Teens Can Save Now for the Future

By Autumn Knoop
 
Why save money at all?
Money is what sustains our day to day lives, and is absolutely essential for our futures. When you get a job, you will receive income. Rather than spend all the money you earned at once, it is recommended that you save a portion of your paycheck for your future. The more you save, the more money you have for things that cost more, such as a house or a car. It is also smart to save money for retirement, as you will not have a job to sustain you anymore.
 
Teens who save
Many teens save, even if it means a couple of coins in a jar. But what about teens who run businesses or earn large amounts of money? For this section of the article, I will be interviewing Aveline Knoop, who is an entrepreneur and student at the University of Southern California in Los Angeles.
 
Q: So, to jump right into it, how young were you when you started saving money?
A: “I started saving money at fourteen years old.”
 
Q: What caused you to start saving money?
A: “I started saving money because I founded my own business making and selling nail art and care products. As I began to make money, I wanted to start saving for my future seriously.”
 
Q: How did you start saving?
A: “I started saving by putting my money in a retirement fund (a tax-free savings account).”
 
Q: How much do you recommend saving?
A: “ Saving 20% of every paycheck you receive is a great standard.”
 
Q: What is a Roth IRA?
A: “An IRA is an individual retirement account which allows you to save up to $5,500 per year. This amount compounds 6% (about) annually to build your savings. A Roth IRA is a business IRA. It allows you to save more than the $5,500 limit as a business.”
 
Editor’s Note: As of 2020, IRA/Roth limit is $6,000 per person, with additional catch-ups for older workers.  Also, a Roth IRA is not limited to business people; anyone can open and fund a Roth IRA subject to income limitations (high earners are restricted).  The main difference between an IRA and a Roth IRA is that you pay no tax now on funds you invest in an IRA.  You then pay tax when you withdraw the funds in the future.  Conversely, you pay tax now on funds for a Roth IRA, but then you pay no tax on these funds in the future.  You can choose to invest in either type of account or both types.
 
Q: Do you have any tips for teens who are interested in saving?
A: “Even if you are working at a day job, I would start saving now. It doesn’t feel like much, but you’ll find your small amount of contributions today will amount to thousands of dollars in a decade. And if you are motivated and believe you have a great idea to start a business - it’s never too early.”
 
How to start saving 
As Aveline suggests, once you start to make an income, you can immediately start saving. The first step to saving is to analyze how much income you are making and how much you are willing to save with money left to spend. In this sense you are budgeting for your future self. Successful saving for the future is anywhere from 10-20 percent of your income, but any amount saved will benefit your future. Rather than spend money on things that you don’t need, simply put that money aside, and create a more secure future for yourself.

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