Finance 101: Shoebox Savings and Baby Bonds

by Erin Dresch

I’d really like to have a savings account, and I’ve tried twice so far to keep one with Bank of America, but I had to close it both times because I couldn’t keep up with the minimum monthly balance/monthly deposit, which resulted in my being charged a bunch of fees. I now have a checking account with Charles Schwab, which earns a tiny amount of interest, but I’d still prefer to have a separate savings account, too. My question: is there a savings account out there that won’t require me to deposit a certain amount per month or maintain a certain balance? I would like to save, but I have very very little excess income (living on a grad school stipend).

First off, if you want to have a savings account with a bank, you need to save more. Savings accounts should be able to take the blow of a monthly fee. Ideally, you should be depositing enough into the account, or have enough in there already in there, for the bank to waive the charge. But I know that’s not your situation right now, so I won’t belabor the point.

Can you start a savings account in shoebox under your bed for the moment? I’m serious. If a $12-ish per month fee is killing you, a shoebox is a good place to start. The key is having the willpower not to dip into the savings. (Which is true for a shoebox or a bank.) I just want you to get a nice money cushion going and start developing good savings habits so you don’t repeat the past.

I’d say once you master the shoebox savings account, you can move on to the bank. I think that will come once you’ve saved a month’s worth of living expenses and can put away 20% of your monthly income to savings.

There are some places to save that fit your requests. Online savings accounts offer up some good options: ING’s Orange Savings account is pretty straightforward with no fees, and Ally Finance has a savings account with no monthly fees/minimum payments, but I believe there are fees for transfers. I hope this doesn’t squash some of your savings hopes. I just think you need to start a little smaller. It really takes no time at all to reap your rewards when it comes to savings, though, so don’t give up.

I’m a 30-year-old woman employed at a nonprofit. I’ve been working at my nonprofit for the past 2.5 years and am generally pretty happy there. I’d like a bigger salary and more responsibility, but up until now I’ve not done anything about it because (1) man, I’m lucky to have a job in this economy! (2) I felt okay about paying my dues for a few years, and (3) I’m kind of a pushover … I’ve never negotiated for my salary before. After 2.5 years, though, I feel like I’m pretty underpaid and also underutilized. I try to ask for more responsibility every opportunity I get, but I haven’t managed to get as much as I’d like.

My question is: how do I ask for more (money and responsibility) in this economy? I don’t really want to say that I want more, or else I’ll have to start looking around for another position … because I don’t really want to look around! I don’t even know if I could get another job anytime soon. At the same time, I recognize that I have a good bargaining chip. We’re pretty busy at work, and I know they genuinely want me to stick around for a while. I want to negotiate but I don’t know how! Please help!

I’m totally for people pushing for better pay, but you have to tread these waters very carefully. I saw two big red flags in your question: bad economy and non-profit.

Since the economy has been pretty much stagnant the last few years, the typical pay raises working folks have seen during the boom years are gone. It doesn’t mean that raises don’t happen, obviously, but instead of an 8% raise, you’re more likely to get a 3% raise. (Or no raise at all.) I don’t know what your yearly raises have been like in the past, but sometimes you just need to cross your fingers that your salary will keep up with inflation.

Most people who work at non-profits know the troubles of underpayment. There’s really one big factor at your place of business that stands between you and an increase in salary: how much money is coming in. And unless you’re the accountant, it’s impossible to know for sure what that number is. Instead, take stock of the actions of the company. Have they been hiring? Can you order office supplies with relative ease? Are your bosses easily able to throw a party for someone’s birthday or baby shower? If the answers are yes, then there’s likely money on hand that you could negotiate into your pocket. If no, then I would say a conversation about your salary is still a good idea, but will likely not get the results you’re looking for.

I think your next big task before anything else would be to take on a big project to call your own. Admitting that you’re underutilized is troubling if you want more money. Your bosses need to see some results before they’ll consider paying you more. See if there is room to create a new position will more responsibilities.

The most probable way to make more money at your job is to wait for an opening and pounce on it. I know you feel like you should “pay your dues,” but people who know what they want and know that they can do a good job don’t care about that kind of stuff. You may not feel like you’re ready, but if you’re vocal about what you want and cheer on your abilities, people will take notice. It may feel scary, but it gets results.

In the meantime, work on getting rid of that pushover-ness. Feel confident in your performance and wait until the time is right to make your move.

As a child of the ’80s, my parents did the trendy thing and got me savings bonds. They matured a long time ago and have just been sitting there. I don’t really have anything that I need them for, but I also don’t really want the money that accessible to me as I would probably just piss it away. I want to do something low risk with the money, since I could see myself using it in the next few years for a wedding or a baby or a house or who knows! It seems irresponsible to just leave the money sitting there, not earning interest, but it’s depressing to put it in a savings account that only has an interest rate of 0.1%. What should I do with that money?

I recently cashed in on some savings bonds too! They’re so adorable and old-timey. Okay! Moving on to the task on hand. Since those bonds are matured, they’re doing nothing for you just sitting in your drawer, so let’s cash them out soon … like tomorrow. Once you have the cash, there are lots and lots of places to invest it, it all depends on how much risk/time you want to take on.

The low risk/no thinking route would be a CD. There are plenty to choose from, and a simple Google search pulls up the interest rates at banks that offer them. CDs are great because the money will earn some interest (although not a lot) and you don’t have to think once about it until the deposit is up and it’s time to cash out. Since you say you’re low risk, this could be your best bet.

If you have a pretty big bundle of cash, and are willing to get a bit riskier, I would put it into a money market account. Those funds are managed by a real-life person who makes investments that’ll hopefully bring in a big return. Of course, there are no guarantees, and you may not make so much cash in the next few years. On the plus side, many banks offer money market accounts, so you could set one up where you have your checking/savings, so you money’s all in one place.

I’m giving this advice on the assumption you already have some kind of retirement plan. If not, then that’s what you are going to do with the money. Set up an IRA, and feel great about yourself planning ahead. It’s fun to check in on it year after year, and you’ll have an incentive to put in more when you have extra cash. You’ve heard it a million times, but time really is the best way to gain wealth for your retirement, so setting up one of these guys is crucial. Thank me when you’re a carefree senior citizen.

Growing up I remember my mom tipping people at the holidays, like the mailman and the garbage men. I’m 25 and have been living in cities for years now and have never tipped anyone extra at the holidays. Am I terrible? All the “holiday tipping” guides online seemed to be aimed at suburbanites — i.e. I would have no idea how to even go about tipping the garbage men in my neighborhood (my mom used to chase them down the street in the morning or tape the envelope to the lid of the garbage can before she went to work. I don’t think that would fly in the city). And dry cleaners? I use them at least once a week and they do my wash-and-fold laundry a lot because I’m lazy. So basically, who gets tipped and how much?

Before everyone gets harsh and says, “Erin! The holidays are over. Why are you including this question?” let me explain. I may be a little late to help this person this year, but holiday tipping is a such a social minefield I wanted to include this with the hopes you, dear reader, will remember this come next year.

There is really no “right” answer when it comes to tipping. There are rules of thumbs, what’s encouraged, etc., but no steadfast rules that apply to everyone. And that’s what drives people bonkers over this subject. I few days ago I read somewhere (sorry no link, can’t remember where!) that, when asked, people often lie about how much they tip and say a lower number so the person asking tips less and they look better. I don’t know how it got to be this way, but it’s much too crazy.

My rule of thumb is that if you are able, you should tip those who provide you services over the year. Ideally you should know their name. So that would include the person who cuts your hair, does your nails, cleans your house, walks your dog, etc. I don’t know who my mailman is, and I never get packages, so I won’t be tipping. But if you get packages all the time, tipping that person would be splendid. You should definitely tip the person who does your laundry each week.

For some it may odd to tip someone you may tip regularly (i.e. a hairdresser). But, believe me, these people help you through the year doing a mostly thankless job. They remember those who take the time to say thanks.

I’m not going to give you a suggestion for the amount to tip — that really depends on how much you can give.

There’s probably someone out there with a Miss Manners book they want to hit me over the head with because of the advice I just gave, but I don’t care. It’s really all about where you are in life. Don’t stress over the rules, give what you can, and take the time to thank the folks who wash and fold your laundry.

Previously: Salary Negotiation and the Profitable Blog.

Erin Dresch is the producer of business news at NY1, a local news station in New York City. Do you have a question for her?

Photo by James Steidl, via Shutterstock