MSU Extension 4-H Youth Money Management

It's been said that money can't buy happiness, but it can buy a lot of other things. Things like food, housing, and gaming systems are all bought with money. And if you want to buy all these things, managing your money makes it easier. Today, we are going to be talking about saving and investing. Saving is storing the money you have now to be used at a later date. There are a couple ways to save money. You could put it in a piggy bank or keep it under your mattress. But that can be dangerous. Most people like to store their money in a bank or credit union. Banks and credit unions both have their advantages and disadvantages. For example, credit unions usually have better rates than that of banks. The banks typically have more resources for you to utilize than the credit unions do. It's best to do your research on your local banks and credit unions to figure out what works best for you. Regardless of what you choose, you can place your money in different types of accounts. There are three main types of accounts. Checking, savings and money market accounts, also known as MMA's. Checking accounts make your money easier to access. And debit cards take money directly from this account when you use them. Savings accounts make it a little more difficult to access your money, but they pay you interest on the money you have stored in them. Money market accounts are kind of like a hybrid of the other two accounts. It's difficult to access your money, but they can potentially pay you more interest. It's smart to keep your money in a savings account or MMA, where it can earn interest rather than in a piggy bank or under your mattress, because money typically loses value over time. This is because of inflation. For example, back in 2004, the price of your average candy bar was only $0.85. Now they sell for an average of a $1.39. Interest can offset the loss value of the money. When it comes to investing, there are many ways to do it. Some of these investments involve little risk, but usually a smaller payout. Other methods involve lots of risk, but typically have a larger payout in the end. One way to invest is by getting a certificate of deposit or CD. These are done through your bank or credit union. Cds is a deposit that has a fixed interest rate, that is for a fixed amount of time. You can sometimes withdraw money early from them, but it usually comes at a very high cost. Government bonds are very similar to CDs. But instead of giving money to the bank, you are loaning your money to the government for a specific amount of time. While you have the bond, you get payments called coupons. And at the end of this period, you get all your money back. These can be dangerous if you live in a country with an unstable government. When people typically think of investing, they normally think of stocks. Stocks are, in essence, a partial ownership of a company. The value of a stock is determined by a number of factors, including the businesses earnings and the number of stocks being bought and sold at any given time. To make money with stocks, you generally want to buy them cheap and sell them when their value goes up. There are a couple of different ways to invest in stocks. One way is buying individual stocks in a specific company. How much you make or lose depends on how well the company does. You can also buy into funds that contain many different stocks from a variety of companies. The main two types of funds are mutual funds and index funds. These options are usually a lot safer than buying individual stocks because the risk is spread through a variety of companies. Another way of investment is buying things with the hope that they become worth more over time. One example is real estate. Investing in real estate is usually a good investment. Houses usually go up in value, especially if they're well-maintained. Collectibles or another commodity that can go up in value over time. Items like trading cards, figurines, and antiques, have a chance of being worth more than the original value. This can sometimes take decades though, and there's no real guarantee that they will go up in value. Whether you're going to be saving or investing, depends on what your goal is. Saving can be very helpful for a lot of smaller, short-term goals. If you want to buy something like new clothes or a video game, putting some money aside to eventually buy it is a good idea. However, if your goal is to buy a boat or a new car five years from now, investing is the way to go. Click on the link in the description to take a quiz on whether a goal should require saving or investing. If you think that the answer is saving, Think about how you would like to save. Would you rather store your money in a piggy bank or a credit union? If you think the answer is investing, think about how you would like to invest. Would you rather invest in a CD or put your money in the stock market? Thank you for watching our video on saving and investing. I hope you have a great day and a great financial future.