The Financial Student

One of usual problems with the financial advice given by older adults is that it simply can’t be applied to a younger person’s life, or least not in a straightforward way. One of the most obvious situations where this issue pops up is the Emergency Fund.

Nearly all financial experts, advisers, and bloggers recommend that you keep a certain amount of cash in a savings account to use during an emergency. This emergency could be a job loss, necessary car repair, illness, etc. It is not for a new computer, Xbox, or even the newest iPhone that Apple thought up.

Most, if not all, of these emergencies don’t apply to high school or even most college students. If I lost my job, I’d be pissed and frustrated. But I would still have a home to live in and plenty of food to eat. If I’m sick, I can  just call the school and let them know or go to the doctor.

I’ve been wrestling with this problem for a while now. I wasn’t sure if I really needed “OMG I can’t touch this money unless someone is BLEEDING type money.” But after thinking it over, I’ve decided that…

For now, I’m going to start with a basic savings approach. This means:

• Saving up $1000 to use as a true emergency fund. For what you ask? I’m honestly not quite sure, but I guess that’s the point. The most likely use for this money will be for car repairs when they crop up. Although that brings me to my next thought…
• Saving a bit from every paycheck for a new/used vehicle. At my current income, this will take years, but it’s better than nothing.

I think this plan is the best one I have available to me at the moment since I’m young enough to not have to worry about any traumatic financial problems, but at the same time it’ll help prepare me for future expenses. I’m hoping to pay cash for my next vehicle, which will prevent monthly payments and I can instead use the money for debt repayment.

But most important, saving $1000 gets me in the habit of saving. This is quite possibly the biggest benefit to an emergency fund for any young person because once you get in the habit, it’s going to be hard to break.