Is this a good saving strategy for someone of my age?

Question

Hello, my name is Cole (age 16) (just turned 16 yesterday,woot!) and I was wondering if this is a good saving strategy. I plan to work at minimum wage ($6.25/hour) for 20 hours a week. Let's say work for 30 weeks a year, making my earnings to $3750.00 a year. I do know that I am currently exempt from Federal taxes (by the way can anybody tell me the state and local taxes for Allegheny County,Pennsylvania?). If I put 60% of my earnings into a savings account, and keep 40% for myself($2250.00). I do know the bank I will use earns around 1% interest a year. From the information above if I used all of the 40% for my self and let the money sit, I would have around $2272.50. Now I want to save this until I am in college (age 18 lets say, (B-day is August 12, 1992) since I graduate from high school at age 17.) By the age of 18 I should have around $4567.00. This is without state/ local taxes and promotions I may receive. So can anybody tell me if this is a good saving strategy? If not can anyone tell me a different way to save?

Answer 1

Well it all depends on how much money you want for spending. Because w/only working 20 hours a week at that amount per hour your checks are going to ge very small, and by putting 60% insavings you'll end up w/practically nothing left over. What I did when I was your age was have $25 buck from each paycheck (I was paid bi-weekly) automatically put into a savings account; most all banks can either put a certain dollar amount or a certain percentage into another acount, and I never touched the savings account until I was ready. After a year thats $600. I'd advise the method because w/this way you know exactly how much is going to be taken out of your check and can plan your spending from there. If sounds like you want to put alot in every pay check so you should do like $50-75. But you also have to think..$6.25x20=125 a week x2 weeks is =250 a pay check and thats w/out taxes ( I dont know the tax rate where you live)... So dont short yourself and put so much money into the savings to where your left w/no money, I'd try a low amount first and if you find that you can afford to put more away on each pay check then do it and slowly rise to a amount your feel comfortable at :). Dont start too high!