14. Types of bank accounts.

People may have three basic types of bank account:

Current account is the most popular one which is used for handling day-to-day finances. It is used for everyday transactions such as paying bills, transferring money and drawing cheques. This type of bank account has some advantages. Firstly, it enables people to hold their money in a safe place. Secondly, this type of account allows people to withdraw their money at any time. Thirdly, it provides people with a cheque book so they don’t have to carry much cash.

Deposit account is another popular account which is really designed for saving money and may be used for short-term, small savings. The money paid into this type of accounts earns a small amount of interest. This type of account has advantages. Firstly, it is easier to open a deposit account than a current account because there is no need to have an interview with branch manager. A client only has to fill in a form and deposit the minimum amount of money required by the bank. Secondly, a deposit account earns for the account holder. But if the client wants to withdraw his money immediately, he loses some interest.

Investment account may be used for larger, long-term savings. Money paid into this type of account usually earns more interest, but the customer can’t get his money immediately. He has to inform the bank in advance when he wishes to withdraw the money.

15. Making a personal budget.

Everyone have unlimited wants and limited resources. Therefore, everyone will want to use their income as effectively as possible.

Every day we have to make choices: to buy or not to buy a commodity we like. With budget, our choices and alternatives become clearer. It helps us to use money more effectively.

For the beginning we must know our real income: all sources of money we can rely on. Money resources may include wages and salaries, part-time jobs, interest on saving, allowances, aids. It must be only take-home pay.

At second, we must list fixed expenses, which are set in advance and must be paid regularly. Examples of fixed expenses are rent payments, higher purchase instalments, tuition. Many people include savings as a fixed expense because they regularly save a part of their income.

Then, we must list flexible expenses. They are necessary, but change with circumstances. Food, clothing, and gasoline are examples of flexible expenses.

The next step is to list optional expenses. Optional expenses vary and are not always necessary. They may include entertainment, personal care or college suppliers.

In the end, you must compare your income and expenses. Obviously, expenses should not be higher than income. Most people cannot follow their budget exactly. One expenses may turn higher than planned, while another may be lower. A consistent pattern of overspending suggests that the budget should be readjusted or followed more closely.

16. The value of a college education.

An understanding of opportunity costs and tradeoffs is important personally to high school students, as well as everyone else. Sooner or later, high school students must make choices about what to do after graduation. Every year millions of students graduate from high school. The decision they make will affect the rest of their lives. Some will choose to go to college; some will want to get full time job; others will decide to obtain technical job training. In every case, economic reasoning will help students make better choices.

They should consider the costs and tradeoffs connected with a decision to go to college and decide whether a college education is worth the expense in terms of immediate and future personal growth and economic well-being.

The opportunity costs of going to college involve a loss of practical job experience while attending college. The tradeoffs involved in going to college include using time and money now to gain greater advantages in the future.