How do your parents teach you money? Perhaps through your first piggy bank. With luck, you have been consistent in investing money in it. However, there is a big difference between your https://drpiggybank.com/ piggy bank (ATM) and a real bank, and today people want to show you how a real bank works.
The first thing you need to know about the bank is that this is the place where people keep their money.
Unlike your cash drawer, banks will actually pay you to keep your money with you. This payment is called interest. Each month, banks will pay you a small percentage, which is determined by the amount of money you have in the bank. So, theoretically, the more money you have in a bank, the more interest you will earn.
You probably think it sounds good, but why do they pay me to leave my money there?
This leads to the second thing you need to know about the bank. In fact, they allow you and other people to lend you money. You will be paid to keep your money, so that you can use this money, so that other people can take loans to buy necessary things. Suppose someone needs to buy a new house, he will come to the bank to borrow this money, because most people cannot pay in cash for the whole house. The bank will give them money, and they must return them. However, when they return it, they must return a little more than borrowed, it is also called a percentage. The difference in percentages is that the person who lends the money usually pays higher interest, which allows the bank to pay him for using his money.
Let me give you an example to help you. You have 10 dollars, and you decide to open a savings account at the Children’s Bank. The bank agrees to give you $ 1 for each month during which you keep your account open. At the same time, Billy wants to buy a bike that costs $ 15, but he only has $ 10. Billy decides to borrow $ 5 from the bank to get a bike now. When it comes time to return the money to the bank, instead of paying $ 5, he must pay them $ 7. So banks earn their money and can pay interest every month.
To summarize, a bank is just a place where money is stored and borrowed. You are interested in keeping him there. Banks earn interest when people lend them and return them. Remember that the piggy bank is good, but it does not pay you for keeping your money, so if you have not done so, exit and get your first savings account.