Introduction to Saving Money

On this page, we're going to introduce the idea of saving money. When we say saving money, we primarily mean putting money away for a specific purpose, such as college. We will also introduce a few ways to save money on purchases, and then you can put the money you saved away, too. Cool!

We're guessing that for most of you, saving money feels like a farfetched concept. What if you don't have a job? Or maybe you do, but that money goes toward your family's grocery bill. Perhaps you have relatively easy access to cash, but you tend to spend it right away. We're going to address each of those situations and discuss some ideas for getting into the habit of saving money, regardless of the amount you put away.

Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying. The consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things. -Elise Boulding
Elise Boulding is one of the world's trailblazers in peace studies. She started the United States' first Peace Studies program at Dartmouth College in New Hampshire and was also nominated for the Nobel Peace Prize. Click the image above for more about Elise.

Putting Money Away

We're excited to introduce you to the 1-1-1 rule. Essentially, this rule suggests that you divide your money into three categories: money to save, money to spend, and money to give. The percentage of your money you put into each one will depend on how much you have and your priorities.

  1. First, you SAVE, or put some money away. Think of this as paying yourself and investing in your future.
  2. Second, you decide how much of your money you'd like accessible to SPEND. This doesn't mean you have to spend it right away, but if you want to buy lunch, go to the movies with friends, or perhaps purchase a vehicle, this is the money you'll use.
  3. Third, you GIVE. This could be the money you contribute to your family's expenses or money to donate to a favorite charity.

Using the 1-1-1 System

You could use the 1-1-1 system in multiple ways. Here are two ideas:

  • Jars: For those of you who like to see your money and know that your physical money is safe, we recommend clear jars labeled as save, spend, and give.
    Save, Spend, Give Jars

  • Bank Account: If you have a bank account or would like to get one (to do so, you must talk with a parent or guardian), you could keep track of your money in a spreadsheet, indicating how much money is in each category. We recommend having a savings account as well for the money you're going to save.
Bank Account Example
Income Type Amount Save Spend Give
Paycheck, May 24 $200 $135 $55 $20
Paycheck, June 7 $200 $135 $55 $20
Paycheck, June 21 $200 $135 $55 $20
Paycheck, July 5 $200 $135 $55 $20
Birthday Money $100 $40 $40 $20
Total: $900 $580 $260 $100

 

Distribute Your Money

Here are a few examples of how to distribute your money between the save, spend, and give categories. Make sure to talk this over with your parents, guardians, and/or other important adults in your life.

  1. You have an after-school job. An average paycheck is about $200, and you receive your paychecks twice a month. Your mom takes care of the household expenses but expects you to pay for your own stuff (clothes, coffee, going out with friends, and so forth).
    • One way to distribute your money:
      • Save: $135 per paycheck
      • Spend: $55 per paycheck
      • Give: $20 per paycheck
    • After just six months, you'd have $1,500 in savings, still keeping $660 to spend. You also gave a generous donation of more than $200 to the local animal shelter. Cool!

  2. You don't work during the school year, but you tend to receive money for your birthday, holidays, and so forth from generous family members. You also do chores around the house and are privileged in that your parents give you a small allowance. Let's say you get about $100 a month from your parents and about $300 twice a year from family.
    • One way to distribute your weekly money:
      • Save: $45 month
      • Spend: $45 per month
      • Give: $10 per month
    • One way to distribute your $300 family money:
      • Save: $180
      • Spend: $100
      • Give: $20
    • After just six months, you'd have $450 in savings, still keeping $370 to spend. You also gave a generous donation of $80 to your younger cousin's little league team for a few new gloves. Great!

  3. You work after school and on weekends. Your family has fallen on hard times and not only do you need to take care of all of your own expenses, but you also contribute to the household bills. Because of the situation, you work a lot, earning about $350 per paycheck, which you receive every other Friday.
    • One way to distribute your money:
      • Save: $100 per paycheck
      • Spend: $50 per paycheck
      • Give: $200 per paycheck
    • After just six months, you'd have $1,200 in savings, still keeping $600 to spend.
    • Your give category allows you to contribute $400 per month to household expenses. If that's not quite enough, that's okay: adjust the other numbers to make it work.

Money-Saving Habits

We've talked about distributing your money. Now, let's talk about how to make that spend category cover what you need as well as (some of) what you want. Here, we'll discuss three tips that can help you see where your money is going and hopefully hang on to more of it.

  • Write Everything Down: This first tip is equally relevant for adults and high school students: keep track of what you spend and where you spend it by writing it down. Why?
    • If you write it down, you can see how much money you're spending on coffee or out to lunch. It's a lot easier to see that grabbing a fancy drink at Starbucks four times a week equals about $80 over the course of a month. What else could you do with that $80? Lots of stuff!
    • On the more boring side, if you track your purchases, you can double-check to make no one else is spending your money. This is particularly important if you have a bank account.

  • No-Spend Days: Now that you see where your money is going by writing it down, think about implementing a few no-spend days each week. This could mean that on Mondays, Tuesdays, and Thursdays, you do not make any purchases. If you get into this habit now, it could help save a ton of money over the next few years and even into adulthood.

  • Buy Second-Hand: Did you see how much you're spending on clothing and gasp? To avoid this, try shopping second-hand. There are physical thrift stores all over, and there are also online thrift stores such as Thred Up Links to an external site..

Beware of little expenses; a small leak will sink a great ship. -Benjamin Franklin

Check Your Knowledge

Let's see what you learned about saving money by answering these questions. If you need to, scroll up and read sections again as you answer the questions.

Bottom Line

You can save money, and you can start now. Even if you're saving just $5 a month, save it! Every single time you get some money — whether from your paycheck, as a gift, or from your parents or guardians — save some. Your older self will thank you.

 

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