 You want to learn how to make your money work for you? Yeah! Well, one way is by saving. What's saving? Saving is not spending all of your money today. Let's see what happens to your money when you deposit it into a savings account at a bank. The bank keeps track of how much money you have in your account, and at the end of a certain period of time, usually three months, the bank pays you interest. I-N-T-E-R-E-S-T. This is the money that the bank pays you for putting your money in their bank, because they can use your money to help them make money. How does interest make my money work for me? The interest the bank pays you is not just interest on what you deposit, that is called simple interest. The bank pays compound interest. This type of interest pays you on what you deposit and also on any interest already paid. Let's see how this works. You deposit $100 into your neighborhood bank, and the bank pays 5% annual interest. 5% of $100 is? $5. Another year goes by, and it's time to pay interest again. But this time, the bank doesn't just pay you 5% of what you put in, but it pays on the total amount, or $105. Your money made you money. Saving makes my money work for me. To learn more about being MoneySmart, watch for the next segment of Mary's Money Moments, or log on to the ChicagoFeds website, www.chicagofed.org, and click on MoneySmart Week. I'm Mary Rittenhouse of the Federal Reserve Bank of Chicago. Remember, you should learn about money... ...because it...