Nia Plans for a Drawing Tablet
Juniper School's animation club is making a short film. Nia wants a used drawing tablet so she can create artwork for the film. She records the money she receives for work during one typical month. Her graph shows money from pet care, yard work, helping organize art supplies, and tutoring a younger student. Together, these jobs bring in $70.
Before the month begins, Nia writes a plan for the $70. She sets aside $30 for the drawing tablet. She plans $25 for needs, such as bus fare and school supplies. She gives $5 as a gift and leaves $10 for free-choice spending. The four amounts add to $70, so her plan gives every dollar a job. The $30 set aside for the tablet is saving because Nia keeps the money for a future goal instead of spending it now.
The tablet costs $84. If Nia follows her plan for two months, she will have $60 in her tablet fund. She could wait until she has enough, or she could ask her uncle to lend her $20. Her uncle says she would need to return the $20 plus 10 percent interest. Interest is extra money paid for using someone else's money. Ten percent of $20 is $2, so the repayment would be $22.
Borrowing could help Nia buy the tablet sooner, but it would not make the tablet free. After two months, Nia would still need $4 of her own money to reach the $84 price. She would also need to plan for the $22 repayment. Before agreeing to borrow, Nia checks whether her future income can cover that repayment. Saving takes more time, but it does not create a loan or interest payment.