The easiest way to save is to pay yourself first. That means setting aside a certain amount of money you earn and keeping it in a savings account. The key to saving successfully is by making it a regular habit. By saving early and often, you’ll set yourself up for a brighter financial future.
It’s important to save money for a rainy day, just in case you need it for any unexpected expenses like a broken laptop. Another portion of the money you receive should be set aside for your various goals. These goals can be categorized as short-term, medium-term or long-term. You can reach your goals by saving your money over time.
Tablet, smartphone or laptop
Holiday spending money
Think about a short-, medium- and long-term savings goal and determine how much you can save each month toward each goal. Remember, the amount that you contribute per month toward your goals can’t be more than you earn that month. Then calculate the cost of your goal divided by your weekly contribution to find out how long it will take you to reach each goal.
Savings accounts enable you to keep your money safe and help it grow with interest. You can open an account and start saving at any age with the help of your parents.
The longer you leave your savings untouched in a bank, the more your money will grow. You should limit how often you withdraw money from your savings account and only do so if you really need it.
Compound interest is when you earn interest on both the money you’ve saved and the interest you earn.
Let’s say you deposit $50 into your savings account each month at a 1% interest rate. Each year, the interest you earn will help your savings grow. See how 1% interest will increase your savings over the course of three years when it is compounded monthly:
|Year||Balance||Balance + Interest|