How & Why You Must Save Money

By Arkansas Next on Friday, April 5, 2024

We repeat: You need to save money. Start now. Little by little. Make it a habit. Automate it. Set goals. Don’t quit. Then, watch it grow. Here’s a little bit more about savings accounts and the beauty of compounding interest.


Start with a bank account. Get a checking account and at least one linked savings account so you can move money between accounts. A checking account lets you get paychecks through direct deposit and spend with a debit card.

Some banks even offer benefits to teens setting up bank accounts. For example, Simmons Bank offers a Save10 Youth Savings Account for people under 17, which will match your first $10 saved, give you small bonuses for making A’s in school, and even pay you $100 when you turn 18 years old.

You won’t earn much interest on these accounts, but the point is to have your first tool for saving.

When you get paid, immediately set aside a portion for your savings account(s)—you can even automate this.


Before you confront long-term goals or fun purchases, you need money stashed in case something bad happens—an injury, a job loss or another unexpected expense. That’s your emergency fund.

Try to save enough to cover three to six months of expenses; a few thousand dollars will get you out of a tight spot. Budget money from each paycheck to the fund, and don’t forget to refill it when you spend some.

Never break into this fund for wants; this is only for unexpected but necessary expenses that you can’t afford with your monthly budget.

10%-15% The amount financial experts recommend you save from each paycheck. (Source:


Part of your monthly budget might include making car, student loan and credit card payments. These debts accrue interest (and add to your debt). As you reduce your debt balances, you also reduce the amount of interest you're charged. Getting your debts paid down as quickly as possible keeps money in your pocket (money you can put into savings). 


After setting aside money in savings, paying down debts and paying monthly expenses, if there is any money left, it might be time to up your savings or make larger debt payments. Enjoy spending a little of the extra at times, but saving any excess pays major dividends when you start young.


Feeling overwhelmed, intimidated, or like you don't have much to save anyway are reasons young people are often slow to start saving. But it's easier than it seems, so go ahead. Start now. Be brave, and save boldly.


3 ways to save money in your sleep

AUTOMATED SAVINGS: A portion of your paycheck missing? Awesome! It's automatically been put into your savings account for you (as long as you set it up that way). You can schedule additional automatic transfers from your checking account into savings (monthly, bi-weekly, or weekly) to save even more without thinking.

ROUND-UP SAVINGS: Banks and apps like Acorns will help you save by rounding up purchases and saving that extra. Example: If you spend $4.25 on a coffee, the purchase will be rounded to $5, and that extra $.75 will be put into your savings account.

CASHBACK AND DIGITAL COUPONS: Apps and browser plug-ins Honey, Coupert and Ibotta automatically help you find better deals on items you’re about to buy, not to mention give you cash back (it's legit!) on most purchases. The cash back is deposited securely via PayPal. Move that into savings, and boom!