How to Save Money For Kids – Money Facts
An essential part of a budget is savings.
First, make a budget outlining your income and all your essential expenses.
What is left over should be divided into categories; such as entertainment, gifts, etc. Another category should be savings.
It doesn’t matter how much you can contribute to a savings account as long as it is some amount.
The intent is to promise not to touch it unless there is an emergency or if and when you have accumulated an amount that will easily pay for a special expenditure like a vacation or semester fees for school, etc.
How much to contribute to savings
If you are earning a paycheck, some of the money should be put into savings.
If you are giving money as a gift or you get paid for doing an extra job, put that money into savings even if you are tempted to spend it immediately.
Everyone knows that it is fun to spend ‘found’ money, but accumulating a savings account can be just as much fun because it can pay for something big that you want in the future, such as college tuition or a car.
Savings Accounts
There is no rule that savings have to be put into the bank.
When you are just beginning to build a budget, you might want to cash your paycheck, pay all your essential debts, and divide the rest into envelopes – one for each type of spending.
One envelope will be for gifts, one for entertainment, one for clothing, and one for savings.
As you get used to using the envelopes, you can use a spreadsheet to keep track.
Allocate a certain amount for each category and delete the amount you spend each month, except for savings.
Savings should have money allocated every month – but nothing deleted.
Bank Accounts
Generally, people open two accounts with a bank – one for checking and one for savings. Banks will pay you to keep money in a savings account.
What the bank pays is called interest on savings accounts.
However, the amount of interest you will earn is very small and could only be 1%.
Cutting Expenses
This is another way of saving. Whatever you can save on expenses will increase the amount you can put into your savings account.
You can turn off devices you are not using, like the computer or lights in a room when you leave. Look for sales on clothing and try not to buy anything that has not been marked down.
Check the food suppliers’ sales flyers and buy the food chain’s home brand, such as ‘no-name’ products.
Cut down on the specialty coffees you like to buy every day. Start taking your lunch to school or work instead of buying it from the restaurants.
Most millionaires started out by saving a little bit here and a little bit there. It soon adds up. It is never too late to start.
Quiz Time!
QUESTIONS
After paying your necessary expenses, what should you do with the money left over?
Name 3 categories where you can allot some of your left over money.
What does a savings account do for you?
Why do you think banks give you interest on your savings?
Name 3 things you can do to decrease your expenditures.
ANSWERS
You should divide the money left over into categories for spending.
Three categories for spending left-over money could be entertainment, clothing, and savings.
A savings account will give you money for emergencies and for buying something big.
Banks want to encourage you to put money into a savings account so that you will leave it unspent and they will use your money until you decide to take it out.
You can look for sales, turn off electricity when you don’t need it, and give up buying expensive coffees or drinks every day.
