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What's My Interest?
Banks are places where people save their money. Just like a piggy bank at home, a bank keeps your money all in one place and keeps it safe. Banks do something else though, something your piggy bank doesn't do. Banks actually PAY you to save your money with them. They pay you a little bit for each day you keep your money in their bank, in what is called a "savings account." And, the more that is in your account, the more they pay you. This extra money the bank pays you is called "interest." Getting more money just for saving - sounds like a pretty good deal, doesn't it? Do we have your "interest"? In a way, interest is a payment the bank gives you for not spending your money right away.
In this lesson, you will learn about interest and about how and why banks pay it. You will learn about the benefits of saving money. Then, you will think about a future career, find out how much it would pay, and figure out how much interest you can earn on that amount.
- What would you do if you were given some jellybeans?
- Would you eat them all right away or save some for later?
- What if you found that by saving some, you would actually get more?
- Would that change the number of jellybeans you are planning to save?
Activity One
Each of you has 15 jellybeans. This is your "savings account." You are free to "spend" (in this case, to eat!) your jellybeans if you want. But wait - if you save them, you will earn more jellybeans.
- How many will you save?
- How many will you eat?
- Write your answers down on the data retrieval chart. If you eat any throughout the day, make sure to write down how many.
Later in the Day
Your jellybean account has been growing all day. On a piece of paper, write down answers to the following questions:
- How many jellybeans did you start with?
- How many did you eat?
- How many did you save?
- How many do you have now?
- Do you know how you got the number that you did?
- Based on the interest rate, how many will you have at the end of two days?
- How about at the end of the week?
- At the end of the month?
- What if you never eat any of your jellybeans?
- Pretend your jellybeans are worth one dollar each. Use the Interactive Interest Calculator to determine the growth rate of your jellybean account in Activity One.
Activity Two
1. Choose a job you think you might like to do.
2. Use the salary calculator at the Salary.com (http://swz.salary.com/)
web site to figure out how much that job pays for a year's work.
3. Use the Interactive Interest Calculator to figure out how much interest you would earn on that salary. Experiment with different interest rates and amounts of time to see how rates and time affect the interest they will earn.
- Why do we put money into savings accounts?
- What is interest? What is the interest rate?
- What happens if you spend all your money and never save any?
- What happens if you save and never spend?
