How do banks work? Explanation by Mahika

 How do banks work?

Do any of you have a bank account or a piggy bank? These are used to store money that you can collect anytime. A bank, do you know what it is? Banks have been around for thousands of years. These useful and beneficial buildings have many purposes and one of them is to store your money and to make sure that it doesn't get stolen. There are many different types of banks in New Zealand like BNZ, ASB, ANZ and Westpac; these are Australian-owned banks in NZ. Some NZ-owned banks are Kiwibank, TSB, Cooperative bank and SBS.

When you get a bank account you can deposit money like notes or coins that you earn into the account. The best thing is that you get your money back at any time There are also many benefits like you can earn money by giving a bit away. For example, you deposit 100 dollars to your bank. The bank can lend it to people who need it like a newlywed couple. By doing this the newlyweds agree to give back that 100 dollars to you with a little extra money like 30 dollars. This process is called interest. But you only get 2% of the interest and the bank gets 5%. Next is a profit. A profit is like interest but the bank keeps the extra money. So in this case, the bank keeps the money that the newlywed couple gave.

Savings-

When you first open an account, you will need to start saving money. Some examples are when you buy bread try buying a cheaper option, Next, you could save while you shop. Try not to purchase really expensive brands. These are just a few options on how you could save money. By saving money you can use it to spend on your wants. Did you know that if you save a heap of money it can potentially increase your net worth? The point of a savings account is to keep your money in a secure position and the best thing is you can earn a bit of interest. Also, savings accounts are used for larger purchases like a car, house and airplane tickets.

Conclusion- 

This is the end of my explanation. Banks are all over the world. Imagine life without banks money would be everywhere, people could steal. With the help of banks, life is easier, more convenient and there is less to worry about. After this, I hope you go to your parents and ask for a bank account or piggy bank.