Do’s and Don’ts with Your Money

Saving money can be a good decision or a bad one depending on how you invest it. Therefore, it’s important to know how to save preventing you from making the wrong choices. So, what are your choices? Let’s take a look:

Many people say “Put your money under the mattress.” That has been an expression for hundreds of years. Many people put their money somewhere they consider to be a safe place - in their home, a safe deposit box in a bank, or just hide it. The problems with hiding money is the house could burn down, it could be stolen and the money is not working for you, meaning it doesn’t grow.

Money has an engine that can grow your money. You’re the engineer who decides how to make your money grow by choosing your method. Let’s look at some choices below.

You may ask yourself, “How do I decide to make my money grow? Consider this choice: Lend money to a classmate. Do you think that’s a good idea? Of course not. Promises are “not worth the paper they’re written on!"

You could open a savings account at a bank that pays you some interest, but is in essence, a small return. (The "return" refers to how much additional money you earned.)

Friends may approach you with a promise, “I’ll pay you back.” Don’t do it, you have no collateral, something of value that guarantees you’ll be paid back. Generally, do not do loans with friends, if you want to stay friends! Far too often people risk your friendships, it’s not a good idea.

One of the pitfalls of saving is inflation. That means your money will decrease in value as prices increase and your dollars are worth less. For example, last year a bag of chips was $1.00 and today it’s $1.25.

If you’re interested in putting your money to work, open an account with an investment company. Such companies offer many ways to put your money to work such as buying stock and bonds.

Do ask yourself: "Will I have easy and convenient access to my money?" Some investments cannot be retrieved until they mature; one year or more.

What that means is, for example: If you purchase a savings bond providing a rate of interest at 2%, then if you invest $100, the bond pays 2% ($2). When the bond matures, it is safe but the return is unimpressive.

In addition, you cannot use the money you invested cannot be used until the bond matures, meaning when the year is up in this example.

No matter where you put your money, always consider your return on investment and the level of risk you're willing to tolerate.