What is Savings?
Savings is money you put away to be used later, usually put away a little bit at a time. People save for lots of reasons. Most often savings are used for emergencies or to purchase things that cost a little more. Young people might save for things they want to buy in the near future, such as a new computer game or bicycle; or, young people might save for things they will need later in life such as a college education or a car
How much should I save?
That depends on what you want to buy or what you want to do with your money. If you want to buy a new bike, you’ll need to find out the price of the bike (don’t forget to include money for taxes and a safety helmet).
Then you will need to decide how long you want to save for the bike. Let’s say you want to buy your new bike in 6 months and your parents have agreed to pay for half of your new bike if you save the other half. Here’s how it would work.
You would need to save $12.62 each month for six months to buy your new bike.
Most people don’t save because they don’t keep track of how they spend their money. Sounds too simple? Well, saving really is. So how do you keep track of the money you get (we’ll call this "income") and the money you spend (we’ll call these "expenses"). Most people keep track by creating a budget. A budget is simply a written list of the income you expect to get and the expenses you think you will need to pay.
Let’s try a sample budget:
Jane receives an allowance of $5 a week. She also receives $15 a week for babysitting. How much money does Jane receive each week? Click here for the answer
Here are Jane’s expenses (how much she spent) this week:
