Hi, Sooper Cooper. Even though you didn’t go to finance school, you should still know some basic concepts that are in finance that I will ask you about now.
Okay, bring it on!
Number one. Do you know what earnings are?
Well, earnings are the money that I get from chores, right?
Yes, they are the money that you get for chores, but there are also other ways to get earnings. Do you know any of that?
Maybe you can get earnings from a job?
Yes, very good Sooper Cooper. Next question. Do you know what savings are?
Well, savings are what you put in a savings account?
Can you explain more about that?
No, I don’t know.
Well, savings are what you get when you don’t spend everything that you earn.
For example, if you earn $10 from doing chores, and you spend $6 on candy, you would have $4 left over. These $4 would be your savings.
Oh, okay. Is there anything else you wanna ask me?
Yes. By any chance, would you know what investing is?
Ummmm, no I don’t know anything about investing. Can you tell me about it?
Well, investing is one of the things that you can do with your savings. Investing is a way to place your money so that it can grow, or make more money, for you.
For example, if you put it in a stock, bond or CD, then it can make more money and grow for you. All those three are a type of investment.
Now that I have explained to you all these topics, I’d like for you to tell me the differences.
Okay. So, earnings are what you get from doing chores or a job. Then, savings are what you get when you don’t spanned everything you earn. And then, if you have savings, then you can do some things with it – and one of those things is investing, right?
Yes, very good Sooper Cooper. And one more thing.
Not another question!!!
No, no, no, not another question. Remember, finance is your friend!
Podcast: Earning, Spending, Saving and Investing
All about the very basics of finance: what is earning, spending, saving and investing – and the relationship between these.
Show notes and transcript at: Earning, Spending, Saving and Investing