Minds On

Types of bank accounts

There are many ways to store money, from an old-fashioned piggy bank to a bank account. A bank account is more secure, and you still have access to your money. Banks and other financial institutions offer different accounts to store and keep track of money. In Canada, the two main types of bank accounts offered are: a chequing account and a savings account. There are a number of differences between these two accounts.

  • requires a co-signer (usually a parent or guardian) to open this account, depending on your age
  • used for day-to-day banking, making purchases, and paying bills
  • account holders can deposit and withdraw money via an ATM (automated teller machine)
  • if account holders use an ATM that is not associated with their bank, they may incur a small fee
  • account balances in a chequing account do not usually earn interest
  • depending on the bank, there are several different types of chequing accounts (e.g., student accounts, business accounts, and accounts that may offer other incentives)
  • some of these accounts may charge a monthly fee and offer specialized services (e.g., unlimited ATM transactions or unlimited e-transfer transactions)

  • requires a co-signer (usually a parent or guardian) to open this account, depending on your age
  • ideal for saving money that you would not need to access each day
  • account balances earn interest over time
  • depending on the type of savings account, you can easily access your money when you need it
  • there are a variety of different types of savings accounts depending on your needs and financial goals

Access this video where Shannon explains the responsibility of opening up a bank account. What type of account would you recommend to a friend or family member trying to save money? What could they decide to do to help them plan a short-term savings goal?

Student Success

Think-Pair-Share

Think and reflect

Think:

Spend a few minutes considering each of these questions.

  • What would a chequing account allow you to do?
  • What would a savings account allow you to do?
  • Are you aware of any banks in your area that have special offers for students? Why would banks want to encourage students to open up a bank account?
Reflect:

How do you think banks make money for themselves?

Note to teachers: See your teacher guide for collaboration tools, ideas and suggestions.

Action

SMART goals

In the Minds On section, you explored the differences between chequing and savings accounts. Our personal financial goals determine the amount of money we put in our savings account. So how do we set a financial goal? And how do we monitor our financial goals?

At various times throughout the year, people set new financial goals. Why do they set new goals? What is the purpose of goal-setting? Can we set goals at any time?

Goals are used to focus attention on and track new behaviours. Goals are targeted in such a way that they can be evaluated to determine if they are achieved. Although goals are often created at the beginning of a new year, they can be created at any time. Often a SMART goal framework is used to develop goals.

SMART goal definition

The goal is clearly defined and answers the five “W” questions, if applicable.

The goal should contain evidence that is in measurable terms.

The goal should motivate you, but also be manageable depending on your current and future circumstances.

Ensure that your goal is meaningful to you and worth your effort.

Establish a time frame for you to achieve the goal you have set for yourself.

Applying the SMART goal framework

Jamie wants to save for a new smart phone. They applied the SMART goal framework to help plan how they will achieve the goal.

Aspect of goal Evidence
Specific I would like to save $400 for the latest smart phone on the market.
Measurable I will begin saving $15 each month, beginning in November.
Attainable I earn $40 each month from my newspaper route, so I will set aside $30 a month in my savings account. I will continue to work delivering newspapers while I save for a phone.
Relevant A phone is important to me because I want to stay connected to friends and my parents. Learning to use an online banking platform to monitor my progress is also a skill that is important to me.
Timely I will give myself 14 months to reach this goal.

Jamie’s plan to save for a smart phone is an example of a short-term goal. They could create a longer-term goal if they were planning on saving a larger amount of money. This could be useful for saving for post-secondary tuition. In any case, the SMART goal framework can be used to create a variety of financial goals and plan for the future.

Planning for your future

Now it is time to plan your own future financial goals. First, determine your desired post-secondary pathway (apprenticeship, college, or university). Then determine the costs associated with the pathway you have chosen. Be sure to explore the costs for tuition, books, and other expenses, such as transportation, accommodation, food, bills, or entertainment. Calculate these costs using the below example as a guide.

Calculation example:

IF the yearly tuition at College ABC will cost me $3,500 and my program length is two years, THEN I will need to save $7,000.

IF text books and supplies cost me an average of $400 each year, THEN I will need to save $800.

IF transportation costs $100 each month, THEN I will need to save $800 each year x 2 years = $1,400.

Total expenses = $7,000 + $800 + $1,400 = $9,200.

Your post-secondary SMART goal

Now that you have calculated the costs associated with your post-secondary pathway, use the SMART goal framework to help you set a long-term financial goal. Remember that a SMART goal is specific, measurable, attainable, relevant, and timely.

Complete the Post-Secondary SMART Goal Organizer in your notebook, or use the following fillable worksheet.

Post-Secondary SMART goal
My goal is to save: $
Aspect of goal Evidence
Specific
Measurable
Attainable
Relevant
Timely

Press the ‘Activity’ button to access the Post-Secondary SMART Goal Organizer. 

Activity (Open PDF in a new window)

Consolidation

Goal setting factors

In your Math journal, reflect on the following questions:

  1. After discovering the cost of living and the cost of expenses, how have my goals changed?
  2. Are my goals realistic?
  3. What have you determined based on your findings?
  4. What other factors should we keep in mind when setting goals?

Reflection

As you read the following descriptions, select the one that best describes your current understanding of the learning in this activity. Press the corresponding button once you have made your choice.

I feel...

Now, expand on your ideas by recording your thoughts using a voice recorder, speech-to-text, or writing tool.

When you review your notes on this learning activity later, reflect on whether you would select a different description based on your further review of the material in this learning activity.

Press 'Discover more' to extend your skills.

Long term planning and budgeting

In discussing short-term and long-term goals, we had a dollar amount in mind, based on the total cost for the item.

Now, let’s think about our future career and future goals. First, you will need to decide the location where you want to live. Then you will need to predict the monthly cost for either renting or owning a property. Finally, you will need to consider other expenses that may come with renting.

Complete the Sample Budget in your notebook, or use the following fillable and printable document.

Sample Budget
Regular Monthly Income Sources
Earnings $
Wages/allowance $
Gifts $
Other $
Total $
Regular Monthly Expenses
Rent/mortgage $
Food $
Transportation $
Phone/internet/cable $
Entertainment $
Savings $
Loan payments $
Emergency fund $
Utilities (heat/hydro/water) $
Home insurance $
Clothing $
Other $
Total $
Monthly Excess Total = Monthly Income − Monthly Expenses
Monthly income $
Monthly expenses $
Monthly excess total (savings) $

Press the ‘Activity’ button to access the Sample Budget.

Activity (Open PDF in a new window)

Research a career

Now that you have determined a monthly budget, you will want to make sure you can meet your predicted monthly costs with your chosen career.

Determine a career of your choice and research the average gross salary for this career. A gross salary represents your income before taxes and deductions. (Visit myblueprint.ca(Opens in a new window) or skillszone.ca(Opens in a new window) if you are looking for some websites to get you started.)

Career Average starting salary (per year) for this career

Calculate income tax

Now, let’s explore what you would pay in taxes based on your gross income. Federal taxes in Canada are calculated on your income using tax brackets for different amounts.

First, a person would pay 15% on the amount up to $47,630. Second, a person would pay 20.5% on any amount more than $47,630 and less than $95,259. Third, a person would pay 26% on any amount more than $95,259 and less than $147,667. Fourth, a person would pay 29% on any amount more than $147,667 and less than $210,371. And finally, a person would pay 33% on any amount more than $210,371.

As you will notice, when your salary increases, so too will your payable taxes.

So how do we calculate this? If your taxable income was $50,000 in 2020, you would calculate your federal tax as follows:

  Explanation Calculation Total

Step 1

Pay 15% on the amount up to $47,630.

= $7,144.50

Step 2

Your salary was $50,000 and we have $2,370.00 remaining from the $47,630 that was calculated for taxes in step 1

= $485.85

Step 3

Add the two totals

= $7,630.35

Determine the federal taxes you will pay on the salary of your chosen career. Next, determine the federal taxes you will pay on the following salaries:

  • Starting salary for an accountant–$70,000
  • Starting salary for a teacher–$55,000
  • Starting salary for a licensed plumber–$73,000

Connect with a TVO Mathify tutor

Think of TVO Mathify as your own personalized math coach, here to support your learning at home. Press ‘TVO Mathify’ to connect with an Ontario Certified Teacher math tutor of your choice. You will need a TVO Mathify login to access this resource.

TVO Mathify (Opens in new window)