Saving money is like planting seeds for the future: Whatever you save today grows the possibility of what you can do with that money tomorrow.

In this article, we’ll dive into why saving is important, how to set reachable savings goals, and some ways you can make saving fun instead of a chore.

Why Saving Matters

When you save, you put aside money you’ve earned or received as a gift instead of spending it right away. You can save any amount, from the spare change you got back after buying ice cream, to the $20 you received in a birthday card, to the money you’ve earned from babysitting or mowing lawns. Saving helps you make progress toward a larger goal.

What do people save money for? Here are some common reasons for saving:

• Short-term goals – Things you want sooner, like a bike, a phone, guitar lessons, or a concert ticket
• Long-term goals – Bigger dreams, like a car, college, or even a house
• Emergency fund – Savings established by adults for unexpected expenses, like car or house repairs

People also save money to give themselves more choices and opportunities in the future. Kids might save money for a trip to a theme park or to host a pizza and movie night with friends. Parents might save money for a family vacation or a celebratory dinner at a fancy restaurant.

Saving isn’t always easy, but it’s always worth it!

Setting SMART Savings Goals

SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound. When it comes to saving, it means you know exactly what you are saving for, how much you want to save, and that your goal is realistic, important, and has a timeline.

SMART goals help you think about what you really want or need, if the goal is important enough for how much it will cost and how much time it will take to save for it, and if the goal is something you can achieve in a certain amount of time, based on how much you earn.

Say you really want to buy a $500 bike, but your parents say it’s not in their budget right now. Maybe you already have $100 saved in birthday money, and you earn $20 each week in allowance if you complete all your chores. In this case, your SMART goal would look something like this:

• Specific: The bike you want costs $500.
• Measurable: You already have $100, so you need to save $400 more to achieve your goal.
• Achievable: You earn $20 a week if you do your chores, so you are earning money regularly.
• Realistic: A bike is a realistic item to want. You can use it to get around, exercise, and have fun with your friends.
• Time-bound: You have $100 and need to save $400. You know you can earn $20 each week. At that rate, it will take you 20 weeks, or about five months, to get the bike.

Remember, any amount of money you bring in can be saved. So, if you receive any additional money as gifts or pick up an extra $20 walking the neighbor’s dog, you can add it to your savings and reduce the time you need to save up for your goal.

However, if you decide to spend some of your birthday or allowance money on a video game or a trip to the movies with friends, you’ll have less saved, and your goal will take more time to achieve.

Longer-term goals, like saving for a car you want to buy in your late teens, will take a lot more time and likely require earning more money. When saving for something big that costs thousands of dollars, you will probably need a real part-time job that earns you regular wages. In the meantime, every little bit counts, so save all the allowance, gifts, and spare change you can.

Create a Savings Plan – and Make it Fun

For small savings goals, a good old piggy bank or savings jar can do the trick. Keeping it up on a high shelf when you’re not filling it can make you less likely to take money out and spend it. If you’re saving for a larger or more long-term goal, or if you’re really serious about making savings a habit, you can set up a savings account at your local bank or credit union or online. Savings accounts are safe places to save money and earn a little bit of interest. Online savings accounts often offer higher interest rates than traditional ones.

If you’re setting up a savings account, you will need your parent or guardian’s help. Some savings accounts offer an app you can access on your phone or tablet, which can help you track your progress.

While it’s certainly easier to spend money than save it, there are ways to make saving exciting and even fun. Here are some ideas:

• Set goals to stay motivated. If you’re saving for something specific, find ways to remind yourself what you’re working toward. Tape a photo of that new bike to a piggy bank or jar you’re using to save your extra cash and change. If you’ve set up a savings account, you can often give it a nickname – so think about naming it for that new video game system, or if you’re thinking long term, “car fund”.
• Track how much you save. Whether you make a chart to hang on your bedroom wall or track it on a banking app on your tablet or phone, seeing your progress helps you keep your goal in mind.
• Consider saving challenges. Making saving a habit will set you on a path to smart money management throughout your life. It may be easier to stick to saving if you start small. Try one of theses savings challenges:
  • 52-week challenge: Deposit more into your piggy bank or savings account every week for 52 weeks (a full year). You can even start with just 25 cents on the first week. Increase it to 50 cents on week two and 75 cents on week three. Following this plan will help you save $344.50 in one year!
  • Spare-change challenge: This one’s pretty basic. If you get or find some spare change, add it to a jar or a piggy bank. When you’ve completely filled the container, open it up to see how much you’ve saved.
  • The no-spend weekend (or week) challenge: On weekends, or maybe during a certain week each month, try not to spend any money you’d usually spend. Maybe that means not buying snacks or finding free ways to have fun with your friends, like hanging out at the park or watching movies at your house instead of heading to the arcade or theater.
• Celebrate milestones. Saving isn’t always easy, so it’s good to reward yourself for progress. Of course, you don’t want to spend too much of that money you’ve worked so hard to save, but if you’ve managed to save $100 for that new bike, go out and have lunch with your friends to celebrate.

The Awesome Power of Compound Interest

Imagine earning extra money just by saving – that’s what interest is all about. When you put money into a savings account, your bank or credit union can use that money to make more money. The bank or credit union pays you back a small percentage of the amount of money you are saving, and that small amount is called interest.

Compound interest takes it a step further: Your bank or credit union pays additional interest not only on the money you add to your account but also on the interest you’ve already earned.

Say you initially put $100 in your savings account, which has a 2.5% interest rate, and it compounds once a year. Each month, you add $25. In three years, your money has grown to $1,030.38.

Get Started Today!

Spending money helps you get what you want, but saving money helps you reach bigger goals. Set your SMART goal, figure out how much – and how long – you need to save to get to that goal, and choose the way you want to save. A savings account with Minster Bank can help you keep money in a safe place and see extra earnings from interest.

Financial literacy is a lifelong journey, and we are here to support you at every stage. With fun, easy-to-understand resources, Know & Grow reflects our mission to provide educational opportunities for all. Visit our Know & Grow page to download the Zogo app through Minster Bank and get savvy with your savings today!