Whether you're Joe the Plumber or Warren Buffett—or, we're guessing, neither—you need to do something with your money. And (spoiler alert) putting it under your mattress is a terrible idea.

And not just because of bed bugs.

 

0% interest.

Your mattress, we're guessing, doesn't pay interest. That means, if you put $100 under your mattress and then come back to get it a year later, it won't have gotten any bigger…unless you count the mold growing on it. If you'd put that money in an account with a 1.3% interest rate, when you came back a year later, you'd find $101.30. Sure, that doesn't seem like a lot, but the more money you have and the higher the interest rate, the more it adds up.

Bottom line: you want your money to make money. While you sleep, study, or cream your best friend in a ping pong tournament, your money is hard at work doing its thing. You don't have to do anything, and it'll get bigger and bigger.

How does it work? Basically, you're loaning your money to the bank. When anyone takes out a loan, they have to pay interest: a financial "thanks and we promise we'll pay you back" for being able to borrow someone else's money. Same deal here—except the bank is borrowing money from you to loan to other people. The bank is pretty sure those people will also pay the money back, but to be sure you trust them with your cash, the bank gives you a few extra pennies every month.

(P.S. Don't freak out. Even if people don't return the money they've borrowed, the bank still has to give you whatever money you put in. You can thank the FDIC for that.)

Once you have more than a few bucks, you might start investing. Until then, get serious about saving.

Keep Shmooping to find out all the different ways to jump on the gravy train.