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Saving Money and Interest

6th grade nonfiction passage about saving and interest: 197 words, five questions, an answer key and vocabulary.

6th grade nonfiction saving and interest 197 words

Saving Money and Interest

When you put money in a savings account at a bank, the bank pays you a little extra for letting it use your money. That payment is called interest. It is one of the reasons people save instead of keeping all their cash in a drawer.

Suppose you deposit 100 dollars in an account that pays 5 percent interest each year. After the first year, you earn 5 dollars, so your balance is 105 dollars. In the second year, the bank pays interest on 105 dollars, not just the original 100. You earn 5 dollars and 25 cents, and your balance rises to 110 dollars and 25 cents.

Earning interest on interest is called compound interest. At first the extra amounts look tiny, but they grow a little faster every year. If you made no more deposits, that account would hold about 163 dollars after ten years, even though you only put in 100.

The lesson is that time is a powerful helper. The longer money stays in an account, the more it can grow, so people who start saving young have an advantage. Interest rates change from bank to bank and from year to year, so it is smart to ask questions and compare before choosing an account.

Questions

  1. What is interest? in the text

  2. How much would the account hold after the first year in the example? in the text

  3. What is compound interest? in the text

  4. Why do you earn more interest in the second year than in the first? think about it

  5. Why do people who start saving young have an advantage? think about it

Words to know

interest
money a bank pays you for keeping your savings there
deposit
to put money into a bank account
balance
the amount of money in an account
compound
made of interest that earns more interest
advantage
something that puts you in a better position
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One passage, three levels

The same topic and facts written three ways, so a mixed class can read and talk about one text. Each group’s sheet shows only a shape; the key says which is which.

● Easier · 165 words · Flesch-Kincaid grade 3.1

You can put money in a savings account at a bank. The bank pays you a little extra for using your money. This payment is called interest. It is one reason people save money in a bank.

Say you put in 100 dollars. The bank pays 5 percent interest each year. After one year, you earn 5 dollars. Now you have 105 dollars. In year two, the bank pays interest on 105 dollars. It does not pay only on the first 100. You earn 5 dollars and 25 cents. Now you have 110 dollars and 25 cents.

Interest on interest is called compound interest. At first the extra money is tiny. But it grows a bit faster each year. Make no more deposits, and the account would hold about 163 dollars after ten years. You only put in 100.

Time helps a lot. The longer money stays in the bank, the more it grows. People who start young have an advantage. Rates change from bank to bank. So ask questions and compare before you pick an account.

▲ This passage · 197 words · Flesch-Kincaid grade 7

When you put money in a savings account at a bank, the bank pays you a little extra for letting it use your money. That payment is called interest. It is one of the reasons people save instead of keeping all their cash in a drawer.

Suppose you deposit 100 dollars in an account that pays 5 percent interest each year. After the first year, you earn 5 dollars, so your balance is 105 dollars. In the second year, the bank pays interest on 105 dollars, not just the original 100. You earn 5 dollars and 25 cents, and your balance rises to 110 dollars and 25 cents.

Earning interest on interest is called compound interest. At first the extra amounts look tiny, but they grow a little faster every year. If you made no more deposits, that account would hold about 163 dollars after ten years, even though you only put in 100.

The lesson is that time is a powerful helper. The longer money stays in an account, the more it can grow, so people who start saving young have an advantage. Interest rates change from bank to bank and from year to year, so it is smart to ask questions and compare before choosing an account.

■ Harder · 228 words · Flesch-Kincaid grade 9.9

When you deposit money in a savings account at a bank, the bank pays you a modest amount extra in return for being allowed to lend and invest your funds. That payment is called interest, and it is one of the main reasons that people save at a bank instead of hiding all their cash in a drawer at home.

Suppose you deposit 100 dollars in an account that pays 5 percent interest annually. After the first year, you have earned 5 dollars, so your balance stands at 105 dollars. During the second year, the bank calculates interest on 105 dollars rather than on the original 100. You therefore earn 5 dollars and 25 cents, and your balance climbs to 110 dollars and 25 cents.

Earning interest on previously earned interest is known as compound interest. At the beginning, the extra amounts seem tiny, but they accumulate a little faster every single year. If you made no additional deposits, that account would hold about 163 dollars after ten years, even though you contributed only 100 dollars yourself.

The lesson is that time is an enormously powerful helper. The longer money remains in an account, the more it can grow, so people who begin saving early in life enjoy a real advantage. Interest rates vary from one bank to another and from one year to the next, so it is wise to ask questions and compare several accounts before choosing one.

Download as one PDF

How to use it

  1. Press Read it big (or B) to put the text on the projector, or Full screen (F) to fill the whole screen.
  2. Ask the questions one at a time and use Show answer when the class has decided. A shows or hides every answer.
  3. Print student copy for the class, or Print with answers for yourself.

Ideas for class

  • Before reading, put interest, deposit, balance, compound and advantage on the board with their meanings from the Words to know section and have students predict what the text will be about.
  • Read it aloud once while students follow along, then have them reread it alone or with a partner. At a calm 100 words a minute it takes about 2 minutes to read aloud.
  • Use the Read it big button (or B) to put the text on the projector, and Show answer on one question at a time so the class commits to an answer first.
  • Question 4 asks the reader to infer. Ask students to point to the words in the passage that led them to their answer.
  • Ask students to write one question the passage did not answer, then look for the answer in a book or on a classroom screen.
  • Print the student copy for independent work and keep the answer-key copy for yourself.

Related

Questions

What reading level is "Saving Money and Interest"?

It was written for 6th grade. It has 197 words and works out to a Flesch-Kincaid grade level of about 7.0. That is a formula's estimate from sentence length and syllables, and it is not a Lexile or a guided reading level, so check it against your students.

What do the questions ask?

There are five. 3 ask for something the text says directly and 2 ask the reader to work something out from clues. Each has an answer in the key, and the answers are written as a teacher would accept them, not as the only possible wording.

How long does it take to read?

About 2 minutes read aloud at 100 words a minute. For a one-minute fluency check, paste it into the fluency timer and use the word count.

Can I print it?

Yes. Print student copy gives the passage, the questions with lines to write on, and the word meanings. Print with answers gives the same page with the answers filled in. Both are made in your browser.

Is this passage from a published book?

No. It was written for Peabody Teach, so there is no book to buy and no login to read it.

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