Million Bazillion Academy, week 5: Banks and saving

A girl ignores loud, tempting advertising around her to deposit money in a savings jar.
Click the image to print a version of this illustration you can color in yourself! (Ashanti Fortson)

In the fifth week of Million Bazillion Academy, your kids will learn about the purpose of banks!

We’ll explore:

  • Banks’ two main functions: lend money and keep money safe
  • The difference between checking accounts and savings accounts
  • How to “pay yourself first” to achieve your savings goals

To help your kids learn this knowledge, we’ve got these resources:

  • A Million Bazillion episode recommendation
  • An activity for your kid to make a savings jar or envelope
  • Marketplace stories for kids and parents who want to delve deeper

Listen to this!

The kids want to know!

Listener Noah, age 13, asks: What is the difference between a savings account and a checking account?

Banks offer checking accounts and savings accounts to people who want to safely store their money. Many people have both a checking account and a savings account because they have different benefits, so they complement each other.

Checking accounts offer people ways to pay for things other than cash. Unlike money, which if lost is gone forever, paper checks and debit cards can be replaced if lost. Nowadays, using a debit card linked to your checking account is the most common way to pay for things, but 30 years ago people were more likely to use paper checks.

Savings accounts don’t offer as many ways to pay for things on a day-to-day basis as checking accounts. That’s intentional, because they are used to save money for longer-term goals or in case of emergencies.

Checking accountsSavings accounts
Used to spend moneyUsed to save money
Allow unlimited transactionsMany limit [ER1] transactions to just six per month.
Let people directly pay others with checks or debit cardsDon’t have checks. People can use debit cards to withdraw money in savings accounts at an ATM.
Pay account holders less interest for keeping their money in the accountPay more interest for keeping money in the account
Kids need parents to help open themKids need parents to help open them

Let’s get creative! Make your own savings jar!

So how do people start saving? One strategy is to “pay yourself first.” When you get some money, before you spend anything, set aside some of that money for a savings goal.

Materials you’ll need:

  • Empty jar or envelope
  • Decorating materials (paints, paper, tape, coloring pencils, etc.)

Ask your kid(s) if there is something that they’ve wanted for a long time. Do they know how much it will cost to buy it? Maybe it seems like it is out of reach right now, but if they start a savings fund and put it in the [BLANK] Family Bank, they can start saving, and in no time, they’ll have enough to buy it.

A savings jar or envelope is like a piggy bank but with a specific goal in mind.

Have them write down what they are saving their money for and include the total amount they are trying to save. Then let them decorate their savings jar or envelope. 

(Parents, it could be fun for you to decorate a jar for one of your own savings goals. Tell your kid(s) what you want to save for and why.)

Next: Ask them how they plan to save

If they receive an allowance, bring out their savings jar or envelope when you give them the money. Suggest that they “pay their savings first” by putting aside a portion of their money toward their savings goal.

Are there jobs that they can do to earn money? Brainstorm ways they can do extra around the house for additional allowance.

This can also be a great activity to play around a birthday, if they receive money from family members.

Every time that they add more money to the jar, make sure to emphasize how much they have saved in total and how much more they have to go.

Extra credit!

I you or your kids want to learn more about banks, we recommend listening to these related Marketplace stories.

Next week: Credit cards!

We’ll wrap up Million Bazillion Academy by digging into the costs and benefits of using credit cards!