Don’t Wait for a Rainy Day–Start Saving Today

Spending money is fun. Saving it can be even more fun–especially if you get to watch it grow. Pay yourself first, and put your money where your future is…it’s all in this issue of The Vault from Biz Kid$!

Why Save?

There are two main reasons to save your money:

  • To buy things that cost more than one paycheck will cover.
  • To create a “safety net” for yourself in case your source of money dries up.

Saving gets easier when you make a habit of it. That’s why, to be a Biz Kid, you should always…

Pay Yourself First!

If you spend every penny, everybody but you is getting paid. So pay yourself first–every time you get money, sock some away in your savings. And be generous–you earned it.

Set a Goal

There are two kinds of savings goals. You can set a target percentage: 10% of every paycheck, for example. Or, you can set a target amount–say, the price of something you want to buy, or three month’s worth of expenses. Either way, having a plan makes it easier to save.

Fast Fact

Which would you rather have–a million dollars today or a penny that doubles every day for a month? Click here to find out the surprising answer!


Get Interested in Interest!

When you deposit money in a savings account, the bank or credit union loans it to other people. Interest is what the bank or credit union pays you for allowing them to use your money. (Don’t worry, they’ll give you your money back when you ask for it.)

  •  Interest you earn usually is compounded–you earn interest on your interest.
  •  Time is your friend with interest rates. The longer you leave your money in a savings account, the more interest it earns. It can really add up!

The chart above compares how $1,000 grows over ten years in two different savings accounts–one with a compound interest rate of 3.25% and the other with a compound interest rate of 0.25%. As you can see, just a few percentage points make a big difference over time!



Ask John Paul

Dear John Paul,

What’s the best way to make my money grow?

– Sanjit S., Plano, TX

Hi Sanjit,

There are three ways to make your money grow. You can:

  •  Buy stocks (like your favorite doughnut company) or other investments. But, investments don’t always grow–sometimes they shrink to nothing!
  •  Give it to a charity and make it grow into something good for the world.
  •  Save it in the bank and let it grow via interest.

The last one is sure to benefit you in the long run. Shop around for the best interest rate, put in your money, and watch it grow. Compound interest is the way to go!

John Paul Pigéon is a 12-year-old financial guru from Fort Worth, Texas who helps kids learn about money and business. Click here to visit his Web site. Send your question to It may be selected for our next newsletter!

Biz Kid of the Month

He’s not a kid anymore, but he’s definitely got a head for business. Ramit Sethi writes the blog I Will Teach You To Be Rich with more than 175,000 readers per month. He co-founded PBwiki, an online service that hosts millions of users per month.

What advice do you have for young people just starting to save?

There’s a lot of hype and nonsense out there. Just start with a trustworthy bank that pays a good interest rate and shovel as much money as you can in there.

What’s the best way to make sure you save enough?

Set up an automatic withdrawal from your checking to your savings account–it will save you so much time.

What resources do kids have to get involved in entrepreneurship and finance?

When you’re a kid, your biggest resource is time–you’ll never have that much free time again. Plus you have people around you who want to help you out. Most parents are willing to help out if you’re serious about saving, investing, or starting a business.

How do you save money with so many temptations to spend it?

Most people have no idea where their money goes. Just by becoming conscious of what you spend, I bet you can save 10% of what you make.

How did you get started with finance?

When I was going to college, I applied for dozens of scholarships. The first one I got sent me a check for $2,000 in my own name–big mistake. I invested it in the stock market and lost half of it right away!

Do you know a Biz Kid who should be profiled in our newsletter? Tell us at!



Info to Go
  •  And, of course, click here get the latest from Biz Kid$!
Next Month: Introducing Investments

What else can you do with the money you save besides put it in a savings account? Lots of things! Next month, we’ll start our two-part series on investing. Don’t miss it!

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