Managing finance well: records, debit cards and credit cards – Financial Awareness (Senior 1 Entrepreneurship) | Ganzaa

Financial Awareness

Lessons

Senior 1 · Entrepreneurship

Financial Awareness

5 lessons

Lesson 5 of 5

Managing finance well: records, debit cards and credit cards

25 min

Case: the missing Frw 5,000

Keza is a mobile-money agent at a kiosk near the bus stop in Huye. Every morning she writes her opening cash in a notebook. Every time a customer deposits cash or withdraws it, she writes it down. Every evening she counts her cash and compares it with the book.

One Friday evening the box held Frw 5,000 less than the book said it should. Keza went through the day's entries one by one and found it: at the busy lunchtime a customer had withdrawn Frw 5,000 and, in the rush, she had not written it down. The money was not lost. Her record was incomplete. (An illustrative case.)

Think about it: Without the notebook, what might Keza have believed had happened to the money?

Habits of good money management

Whether you run a kiosk or manage your own pocket money, the same habits keep money under control.

Habit	Why it matters
Keep written records of money in and money out	You can find mistakes and see where money goes
Make a budget and compare it with what actually happens (Lesson 1)	Overspending is caught early
Keep business and personal money apart	The business always has cash for stock and bills
Save first, and keep an emergency fund	A shock does not force you into debt
Borrow only for things that earn (Lesson 4)	Repayments come from new income
Check statements and mobile-money messages	Errors and fraud are spotted quickly
Protect your PIN and never share it	No one else can spend your money

Definition

Financial records: written or digital notes of every amount of money received and paid out, with the date and the reason.

Example: Keza's notebook of deposits and withdrawals.

A cash record is checked with one formula:

$\text{closing balance} = \text{opening balance} + \text{money in} - \text{money out}$

Worked example

Checking Keza's cash for Friday (illustrative figures)

Opening cash: Frw 200,000. Cash received from customers' deposits: Frw 350,000. Cash paid out for withdrawals, as recorded: Frw 420,000.

Step 1: expected closing cash. $200,000 + 350,000 - 420,000 = 130,000$

Step 2: compare. She counts Frw 125,000. Difference: $130,000 - 125,000 = 5,000$ .

Step 3: explain. A Frw 5,000 shortfall means Frw 5,000 went out without being recorded: the lunchtime withdrawal. Adding it gives recorded withdrawals of Frw 425,000, and $200,000 + 350,000 - 425,000 = 125,000$ , which matches the cash.

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Debit cards and credit cards

Banks give customers plastic cards for paying in shops and online and for taking cash from machines. Two cards can look identical and work in completely different ways.

Definition

Debit card: a card that takes money straight from your own bank account when you pay or withdraw cash. You can spend only what is in the account.

Example: Aline pays for groceries with her debit card, and Frw 12,000 leaves her account at once.

Definition

Credit card: a card that lets you spend the bank's money, up to a limit, and pay it back later. If you do not repay the full amount by the due date, the bank charges interest on what is left.

Example: a business owner buys a Frw 300,000 laptop with a credit card and repays the bank over the following months.

Definition

Credit limit: the most a credit-card holder may owe the bank at one time. PIN (personal identification number): the secret code that proves you are the card's owner. ATM (automated teller machine): a machine that gives out cash when you insert a card and enter your PIN.

Example: a credit limit of Frw 500,000; a four-digit PIN.

	Debit card	Credit card
Whose money do you spend?	Your own, from your account	The bank's: a short-term loan
When is it paid?	Immediately	Later, when the monthly bill arrives
How much can you spend?	What is in your account	Up to the credit limit
Interest	None on purchases	Charged if the bill is not paid in full
Main benefits	No debt; safer than carrying cash; a record of every payment	Pay for large or urgent items before you have the cash; accepted abroad and online
Main risks	Fees; theft of the card and PIN; card details stolen online	Easy to overspend; high interest; debt that grows; the same theft risks

A mobile-money wallet works much like a debit card: you can spend only the money in it, and each payment leaves a message as a record.

Worked example

What an unpaid credit-card bill costs (illustrative rate)

Suppose a credit card charges 3% a month on any balance not repaid, and Frw 80,000 is left unpaid.

Interest for one month: $\frac{3}{100} \times 80{,}000 = 2{,}400$

Over 12 months (even if the interest itself were never charged interest): $2{,}400 \times 12 = 28{,}800$

At least Frw 28,800 a year for nothing but delay. In practice it is more, because unpaid interest is added to the balance.

Worked example

Small fees add up (illustrative fee)

Suppose each cash withdrawal costs a fee of Frw 300. Mugisha withdraws cash 8 times a month.

$300 \times 8 \times 12 = 28{,}800 \text{ a year}$

If he plans ahead and withdraws once a week (4 times a month): $300 \times 4 \times 12 = 14{,}400$ , a saving of Frw 14,400 a year.

Warning

Keep your PIN secret, always. No bank, SACCO or mobile-money company will ever ask for your PIN by phone or message. Cover the keypad at an ATM, never let anyone "help" you with the machine, and report a lost card at once so it can be blocked.

Tip

Treat a credit card like a debit card. Spend on it only what you already have in the bank, and repay the whole bill every month. Then the card is a convenience and never a debt.

Learn Bright, "Financial Literacy: Debit and Credit" (about 5 minutes). Watch for when each card is the better choice. The video is American, so the fees and rules differ in Rwanda; the principles are the same.

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Activity: a week of records

For one week, record every franc you receive and spend: date, amount, reason. Include mobile money.
Each evening, check: opening money + money in − money out = money you actually have. Explain any difference.
At the end of the week, list three things your record shows you did not expect.
In groups, write five rules for using a bank card safely, and display them in the classroom.

Practice

Give three habits of good money management.
A shop starts the day with Frw 50,000 cash, takes in Frw 180,000 and pays out Frw 95,000. What should the closing cash be?
At closing time the shop in question 2 counts Frw 132,000. What is the difference, and what might explain it?
State two differences between a debit card and a credit card.
Give one benefit and one risk of using a credit card.
A credit card charges 2% a month on an unpaid balance of Frw 150,000. What is the interest for one month?
Uwase says, "I have a credit card, so I don't need savings." Is she right? Explain.

Show answersHide answers

Any three: keep records; budget and compare; keep business and personal money apart; save first; borrow only for things that earn; check statements; protect your PIN.
$50,000 + 180,000 - 95,000 = 135,000$ : Frw 135,000.
$135,000 - 132,000 = 3,000$ : Frw 3,000 short. Perhaps a payment was not recorded, change was given wrongly, or money was stolen; the records should be checked.
A debit card spends your own money immediately; a credit card spends the bank's money, to be repaid later, with interest if not paid in full.
Benefit: you can pay for an urgent item before you have the cash. Risk: overspending and high interest on unpaid balances.
$\dfrac{2}{100} \times 150{,}000 = 3{,}000$ : Frw 3,000.
No. A credit card is a loan: using it in an emergency creates a debt with interest, while savings are her own money at no cost.

1Case: the missing Frw 5,000

2Habits of good money management

3Debit cards and credit cards

4Activity: a week of records

Case: the missing Frw 5,000

Habits of good money management

Debit cards and credit cards

Activity: a week of records