Save a little. Save often. Save young.
“You’re too young to save.”
I started saving as soon as I started part-time work from the age of 15. I didn’t earn much but with every wage slip I made sure I put something aside for uni. Even though I wasn’t interested in personal finance until I turned 16 I always knew that saving a little bit when I could would help me in the future.
At that point I didn’t fully comprehend just how much of a difference saving from a young age can make. Of course you should always try to live in the present but that’s not to say you can put a small amount aside each month for your future. In spite of my friends’ disapproval because I wasn’t ‘living my life’ I insisted on saving. To this day I feel like I was living my life whilst creating security for my future. Spending everything you have doesn’t automatically mean you’re living life to the full.
So why should you try save from a young age or at university?
Compound interest.
When you have money in a savings account you earn a certain rate of interest. For example say you have £1000 in an account earning 2%. If you left it there for 1 year you would earn £16 in interest. If you left that the £1000 and the interest in that account for another year you would earn £32.26 over the two years. That’s because you’re earning interest on the original balance AND the interest that you earned in the previous year.
Young people and students like yourselves have the benefit of time. Compound interest means if you put in a little now you reap the benefits later on because the interest has had more time to compound. This is exactly why you can never be too young to save.
If you want to see the bigger effects of compound interest I’d recommend this. Thinking about retirement may not seem as premature as you think.
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