Copyright Goodheart-Willcox Co., Inc.
Chapter 8 Consumer Services 219
Saving and Investing
Budgeting is not only about spending to meet needs and wants, but
also about saving and investing for the future. Investing involves putting
money into something to gain a fi nancial return.
A common way to save money is to open a savings account that
earns interest. Interest is a percentage of money the fi nancial institution
pays regularly for the use of the account holder’s money. With an interest-
bearing savings account, the interest rate is usually fairly low, but the
principal (original amount invested) will grow over time. Figure 8.17
shows other common ways to save and invest.
Banking Electronically
In times past, invoices or statements were mailed to purchasers of
goods and services. The purchasers wrote checks and mailed them to the
merchant. This took time and created a signifi cant cost for transactions in
printed paper, postage, and check processing.
Electronic banking has changed this process signifi cantly
(Figure 8.18). Electronic banking involves using the Internet to access
banking services. Through the use of electronic banking, people can
instantly check account balances and look at their statements. They can
transfer money from one account to another, which is called electronic
funds transfer (EFT). They may even use online bill pay to electronically
My Monthly Budget
Income
Part-time job
Babysitting
Gifts
$150
$50
$5
Total income
Expenses
Fixed expenses
Lunch
Flexible expenses
Magazines
Snacks and eating out
Clothing and accessories
Transportation
Total expenses
$30
$5
$20
$20
$10
$10
$95
$205
Figure 8.16 When income is greater than expenses, saving money can occur. How much
money can be saved in this budget?