By Grace Solomon
As a teenager, you’re probably starting to make money, whether it’s from an allowance, a part-time job, or even from entrepreneurial ventures like selling items online. But what happens next? Should you spend it all or put some aside for the future? This is where savings and the power of interest come into play.
Why saving early is a Game Changer
Imagine this: you get N1,000 today and spend it all on snacks, games, or new clothes. It’s fun at the moment, but once the money is gone, it’s gone. Now, picture putting that N1,000 aside instead.
Over time, your small savings can add up to something much bigger, helping you buy something more meaningful in the future—like a new phone, a laptop, or even starting a business.
The earlier you start saving, the more time your money has to grow. Teenagers who save today are setting themselves up for a future where they have more financial freedom. It’s not about how much you start with, but how consistently you save that makes a big difference.
How Savings Accounts Work
Most teenagers start saving using a piggy bank or cash envelope, but there’s a more powerful option: a savings account. A savings account is a type of bank account where you can store your money safely, and unlike a piggy bank, your money doesn’t just sit there—it can actually grow.
When you deposit money into a savings account, the bank pays you something called interest. Interest is like a reward the bank gives you for trusting them with your money. Think of it as extra money you earn without doing any extra work!
The magic of compound interest
Now, here’s where things get really exciting. Compound interest is the magic ingredient that makes your savings grow even faster. It works like this: not only do you earn interest on the money you deposit into your account, but you also earn interest on the interest you’ve already made. This snowball effect means your money grows quicker over time.
Let’s say you save N1,000 in a bank account that gives you 5% interest per year. After one year, you’ll have N1,050. The next year, instead of earning interest on N1,000, you’ll earn interest on N1,050, and so on. The longer you save, the more your money will multiply without you lifting a finger.
Why it matters
Saving early and consistently allows you to take advantage of opportunities later in life, like buying something you really want, funding your education, or even starting your own business. Plus, developing good money habits now sets you up for financial independence in adulthood.
So, don’t underestimate the power of small savings. Whether you start with a piggy bank or move to a bank account, the key is to start now, stay consistent, and let your money grow over time. With a little patience and the magic of interest, you’ll watch your savings grow bigger than you ever imagined!
Pro Tip: Start Today!
Why not start small? Set a savings goal, open a bank account, and commit to saving a portion of your allowance or earnings every month. You’ll be amazed at how quickly those small amounts turn into big results!
Grace is of Lagooz School, Lagos
