Why do people save? How do you save? How do you save and make money at the same time? We will find answers to these questions and more in this lesson on saving and U.S. Savings Bonds.
You will write a persuasive letter telling why people use savings bonds as a way to save their money.
When people save money, they are not spending it! There are many ways to save money. Do you save money in a piggy bank? If you put $50.00 in a piggy bank and you forget about it for five years, how much money will you have in your piggy bank when you remember it? That's right, you will have the same $50.00. No more, no less!
What if you could take your $50.00 and lend it to the United States government for five years? Would you believe that your $50 then could earn you extra money? Now instead of $50 you would have around $55? How could that happen?
It could happen because the government would pay you INTEREST. INTEREST is what the borrower pays to the lender for the use of the lender's money. In this case the borrower is the government. And the interest is a way of saying "thank you" to the person who has let the government use his or her money.
Do you know why the government needs to borrow money? Well, the government uses money to pay the people who work for the government, including those who defend our country. The government also borrows money to make payments to people who are retired, and to others who need the help. Our government pays for all the buildings, equipment, ships, and military bases that the government owns. The list goes on and on!
Some of the money the government needs to run the country comes from taxes that everyone pays. But sometimes the government needs to borrow money from people. One of the ways that the government does that is by selling savings bonds.
Did you find out why people buy bonds? It is one way to save money and earn interest. The government borrows your money and uses it to run the government.
Money not spent is called savings. You can take your savings and buy a U.S. Savings Bond. The government will pay you extra money called interest if you buy a savings bond. The government will take the money it borrows from you and use it to run the country.
Pretend you are grandmother or grandfather. You have $100 to give to a grandchild. Write a letter to your grandchild trying to persuade him or her to save all or part of the money by buying a savings bond. Be sure to let your grandchild know how the government is going to spend the borrowed money.
When you are done with the lesson, visit Fun Facts for some "Fun Facts" on savings bonds.