HOW TO SAVE
Interest makes your money grow

What happens when you put your money in the bank? Well, they use the money from all their clients together - which is a lot - and put it to work to bring in more.

For example, they might let an architect use $100,000 to construct an office building. He can rent or sell the offices to get money to pay back the bank and have some left over for himself. But he has to pay the bank something extra for letting him use those $100,000, and they agree before hand on how much that is going to be.

Let's say he borrowed $100,000 but he pays back $110,000. Now the bank will have an extra $10,000. The bankers can use that money to pay their employees. And they can share some of what's left with the people who put their money in the bank in the first place.

Interest is the additional money that they got back from the architect. And interest is also what they give you for letting them use your money. Interest is the money the bank pays you when you lend them your money in a savings account. When you deposit money in a savings account (or borrow it from the bank), you decide together how much the interest is in the form of a "percentage" based on one year.

As you see, you want the bank to pay you a higher interest rate (percentage) for using your money, and in the example that follows you can see how your money grows better with interest. Of course, if you save more, youÕll have more and it will grow more.

In the following example, you save $5.00 every day instead of only $1.00.
Without Interest Save $1.00
* Daily = $ 1.00
* Monthly = $ 30.00
* Per Year = $ 360.00 (without interest) With Simple Interest Save $1.00
* Daily = $ 1.00 * Monthly = $ 30.00
* Per Year = $360.00 + 10% interest = $396.00 Without Interest Save $5.00
* Daily = $ 5.00
* Monthly = $ 150.00
* Per Year = $1,800.00 (without interest)

LESSON
"Saving with interest is better." I started saving in my piggy bank. From my piggy bank, I learned to put it in a savings account in the bank. Then my dad taught me about investing. After a while he showed me what Mutual Funds are. Today I have a Mutual Fund called Dodge and Cox. This is where I have my money saved and invested.

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