Explain This: Banking

You just got a big haul for your birthday: new sneakers, books, and $150 in cold, hard cash. What will you do with the money? One option is to put it into a bank account. Banks are places where you can safely store your money.

If your money is in a bank, you don’t have to worry about losing it or forgetting where it is. A government organization called the Federal Deposit Insurance Corporation (FDIC) protects your money. If something were to happen to the bank, the FDIC would get you your money back.

Anyone can open a checking account or savings account—or both! (If you’re under 18, take an adult with you to help.) A checking account is used to buy day to day things, like snacks or clothes. But a savings account is where you put cash away until you need it. Banks will even pay you to keep your money in a savings account!

You just got some great presents for your birthday. You have new sneakers, books, and $150 in cash. What will you do with the money? One option is to put it into a bank account. Banks are places where you can safely store your money.

If your money is in a bank, you don’t have to worry about losing it. A government organization protects your money. It’s called the Federal Deposit Insurance Corporation (FDIC). If something were to happen to the bank, the FDIC would get you your money back.

Anyone can open a bank account. (If you’re under 18, take an adult with you to help.) There are two main account types: checking and savings. A checking account is used to buy everyday things, like snacks or clothes. But a savings account is where you put cash away until you need it. Banks will even pay you to keep your money in a savings account!

You can track how much money is in your account by logging into your account online or using a banking app. Some people still manually balance a checkbook or check register by writing each deposit and withdrawal by hand!

“Banks are great because they want children to understand the system,” says Liz Frazier Peck, a financial planner and author of a book that teaches kids about money. The more that kids are comfortable and confident with money when they’re young, she says, “the less intimidated they’ll be as an adult.”

Building money smarts early creates more opportunities to learn from your mistakes. Plus, understanding money early gives you extra time to put your money to work for your future.   

There are a few ways to track how much money is in your account. You can visit the bank, log into your account online, or use a banking app. Some people still keep track manually. That means they write down each deposit and withdrawal by hand!

“Banks are great because they want children to understand the system,” says Liz Frazier Peck. She’s a financial planner who wrote a book that teaches kids about money. The more that kids are comfortable with money when they’re young, she says, “the less intimidated they’ll be as an adult.”

There are plenty of reasons to build your money smarts early. For one, it gives you more chances to learn from your mistakes. Plus, understanding money early gives you extra time to save it for your future. You can figure out how to make it work for you!