Shelby: In our Generation Money series, we keep you in the know on all things money. Experts say your generation could be facing a pretty tough money situation down the road. So, one way to get ready? Start saving.
A recent study found that three in four teens have a savings account, but the majority don’t really know how it works. So we want to put you to the test.
When you open a savings account at a bank, the bank pays you to keep your money on deposit.
So here is today’s pop quiz question!
What does the bank pay you? Is it:
A. A wage
B. An account balance
D. A dividend
You have got ten seconds!
Time is up! The right answer is “C,” interest.
So, what exactly is interest? It is the cost of borrowing or lending money and is expressed as a percentage. Think of it this way, when you open a bank account, you are lending money to the bank. The bank pays you interest and then lends the money to someone else at a higher rate. This is how the bank makes a profit.
Managing the ins and outs of money is something schools across the country are trying to tackle. And they are looking for creative, hands-on ways to do that. Just look at this program at Davenport West High School in Iowa, where students run the school’s credit union.
The credit union, which is kind of like a bank, is open three days a week during lunch periods. It is run by upperclassmen under the supervision of a local credit union manager. And students get to do a little bit of everything.
Libby Burken: We help deposit money, do transactions, we open accounts for everybody, and we do a lot of marketing.
Shelby: Libby Burken is one of four students chosen from the school’s business academy program. The students work four hours each week at the credit union and also take a local community college finance class taught at the high school.
Students say by working at the credit union, they are cashing in on lessons that can’t be taught in the classroom.
Libby: Managing money is a very big thing. We have learned a lot about saving our money and how to spend it wisely, and where to put it, what checking accounts are different from savings accounts, how to use our debit cards.
Shelby: And Libby says this opportunity will make a difference in her future.
Libby: Well, I think it’s going to really help us decide on our majors for college. And I think it’s a really good thing for students who are going off to college who are going to have to have a bank account and they’re not going to have to have parents there to help them.
Shelby: So do you want to learn more about managing your money? Well, don’t miss our Generation Money page at Channelone.com.