The path to financial abundance starts with one simple step.
Beth Pedersen, Citizens Bank’s Senior Vice President, Chief Financial Officer, knows a lot about finances. In fact, she teaches financial literacy, not only has she taught at the college level, but one of her passions is teaching financial literacy at the Indiana State Women’s Prison.
“One of the most important things I teach them is you don’t have to be ‘rich’ to invest,” Pedersen says. “And this is great advice for anyone. You don’t start big—you start small, putting just a little something away. And then? Don’t touch it.”
That one simple step can add up to a lot of savings and security over time, she explains. “I love helping people understand that even a small savings, with the power of compound interest, can have a huge impact.” Here are some of her tips she shares with students.
- Open a regular savings account.
- Create the habit. Start with whatever you can afford, even if it’s $5 a week, and start depositing it.
- Take your savings out FIRST from your paycheck. Make it a priority.
- Make sure your savings account is not easily accessible. Don’t have it attached to your ATM card so that you can access it electronically to borrow money when the mood strikes. Keep it as a separate and stand-alone account you have to access in person.
- Harness the power of automatic deposits. For example, have your paycheck deposited automatically into a checking account, and your savings automatically from there to your savings account.
- Use auto pay to banish late bills. This is a great way to avoid late fees, which can add up over time at around $25 per penalty.
- Keep track of your money. Get some sort of app that shows you what you have, what you’re spending, what’s left over. And find what works for you. Maybe it is a checkbook ledger, or an envelope system, or an app like Mint.com.
- Set up your account for online banking so you can always go in and see what’s going on with your money, and check it often.