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Saving 101

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Regina Bish and Arianne Hammond, Youthlink Writers

Admit it, saving money is one of the hardest things for teens to do, especially when our wants outweigh our needs and our 'income' doesn't quite cut it. Despite this, let's face it, saving is IMPORTANT and if you, like most other young people, plan to be rich then it's something worth doing.

'Someone's sitting in the shade today because someone planted a tree a long time ago.' Warren Buffett simply meant that although it takes time, the resultant rewards will leave you living 'easy breezy' for a while. Youthlink sought advice from two young financial minds in the money business, Judith Hyllam-Ennis (branch manager of Churches Credit Union) and Woodrow Smallwood (licensed financial adviser for Caribbean Assurance Brokers), to help you, our readers, with some saving tips that will surely all seasons.

Short-term Saving

Scenario: Let's say, for instance, that your goal is to enjoy some of the best parties of the year and your earning is $16,000 to $35,000 from your summer job(s). How do you manage to accomplish your goal without blowing your entire summer earning?

Judith Hyllam-Ennis says: Churches Credit Union offers a variety of saving plans that would be perfect for young people. One such plan is the Hand-to-Hand Partner Plan, where persons are asked to invest for 16-48 weeks. The savers determine the plan, with the amount of money and the saving time. At the end of the saving time they are given a bonus on their savings, but the bonus depends on the saving time. For instance, if someone chooses the 16-week plan, then that person is given 1/8th bonus of the saving lump sum. This incentive would be great for persons looking forward to extra cash to enjoy festivities.

Youthlink says: This saving plan is ultimately similar to the 'partner' scheme that exists in Jamaica, but saving with an institution not only gives you the guarantee that your money will be safe, but an added bonus for all your hard work as well, making this plan 100 per cent better.

Medium-term Saving

Scenario: Your goal is to come up with part of the money for your university tuition or to contribute towards buying a car. This saving period is between 12 to 36 months. It takes a little longer but the savings outcome will be greater.

Woodrow Smallwood says: Prioritise and budget. If it's your goal to buy a car, this is what you need to do: 'One a Day' - this means that you give up one thing each day that would incur a cost that could be deemed unnecessary. You may have to eat what is available at home rather than go out to buy fast food on a regular basis. You may also need to talk less on the phone and ensure that you start buying less credit and making what you've bought last longer. It may be tough, but think about your goals and ask yourself questions like: "Do I really need to buy this?", "Can I do without this item for just this month?" Once you have answered these questions, saving shouldn't be that difficult. There is a 20 per cent rule when it comes to saving for any short-, medium-, or long-term plan. This rule will help you to save as much as you need to without much hassle.

Youthlink says: This rule is foolproof and the pressure of saving as much as you can is greatly minimised, thus giving you more freedom to enjoy your income. Let's face it, most of us have a hard time saving but by putting a minimum of 20 per cent in the piggy bank, you will see yourself reaching your goal without fail.

Long-term saving

Scenario: As university graduates or young professionals, you goal is to buy a home, car or to further your education. This type of investment will require more than 36 months of discipline, however, it is surprisingly easy to accomplish.

Woodrow Smallwood says: Saving long term is definitely easier to do. If you are saving with a reputable financial institution, then the money is guaranteed to be safe and the interest that can accumulate over time will help persons to save more as the time passes. However, if it is that you are saving towards long-term goals such as home or education, the compound effect of the saving plan is greater. Remember that small amounts over a longer period of time still add up. It is less stressful and less tiresome to save one million dollars in one year than it is to save it in five years.

Judith Hyllam-Ennis says: Churches Credit Union has many long-term investment plans that young professionals would be interested in saving with. One such product is our Pension Gold retirement plan. We usually encourage young persons to look into this option, as many have the desire to be self-sufficient. This plan is designed for persons to be comfortable after retirement and they can save as much as they want to up until they retire. It is tax-free and flexible, with the saver choosing how he/she wants to get the money during retirement.

Youthlink says: Long-term saving is definitely cheaper and much more flexible than short- or even medium-term saving. This is because saving money is hard, especially if you want to use it for immediate needs and wants. With self- discipline and sacrifice, however, it will all be worth it in the end and you will definitely start to see the benefits of saving.

For more information or queries, email your questions to: woodrow.smallwood@caribbeanassurance.com.

Judith Hyllam-Ennis is the officer in charge of Churches Credit Union (Old Harbour sub-branch). For information of the products mentioned, as well as others, please visit their website at www.churchescreditunion.com.