Savings accounts are a good way to save money.  Unlike a checking account, savings accounts are meant to be used to save money, not spend it.  You can save for something special or for that ‘rainy day’ that our parents always say is coming.  By rainy days, it means emergencies or things you need when something unexpected happens.  For example:  Let’s imagine that John doesn’t have a savings account.  He finds out that his favorite rock group is having a concert in his town.  He needs ticket money but all the money he has is in his checking account or in his pocket.  These don’t add up to a concert ticket.  If he had saved his money, he would have had the money he needed for the concert.
     Some people think it is much easier to save their money in a piggy bank or in a box under their beds.  This is not as good as a savings account because it is too easy to spend.  Having $10.00 in a box under your bed when your friend says, “Let’s go get ice cream,” is probably not the best savings plan.  It is too easy to get ice cream and promise yourself that you will replace the money.  Somehow it never gets replaced.
     Most of the time, a savings account is your first bank account.   You need to choose the right bank for you.  Click here for tips on finding a bank.   After you choose your bank, take your parent to the bank with you because, depending on your age, he/she might have to sign up for the account with you.  Find out what your Social Security number is from your parents because this is a number that is used to set up bank accounts.  When you get to the bank, there are usually people standing at high desks with little window areas.  They are called tellers and handle deposits and withdrawals to and from your accounts.  People who start accounts usually sit at desks with customer chairs in front of them.  Account managers have started plenty of savings accounts and will help you through the steps to becoming a GREAT SAVER! 
     You sign up for the account and then give the bank employee the money you want to deposit.  You might be given a passbook which is really a register of every deposit or withdrawal that happens in your account.  You would need to bring it to the bank each time you wanted to take money out or put money in.  Many savings accounts can be seen online and don’t have a passbook.  These would get a monthly statement showing all of the deposits and withdrawals. 

Looking at the passbook image to the left, notice that there are columns for money that is added into the account or subtracted from it.  The first deposit is a paycheck.  This gives you a balance of $25.00.  After that the bank will list anything that adds or subtracts money to or from your account.  The picture on the left shows that this person withdrew $20.00 from the account and earned 69 cents interest.   You get more interest as your balance increases.

     Interest is money that the bank pays to you so that you keep your money in the account and allow them to use it while it is there.  They use the money that has been deposited in their bank to lend to people who want to buy a home, pay off bills, or things like that.  There are two different kinds of interest.  The first is simple interest when you earn a percentage on money you have in the account for a year.  This means that if you put $100.00 into an account that earns 5% yearly, you will have $105.00 by the end of the year.  There are also compound interest accounts.  This means that if you have $100.00 in an account for a year, you will earn interest on that PLUS interest on the monthly interest they pay you, too.  Obviously, compound interest will add more to your savings total.
      It is very important to keep your bank receipt for money that is put in or taken out of the account so that you can make sure that your balance matches the bank’s balance.  You need to ‘balance’ your savings passbook every month so that you can find mistakes early enough to fix them.  Banks have a time limit for fixing mistakes in your account. 
     To balance your savings account each month, you need to know what your beginning balance was for the month, add all of your deposits and subtract your withdrawals to get the amount that should be in your account.  If you just set up the account, you take all of your receipts for deposits and add them.  Then you take any withdrawal receipts and subtract them from the deposits.  This would be how much money you have, without interest being added. Then you take the passbook, if you have one, and compare your total with their total.  If you have a statement savings account, you compare the totals, too.  Once you add the monthly interest, your total should exactly match the bank total.  If it doesn’t, then you need to go back over your deposit and withdrawal receipts and compare them to the bank balance.  Did you deposit money after the date on the bank statement?  If you did, then that deposit won’t show up until next month.  If the difference seems to be a bank error, you only have a couple of months to get it fixed. 
     Other savings accounts are:  Certificates of Deposit (CDs) and Money Market accounts usually used when you have lots of money and want to get more interest, and Individual Retirement Accounts (IRAs) which are retirement accounts where the money stays until you are 59 and/or quit working forever.
     Many people save money last.  They pay all of their bills and expenses for the month and then check to see if there is any money left.  If there is, they might save it.  The problem with this is that most people either don’t have any money left to save or the money never actually gets into the savings account.  While we are young, we need to start managing our money with good saving habits.  Even if you have only a little money, start a savings account.  Add a little each time you get your allowance or get paid for some job you do around the house.  Figure out what 10% of the money you make is and then put it in the bank.  Having it in the bank lets you see it grow and makes it harder to spend.  We saw online that people today are saving less money and that they have a harder time when the economy gets worse.  You can make your future more secure by saving NOW!

More Piggy Pages

Fun Fact

Piggy banks started in the 1600s when they were given to apprentices  at Christmas with a coin or two in them.