When asked “what are the best times to save money,” experts often give the simple response of “as soon as possible.” While that’s true on the most basic level, it helps to add some details to the response. There are many ways to save money, so one of the biggest question is when to use a particular method.

Prior to Entering the Workforce

It’s a good idea for children to start saving money as soon as they get any. In grade school, kids usually get funds as allowances or holiday-related gifts. When they are instructed to save some of this money, they learn good habits and get to see how saved funds add up over time. Once they get to withdraw the money to purchase something they couldn’t have afforded before, they see how the practice can be rewarding.
At this age, a passbook savings account is usually enough because the amount of money involved is relatively small. Even though the interest on these accounts is low, it is enough to demonstrate the principles that will be involved in future interest-bearing investments.

Upon Beginning Employment

First jobs tend to have low pay, but that doesn’t mean workers shouldn’t save. By following tips for saving money such as using coupons, avoiding expensive practices like dining out too often, and making a set budget, entry-level workers can have enough money left over to put some away. At this stage, two or three types of savings accounts should be activated:

During the Career Years

At this time of life, the low-paying “teenage” jobs are usually things of the past. Now may be a time to get into more serious investments. The IRA or other retirement account should be kept, but it may be time to add to it. Start a stock portfolio or get into other advanced investment strategies to help grow those retirement funds.

Remember the Risk Factor

It’s important to remember that there is no such thing as a totally risk-free investment. Even U.S. government bonds are subject to factors like the national credit rating.

Some investments, however, are far riskier than others. These have the allure of the potential of riches, but come with the chance of losing up to 100 percent of the money involved. To avoid overly-regrettable situations, you may want to make sure to keep retirement funds in investments that aren’t very risky.
Important Factors Helping to Save Money

The Retirement Account

There are several options for retirement savings. One of the most popular is the IRA. The most popular form of IRA allows savers to defer taxes on the funds until withdrawal. These and other retirement accounts typically have penalties for withdrawing funds before a certain age, and this encourages long-term savings. While this is great for retirement, it may not be not good for goals that will involve faster access to the funds.

The General Savings Account

This is the account that will usually hold funds for a relatively short period of time. Someone who needs to save for a down payment on a house or car, collect money for an extravagant vacation, or otherwise pay for a short-term goal should have one of these accounts. Passbook savings accounts may be needed at first if customers don’t already have some seed money accumulated. Other easy-entry savings accounts include CDs and similar products offered by local banks.

Intermediate Savings Plans

Money that isn’t being saved specifically for retirement shouldn’t all go to short-term goals. Look into some other possible investments like real estate, mutual funds, and similar things to grow some of those “extra” funds into something big.

What if Expenses Are Too High to Allow Savings?

The easy answer is to cut the expenses. Unfortunately, many people in this situation don’t see any way to do this without substantially lowering their current quality of life. Here are a few tips that are often overlooked:

Purchase in Bulk

It may seem like a deal if a small item is $1 and the big one is $5, but running the numbers will almost always show that the larger size costs less per ounce. It will also last longer!

Avoid Off-Brands

They seem cheap, but may actually cost more because some may be low-quality and force users to buy them more frequently.

Look for Coupons and Sales

It’s possible to get good, name brand items at shockingly low costs if one is diligent about checking store fliers and other sources of coupons and sales.

Buy Raw Food and Cook at Home

Claims that fast food is cheaper than raw grocery store fare aren’t always true. The same goes for TV dinners. Home-cooked meals made from scratch can be are cheaper and promote better health.
These are just some of the ways that savings can be started at a young age and continued throughout someone’s lifetime. Talk to a financial advisor for even more ideas and to get a detailed savings plan.