Bank Accounts

Youth Accounts: It is a savings account reserved for youths ages 18 and under. The features of this type of account are that there are few fees, unlimited number of transactions, free record keeping, usually no minimum balance and there is a small amount of interest that you can earn. The cons of this are that it is limited to those aged 18 or under and there are debit limits meaning there is a limit on how much you can spend or withdraw.

Chequing Accounts: This account was designed to be used to make payments. They have high or no limits to their number of withdrawals or deposits. This account always has a record of your spending. This account is accessible through online banking and ATMs. Some downsides of this account are that there are maintenance fees and ATM fees, some accounts require a minimum balance and they usually pay little to no interest.

Savings Accounts: These are accounts that pay you interest by maintaining a balance in the account. They have relatively high interest rates compared to the other accounts. You can open this account with little money that you can save to grow your savings. These accounts have withdrawal limits and occasionally a minimum balance requirement.

Let's Apply our Knowledge!

  1. Bob is 17 years old and wants to open a bank account to start saving. Which type of bank account should he open?

    2. Incorrect. Since Bob is under 18, he will not be able to open a chequing account by himself.
    Incorrect. Hint: Notice Bob's age.
    Correct! Bob should open a youth account as he is under 18.
    Incorrect. Facebook isn't a type of Bank Account.
  2. What is a benefit of a chequing account?

    3. Incorrect. High Transaction limit is a benefit of chequing accounts, but there is a better answer!
    Incorrect. A chequing account can be easily accessed through and ATM or online banking which is a significant avantage, but there is a better answer!
    Incorrect. A chequing account can keep track of you transactions which can be useful for many purposes. However, there is a better answer!
    Correct! All of these are benefits of a chequing account.
  3. Which type of account should you maintain a balance in?

    4. Incorrect. Chequing Accounts should only contain money needed for day-to-day transactions.
    Correct! You should maintain a balance in your savings account as you can earn interest on it.
    Incorrect. Hint: Which account gives you interest?
    Incorrect. Keeping cash does not provide any benefit.

Credit Score

A credit score is a numerical representation between 300 - 900 of how well an individual is able to manage their credit. The higher the score, the better it is for the individual as it shows that they are good at managing their credit. This lets lenders know how risky it is for them to lend money to the individual. Lenders will want to know if the person they are giving money to will actually be able to pay them back on time. With a better credit score, you have a higher chance of having loans being approved by lenders.

An individual’s creditworthiness or credit score can be determined by a number of factors. Some of these factors include the number of open accounts, levels of debt, repayment history and a variety of other factors. Improving one’s credit score can take a really long time. The best way is to just make sure that payments that you make are made on time and that you eliminate any debt you have. Having a credit card and paying all of the bills on time are really important.

Let's Apply our Knowledge!

  1. Which of the following is the best credit score?
    2. Incorrect. There is a better credit score.
    Incorrect. Hint: higher the better.
    Incorrect. 780 is a very good credit score, but there is a better option.
    Correct! This is the best credit score out of these options.
  2. What is a benefit of a good credit score?
    3. Incorrect. A higher credit score does not get you discount on your bills.
    Incorrect. Your credit score does not improve the interest rates that your account gives.
    Correct! A good credit score allows you to get loans easily.
    Incorrect. Only one of these is the correct answer.
  3. What can you do to improve your credit score?
    4. Incorrect. There is a better option available.
    Incorrect. This is a good way to improve you credit score, but there is a better option available.
    Incorrect. Hint: look at the other options as well.
    Correct! All of these are things you can do to improve your credit score.

Budget Planning

A budget is a plan that you create to track money you are making (income) and the money you are spending (expenses). This lets you put money aside for saving and help plan your spending. Whenever you create a budget plan you should decide on what your goal is for saving or spending. This goal would include how much money you will need in how long. You then want to list out your different income sources and expenses and how much money is involved for each source and expense. Examples of sources would be wages, self employment income and tax benefits while some examples of expenses would be bills, groceries and any current savings. You can take a look at this list and sometimes cut out any expenses you feel are unnecessary.

A way to determine unnecessary expenses is by categorizing them as needs or wants. You should make sure that your expenses do not have a total which is higher than your total income. With this extra money you can either save it for things like emergencies or invest it. Putting this plan in action can be difficult so it's best to start slow and then slowly increase the amount of money you save as you start to understand your spending habits. After this there can still be many changes to your plan as other things pop up such as seasonal expenses (yearly events like trips or birthdays) or a major financial event (like the loss of your job). It is always important to re-evaluate your plan whenever events like these occur.

Let's Apply our Knowledge!

  1. What is a benefit of a budgeting plan?
    2. Incorrect. A budgeting plan cannot directly increase your income.
    Incorrect. A budgeting plan does the opposite, it helps reduce expenses.
    Correct! A budgeting plan can help increase your savings by helping you reduce your expenses.
    Incorrect. Hint: Review the Budget Planning section.
  2. What percent of your income should you spend on your wants according to the 50/30/20 Budgeting Rule?
    3. Correct! According to the 50/30/20 budgeting rule, you should only spend 20% of you income on wants.
    Incorrect. Hint: Look at the second image.
    Incorrect. This is not a very sustainable approach, through it does seem enticing :)
    Incorrect. Hint: Review the 50/30/20 budgeting rule.
  3. What is a strategy you can use to improve/implement your budgeting plan?
    4. Incorrect. There is a better option available.
    Incorrect. Hint: Look at all the options.
    Incorrect. You can categorize your expenses into needs and wants which can help reduce your expenses, but there is a better option available.
    Correct! You can use all of these strategies to improve your budgeting plan.