chapter 3

chapter 3

Saving and borrowing

Many pupils save money. Research shows that youngsters do not spend all their income at once. A portion of it is spent and the remaining portion is saved. No less than 86% of third-year havo/vwo pupils save. Saving is not spending a portion of the income. The average amount saved in the accounts of third-year pupils is € 1,435. Not all of that money has been saved by the pupils themselves. In more than half of the cases the parents have stepped in. 15- and 16-year-old pupils who save, put an average amount of
€ 40 into a savings account every month.

This chapter also contains the necessary arithmetical work. This concerns calculating the interest you get on a savings account. When you save, you shift the spending to a later point in time, whereas borrowing means you bring your spending forward in time. Borrowing costs money, because you have to pay interest. Other forms of borrowing are hire-purchase and buying on instalment credit terms.
The building blocks in this chapter deal with budgeting, saving and borrowing.

Loans in all kinds of forms (www.nibud.nl)
Borrowing money (www.watislenen.nl)
Calculating the effective mortgage loan interest from the nominal mortgage loan interest


Glossary chapter 3

Fixed periodical payment composed of interest and repayment of a borrowed amount.
continuous credit
A (bank) account with which you can borrow up to a certain maximum (also known as ‘being in the red’). As compensation for this continuous credit, you pay interest. A personal loan for which it has not been agreed that the loan must be repaid before a certain date.
The increase in prices of goods and services. Increase in the general price level.
The compensation which must be paid for the borrowing of money and which is received for the lending of money.
interest rate
Percentage that the bank gives or asks for saving or borrowing.
The median is the middle value in a group of numbers. In a series with 1, 7, 8, 11, 29, 44, and 59, the median is 11.
mortgage loan
A long-term loan with immovable property as security: if the debtor cannot fulfil his obligations, the immovable property can be sold.
personal loan
A loan for which a fixed amount including interest is paid back every month. It is also determined in advance withijn which period the borrowed amount will be paid back.
purchasing power
The quantity of goods that you can buy with your income (or a euro).
Not spending a portion of the income.