Two Market Day Plans
At the Brookside Farmers Market, cousins Tessa and Andre help their families. Tessa works at an herb booth, and Andre works at an apple booth. Each cousin earns $48 for each Saturday of work. They both hope to buy a used bicycle that costs $80 so they can ride to the market.
Tessa makes a budget before she uses her money. She plans $20 for needs, such as bus fare and lunch. She plans $8 for wants, such as a small treat. She puts the remaining $20 into savings for her bicycle. A budget is a plan for how to use income.
Andre also has $48, but his plan is different. He spends $20 on needs, such as bus fare and lunch, and $28 on wants. He puts $0 into savings. Andre enjoys his purchases, but his plan does not move money toward his bicycle goal.
Tessa deposits her savings in Brookside Community Bank. The bank holds deposits, keeps an account record, and may lend some deposited money to borrowers. The bank's flyer says that its account earns 5% interest each year. For a deposit kept for one full year, $20 earns $1 in interest and $40 earns $2. Interest is extra money the bank pays on saved money. A jar at home can hold money, but it does not pay bank interest or provide a bank account record.