Video: Saving Money

Saving Money

Why do people save money?

We work to make money.

Why shouldn’t we be able to spend all of that money we just made?

If we spend it all, we won’t have any left in case of an emergency or to buy things that cost more than what we have.

It’s important to save money in case we really need it.

For example, let’s say we earned $100 and spent $50 on a new wireless remote control, $20 on a new shirt, and $6 on lunch.

We just spent $76 out of the $100 we just got.

Then we found a hole in our only pair of shoes, so we needed to buy a new pair, but they cost $60.

We already spent $76. We only have $24 left.

If we would’ve saved more of the money we earned, we could have had enough to buy a new pair of shoes--something that was more of a need than a new remote control.

When people save money, they give up the opportunity to buy things now, and instead, wait to buy things in the future.

David’s family wants to go to Disney World, but it is expensive.

His dad has been saving $200 from each paycheck for the past year.

If he gets paid twice a month, do you know how much he saved?

200 x 2 = 400, multiply that by 12 months in a year to get $4,800.

Because David’s dad saved that money, the family was able to go on a weekend vacation to Disney World!

It’s important to think ahead and make wise decisions when it comes to what to do with the money you earn.

Save vs. Spend

We know saving money can be helpful, but how do we save money?

It can be as simple as a piggy bank.

Put any money aside that you want to save into a piggy bank. Don’t take it out unless it’s an emergency.

When your piggy bank is full, consider asking your parents to open up a bank account for you to put your money in.

A bank is a place where people can put their money to keep it safe. Banks are good places to save money.

When you put your money in the bank, you are making a deposit.

Banks can offer to pay interest on the money you deposit into your savings account.

Interest is a percentage of the sum of the money in your account.

For example, let’s say you put $100 into a savings account and each month put in $10 for a year. You would have put in $220.

But if the bank offered 5% interest on the sum of your money, at the end of the year, you would have $231.

(220 x .05 = 11; 220 + 11 = 231)

The bank paid you $11 in interest to hold your money in the account.

It may not seem like a lot of money, but imagine you saved even more money. The more money you have in your savings account, the more it will grow.