Saving & Investing
If you have created a budget and you have some extra funds leftover, you should decide if you want to save and/or invest your money. Learning how to save and invest early on can help you build good financial habits that will lead to accumulating wealth at an earlier age. Many people may think that saving or investing is difficult and complicated, but saving even small amounts of money and learning more about investing your money wisely can help you to make your money work for you in the long run!
What is saving?
Saving is when you put put away money, usually in a savings account through a bank, to use towards a specific, short-term goal. You might save money to buy a computer, take a trip, purchase a car, or to have an emergency fund or "rainy day" fund to fall back. All of these are great examples of short-term savings goals where accumulating money in a savings account would be beneficial.
Having a savings account is a low risk way to keep your money safe while you save to reach your short-term financial goals. Savings accounts are usually easy to access, so you can use your money when you need it. However, most savings accounts have interest rates that are lower than the rate of inflation, so your dollars may lose purchasing power over time. This doesn't mean that you shouldn't have a savings account - having a savings account that is easily accessible for certain types of short-term savings goals is an important step in achieving financial security! But it is only one of many ways to make your money work for you.
The first step to saving money is to build a budget - knowing how much money you have and how much of your money you are spending each month will tell you whether you have enough money leftover each month to save. Jayhawk Finances can help you get started in figuring out savings goals for every financial situation.
What is investing?
Investing is when you put your money into a certain type of account (like a retirement account, otherwise known as a 401k or a Roth IRA). Investment accounts are usually used to achieve long-term financial goals, such as saving for retirement. Investing allows you to put your money into vehicles that have a better chance to outpace the rate of inflation so you can avoid losing value on your money - but there is a higher risk with investing, so you need to to know how to invest wisely to be successful.
Investing is one of the ways in which money can begin to work for you and offer a potential for an additional stream of income. Students are often times curious about investing, but have little to no understanding about how or where to start. Working with Jayhawk Finances, students can learn about the different types of investments, tips on where to get started, and resources on where to learn more about investing.
Types of Investments:
- Retirement (401k, Roth IRA, IRA, etc.)
- Stocks
- Bonds
- Mutual Funds
- Annuities
- Commodities
- 529 College Savings Plans
- Health Savings Accounts
Finding a Financial Advisor
Jayhawk Finances can help you to learn more about what investing is and resources to get started, but we are not able to provide advice on what types of investments you should personally make. If you are looking for advice on what to invest in, finding a trusted financial advisor can help you to reach your short- and long-term financial goals. Here are a few tips:
- Create a budget first - in order to successfully work with a financial advisor, you need to have a basic understanding of your financial situation.
- Check with family members and close friends - they may have a potential refence to a good financial advisor.
- Be sure you do your own research about the background of the advisor that you want to work with. It's ok to ask them questions!
- Find a "fee-only" fiduciary advisor (see links on the sidebar list).
This information is being provided for educational purposes only; it does not constitute an endorsement or approval by the University of Kansas. The University of Kansas bears no responsibility for the accuracy, legality or content of the resources listed.