Whether you want to save up for a new dress, cool video game or your college education, you're going to need a financial game plan. If you are serious about saving your cash, keeping it in a shoe box is not smart. Start a savings account. This account should be separate from the account you use for "spending money.
Look for a bank that offers a higher interest rate (that's the money the bank pays you to keep your cash with them) and also make sure they are not going to charge you a lot of service fees. In fact, a lot of banks don't charge kids any service fees at all, so shop around to find the right bank for you. But the important part is to start putting money in your account. Start with whatever you have, whether it's $5 or a $500, it all helps.
The best thing to do is to make a saving plan. Decide how much you're willing to put aside every month and then do it. If you already have an checking account, most banks will be able to set up an automatic transfer every month - so the cash will come out of your “spending” account and go into your “savings” automatically. This is helpful because it's way easier to save money if you never have a chance to spend it in the first place.
If you have a serious goal—paying for college, buying a car, backpacking through Europe after graduation—the best idea is to start making your money work for you. Invest your money somewhere where it's going to make more interest than in your savings account. There are tons of investment opportunities out there. A financial advisor, banker or a money-savvy friend might have some ideas for your specific situation. Here are some options you might considers:
Bonds: When you buy a bond it means you are lending money to someone (for example, your government or a company). With a bond you get a higher rate of interest than with a bank account, but sometimes you have to wait 10-15 years longer to get your money back. The most common bonds are U.S. Savings Bonds.Stocks: When you buy stocks you are actually buying a tiny piece of a big company—Disney, McDonald's or Nike. You can often make a lot of interest in the stock market, but there are downsides to investing. If the stock goes down, the money you get back from your investment goes down too.
Mutual Funds: Mutual Funds are like investing on your own, but instead you pool your money with other people and invest in a bunch of things (stocks, bonds etc.) with the help of a financial manager. This is a good option because you have a professional doing all the hard work, and it is less risky since you don't have all your investments in one place.
