Saving and Investing

There are many ways people can get the money they need to pay for what they want. The first step is to set a goal of how much money you need. If you take any money you have from your allowance or job and put it in a savings account, the money will earn interest over time and your bank account will grow. Saving money in a savings account is a safe, low risk way to build your money. While it will grow slowly, the money cannot be lost. There are a few drawbacks to savings accounts. The interest rate your money earns is usually low. If inflation (a rise in the prices of the things you buy) is affecting the economy, the money you save may not be enough to keep up with the rise in prices.  

There's only one kind of U.S. Treasury securities investment kids can make – savings bonds. Over time, you earn interest on the bond's value and can get back the value of the bond (what it cost) plus the interest. Once you're an adult, you can also invest your money in other Treasury securities like bills, bonds, TIPS, and notes. You can also invest in mutual funds, which are made of a mix of stocks and other types of bonds. Investing money usually gives you a higher interest rate, which means you could end up with more money. However, investing also includes risk. The interest rate on your investment can go down, sometimes quickly. You could end up losing money.

Most people use both savings accounts and investments to save for their future. You need to decide how soon you need your money and if you can afford to lose any of it when you decide how much to save and how much to invest.