Saving Money

Saving money isn’t as exciting as spending money, but it’s an important part of learning to manage money. If you think about it, saving is a choice between spending money right now and spending it in the future—probably on something you want even more!

People have different attitudes about saving. Some people love to spend money and have a hard time saving or understanding why it’s important to save it. Other people save as much money as they can and have a hard time spending money, even when it’s necessary.

Even though everyone has their own savings habits, it’s always smart to save money for things that are happening soon and for things down the road. This is called short-term and long-term savings.

A good savings plan sets aside money for short-term and long-term needs, and for emergencies. How much you need to save depends on the amount you need in the future and how long you have until you need it.

Right now, you may not have any expenses to plan for, or even any money to save! That’s okay. When you do get money, practice saving so it’s a habit as you get older. Even 10% or 20% saved adds up. For instance, if you get $20 for your birthday, put away $2 or $4 for later. You may not have anything you want to spend money on now, but in the future you will and you’ll be glad you planned ahead.

While you may use a piggy bank or wallet to save money right now, many people store their extra money at a bank or credit union. Savings accounts are popular because they keep your money safe but also available to take out, or withdraw, when you need it. When you’re young, you’ll need a parent or guardian to open a savings account with you. As you get older, you can take more control over the account.

Savings accounts also earn interest, which is money paid to you while your money is in the account. It’s like a reward for saving money from the bank. The amount of interest you are paid depends on the interest rate and how much money you put in the account.

Amounts under $100 will only earn a few pennies or dollars in interest, but it adds up over time. Plus, that interest is added to the total amount. Say you deposit $50 and earn $1.25 from interest in one year. Now you’ll have $51.25 earning interest the next year.

The money you keep at banks and credit unions is protected from loss, so it’s safer than storing it at home. Financial institutions have other accounts for saving money, too, depending on how long you leave the money in the account and how much you deposit.

You’re never too young to start saving money and thinking of your future financial success.