What’s the best way to save money for my ‘new’ used car?
Dear Mr. Suffrin: I’m 13-years-old and I’m saving my money so I can buy a car when I turn 18. I earn $60 a month babysitting for neighbors. I also get $40 per month for doing my chores around the house. My mom gives me $10 for every A I make on my semester report cards, and I always get three or four of them, so that’s $60 to $80 per year. She pays for my clothes and other expenses. How much should I save for my car – and where should I put the money? I have $500 in the bank now. – Looking Ahead in HahnvilleDear Looking Ahead: Assuming you’ll be able to earn 5% interest on your savings, the $500 you’ve already put away plus the $110 per month you anticipate making will grow to $6,442 four years from now, when you turn 18. Whether the $6,442 is enough for the car and your rainy-day account depends on the type of car you want and what you feel you’ll need for a rainy day.
The money should be invested in short-term certificates of deposit (6-month to one year) or a combination thereof. CDs yielding at least 5% are what you want. The CDs should mature on the date the money will be needed for the car purchase. Talk to a banker or broker for details.
Students’ questions about finances answered – only in the St. Charles Herald-Guide. Financial expert and school board member-elect Al Suffrin, a certified public accountant, takes on the tough questions from parish kids- and their parents – in an important weekly column everyone should read. Send YOUR questions to: editor@heraldguide.com or write: MONEYTALK, P.O. Box 1199, Boutte, LA
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