For the teenage working population, the urge to spend every dollar in the bank runs rampant. Though this desire will not always harm young members of the workforce, future-minded teenagers may put away their pay for a rainy day. The ultimate goal for any saver will vary, especially in youth, but beginning that journey early will help people develop necessary skills that will provide increased comfort later in life.
While around 26% of households in the U.S. live paycheck to paycheck, anyone who can put a portion of their income away will find the action valuable. Goals such as college education, a car, a down payment on a house or simple security in case of tragedy can each grow in accessibility with time and consistent saving. Traditional savings accounts may work for short-term, accessible goals, but prospective users may look at the low interest rates and worry they will not stash enough cash by using them. For people looking for ways to save and grow money, high-yield options exist. These options include high yield savings accounts (HYSAs), money market accounts (MMAs) and certificates of deposits (CDs). Frequently, these options will include a time where the saver cannot access the money, but for people who find themselves dipping into savings unnecessarily, this can become a blessing in disguise.
“If you’re going to seek a financial advisor, make sure it’s one that has a fiduciary interest in you, not just one that’s earning a commission off you. You need to prioritize in the short run, saving up an emergency fund to pay your bills before you start any long-run saving. Stocks are riskier, but [on a different scale than regular savings] they grow over time if you leave it alone,” Advanced Placement (AP) Macroeconomics teacher Dr. Pamela Roach said.
HYSAs work similarly to their traditional counterparts, their main difference simply involves their yield rates. The interest rates of these accounts will lead to higher speed monetary gain, but they can vary and will not provide the consistency that people prefer for time-sensitive goals. For short-term efforts, however, these accounts will benefit holders because they can typically withdraw whenever they need to, although the amount may face limitations.
For people concerned about HYSAs’ limitations, MMAs can present an opportune solution. Similar to checking accounts, MMAs offer their holders constant, easy access to their funds, frequently including debit cards. MMAs provide high rates for users, meaning the interest on the money within the account will add to the account’s content to a comparatively high degree. These rates do vary, though, so for those with less money in the account, looking into other options may yield improved results.
An almost untouchable solution, CDs provide owners safe investment-like results, as they stow the money away for a set amount of time. While withdrawing from the accounts before the agreed-upon period ends will cost the certificate holder, CDs’ terms can last for times as short as three months. In these entities, money can compound anywhere from around 1% to 4.65%.
While saving may seem insurmountable to several, a select group of youngsters may conquer it with the simple act of opening an account and watching Washingtons turn to Franklins. By understanding the high-yield options in this space, teenagers can decide on the way they spend and save their money without worrying about missed opportunities.
