Hi! I’m Dollar the Dragon. I’m here to teach you all about money. We use money in many different ways, and there are lots of tools to help us earn, save and spend money.
One of the tools we use to spend money is a check. You’ve seen your mom or dad write checks to pay bills, to buy groceries, and to pay for things when you’re shopping. You’ve probably seen them get checks, too, from people who want to pay them.
Checks are handy because they’re a way to pay for things without having to carry lots of cash around. Checks are safe, too, because they are only pieces of paper – not money – until you sign them.
When you write someone a check, you are asking your bank to pay that person the amount of money written on the check. Your signature at the bottom of the check means that you promise you have at least that much money in your checking account.
Your checking account is the money you keep at the bank to use whenever you need it – either through checks, or by taking it out at the money machine (Automated Teller Machine). Because the money in your checking account has to be there whenever you want it, checking accounts are also called demand deposits.
When you write someone a check, they can trade that check for cash, either at your own bank or at their bank. Or they can deposit the check into their own checking account. From the numbers on your check, their bank will know how to get the money from your account at your bank.
If you write a check without having enough money in your checking account, your bank will refuse to pay the check, and will send it back to the person you gave it to. This is called “bouncing” a check. It makes everyone unhappy. You’ll still owe the person you wrote the check to, and you will probably have to pay extra money to them and to your own bank. Have you ever been caught telling a lie? Bouncing a check feels like that; it’s very embarrassing!
This tells the bank who wrote the check and how to reach them. Sometimes you will see telephone numbers or identification numbers in this spot, too.
This number helps you keep track of the checks you’ve written, how much they were for, and who you’ve paid. You should keep a list of every check you write.
What day is it? Write the date here. This tells the bank when you promised to pay the money.
Who are you writing the check to? Write their name here. Putting someone’s name here means that they can ask the bank to pay them from your checking account.
How much are you paying? Write the amount in numbers here. You can write the number in decimals (20.00) or as a fraction (20 00/100). Write clearly, so there’s no confusion about how much you mean to pay.
How much was that again? Just so there’s no confusion, write the amount again – but this time, in words (twenty) with a fraction (00/100). This makes sure that no one can change the amount on the check after you write it.
This tells everyone where your checking account is.
This is a space to help you remember what you wrote the check for. You can write anything you like here, like “Legos” or “pizza.” If you are paying a bill that has its own account number, you should write that account number here.
These numbers tell other banks whose money will pay this check. On most checks, these numbers are printed in magnetic ink so that scanners can read them quickly.
Sign your check here! You shouldn’t sign a check until it is completely filled out — because once you sign a check, it’s money. Your signature here is your promise to pay.
Checks are special pieces of paper, with security markings and magnetic inks to help them go through sorting machines. They look fancier than regular notes, because they can be turned into money! Click on each number to see what that part of the check is for, and how to fill it out.
1. Name and address: This tells the bank who wrote the check and how to reach them. Sometimes you will see telephone numbers or identification numbers in this spot, too.
2. Check number: This number helps you keep track of the checks you’ve written, how much they were for, and who you’ve paid. You should keep a list of every check you write.
3. Date: What day is it? Write the date here. This tells the bank when you promised to pay the money.
4. Pay to the order of: Who are you writing the check to? Write their name here. Putting someone’s name here means that they can ask the bank to pay them from your checking account.
5. Amount: How much are you paying? Write the amount in numbers here. You can write the number in decimals (20.00) or as a fraction (20 00/100). Write clearly, so there’s no confusion about how much you mean to pay.
6. Amount: How much was that again? Just so there’s no confusion, write the amount again – but this time, in words (twenty) with a fraction (00/100). This makes sure that no one can change the amount on the check after you write it.
7. Bank name: This tells everyone where your checking account is.
8. Memo: This is a space to help you remember what you wrote the check for. You can write anything you like here, like “Legos” or “pizza.” If you are paying a bill that has its own account number, you should write that account number here.
9. Your Account Number and the Bank Routing Number: These numbers tell other banks whose money will pay this check. On most checks, these numbers are printed in magnetic ink so that scanners can read them quickly.
10. Signature: Sign your check here! You shouldn’t sign a check until it is completely filled out — because once you sign a check, it’s money. Your signature here is your promise to pay.
Hi! I’m Dollar the Dragon. I’m here to teach you all about money. We use money in many different ways, and there are lots of tools to help us earn, save and spend money.
Do you have a savings account? A savings account is a tool you can use to help you keep money in a safe place and even earn more, through the interest the bank pays you. The more money you save, and the longer you keep it in the bank, the more money the bank pays you. That’s why you should save as much as you can, for as long as you can!
When you open a savings account, you bring your money to the bank and they give you your own special number – an account number – that keeps track of how much money the bank is keeping for you. You may get a little book, called a “passbook,” to help you keep track of how much more money you bring to the bank, and how much money the bank is paying you in interest. The bank will also send you letters to remind you of how much money you have in your account.
Why would the bank pay you money for keeping your money in a safe place? When you put your money in a savings account, you are telling the bank that you won’t need it for a while. So the bank uses your money to help people who need loans for houses, or cars, or going to college.
People who borrow money from the bank pay it back with some extra, as a fee for being able to use that money. The bank then pays you, for letting the bank use your money to make these loans.
These payments are called interest. It’s a little like paying rent on money. How much interest you earn depends on how much money you have in the bank. The interest rate is a fraction that the bank multiplies by how much money is in your account, to figure out how much to pay you.
The interest rate is usually the same whether you have $20 in your savings account, or $100. But if the interest rate is 3%, you will only earn 60 cents if you have $20 in your savings account. If you have $100, you’ll earn $3.00! The more you save, the more you earn.
Hi! I’m Dollar the Dragon. I’m here to teach you all about money. We use money in many different ways, and there are lots of tools to help us earn, save and spend money.
Automated teller machines, which you may call ATMs or money machines, are very handy tools for getting cash, finding out how much money is in your checking and savings accounts, and even buying things like stamps or subway tickets.
When you were a little kid, did you think they were magic? You put in a card, punch in some numbers, and you get money! How does that happen?
Fun Facts
How does the ATM know how much money to give you? No, there isn’t a small person in back counting out the bills. ATMs have an electronic eye that can “read” each bill and tell whether it is $20, $10, or some other amount. They also have a sensor that knows how much each bill should weigh – so it can tell whether two bills are stuck together, or if a bill is so worn out it shouldn’t be used any more. Worn-out bills go to a “reject” bin!
ATMs are connected to their banks by telephone lines. When you put your card into the machine, the card’s magnetic strip tells the machine your account number and the name of your bank. If that ATM can connect to your bank, the screen will ask for your Personal Identification Number (PIN), to make sure that you’re you and no one has stolen your card. Your PIN is your “secret code.” Keep it safe; don’t tell it to anyone except your parents!
You can use the ATM to take out money, to put money in your account, to check how much money you have, or to buy things like stamps. If you ask the ATM to give you money, the machine uses its telephone lines to make sure that you have enough money in your account. When the machine gives you your money, it will also give you a printed record of your visit. This paper will tell you how much money you took out, and give you the date and time of your visit. Save this receipt, and use it to help you keep track of how much money is in your account.
Hi! I’m Dollar the Dragon. I’m here to teach you all about money. We use money in many different ways, and there are lots of tools to help us earn, save and spend money.
Besides savings accounts, another way to save money is to buy savings bonds from the United States Government. While bonds are a way for you to save money, they are actually a loan you make to the government, to help pay for things like highways, hospitals and even the space shuttle. The bond you get is the government’s “I.O.U.”
When you buy a savings bond, you agree to let the government use your money for a certain period of time – three years, five years, or maybe even longer. You pay less for the bond than the amount printed on it; at the end of the loan period, when the bond matures, you can cash it in for the full amount.
Buying bonds is an easy way to save for your long-term plans, like college! Because you have to wait until the bonds mature, you won’t be tempted to use that money for other things. Bonds make good presents – maybe you’ve already gotten one for your birthday or some special event.
You can buy Series EE Bonds and Series I Bonds from most banks or credit unions. Some banks even sell bonds over the Internet! Anyone who lives in the United States and has a Social Security Number can buy a U.S. savings bond – you don’t have to be a grown-up.
Hi! I’m Dollar the Dragon. I’m here to teach you all about money. We use money in many different ways, and there are lots of tools to help us earn, save and spend money.
A budget is a tool for figuring out where your money comes from and where it goes. It’s a written plan that says how much you will earn, how much you will spend, and how much you will save. If you have a budget, you can plan how to get the things you want, and make sure that you don’t waste your money on things you don’t need.
To “balance” your budget, just make sure that the money you earn (income) equals the money you spend (expense). If you spend more than you make, you will have to borrow money – and how will you pay it back? But if you make more than you spend, you can save for bigger things like camp, a bicycle, or a new computer.
Before you make your budget, keep track of how much money you earn and spend in a week. Carry a little notebook, if you need to, so you don’t leave anything out: $5.00 earned from babysitting, $10.00 for mowing the lawn, 50 cents spent on gum, $7.00 to go to the movies.
That will help you plan your budget. Do you know that your parents will pay you $10.00 every week to mow the lawn? List that as income. How many friends do you need to buy birthday presents for this month? List that as expense. Make adjustments where you need to, to make sure that you will only spend as much as you earn.
Once you have your budget, stick to it! Don’t spend $5.00 on candy at the movie theater if your budget says you’ll only spend $2.00. Your budget is the most powerful tool you have to make sure that you’re managing your money – and it’s not managing you!
