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Have you ever been asked if you are saving for a rainy day? What does that mean? What do you need on a rainy day that you don't need on a sunny one? In this lesson, you will discover that saving for a rainy day means putting money aside so that it will be there for you at a time when you may need a little extra. You will also learn that saving for something in particular might be a good idea. In fact, you will find that you can earn money by keeping your savings in a bank!


You will be required to complete a drag and drop activity. This activity will be a cost-benefit chart about savings.


Read the familiar story of the Grasshopper and the Ant . The moral of the story is that the grasshopper should have been working for tomorrow instead of playing today. Who are you more like--the grasshopper or the ant?

When we save money we are being like the ant. We are putting away money for a time when we will need it. Or we can put money away for some specific thing we want. Is there something you would like to buy that costs more than your usual allowance? How do you go about getting that item? A good way to get that item is to save for it. How long will you have to save? Click on: The Allowance Room and see how long you will have to save your allowance to buy the items you have in mind.

There are many ways to save, but in this lesson you will see that a bank will pay you money if you save in a savings account.interest rates That is called paying you interest. Are you INTERESTED to find out how that is done? Just think: your money could be making you more money!

First of all, let's talk about banks. Banks are financial institutions that help people save money and earn interest. How do they do that? Because they also let other people borrow money, and those people pay the banks interest. INTERESTING!

Interest is paid by a bank to people who allow the bank to use their money. When you deposit money in a savings account, that money is used by the bank to make loans to other people. Since the bankers are using YOUR money, the bank pays you for your help. WOW! Your money works to make more money for you!

How does it work? Here's an example. Say you deposit $100 in a savings account at your bank. The bank takes you money and lends it to someone else. Since it is YOUR money the bank is lending, the bank pays you interest for your help. Now you $100 is worth more than $100. It has worked for you! In our Web site, the interest rate is 10 percent, so your account would be worth $110. Your money made you more money! How did that happen?

How can a bank give you more money than you deposited? Well, a person who borrows FROM a bank has to pay the bank interest. So, the borrower must pay back more than just what she or he borrowed. The borrower pays the bank interest, and the bank pays you interest! Isn't that interesting?

Click here to experiment with our interest-rate calculator. You can insert different interest rates and amounts of time to see how the different rates and times affect the interest you can earn.

Savings are the part of your income that is not spent. You could just keep your savings on a table at your house, or in a pocket, or in a piggy bank, but then your savings wouldn't earn you interest. Your money will not work to earn more money for you unless you keep it somewhere that pays you interest.

checksThe Web site used in this lesson deals with savings AND checking, so you will learn how to write checks. Part 1 of the series on banking covered checking accounts. In this lesson, you get to fill out the forms for checking accounts. What if you want to save your money in a bank? Then you would want to get a savings account . You may be wondering about how you would get your money out of the bank if the bank was closed. You might need some money to go to a movie with your friends, for example, but how could you get it if the bank was closed? and you had no money. That is when you might go to an ATM machine .

Remember that grasshopper and ant story? The grasshopper didn't save, so when he needed food, there was none. The ant saved, so when winter came he had plenty. They both made up songs about saving to the tune of "London Bridge." Can you make up a song about saving your money?


Did you like filling out all those forms? How about using an ATM? Cool, huh? In this lesson you have learned that interest paid by a bank is one benefit you gain by saving your money. You have also found out that savings is income that is not spent.


Do you know what a T-Chart looks like? Do you remember what costs and benefits are? Costs are what must be given up when a choice is made. Benefits are the gains received as a result of a decision. If you decide to save, are there costs and benefits to that decision? You bet! Let's look at those costs and benefits. Click on Save My Money, and use a drag and drop technique to fill in the T-Chart.


Go to the Banking on Our Future Web site to learn more about banking.

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