steady income, you can still save spare change automatically. Digit tracks your spending and gets used to your spending habits. Every couple of days, when Digit senses that you have a few extra bucks in your account, it will shave a little off the top (between $5 to $50) and transfer it to your savings account. The best part? You’ll never know it’s missing. And you can access your savings anytime.
Use the $5 rule. Anytime you have a $5 bill in your wallet, save it. This is a simple way to give your savings a little extra boost. At the end of each month, deposit the funds into your savings account and watch it grow.
Learn how to sell items online or host a garage sale. Turn all the odds and ends lying around your house into a potential income stream. Set up a free account to sell items on eBay and pick a weekend to organize a garage sale for everything you can’t sell online. Your parents will love you for cleaning out the basement and you can pocket part of the profit.
How to save the cash:
Open the right savings and checking account. It may sound simple to just ask your parents to set you up with an account at their bank and call it a day. But there are some good reasons to not just go that easy route. At your age, every penny counts, and some of the most popular big bank accounts out there charge all sorts of hidden fees that can easily chip away at your progress. Instead, do your research and compare savings accounts and checking accounts. When you’re shopping around, look for these three qualities: No minimum balance requirement, no monthly fees, and a high interest rate. Interest is the money the bank pays you to hold your savings with them, and it will add up over time and actually add to your existing savings.
Link your savings account to your checking account. This is especially important if you are getting a regular paycheck from an after school job or other work. When you link your savings to your checking account, you can easily transfer funds directly into savings. Also, you can easily transfer your Digit stash over to your main savings account.