$MART
FINANCIAL CHOICES FOR TEENS
4
Saving
You’ve thought about your long-term career plans and secured a summer job.
Congratulations! Now what to do with all that extra cash? Whether you head straight
to the mall or to the bank with your income, you’ll first want to develop skills in
saving and buying. Let’s take a look at saving.
SAVINGS GOALS
First, break down your savings goals into short, medium and long-term goals.
Examples of these types of goals are:
Short-term goals up to three years
If you’re in high school, these may include buying a car and maintaining savings for
entertainment. It’s also important to build savings now for college and other future
expenses. What can you do each year of high school to save smart?
•
Freshman year
Get in the habit of saving by putting away about 10 percent of what
you earn or receive as gifts.
•
Sophomore year
Create a budget based on your income, savings, needs and wants.
Think about how these will change in years to come.
•
Junior year
Start learning about credit. Many students acquire credit or debit cards in
high school. Develop smart habits of living within your means now.
•
Senior year
Hone your money management skills. Continue to use
your debit card and electronic banking to track expenses.
Medium-term goals of three to five years
Since these goals will include your years immediately after college, you’ll factor
in education costs and living expenses. These goals are quite different from your
short-term high school savings plan.
Long-term goals of five to 20 years
You don’t have to have all of the answers now, but you do want to be thinking
about the type of city or town you want to live in and the type of work you’d
like to do in the future.
Learn more about credit and complete a budgeting worksheet and a
monthly expenses chart in our “Financial Literacy for Teens” supplement:
services.nwsource.com/nie/times/pdfs/10-14-12_BECU_Financial%20
Literacy%20for%20Teens%208-Page.pdf
What financial decision can you make today
that will positively impact your future?
Saving for College
If your short- and medium-term goals include a university
education, you’ve probably already realized that between
tuition, books, room and board, the costs can really add up.
You’ll first want to determine how the federal government can help you pay for
college. First, complete a Free Application For Federal Student Aid (FAFSA) at
fafsa.ed.gov/
. This worksheet will factor in estimated college expenses
and financial aid, grants or scholarships you may receive. You will then receive a
Student Aid Report that will inform you how much you or your family is expected
to pay for college.
Explore the following types of financial aid to determine which may be right for you:
STUDENT LOANS
•
Subsidized Stafford loans
Subsidized loans are given to undergraduate students who demonstrate financial
need. The federal government pays the interest while the student is in school and
defers payment until after graduation.
•
Unsubsidized Stafford loans
Unsubsidized loans are granted to undergraduate students who do not
demonstrate financial need. As opposed to subsidized loans, the student is
responsible for interest accrued while in school. The 2013/2014 interest rate
for both subsidized and unsubsidized loans was 3.86 percent.
•
Parent Loan for Undergraduate Students (PLUS) loans
PLUS loans are granted to graduate and professional students and parents of
dependent undergraduate students to pay for education expenses not covered
by other financial aid. PLUS loans have a fixed interest rate of 6.41 percent.
•
Perkins loans
Perkins loans are typically granted to low-income families from the school on a
first come, first served basis. Similar to subsidized loans, the government pays
the interest while the student is in school. Undergraduate students may borrow
$5,500 per year, up to a total of $25,000.
•
Consolidation loans
Consolidation loans combine eligible student loans into a single loan.
SCHOLARSHIPS AND GRANTS
Unlike federal loans, scholarships and grants do not have to be repaid. You may
be familiar with scholarships and grants given to students for their academic
or athletic ability, but did you know that some private companies, nonprofit
organizations, religious and professional organizations also offer scholarships?
You can research these opportunities at the following websites:
• fastweb.com
• schoolsoup.com/scholarships/signup.php
• studentaid.ed.gov/types/grants-scholarships
Sources: becu.org/learn-and-plan/web-resources-detail.aspx?id=94&type=article&topic=12
becu.org/learn-and-plan/articles.aspx?topic=8&articles=1&webcasts=0&calcs=0&sort=newest
becu.org/learn-and-plan/web-resources-detail.aspx?id=104&type=article
