Gary F. – Cabrillo High School

If you asked any young adult how they use their money, a large majority would not even begin to mention the foreign concept of saving. Now, if you asked them if they were in debt, surely more than half would nod their heads in shame. To figure out what young adults can do to become better spenders and how they can stay out of debt, we must figure out why they aren’t saving. Well, that’s simple, youth today are plagued with expenses well beyond what they can actually afford, whether it be an expensive house market or massive student loans they certainly do have many expenses, but there lie more substantial problems.

It is said that you should save twice your salary by the age of 35, but how can a young adult do that if they barely break even? Well, the most important thing for them to do is to spend money on themselves before dispensing the rest of it away to other expenses. But isn’t buying an iPhone or fine dining spending money on themselves? No, because that’s dispensing money to other expenses, not themselves. What spending money on themselves means is to save money that they earn and keep it in their pockets, not in other people’s pockets. Before they indulge in the expenses they usually do, young adults should take at least 10% of their money and save it for a rainy day, or even take tiny amounts of money and start accumulating wealth, even something as minuscule as $5 a day can go a long way in a lifetime.

Saving money is important but young people also should be aware the value of that said money over time. In order to sufficiently keep the money they save, they will need to be aware of interest rates they receive from their bank. Say an individual has a dollar in a bank account and they leave it in there for one year, the dollar’s value would decrease due to inflation and they’d be left with 98 cents, so if they had $1,000 they’d be left with $20 less and so on. That’s when interest helps them, once people put their money in a bank, the bank is borrowing that money and pays them interest to encourage them to deposit. Now, let’s take that same dollar and add interest rate of 4% to it, in one year that dollar will increase in value with it now being $1.04 and with the $1,000 investment it would be $1,040, the higher the amount the better the value. Be wary though, most banks offer less than 1% interest on deposited money so they should choose their banks wisely or else their money will lose value over time.

Debt is to put it simply, is to owe a lender money. A huge factor in keeping young adults debt free is to make sure they don’t borrow money that isn’t theirs in the first place. They should not open up an account for that credit card they receive mail that gives them points for gas because it’s “handy”, and they shouldn’t take thousands in student loans unless they can actually pay their bills to accommodate. If they’re tardy on bills, they’ll find themselves in debt. They should also keep in mind since it’s loaning we’re talking about, the aforementioned interest works against them. If they don’t pay their loans off in a timely manner, they’ll fall into debt that’ll infinitely increase the longer the bills are left untouched. If they’re offered a loan or receive a credit card in the mail, they shouldn’t accept it unless they know they can pay it off later.

So what can young adults do to become better savers? What can they do to stay debt free? For a young adult, the best way to become a better spender and stay out of debt is to show responsibility and save. In order to enjoy life people must understand that sacrifices need to happen, that’s the general concept of economics. It’s reasonable to want to spend money on belongings that’ll make them happy, but predictability & security is extremely important especially if they intend on having a house, traveling the world, or even starting a family. Saving will quite literally save our youth from instability and uncertainty and perhaps even make them millionaires by retirement.