The big ideaA savings account keeps coins safe and adds a small yearly extra, called interest.
How it works
Maya wanted a bike that cost 440 pretend coins, and she had 400 in a jar. A jar adds nothing, so after two years it still held 400, forty short.
A savings account at the Coin House keeps coins safe and pays a small yearly extra, called interest. Maya could take her coins back any day.
The pretend rule: 1 extra coin for every 20, each year. So 20 earns 1, 40 earns 2, and 400 earns 20.
In year two the account held 420, which is twenty-one twenties, so 21 arrived. The extra earned extra.
Maya's account, year by year.A jar and a savings account.
Example 1: The extra for 60
The rule is 1 extra coin for every 20.
60 holds three twenties, so the extra is 3 coins.
The balance would be 60 + 3 = 63.
Example 2: Year one
Maya puts in 400.
400 holds twenty twenties, so 20 extra arrive.
The balance is 400 + 20 = 420.
Example 3: Year two
The year starts at 420.
420 holds twenty-one twenties, because 21 × 20 = 420.
So 21 extra arrive, and the balance is 420 + 21 = 441.
The extra earned extra.
Example 4: Buying the bike
The bike costs 440 and the balance is 441.
Maya takes out 440.
One coin stays behind: 441 − 440 = 1.
Words to know
interest
The extra a savings account pays.
balance
The coins in the account now.
ledger
The book where the Coin House writes each account.
statement
A yearly list of what changed.
Watch out
A jar adds nothing, however long it sits.
These numbers are made up. Real accounts pay different amounts that change.
Some accounts charge fees, so a grown-up reads the fine print.
In year two the extra is bigger than in year one, because the extra earned extra.
Try it
With 1 extra for every 20, how much extra does 80 earn in a year?
Maya's balance is 420. How many twenties is that?
The jar holds 400 and the account 441. How many more is the account?
Do all real accounts pay 1 coin for every 20?
Answers: 1. 4 · 2. 21 · 3. 41 · 4. No
Try at homeAsk a grown-up to show you a bank statement with the private numbers covered. What does each line mean?
For grown-upsThese are pretend coins. Real savings accounts differ, so if your child asks, read the fine print of a real one together: what it pays, what it costs and how to take coins out. Nothing here is advice about where to keep money.
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