Saving and Investing for Students

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SAVING AND INVESTING
Small Savings Add Up
to Big Money
How much does a bottle of soda cost you?
If you buy a bottle of soda every day for $2.00, that adds up to 
$730.00 a year. If you saved that $730.00 for just one year, and put 
it into a savings account or investment that earns 5% a year, it would 
grow to $931.69 after 5 years, and grow to $3,155.02 after 30 years. 
That’s the power of “compounding.” With compound inter-
est, you earn interest on the money you save and on the inter-
est that money earns. Over time, even a small amount saved 
can add up to big money.
If you are willing to watch what you spend and look for 
little ways to save on a regular schedule, you can make money 
grow. You just did it with one bottle of soda.
If a bottle of soda can make such a huge difference, start 
looking at how you could make your money grow if you de-
cided to spend less on other things and save those extra dollars.
If you buy on impulse, make a rule that you’ll always wait 
24 hours to buy anything. You may lose your desire to buy it 
after a day. And try emptying your pockets and wallet of spare 
change at the end of each day and put that money aside. You’ll 
be surprised how quickly those nickels and dimes add up!
PAY OFF CREDIT CARD OR OTHER HIGH INTEREST 
DEBT
Speaking of things adding up, few investment strategies pay off as 
well as, or with less risk than, merely paying off all high interest 
debt you may have. 
Many people have credit cards, some of which they’ve “maxed 
out” (meaning they’ve spent up to their credit limit). Credit cards 

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U.S. SECURITIES AND EXCHANGE COMMISSION
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can make it seem easy to buy expensive things when you don’t 
have the cash in your pocket—or in the bank. But credit cards 
aren’t free money. 
Most credit cards charge high interest rates—as much as 18 
percent or more—if you don’t pay off your balance in full each 
month. If you owe money on your credit cards, the wisest thing 
you can do is pay off the balance in full as quickly as possible. Vir-
tually no investment will give you the high returns you’ll need to 
keep pace with an 18 percent interest charge. That’s why you’re 
better off eliminating all credit card debt before investing savings. 
Once you’ve paid off your credit cards, you can budget your 
money and begin to save and invest. Here are some tips for 
avoiding credit card debt: