Spending and Saving

The most common way to pay for things is by using money

There are different ways we can pay for things using our money

The first way is by using US dollars

The second way is by bartering or exchanging (exchanging your granola bar for your cousin's apple)

The third way is by credit

Credit is the promise to pay for something

A credit card lets the cardholder buy things and pay for them later

The cardholder pays the credit card company every month until all of the money is paid back

The money a person earns but does not spend is called that person's savings

For example, suppose you baby sit and earn $10 but you want to buy a pop it for $7. If you subtract the $7 from the $10 you would have $3 left over that you can save to use later

You can save money over a long or short period of time (days, weeks, months, years)

You can save for small things like a basketball or bigger things like a car

A bank is a business that keeps exchanges, and lends money to people

A bank is a good place to save money because banks give you a bonus for saving

This bonus is called interest

Interest is the money a bank gives you for letting it hold your money

The bank gives you money while you save, and interest makes your savings grow

A budget is a plan that shows your income, expenses, donations, and savings

A budget is a good way to help you save and spend your money

Income is money your earn

Expenses are what you spend

Donations are money or goods you give to charities, or groups that help others

Savings is the money you saved