Main content
Course: Financial Literacy > Unit 2
Lesson 3: Saving money- Why and how to save
- Why and how should I save money?
- Planned and unplanned expenses
- I am ready to save. What is the next step?
- Saving wisely: emergency fund
- Emergency fund
- Saving wisely
- Saving wisely: planned expenses
- Paying yourself first
- Pay yourself first
- Paying yourself first
- What are different types of savings accounts?
- What is interest and how does it work?
© 2024 Khan AcademyTerms of usePrivacy PolicyCookie Notice
Why and how should I save money?
Learn the reasons and strategies for saving money.
Saving money is very important for a number of reasons. First, it allows you to have a safety net in case of emergencies. For example, if you suddenly lose your job or have an unexpected medical bill, having money saved up can help you avoid falling into debt.
Another reason it's important to save money is so you can reach your goals. If you want to buy a car or a house, save for college, or travel to a new place, it often takes time to save up enough money to do those things. By saving regularly, you're taking steps towards achieving those goals.
How do I save money?
There are many different methods people use to set money aside. Here are a few examples:
- Some people automatically deposit a certain percentage of their paycheck into a savings account, so they don't even have to think about it each time they get paid.
- Others keep a piggy bank or jar at home, where they add their spare change each day or week.
- Another strategy is to create a budget and designate a certain amount each month to put into savings.
- Some people use apps or services that "round up" their purchases to the nearest dollar and put the extra change into a savings account.
- Finally, some people use specific goal-setting strategies. For example, they might save all
How you choose to save money is up to you, as long as you are saving.
Want to join the conversation?
thanks for this information! maybe I'll finally become a doctor and my dad will be proud of me!(47 votes)
I am sure your dad loves you and is proud of you. After all, you have become what he raised you to be. Even more importantly: Do what makes yourself proud and loved. Otherwise, you will be chasing something that is out of your control.
The best of luck to you.(65 votes)
- Investing and watching my money grow is too boring, even with Subway Surfers.
I'm gonna buy a battleship, and start plundering other ships. Let's bring back the pirate times(30 votes)
From which bank will you borrow the funds to purchase the ship? Have you investigated the costs of buying and owning a ship, paying a crew, and providing ammunition for your piratical plans? Maybe you should start saving.(47 votes)
Why don't people save as much as they would like to, or what to? why is it so hard for so many people to get the concept of saving their money? How can I get better at saving money?(9 votes)- Well you can get better at saving money by knowing exact what you need and want and then eliminate SOME things that you know you don’t need, then put that money that is extra towards saving. The reason it’s so hard for people to save money is because there is so many things you can get with certain amounts of money, so for example if someone has extra money from their job and they already know SO MANY THINGS THEY WANT, without self control and being educated right they will try and get everything they want that they can in that moment. Because of this cycle, people have a hard time saving money sometimes.(17 votes)
- My family used to have a huge filtered water jug in which we all put spare change and small bills. If I were to propose we restart this jar, would it be an efficient way to save money for a 'rainy day'?(8 votes)
- No. That's not a rainy day fund, because it's built on "spare change". A rainy day fund (or emergency fund) is built on paying into it first, not last. I can imagine myself stopping at the gas station on the way home and filling up the tank, using the change from a $50 bill to get a candy bar before putting what was left back into my pocket to put into the jug. Can you see yourself doing something like that?(4 votes)
I would recommend maybe buying things with cash and whatever your change is in coins left over put it in a safe place and let it grow. I did this when I was 16 years old to 18 years old. I only used cash. Obviously this won't work for online purchases, but everything else in person will work. Gas stations, grocery stores, movie theaters etc. Whatever my change was after, I just put the coins in a jar. Two years went by and I took it to the bank and I had over $200.(9 votes)
Wat up Bailey? Do u still save your change Now ?(1 vote)
- I like to save money So I can get some cool stuff(7 votes)
- how to be a millionaire(4 votes)
- This is the wrong course for you.(4 votes)
Would it be better to invest your money into a low-risk low reward instead of letting it sit in a savings account? If not then how much % of your savings should you invest?(4 votes)- When you put money into a savings account, your deposit is insured through the Federal Deposit Insurance Corporation, so if something goes wrong with the bank, you don't lose either the principal OR the amount of interest it has earned.
When you invest in something like a mutual fund, bonds or stocks, you might earn more, but if the fund, municipality or corporation into which you put your assets fails, you're totally out.
So, whether you choose an account or an investment depends on your tolerance for risk.(4 votes)
- how much money should i save?(4 votes)
but it in a saving accout(2 votes)
- When using the 50/30/20 rule, am I correct to assume that is based on net pay? Do people include their pre tax retirement savings in that calculation also, or is it 20% of your net pay in addition to any pre tax savings? My job takes 13% of our pre tax dollars towards our pension. I save another 11.5% in a post tax retirement account, and after that, just keeping up with bills is a struggle. It's not even possible to live in 50% of my pay. 42% of my paycheck goes to my mortgage... and prices have jumped a lot and if I rented something smaller, I would pay even more!(3 votes)
- You could always pick up a side hustle to bring in more money. Try learning how to copywrite, or sell your skills on websites like Fiverr in order to increase net income.(4 votes)
