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Take just a minute and think about the future you'd like to have.

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To get there, you need to be responsible and save your money so that it grows over time.

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This is saving money in plain English.

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Meet Jasmine. She's 20 years old and her goal is to buy a home in the future.

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Jasmine is already saving for that future home purchase and recently learned how to save responsibly.

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When she was younger, she had a piggy bank and often added money to it.

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The problem with the piggy bank was that her money just sat there.

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She got out the same amount she put in.

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Instead of using a piggy bank, Jasmine found a way to help her money grow over time

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by saving it in a bank or credit union where she can easily get it back when she needs it.

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While it's there, the bank uses her money to help other customers who need to borrow money.

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It's like Jasmine is loaning her money to the bank.

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Because she's helping the bank, they add a little extra money to her account automatically.

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It's these payments from the bank that help her money grow over time.

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This extra money is called interest and it's paid to Jasmine over the course of a year.

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The amount of interest she earns is based on two things.

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The amount she has in the bank and the Annual Percentage Yield, or APY, which is a rate set by the bank.

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Here's how they work together.

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Let's say you deposit $100 in a savings account with a 3% APY.

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That $100 will earn $3 in interest over the course of a year.

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Now, you could take that $3 in interest and buy a latte, but you decide to leave it in the bank.

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This way, you have more money in the bank and earn interest on $103 instead of $100.

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As long as you leave it alone, your money will grow even faster because the interest adds up year after year.

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It's called compound interest and this simple idea will help Jasmine buy a home.

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Here's how.

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In her piggy bank, Jasmine has saved $5,000.

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But for the home she wants, she knows she'll need more and realizes that smart saving is all about thinking long term.

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If she deposits this in a bank and earns 3% APY, that $5,000 would become $9,000 in 20 years.

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That's $4,000 more thanks to compound interest.

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$9,000 is good, but it may not be enough.

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To help her money grow even faster, Jasmine decides that she can add $100 to her savings each month.

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That's $1,200 a year, even more money to earn interest.

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This will be a huge help.

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Jasmine can see she's getting close.

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With the $5,000 she has saved, plus the money she adds monthly, she can save $29,000 over 20 years if she saves it in a piggy bank.

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But with compound interest from her bank, that $29,000 could become over $42,000 in 20 years.

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A nice start on buying her dream home.

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All she had to do was add money to her savings regularly and watch it grow.

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Yay!

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If you're ready to save responsibly, visit a bank or credit union and talk with a financial professional about APYs and savings.

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The keys to smart saving are to start today, add money regularly, and watch how compound interest can help your money grow and grow.

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I'm Lela Fever, and this has been Saving Money in Plain English on the Common Craft Show.

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One more thing, you can download presentation-quality versions of our videos without ads like this in the Common Craft Store.