Introduction to Financial Institutions for Kids and Teens
This video explains the concept of a financial institution in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about financial institutions, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Elementary School
- Middle School
- High School
The topics covered are:
- What is a financial institution
- What do people use financial institutions for
- Are financial institutions regulated by the government
- How does the government ensure people have confidence in the financial institutions
What is a financial institution?
A financial institution is a type of company that is part of the financial services sector.
There are many types of financial institutions, and most people interact with them regularly. Retail banks, credit unions, insurance companies, brokerages, and investment banks are some examples of financial institutions.
What do people use financial institutions for?
Financial institutions are such an integral part of everyday life that when major financial institutions go bankrupt, it leads to widespread panic – often requiring the government to intervene.
Are financial institutions regulated by the government?
The health of financial institutions directly impacts the overall health of the country’s economy.
Since financial institutions handle peoples’ money, they are under strict regulation by the government to ensure consumer protection and economic stability. The government needs to make sure people have confidence in the financial institutions they are dealing with.
How does the government achieve this?
The government uses a combination of strategies to achieve this.
For example, banks are required to keep a certain percentage of deposits as cash at all times so they don’t run out of money if a lot of people want to withdraw at the same time.
The government also uses measures like insuring bank accounts through FDIC so that people do not lose all their money if a bank fails.