3 Effective Ways for College-Bound Teens to Maximize Their HYSA

Finishing high school and knowing that college is in your future is so exciting. Your world is full of possibilities, and while you might not be financially independent from your family yet, your college years are a great time to start breaking away and becoming a full-fledged adult. Savvy grown-ups know that a high-yield savings account (also known as a HYSA) is one of the best financial assets you can have, because you’ve got a safe place to keep cash and it’ll even earn interest.

Right now, the average rate across all savings accounts is just 0.47%, according to the FDIC — but some HYSAs pay you 10 times that or more on your money! Here are a few ways to maximize your HYSA starting this year — and into the future.

1. Set goals for your money

Call me strange (you won’t be the first person to do so), but I enjoy putting money in my savings account because it gives me the chance to dream about what I’m going to do with it. My account helps feed this urge, too, because it came with the ability to set up multiple sub-savings accounts (depending on your bank, these might be called “buckets,” “pockets,” or something else). This means I can earn the same high APY (annual percentage yield) across all my saved cash, no matter what I’m saving it for.

To maximize your HYSA, I recommend finding an account that lets you do the same. Having separate parts of your savings account for different goals means it’s easy to check your progress toward them. And creating those goals can be a powerful impetus to save more money — there’s really nothing like watching those balances grow.

2. Earmark some for emergencies

Yes, I know I said above that having goals and plans for your savings is incredibly important if you’re hoping to save effectively. Well, one particular goal is important enough to deserve its own number on this list — an emergency fund. You might assume emergency savings are less crucial for you as a college student, since you’re not quite at the mercy of the world yet — in a real pinch, you likely have parents or other relatives to rely on for help with a surprise bill.

But the sooner you get in the habit of maintaining an emergency fund, the better off you’ll be in the future, when you’re ideally standing on your own two feet from a financial perspective. Living paycheck to paycheck stinks, and it’s expensive.

If you don’t have the funds available to cover an unplanned expense (like a car repair or a trip to urgent care that your insurance doesn’t pay for in full), you may not have options besides taking on high-interest debt. What’s worse than a $1,000 bill from the auto mechanic? Knowing you’ll be paying 20% interest (or higher) on it when you have to charge it to a credit card.

3. Make it automatic

A high-yield savings account won’t do you much good if you’re not putting money into it. This is why it’s great that you can automate savings contributions. Set a monthly savings goal for yourself (or make it for as often as you want — perhaps when you get paid from your on-campus job?), and set up automatic transfers from your checking account to your savings.

This’ll be easier and faster if the two accounts are at the same bank, but even if they’re not, it’s still worth doing. This way, some of your money will always land in savings, without you needing to actively move it there. A higher savings account balance (and more interest earnings) will be your reward for making this simple move.

Another good option, if it’s available to you, is to sign up for automatic “round-ups” or “keep the change” programs with your bank. If you opt in, the money you spend from your checking account will be rounded up to the nearest dollar and the difference goes to your savings. For example, if you put a pizza bill for $18.22 on your debit card, $19 will be taken out and $0.78 will land in your savings account. It’s a pretty great way to ensure a small amount of money is always being funneled to savings.

If you’re headed off to college in the fall, you’ve likely got a million things on your mind. Who will your roommate be (and will they help you keep the room clean)? What classes will you take? Maximizing your high-yield savings account is perhaps at the bottom of your list. But if you’ve got these moves on your radar and can put some into practice, you can ensure you start adult life on the right financial foot. And trust me when I say that’s worth it.

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