Cash Course: The Right Way To Save Money | Kids Shows

did you know that more than six out of 10 American households don't have enough savings to cover an unexpected one thousand dollar expense such as a car repair or an emergency room Bill life is full of surprises some good some bad and some expensive you can't always predict these things but you can prepare for them the first reason to have a savings account is for financial emergencies some people refer to these as rainy day funds another reason is to gradually save up enough money to purchase something expensive like a new phone or a quality musical instrument or your first car these things may cost a lot of money but you can afford them if you save up little by little over time and discipline yourself to not spend the money until you've reached your goal a third reason to save is to build what some people call a nest egg or wealth for your future with discipline saving and investing habits you could even Achieve Financial Independence someday that may seem like a long way off right now but when you get there you'll thank yourself for saving up over the years [Music] as soon as you begin earning money you can start saving a percentage of your income and a savings account at a bank can help you do that a savings account will pay you a small amount of interest and let you deposit money as often as you like but we'll usually limit how often you can withdraw money it's a very simple account and one of the first ones you should create the way you grow the account is to make regular deposits and no withdrawals keeping the money at the bank makes it a little harder to spend than if it were under your mattress at home and that helps you save it whether it's for an emergency fund a big purchase or investments in your future you should always be growing your savings emergency fund how much should I save for that well financial advisors often recommend saving enough to cover at least three to six months worth of expenses so if you usually spend eight hundred dollars a month you should aim to have forty eight hundred dollars in your savings account it may take a while to save up that much money but once you do you'll be better prepared for an emergency than most people if that seems impossible start small by saving up enough to cover at least one month's expenses I can do that yes you can go you so are you ready to start saving money just follow a few simple steps first figure out where you're starting from how much money do you currently have saved up whether it's in your piggy bank or a bank account and if you don't have a savings account then ask your parent or Guardian to take you to a bank to set one up second decide how much you want to save either as an emergency fund or a purchase goal let's say you want that sweet emergency cushion of six months worth of expenses saved up just add up how much money you generally spend every month multiply that amount by six and that's your savings goal third create your plan of action how are you going to do it how long will it take if your goal is to have twelve thousand dollars in Savings in the next 12 months then you'll have to save one thousand dollars a month can you do that make sure your savings goal can realistically fit into your budget or I could use the 50 30 20 rule right according to that budgeting rule you should put twenty percent of your income each month directly into savings so if you make one thousand dollars a month you should put twenty percent of that 200 into your savings over one year you will have saved twenty four hundred dollars just remember to start each month by putting away the amount you've decided to save if you wait until you're done spending to see what's left over you'll usually end up with little or nothing left for savings if you're having trouble saving look carefully at your spending habits and cut out the things that aren't as important like those in-game purchases transfer this money into your savings instead make your budget lean and mean and it will repay you in the end but you have to be purposeful and patient if you can't make any budget cuts look for ways to earn more money now that you have your savings account a savings goal and a plan to reach it you're on your way to peace of mind sure it's tempting to spend that money right now but later when you buy that big ticket item you'll be satisfied with your self-discipline in reaching your financial goal and you'll also be glad when you have cash for a rainy day or to invest in your future bringing you that much closer to being financially safe [Music] subscribe and watch more at prageru.com