Case Study: I’m 18 and Saved $5000 at my First Job
Case study time!!!
I’ve read from my loyal fans (which at this stage consists of one former colleague and some dude I don’t know in the Netherlands) that sometimes you need a little help with managing your money situation. I’m here to lend an ear and whip you into shape. Nicely, of course.
My friend asks, on behalf of his niece, who is a student and just got her first job in 2017:
I’m 18 and Saved $5000 this Year at my Part Time Job. What should I do with it?
Well, first of all, congratulations for being able to resist the temptation to blow your money! Being 18 is an exciting time, for more reasons than one. You can look at your future and influence it based on what school or career you want to focus on. You haven’t had your heart broken yet. And compound interest is on your side!
If you have $5000, in my opinion you should save half of it towards a short term goal and half on a long term goal. What are your short term goals? Maybe they include traveling abroad for a semester or buying a fancy laptop so you can work on your art passion. Maybe you’d like to help pay for your education this year. Whatever your goal is, this is money which would be saved in a high-interest savings account. I use EQ Bank and recommend them. Why? Because they have one of the highest interest rates, that’s why-2.3%.
Next, let’s discuss the $2500 which will be going to your long-term goal. If our lovely student has a part time job of 20 hours a week, netting $1000 a month (minimum wage is $15 an hour), and saves 50% of that, in 5 years she will have $34,565.23. Not too shabby! In 5 years when she is 23, that can be used as a down payment on a condo, to start a business, or to take further education.
Listen, Lady Dividend, I can hear you moaning and wondering. It’s five g! Is it really going to make a difference?
Yes. Because right now, you’re forming a habit where you save 50% of your income. If you do that, you will always have enough money in the bank to live your dreams. Even if you don’t know what those dreams are yet.