When you spend your money to buy goods and services, the business you are buying from can then pay out wages to its employees, buy raw materials and equipment, they pay taxes, and make a profit so that they can stay in business.

If you choose not to spend all of your income and have some left over at the end of each week or month you can save or invest it. If you save with a bank, building society or other financial institution, your money may be lent to:

• Prospective homeowners as a mortgage for them to buy property. The borrower pays interest to the lender.
• Businesses also pay interest on money borrowed.

Should you choose to buy shares, bonds, or other securities from a company when they are issued. You are providing that company with the capital it needs to buy its equipment and building to expand. If you buy existing assets, such as shares or property, you may free up money for the former owners to spend.