Whether you're earning your own money or you receive it as a gift, you'll need to be a good money manager. Understanding money is important to make sure that you know how to spend it wisely and save for the future. The math skills you learn in school are useful for counting, budgeting, and tracking where you spend your money. It's also helpful to understand how banks work as you manage your funds.
Managing Your Money
Managing money is a skill that everyone needs to learn. When you manage your money, you decide how much you will save and how much you will spend on needs and wants. It's also important to think about the differences between needs and wants as you decide how you spend your money. For example, people need clothes to wear and food to eat, but people don't need electronic gadgets and games. A budget is a plan for managing your money. Most of the time, it's best not to spend all of your money, especially if you're buying things you don't need. Saving money helps you plan for special purchases or activities you want to do in the future.
How a Bank Works
People may need a safe place to keep their money to protect it from theft and loss. Instead of keeping money in a piggy bank in your bedroom, you might choose to open a savings account at a bank. Placing money in a bank account can keep it safe so you know it won't be lost or stolen. Keeping your money in a savings account can also earn you extra money, called interest. Banks pay customers interest for keeping money in bank accounts. Banks also offer customers other kinds of services, like different types of accounts and loans. If a customer needs money for a big purchase like a house or a car, the customer can ask the bank to loan the money. The bank will set up the loan and charge the customer interest to pay for the use of the money. The customer agrees to pay the money and the interest back to the bank.
Money Math Concepts
Money math involves many of the math skills you learn in school, such as addition, subtraction, multiplication, division, fractions, decimals, and percentages. When you understand these math processes, you can use them to help you manage your money. For example, if you want to buy a puzzle for $5 with a sales tax of 6 percent, you would need to understand how to figure out the sales tax for $5 to make sure you have enough money to buy the item. The math skills you would need for this situation would be multiplication and an understanding of decimals and percents.
Knowing money values and how to count money will make it possible for you to buy things, and you will also know if a cashier gives you correct change. Handling money can help you learn how to count it. Making purchases in a store can help you become comfortable counting money. You might also ask a parent to let you pass money to a cashier and take the change for practice.
Practice more math skills by making a budget for yourself. Your budget should include your income, such as your weekly allowance and money you earn babysitting or doing yard work for neighbors. After you figure out your income, you can then decide what you want to do with it. Typically, people save some money, use some money to pay for needs and wants, and give some money away to charities to help others. Use your math skills to decide what percentage of your income you want to save, spend, and give away so you can achieve your goals. For example, if you make $25 per week and you want to save and give away 10 percent of your income, you would plan to save $2.50 and give away $2.50 each week.