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(Describer) Titles: Beginning Balance. How To Start Your Financial Future. Today we are discussing: Savings.

Our world is rapidly changing. With such a high percentage of money being tracked electronically, it is more important now than ever before to learn how to keep track of it. So, as a young adult learning how to budget, get your first savings account, and file taxes, what are the basics you need to know? When thinking about savings, I bet your first thought is a piggybank. Well, that's not far from what a savings account is. It's basically an account where you put money that you don't need immediately, and it's better than a piggybank because you can earn some interest. So, what does that mean? It means that you will make money just by having that type of account. Your savings account balance annually yields around 1% or less, so you likely won't get rich off its interest, but it's more than you would make if your money was just sitting in a checkings account. It seems pretty smart to keep your money in a savings account, right? Well, S.M.A.R.T. is actually an acronym for achieving your savings goals. S.M.A.R.T. stands for: Specific, Measureable, Attainable, Relevant, and Time-Related. Money goals, like any other goals you have, need motivation to be achieved. By taking your goal and breaking it down into a S.M.A.R.T. goal, anything is possible. So instead of just saying, "You should make your goals S.M.A.R.T. goals," let's apply it to one of my goals. I want to save up for a bike. So, start out with "S," which is Specific. This means I need to be clear on what I want to accomplish. So my specific goal is saving the money that it costs to purchase a bike. The next letter is "M," which stands for Measurable. My measurable goal is "How much does it cost?" The specific bike I want is $200. Moving on to letter "A," which stands for Attainable, how do I save that $200? How you save that money isn't exactly a science, but there are some fairly easy ways to get started. One way is to have a portion of your earnings directly deposited into your savings. So, if I were to have 10% of my weekly paycheck of $500 directly deposited into my savings, I would have $50 a week, and within a month, I would have saved enough money to buy my bike. The next letter is "R," which stands for Relevant. This means asking yourself questions like, "Is this the right time to buy a bike?" Maybe you don't have a job and saving for a purchase like this doesn't seem relevant for you. Well, what about rounding up your purchases? Whether you prefer an app, a credit card, or a bank, there are many round-up options where every time you purchase an item, the cost will be rounded up to the nearest dollar. The money that is rounded up will then be put into your savings for you. So, if you were to buy a 95-cent can of soda, the extra five cents would be added to your savings account, and over time, it will add up. Using a round-up savings option might not seem like the quickest way to achieving your savings goals, which is actually the final acronym-- "T" for Time Bound. You want to know how long it will take to achieve your goal, and that is really specific to how you choose to save. While saving aggressively will get you to your goal faster, every penny counts and gets you one step closer to your goal. So, let's review everything we've learned. Savings is an account you keep money in that you don't need immediately, and it's better than a piggybank because you can earn some interest. S.M.A.R.T. is an acronym for achieving your savings goals. S.M.A.R.T. stands for "S," Specific; "M," Measurable; "A," Attainable; "R," Relevant; and "T," Time-Related. Lastly, there are simple ways to grow your savings over time, such as automatically deducting from your paycheck into your savings or rounding up your purchases through a card, an app, or your bank. There are so many simple ways to be a smart saver. So, what are you waiting for? Head over to wbgu.org/EducationalVideos for more ways to improve your financial literacy.

(announcer) This financial literacy video was brought to you by a grant from the Ohio Broadcast Educational Media Commission and WBGU PBS in consultation with the Ohio Department of Education. For more videos in our financial literacy series, please go to wbgu.org.

(Describer) Accessibility provided by the US Department of Education.

Accessibility provided by the U.S. Department of Education.♪