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.
