There are so many options to save money and it’s really worth the effort to do a bit more homework while in school to find out the best options available. Check out the article we did about savings accounts online http://www.savingstoolbox.com/2008/08/13/how-to-compare-online-savings-accounts/.

Great post, Stephanie! Nice concept!

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Right now, the savings account is just to catch my money until I have enough to get a Roth IRA at Vanguard and fill it with their index funds! That’s the plan, anyway.

The folks who sell professional investment advice are like mechanics, lawyers, and physicians — it’s hard to spot the good ones without an inside line, and the world is FULL of crummy operators who are just after your money.

Sites like the Motley Fool like to pitch a do-it-yourself view, and I do that myself. My blog has some discussion of investment ideas, mostly looking so far at the quality of the reporting on different companies.

If you plan to spend most of your time having fun and not reading about investments (this is the case for folks who don’t find reading investment research fun), you may want to find a few companies with a long track record of building shareholder value (either by aggressively reinvesting profit at a good return, or paying substantial dividends to shareholders who can participate in a dividend reinvestment plan). I have a few companies I like in this space, but you will want to balance your interests when you pick for yourself.

Leaving money in the bank is awful: interest doesn’t meet inflation, so it’s like withdrawing the money and every week burning some of the bills to amuse your parakeet. You need an inflation-beating return, and preferably a return that beats the major stock indexes.

Lots of interesting ideas are out there, and some of them are on my blog, but you should be thinking early about how to turn today’s spare money into a fortune in ten years. The power of compounding returns is great enough that you really don’t want to be on the sidelines.

A combination of the two, actually. I have several online savings accounts, because I’ve opened up a lot to get the bonuses they were offering at the time. So I’m just purposing each one for something different.

I say it’s a “combination” because I’m combining the textbooks fund and the getting established fund into one savings account, and keeping track of it on a spreadsheet.

For your situation, my suggestion would be to use ING’s online savings accounts. You can open multiple ones really fast (I timed it, each new one takes about 42 seconds!) and you can make some of them joint accounts with your finance, and keep others separate. If you’d like, I have referral links for ING, so you could get a $25 bonus for opening an account with them.

I am starting a wedding fund, which I will put into its own high interest savings account with my fiance, but other than that I only have one savings and one checking account. Any recommendations?

I see what you’re saying about the getting established and the emergency fund. But since they’re both just savings accounts, the distinction is really just psychological. When the time comes to actually get established, I’ll use what’s in the fund for that, and if I need more, it will come out of the emergency fund.

About the Roth, isn’t there a rule that contributions may only be removed penalty free IF you wait five years before you take them out? I seem to remember that, but I gave away the book I read it in.

Personally, it seems you are making this complex. For example, getting established is a one-time expense. Admittedly, you can anticipate it some, but in my mind it is just a kind of “mini-emergency”. You take a hit on your emergency fund to get started, and you go back to building your emergency fund.

In my mind, it’s almost all “emergency fund.” The difference is what balance you think you need for emergencies. If you know a car is in the future, then your goal is perhaps $20,000 instead of $10,000.

And don’t forget, you may be able to start your Roth a bit earlier than you think. You can take out your contributions without penalty. You shouldn’t unless you have an emergency of course, but you can. So you could reasonably build your emergency fund to $5000 and then move $1000 in your Roth IRA. Invest it in money market funds if your really feel conservative and then your principal will be safe for you.

A note about the retirement savings: I know that I’m foregoing some compound interest, but the problem is that compound interest works both ways. Money trapped in a retirement account isn’t very good for me if I have to tap into my credit card to pay for the basics. I want to start contributing, but there are some pressing expenses that will come in order for me to get off on my own, and to the point where I’m making enough to save for retirement. Sorry if that wasn’t clear!

Also, in terms of fun money, I’ll gonna sit on that for a little bit. I’ve done quite a bit of traveling in college, actually, some of which was reflected in my credit card balance! Nowadays, I’m enjoying traveling to interesting places close by - it’s cheaper and I get to see new sights in my home city. When I reevaluate in a few months, maybe a travel fund will sneak its way in there