I've always tried to save for a rainy day, now my son is away at college and I want to get him to start saving too. What do you suggest?
Answer: To encourage your college aged son to start saving, suggest automated savings. If he has a steady income – from a part-time or full-time job, for example – he may be able to set up a payroll deduction from his employer.
He could also set up an automated transfer to a savings account through his bank or credit union.
It’s also a good idea to talk about how much he should save. Some experts suggest saving three to six months’ worth of expenses. That’s a good target, but it may be hard to reach for a young person just starting out. Talk about some recent emergency expenses you or he have had recently, like a car repair or repairing a crashed computer. You can use these sample expenses as targets. When these targets are reached, then your son could aim higher.
Because he’s saving for emergencies, be sure you talk about keeping the money safe, like in a federally insured bank or credit union saving account. He should also be able to get to the money quickly when it’s needed, so accounts that penalize early withdrawals or that have higher transaction costs, like certificates of deposit or investments, might not be the best options.
For more money activities for your child, visit our Money As You Grow section.