Vocabulary
This government corporation was created in the 1930's to protect your money in the bank (up to $250,000)
FDIC (or Federal Deposit Insurance Corporation)
How much simple interest does Michelle's savings account earn if her principal is $100, her rate is 2%, and her time is 2 years?
I = P x r x t
$4
(her new account total will be $104)
Economists recommend you save what percentage of each paycheck?
20%
This type of bank is member owned.
A credit union
Tommy typically cuts 10 lawns per month and earns $20 per lawn. How much money will he earn in total? (Assuming he has no expenses).
$200
What type of expense do you save for an extended period of time to afford? (Hint: An example might be a car or a cell phone).
Long term expense
How much compound interest will Rochelle earn in her savings account if she starts with a principal of $400, she has a rate of 1%, and her time is 1 year?
I = P x r x t
$4
(At the end of the year, her savings will be $404).
Give an example of an unexpected expense you might use an emergency fund to pay for?
(Answers may vary).
This type of bank can only be accessed on the web or by phone.
Online only bank
If Janae has 10 months to save $500 for a trip to Puerto Rico, how much does she need to save per month?
$50 per month
This type of account usually does not earn interest, has some fees, and it can be accessed an unlimited amount of times each month through ATMs or debit cards.
Checking account
How much simple interest will Rahul pay on his car loan if his principal is $5,000, his rate is 5%, and his duration is 5 years?
I = P x r x t
$1,250
(His total payment will be 6,250)
What does it mean to "pay yourself first"?
Any time you get paid, set aside some portion to save before you do any spending
This type of bank has several branches, ATMs, online access, and are not member owned.
Traditional banks
Desiree wants to buy her father a present in 5 months. Name something she can do to help her save for this purchase.
Answers will vary.
This type of account earns interest, usually does not have many fees, but can only be accessed up to 6 times a month.
Savings account
If Erin's principal on her car loan is $15,000, and she has an interest rate of 7%, and a time of 6 years, how much simple interest will she pay?
I = P x r x t
$6,300
(Her payment will be $21,300).
What is one BENEFIT of using a savings account instead of a checking account?
Answers may vary; Your savings account will earn interest, so the money in your account will grow without you doing anything.
This type of bank is not backed by the FDIC, but is backed by the NCUA.
Credit unions
If Angel's savings account principal starts out at $400 and he deposits $100 and he withdraws $50, what is his new principal?
$450
What is the formula for simple interest?
(Hint: think about the principal, interest rate, and the duration)
I=Pxrxt
What is the financial benefit of compound interest?
When you earn compound interest, you earn interest on both the principal and any interest you've already earned.
What is one DOWNSIDE of using a savings account instead of a checking account?
Answers will vary; Your savings account has a limit of 6 withdrawals per month, while your checking account does not.
Give an example of a local bank that offers online banking.
Answers may vary.
Crystal wrote down this formula to describe her savings account:
Interest = $1000 x 2% x 4
According to what Crystal wrote, what is her principal?
$1000