Disclaimer: I am NOT a professional financial adviser nor am I providing advice, I am simply sharing my opinion.
Here in the USA, we have a major problem with teaching our children (and adults) about money. We tell them that debt is good and that we need a good credit rating (which is based on how much and what type of debt one holds) to survive in the adult world. This is just plain wrong... wrong in a big way. Additionally, we rarely, if ever, talk about saving money or planning for retirement. We must stop this way of thinking and start thinking about financial independence.
It's never to late to start saving (read: investing) money. Today, I will briefly write about the least risky way to invest your money: savings accounts. Savings accounts should not be used as a place to just store your money, it should be a low risk place to BUILD your money. Most local and national banks give very, very low interest rates. Wells Fargo pays anywhere from 0.01% for their Way2Save and Opportunity Savings accounts, and up to 0.05% to 0.15% for their Platinum Savings. Yes, they give a percent of a percent! Also consider that Wells Fargo charges a monthly fee if you do not keep a minimum balance of $300 to $3,500, depending on the type of account.
Enter online savings accounts from Ally, Barclay, and C.I.T, to name just three. These are high-yield savings accounts that paying at least 2% interest on their savings accounts. That's 200 times higher than Wells Fargo! These online savings accounts require no minimum amount to open, no minimum monthly balance, and they compound their interest daily rather than monthly like Wells Fargo and other traditional banks. The only real draw back is that withdraws often take several business days, but hey, you are building money not storing it.
To give you some real-world examples, lets look at the monthly interest on $1,500. A typical bank like Wells Fargo with 0.01% interest will hold your money for 30 days, then pay you $0.01 (totaling only $0.12 in 12 months). Whereas a bank like Ally, will net you $2.50 during the same month ($30 after 12 months)! To keep it simple, I did not compound the interest into the yearly totals. That's a HUGE difference. As you continue to deposit money and the interest compounds with deposits, we can quickly turn that $1,500 into $15,000 or even $150,000. To keep it simple, that's $300 and $3,000 per year respectively. Who doesn't want t a $3,000 per year raise?
As the saying goes: The best time to plant a tree is 20 years ago... The next best time is today.
If you are short of cash, I recommend directly depositing $1 per paycheck to start. Increase the amount every couple of months if you can. Before you know it, your money will build to something that you can be proud of! Imagine saving enough to pay cash for a car or house... it IS possible.
As part of a personal story: I get excited when I earn just one penny of interest. Sure, I get laughed at but usually these are the same people PAYING interest, not earning it.