foreign [Music] for kids have you ever seen something in a store you really wanted to buy maybe someone even told you save your money and you can buy it someday how do you earn money to buy things you want or need today we are going to define and explain certain words and phrases that will help you become more financially literate let's grab our friend Frankie Finance to help us along the way needs and wants a need is something you must have to survive like food water clothing and shelter a want on the other hand is
something that would be fun to have but you can live without you know like a skateboard video game or favorite toy knowing the difference between needs and wants can help you be more responsible with your money making a budget a budget is a plan for managing your money it is based on your estimation of income the money you earn or receive as a gift plus your expenses meaning the money you spend one of the main reasons to create a budget is to help you live within your means in other words a budget can keep you
from spending money you don't have and avoid going into debt a debt is a money you borrow from someone else that must be repaid saving versus borrowing as you can probably guess saving is when you set money aside for the future and do not spend it right away like if you are saving up for a special toy or activity you might have a piggy bank at home where you put money that you are saving or you might even have a savings account at a bank have you ever heard of a loan before a loan is
a money you borrow from someone borrowing money means that you are expected to pay it back most often a loan is given for a specific reason like to help purchase something big like a house or a car quite often you will have to pay interest on the loan this means the bank expects you to pay the full amount back plus an extra charge for borrowing the money in the first place this extra is called interest and is a percent of the borrowed amount a savings account is a place where you put money that you intend
on saving for a while and guess what you can actually earn a little extra money while your money is in the bank for real this is also called interest but instead of giving money back to the bank for a loan it is a little extra money that you earn while your money sits in the bank a checking account is another kind of bank account that you can use to pay bills either by check or buy a special card called a debit card checking accounts do not earn interest credit versus debit a credit card is a
small hard plastic card that is issued by a credit card company or other financial institution they are basically a type of loan because using a credit card means you are borrowing money from the company who issued the card here's how it works the credit card company loans you money and you pay it back according to a schedule this is usually one payment per month with interest on the unpaid amount on the other hand debit cards are linked directly to your bank account which means you use your debit card to pay for things with money you
already have in either your savings or checking account want to learn more we have more videos that go into more detail about each of these skills for now let's review what we learned today true or false checking and savings accounts are basically the same exact thing boss savings accounts are for money that you are planning to save for a while and earn you interest checking accounts are used to pay for bills and other immediate needs and wants that do not earn interest fill in the blank a blank is a plan for managing your money budget
what is the difference between a need and a want a need is something you must have to survive a want is something that would be fun to have but you can live without fantastic job Financial friends learning financial literacy is important as you create good money habits for the future what is it one thing you can work on to become more financially literate hope you had fun learning with us visit us at learnbrite.org for thousands of free resources and TurnKey solutions for teachers and homeschoolers foreign
