What is Saving and Why is it Important?
Saving is money not spent. One reason people save money is for a short-term goal, such as buying a new video game. Short-term savings goals are when you save up money for something you plan to buy soon, potentially today, tomorrow, next week, next month, or later in the year. One important type of short term savings goal is building an emergency fund. This will help you be able to pay for large or unexpected expenses that may come up.
Another reason people save money is for a long-term goal, such as going to college, buying a house, or preparing for retirement. Long term goals are usually many years in the future. Reaching long term goals requires consistent savings over a long period of time.
What is Investing and Why is it Important?
Saving money for a long term goal is a lot like riding a bicycle to get to a far away destination. With a lot of time and effort, you can eventually get there. However, investing is like a car; it can help you get to your destination faster. Investing is when you buy something with the expectation that it will earn you money over time. The downside to investing is that it has increased risk. Risk is the possibility of loss. With investing, there is a chance your money may not grow over time or you may even lose money. However, many people are willing to take this risk because of the chance that their money will grow much faster and help them reach their long term goals more quickly. Another reason people invest is because they are passionate about something. If you care greatly about the environment, are dedicated to healthy living, or are an avid gamer, you can help support these causes by choosing investments that prioritize these areas.
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