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BANK page
There are lots of cool places to
hide your money like way back in your closet or buried somewhere
in the backyard. Most of you probably have a stash somewhere in
your room to save things like allowance, money from the tooth
fairy, and birthday cash. So why take your money to the bank and
what is a bank, really? Find out what a bank does, how you can
make money by putting it in a bank, and a lot more right here.
What is a bank?
A bank is a safe place for you to keep your
money. When you first learn about banking, it may look like you're actually
giving your money away, but actually you are lending your money to the bank.
The bank then takes your money and lends it to someone else -- and when that
person gives the money back to the bank, they have to pay interest. The bank
then gives some of this interest to you.
What you are really doing isn't giving your
money away, but making it go to work for you. By putting your money in a
bank account you're telling it to go out and make you some more money.
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You may picture a personal account as
something your can hold and touch, like your piggy bank. Actually it is more
like a brain -- you know your brain is there because it makes your body move
and tells you what day it is, but you can't see it or feel it. A personal
account works almost the same way, you'll know it's there because the bank
will give you a book that has a number on it. That number tells the bank who
you are and how much money you have in your account, but it doesn't tell
them which five dollar bill is the one you gave them, or even where it is.
Some people would rather have their
money close to them where they can see it, and spend it if they want.
Generally it is a good idea to have some money in your wallet, purse or
piggy bank, but by putting most of your money into a bank account, you can
keep it safe. You won't lose it. If somebody would rob a bank, the bank still gives
you your money; and you can make more money by earning interest on your
savings.
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One of the great things about putting money
in the bank is that you make more money from something known as interest. A
bank pays you to keep your money with them. What they pay you is called
interest.
Here's an example of how it works: Suppose
your parents think you spend too much money on junk food and say they will give
you 10 cents a week for each dollar you do not spend. However, part of the
deal is that your parents get to use the dollar you don't spend. In the end,
your parents have to pay you back all the money you have saved, plus an
additional 10 cents for every dollar you lend them. The extra 10 cents is
called interest. Basically they are paying you for saving your money.
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Your savings is the total amount of money you
have in the bank at any given time. This means any money you deposit into
your account, plus the interest the bank has paid you on that money.
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Deposit and Withdrawal
Transactions
Every time you put money into your bank
account, you are making a "deposit". Whenever you take money out, you are
making a "withdrawal". The bank calls these actions "transactions", which
basically means that you and the bank are exchanging money -- either you
give it to them, or they give it to you.
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The best way to get a feel for what a bank is
and does is to go to any branch of your bank. A personal banking
representative will give you the big tour, answer any of your questions, and
even show you the vault, where money is kept safe.
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Money
Making Ideas:
Self Employment
Many entrepreneurs start out with a cool idea for their own
business, but fail because of a lack of planning. To increase the odds that
your first try at self employment will be solid, you should write a business
plan. The plan should:
1.
Describe the product or service you're going to offer;
2.
Indicate what will set this product or service apart from the
competition;
3.
Detail what it will cost you to start and run this business,
and
4.
Estimate your expected profits.
Here's a typical scenario for a lawn maintenance service:
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Costs: |
Rent or buy a lawnmower, gasoline, clippers, garbage
bags, advertising flyers, business phone number, occasional assistant |
|
Point of difference: |
"I'll have your lawn cut, trimmed and bagged before the
end of every week. Satisfaction guaranteed or double your money back." |
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Revenue Potential: |
10 yards a week at $20 a yard is $200 a week |
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Cost Estimate: |
$80 a week |
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Profit Potential: |
Revenues minus the costs is $120 a week |
Try to work through the process for you new business. If you
can figure out the above issues, and still feel excited about going for it,
you're on the right track.
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Living and just being costs money. Your
regular routine probably requires you to always be digging into your pocket
for things like movies, CDs, haircuts, bus fare, clothes and school
supplies. These everyday living costs are expenses which can be planned for.
Figuring out what you spend your money on each week, what things you would
like to buy in the near future, and what you need to save for in the more
distant future can help you to prepare a budget and ensure that you have the
money you need, when you need it!
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Better saving is a good way to reach your
goals. Better buying is another way. In fact, you can save a lot of money
just by smart shopping. For instance, often the same item (i.e. a pair of
jeans) is sold in different stores at a different price. You can also go to
one store and find competing products (i.e. batteries) with different
prices. In addition, some things are sold in three or more different sizes
(i.e. packages of audio cassettes) and the more you buy, the cheaper the
item is on a per unit basis.
Of course, even before looking to maximize
the value of your dollars spent, you should first consider whether you
really need the item. For example, there could be alternatives like renting,
borrowing from a friend or just deciding that the item, even at its lowest
price, isn't worth the savings you'll have to give up for it. Remember, a
product is only worth what we're willing to pay for it.
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Goal Setting
You can't get really interested in saving unless you can
visualize what you want to materialize. For example: “I want to buy a car”
becomes “I want to buy a second-hand (exact model) from Primo Used Cars”.
Here are some more wise words on the matter of goal setting:
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Whether
you want to buy a horse, race cars or be Prime Minister, write down all
your dreams, attach pictures to them if possible, and stick them on a wall
where they'll be a constant reminder. (Pick up the image from above...
Here's a picture of me beside the car I want to buy).
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Identify your goals as short, medium and long term and rank them by how
important they are to you. Pick out the top six in each category. Then get
focused on the first item on your hit list. (For example: It is A1
important that I buy my new car by June 1st of next year).
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Stay on
the savings track by plotting your success on a wall. (This giant
speedometer shows that I've already raised $1500 of the $3600 I need to
buy the car).
The ability to make any goals specific, set target dates and
develop a realistic savings plan to reach them, will make you more
successful in reaching these goals.
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So You Want to Make Some Money...
Almost
everyone has the capacity to earn. Typically, as you get older, your earning
capacity increases, but there are lots of things you can do now to make
yourself some cash. Two basic things are required: willingness to work and
creativity. Because most of you don’t have specialized skills at this point,
you’re going to need to think of things within your range of possibilities.
Use some of these scenarios to generate ideas for your situation:
Jeff
has always been an early riser. When he found out that newspaper delivery
takes place in the early part of the morning, he signed up for a route of
his own. He does it all year long – he even takes an extra part time job in
the summer.
Angie
is a very responsible young girl who loves animals. Her neighbors, the
McDermotts, do too, but they’re very busy with their work and sometimes
leave for long periods of time. When Angie noticed this, she approached them
about exercising the animals and caring for them when the McDermotts leave
town. Because of her good reputation, Angie now works for 3 families on her
block and she earns an average of $85 per week.
Skyler
needed to make some extra cash to keep up with his snowboarding career. He’d
heard his father saying something about needing a cleaning person at his
warehouse, so he asked his dad if he could do the job. His dad was more than
happy to give him the work.
Josie
had always been her mom’s #1 helper. She’d gotten especially good at window
washing, collecting some good tools for the job. When she found herself
needing money to go on a trip with her youth group in the summer, she
rounded up some window jobs and did great work. Word spread and soon she
even had some regular customers. When it was time to go on the trip, she had
more than enough money!
Bert
was an A+ English student. His business began when friends asked him to
proof their papers. Word spread and Bert decided to charge $5 a page. He
upgraded his computer and branched out to work for some small businesses
doing copy work too. The little home business grew, he saved, and eventually
Bert went on to college to pursue a career in journalism and editing.
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