When I was in my late teens, I read a number of money-oriented books about saving, investing, and budgeting. Yes, I was a bit of a nerdy kid, but my family’s history of finances as a flash point led me to seek security in these books.
It helped. I do save, at least I try to do so. We have an education savings plan, retirement savings, an emergency fund, and funds for specific shorter-term goals. Right now, our fund for buying blueberries is getting larger, just in time for blueberry season.
Some of these savings plans offer decent interest and some do not. The purpose of many of them is not the interest, but the savings themselves. However, we do want our longer-term savings vehicles to add money over time in the form of interest.
I do have one long-term investment that is in savings bonds, however. Savings bonds do not provide a lot of interest, but often they provide some stability. If you have a workplace savings plan that encourages you to add to a savings bond and you can spare a few dollars every pay, I find that this is a great way to save a little bit of money. Why? The money disappears right off your pay. You never see it, and if you work for the same employer for many years, it will accumulate over time. Savings bonds are also harder to touch than an a simple savings account, so this prevents you from plundering them for daily expenses. It’s a forced savings vehicle, and that’s a good thing when you are trying to save for the long term.
Perhaps you want to save for a retirement trip or create a dream fund for your child. This is what we are doing with the savings bonds. As the savings grow, we may move them into higher-interest investments. Then again, we may not. My goal is to spend very little thought or effort to save several thousand dollars over a number of years, to give my daughter a gift when she is finished high school or college. It’s a small, small part of our overall savings plans, but it’s simple and I hope that it will allow her to reach one of her goals as a young adult.
Image courtesy of kwod at stock exchange.