Financial literacy Chapter Notes | Social Studies for Grade 7 PDF Download

Introduction

Financial literacy is about understanding how to manage money wisely. It helps you learn how to save, spend, and make smart choices with your money. In this chapter, we will explore banks and the different ways to pay for things. Knowing these things will help you make good decisions about money in your daily life.

Banks

• Banks are places where people keep their money safe.
• They help you save money and use it when you need it.
• Banks offer different services to help manage money.

Types of bank accounts:

• Savings account: A place to save money and earn a little extra money called interest.
• ​Checking account: Used to pay for things with checks or a debit card.

How banks work:

• You deposit money, which means putting your money into the bank.
• You can withdraw money, which means taking money out of the bank.
• Banks keep your money safe from theft or loss.
• Banks use your money to lend to others and pay you interest for keeping it with them.

Services banks provide:

• Loans: Banks lend money for things like buying a house or car, which you pay back over time.
• ATMs: Machines where you can get cash or check your account balance.
• Online banking: Lets you check your money or pay bills using a computer or phone.
• Debit cards: Cards linked to your checking account to pay for things without cash.

Why banks are important:

• They keep your money secure.
• They help you save for the future.
• They make it easy to pay for things without carrying cash.
• They help people buy big things like homes by giving loans.

Methods of Payment

Methods of payment are the different ways you can pay for things you buy. Using the right payment method makes buying things safe and easy.

Common methods of payment:

• Cash: Using coins or paper money to pay for things.
• Checks: A paper slip from your checking account that tells the bank to pay someone.
• Debit cards: A card that takes money directly from your checking account to pay.
• Credit cards: A card that lets you borrow money to pay and pay it back later with interest.
• Digital payments: Using apps or websites like PayPal or Venmo to send money online.
• Mobile payments: Using your phone to pay at stores, like with Apple Pay or Google Pay.

How to use payment methods safely:

• Keep your cash in a safe place, like a wallet.
• Only write checks to people or businesses you trust.
• Protect your debit or credit card by not sharing the card number.
• Use strong passwords for online or mobile payment apps.
• Check your bank account regularly to make sure all payments are correct.

Choosing the right payment method:

• Use cash for small purchases, like snacks or bus fare.
• Use debit cards for everyday shopping, like groceries.
• Use credit cards for bigger purchases, but only if you can pay back the money.
• Use digital or mobile payments for quick and safe online shopping.

Advantages and disadvantages of payment methods:

• Cash:
  • ​Advantage: Accepted almost everywhere and easy to use for small amounts.
  • Disadvantage: Can be lost or stolen, and you can’t use it online.
• Checks:
  • Advantage: Good for paying bills or large amounts without carrying cash.
  • Disadvantage: Not all stores accept checks, and they take time to process.
• Debit cards:
  • Advantage: Easy to use and takes money directly from your account.
  • Disadvantage: You need enough money in your account, or it won’t work.
• Credit cards:
  • Advantage: Lets you buy now and pay later, good for emergencies.
  • Disadvantage: You might owe extra money (interest) if you don’t pay on time.
• Digital and mobile payments:
  • Advantage: Fast, easy, and great for online shopping or paying friends.
  • Disadvantage: Needs internet and a phone or computer to work.