Saving Basics

There are many ways to use money. So people save money for many different reasons. That means you should be dividing up your money to use it in different ways. Let’s look at a few: 

Common Expenses. The adults in your life may expect you to use your allowance to pay for lunch at school, going to the movies, or covering the extra charges on your cell phone bill. That means you need to know about how much these “usual” expenses total. Why? So you can put some money away to pay for them.

Little things. Some people call this pocket money. You should save some money so you can buy little things, like a candy bar, a bag of chips, or a soda.

Emergencies. You forget your jacket at soccer practice, and someone steals it. Or you forget to lock up your bike, and it disappears. If you have a history of being careless, your parents will expect you to purchase the new coat or bike. If you don’t have some money set aside for such emergencies, you have a problem.

Things you buy soon. Whether you love video games, clothes, or you’re eyeing a new MP3 player, you’d better be regularly saving some money for them. Got other purchases coming up? How about presents for others. You need to put money aside for birthdays and holidays, too.

Far-away items. You’ll need even more time to save for expensive items Do you dream of getting a car right after you get a license? Do you plan to take a trip to Europe before college? Speaking of college: how much will you contribute toward college tuition and room and board? Even if you earn a great scholarship, extra cash will come in handy. Even small amounts can add up. You need to set some money aside for these long-term goals.

Investing. This is real long term. This is money you save and leaved untouched for a much longer time. You may think investing is only for adults. Not so. You can start now and gain some new skills.

Giving. If you feel that helping others is important, tuck some money away for giving, too.

Savings banks

You probably get an allowance. If you do, you may want to use several banks to help you keep your savings straight. It may help you to label four-banks to keep your money separated and meet your saving goals:

Spend (Common expenses, little things, emergencies)
Save (Short-term purchases: items on your wish-list and gifts for others)
Grow (Long-term Purchases & Investing: save a little every week and let it add up)
Give (Helping others)

If you feel you need more banks with more specific labels, go ahead. Do what works for you.

Keep this in mind: as you grow older, your savings goals will change, but the need to save for both short- and long-term goals will not. For now, keep some money in the banks in your bedroom. But you’ll want money to work for you. That means you should put it in a savings account so it earns interest. Learn more about earning interest.