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RECOMMENDED GRADE
LEVELS AVERAGE TIME TO COMPLETE
EACH LESSON PLAN IS DESIGNED AND CONTINUALLY
EVALUATED “BY EDUCATORS, FOR EDUCATORS.” THANK YOU
TO THE FOLLOWING EDUCATORS FOR DEVELOPING
COMPONENTS OF THIS LESSON PLAN.
10‐12
Anticipatory Set & Facilitation: 120 minutes
Conclusion/Assessment Options: 20‐60 minutes
Time does not include the vocabulary activity or potential modifications.
Tracey Newman, Family and Consumer Sciences Educator, Ste. Genevieve, Missouri
Margie Chinadle, Family and Consumer Sciences Educator, Rudyard, Montana
NATIONAL STANDARDS LESSON PLAN OBJECTIVES
The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer
Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts
Upon completion of this lesson, participants will be able to: Evaluate the importance of saving money Assess the importance of developing financial goals
when saving money Analyze the trade‐offs and opportunity costs when
saving money Implement the pay yourself first strategy Summarize the time value of money concept Identify the benefits of compounding interest on
savings
MATERIALS
MATERIALS PROVIDED IN THIS LESSON PLAN
MATERIALS SPECIFIC TO THIS LESSON PLAN
BUT AVAILABLE AS A SEPARATE DOWNLOAD
MATERIALS TO ACQUIRE SEPARATELY
DEPENDING ON OPTIONS TAUGHT
My Savings Quest 2.4.1.A1
Take a Chance Tracking 2.4.1.A2
Choose to Save reinforcement worksheet 2.4.1.A3
To Save or Not To Save Essay Rubric 2.4.1.B1
Choose to Save Vocabulary List 2.4.1.E1
The Roommates: Saving Script 2.4.1.E3
Choose to Save Information Sheet 2.4.1.F1
Take a Chance Cards 2.4.1.H1
Choose to Save Note Taking Guide 2.4.1.L1
Choose to Save Answer Key 2.4.1.C1
The Roommates: Saving Prezi Presentation 2.4.1.E2
Choose to Save PowerPoint presentation 2.4.1.G1
Saving and Investing Unit Multiple Choice Test Bank & Answer Key 2.4.0.M1 & C1
Bingo markers (could be beans, buttons, glass rocks, etc.)
Children’s books about saving
Large bag of Jelly Beans (or other candies or markers) with a minimum of six colors
Clear containers (Ziploc sacks, clear bowl, graduated cylinder, clear piggy bank, etc.)
CHOOSE TO SAVE Advanced Level
www.takechargetoday.arizona.edu
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RESOURCES EXTERNAL RESOURCES
External resources referenced in this lesson plan: Consumer Jungle: www.consumerjungle.org
Saving Money in Plain English: www.commoncraft.com/video/saving‐money‐compound‐interest
TAKE CHARGE TODAY RESOURCES
Similar lesson plan at a different level: The Secrets of Saving 1.4.1
Optional lesson plan resources: Bingo Active Learning Tool 3.0.16 Children’s Book Integration Active Learning Tool
3.0.35 Penny Power Active Learning Tool 3.0.2 A Little Goes a Long Way Visual Aid 4.4.1 Time Value of Money Magic! Active Learning Tool
3.0.25 Time Value of Money Math Lesson Plan 2.4.2
CONTENT EDUCATOR MATERIALS PARTICIPANT READING
Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website.
Choose to Save Information Sheet 2.4.1.F1
OPTIONAL ADVANCE INSTRUCTIONThis lesson is designed to be taught as a stand‐alone lesson. However, background content knowledge from the
following lesson plans is directly related to this lesson and may be helpful for participants.
Setting Financial Goals 2.1.4 Financial Decisions 2.1.3 Statement of Financial Position 2.2.3 Income and Expense Statement 2.2.4 Spending Plan 2.2.5 Getting Paid 2.3.9
LESSON FACILITATION
PREPARE
Visual indicators to help prepare the lesson INSTRUCT
Instructions to conduct the lesson facilitation CUSTOMIZE
Potential modifications to lesson facilitation
VOCABULARY ACTIVITY Activity that may be conducted before, during and/or after instruction depending upon the activity and needs of participants.
Bingo
Approximate time: 20 minutes prior to instruction and 20 minutes at the end Materials to prepare for vocabulary activity:
Bingo Active Learning Tool 3.0.16 o 1 Bingo‐ Side One and 1 Bingo‐ Side Two 3.0.16.H1 printed front to
back per person
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12 bingo markers (could be beans, buttons, glass rocks, etc.) per person
Choose to Save Vocabulary List 2.4.1.E1
1 Choose to Save Information Sheet 2.4.1.F1 per participant
1. Conduct the Bingo activity – side one, definitions. Directions are included in the Bingo Active Learning Tool 3.0.16.
o The object of Bingo is for a player to have a row, column or clear their bingo board as a result of matching vocabulary words throughout the activity.
ANTICIPATORY SET OPTIONS There are two anticipatory set options provided for this lesson. 1. Option 1: Children’s Book Integration 2. Option 2: Penny Power
Option 1: Children’s Book Integration Approximate time: 30 minutes (depending on the number of groups) Materials to prepare: Children’s Book Integration Active Learning Tool 3.0.35
o 1 Money Stories 3.0.35.A2 per participant 1 children’s book about saving per 3‐4 participants. Examples include:
o The Tale of the Tortoise Buffett by Lucas Remmerswaal – Participants learn about the role money plays in life including making your money work for you.
o If You Made a Million by David Schwartz – Participants learn about spending, saving, interest, borrowing, and lending.
o One Grain of Rice by Demi – Participants learn about the time value of money.
o A list of additional savings books is available in the Children’s Book Integration Active Learning Tool 3.0.35
1. Divide participants into groups of 3‐4. 2. Complete the Option 2: Graphic Organizer activity as described in the
Children’s Book Integration Active Learning Tool 3.0.35.
Option 2: Penny Power Approximate time: 15 minutes Materials to prepare:
Penny Power Active Learning Tool 3.0.2 o Penny Power PowerPoint presentation 3.0.2.G1
1. Conduct the Penny Power demonstration as instructed.
a. Penny Power introduces the concept of compounding interest by showing the power a penny can have if doubled every day.
RECOMMENDED FACILITATION
If time is limited, choose one children’s book and conduct a class discussion. Tips are provided in the Children’s Book Integration Active Learning Tool 3.0.35.
Increase the number of terms available by using vocabulary lists from topics that supplement this lesson including goal setting, financial decisions, income and expense statement, etc.
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PowerPoint Presentation Approximate time: 90 minutes Materials to prepare: Choose to Save PowerPoint presentation 2.4.1.G1 1 My Savings Quest 2.4.1.A1 per participant Time Value of Money Magic! Active Learning Tool 3.0.25
o Large bag of Jelly Beans (or other candies or markers) with a minimum of six colors
o 2 clear containers (Ziploc sacks, clear bowl, graduated cylinder, clear piggy bank, etc.)
o Time Value of Money Magic PowerPoint presentation 3.0.25.G1 Present the Choose to Save PowerPoint presentation 2.4.1.G1. Split participants into groups of two to three. Participants will work in small groups to discuss prompts as presented in the PowerPoint. Part 1: What is Saving? 1. Slide 1: Choose to Save 2. Slide 2: What is Saving?
a. Saving is an essential part of a financial plan. 3. Slide 3: Why Save?
a. Without savings, a household may not have the money to pay for an unanticipated expense, regardless of their income.
b. Saving may be used for short‐term goals for expenses that aren’t typically a part of a spending plan such as a vacation or new furniture.
c. In groups, brainstorm examples of emergency expenses. Examples include:
i. Automobile repair ii. Medical emergency
4. Slide 4: Saving Reduces Financial Risk and Uncertainty a. Remind participants of the curriculum principle, investing helps you
cope with risk and uncertainty. By having saving, individuals reduce their financial risk.
b. In groups, brainstorm examples of monetary assets they might have. Answers may include:
i. Cash ii. Saving account iii. Checking account
5. Slide 5: How Much Money Should Be Saved? a. Six months of expenses is recommended to provide financial security
or for loss of income. However, the exact amount varies for each individual.
b. This is accomplished by saving 10‐20% of net income each time money is received.
6. Slide 6: Saving on an Income and Expense Statement a. On an income and expense statement, saving is both an expense
(when an individual saves) and a form of unearned income when an individual uses money saved to pay for an expense.
7. Slide 7: My Saving Quest Part 1
The Choose to Save Note Taking Guide 2.4.1.L1 is provided but not included as part of the recommended facilitation instructions or approximate time.
Show the “Saving Money in Plain English” clip from the Common Craft website to explain the concept of compounding interest.
Give each group a white board to document their discussion.
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a. Provide each participant with My Saving Quest 2.4.1.A1. This worksheet will be completed individually throughout the lesson.
b. Instruct participants to brainstorm three items of monetary value that would be on their wish list.
c. Have particpants estimate how much each item would cost to purchase.
d. Ask participants if they have enough money today to purchase all of the items on their list. Typically, individuals do not and must prioritize what they would like to save for.
e. Ask participants to place a star next to the item they would like to start saving for today.
Part 2: How to Save Money 8. Slide 8: Identifying Money to Save
a. Reducing or eliminating large, monthly expenses result in greater saving. However, these expenses are often contractual which makes them harder to change and is why individuals should carefully evaluate the short and long‐term implications of signing any contract.
b. In groups, brainstorm ways to reduce spending. Examples include: i. Cancel/reduce television ii. Use public internet rather than paying for it at home iii. Eat out less iv. Purchase in bulk v. Walk, ride a bike or use public transportation vi. Don’t make impulse purchases
9. Slide 9: Identifying Money to Save a. Sometimes, decreasing expense is not a realistic option. In this case,
individuals should explore ways they can increase their income. b. Another way to reduce expenses is by doing things yourself rather
than paying for a service. However, an individual must consider if they have the time and skills required to complete do it yourself tasks.
c. In groups, brainstorm what they can do themselves to save money. Examples include:
i. Eat at home and/or cook rather than purchase convenience foods
ii. Do your own transportation and housing maintenance and repairs
iii. Do your own cleaning 10. Slide 10: Create a Savings Plan
a. Saving is achieved by setting financial goals. Goals help you to identify a reason for saving.
b. There are many resources, including tablet applications, to help individuals set and track goals including:
i. Websites ‐ Piggy Mojo and Stickk ii. Spending plan programs –Mint iii. Programs offered by depository institutions
11. Slide 11: Make Sure Your Goal is Realistic a. If goals are not realistic, they will not be achieved.
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b. Ask participants to think about what they would give up to receive the item on their wish list. This is a trade‐off.
c. Then, ask participants to think about the value of the item they are giving up. This is their opportunity cost.
d. Opportunity cost helps an individual analyze what matters to them most in order to decide what trade‐offs to make.
e. Ask participants to discuss, in groups, why saving can be difficult. i. Saving requires that individuals give something up in the
present to have money for the future. ii. For saving goals to be realistic and attainable, an individual
must carefully consider the trade‐offs and opportunity cost of what they are giving up in the present.
12. Slide 12: My Saving Quest Part 2 a. Have participants refer back to their My Saving Quest 2.4.1.A1. b. Have participants think about their current individual income and
spending. Instruct them to identify at least three ways they could either increase their income or reduce their expenses today.
c. For each change, have participants identify one trade‐off they will be making.
d. Have participants place a star next to items with a realistic opportunity cost.
Part 3: Making Saving Automatic 13. Slide 13: Pay Yourself First
a. Emphasize that the savings choices they make today will impact their future.
b. The most effective way to pay yourself first is to make the process automatic by using tools such as automatic depository institution transfers or payroll deductions
Part 4: Time Value of Money 14. Slide 14: Saved Money Provides for Your Future Self
a. Money saved can increase in value because of the time value of money. The potential to earn interest.
15. Slide 15 and 16: What is Interest? a. Interest can be paid (such as credit) or earned (such as saving). b. Individuals should save money in a depository institution account that
earns the highest interest rate possible while still being low risk and liquid.
c. Compounding interest is what makes the time value of money work. d. An additional $225 in interest is earned when saving $1000 at a 5%
interest rate rather than a 1% interest rate for five years. 16. Slide 17: How does Time Affect the Time Value of Money?
a. Stress that the longer an individual saves money for, the more time money has to increase in value because of compounding interest.
b. Point out how much more Savannah’s parents had to save ($350/month) to reach the same savings goal.
c. Felix’s parents earned $8,856 in interest and Savannah’s parents only earned $2,676 in interest because they started later.
Use the A Little Goes a Long Way Visual Aid 4.4.1 to illustrate the Time Value of Money.
If a further math emphasis is desired, complete the Time Value of Money Math Lesson Plan 2.4.2 at this point in instruction. This lesson focuses on the math and calculations of simple and compounding interest.
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17. Slide 18: How does Money Affect the Time Value of Money? a. Individuals should continue adding to their principal through ongoing
saving to maximize the interest being earned. 18. Slide 19: Time Value of Money Magic
a. Complete the Time Value of Money Magic! Active Learning Tool 3.0.25 as a visual demonstration that corresponds with the Time Value of Money Magic slide. The demonstration utilizes colored jelly beans to show how compounding interest works.
19. Slide 20: Maximize Your Return a. Discuss how participants can use time, money, and interest rates to
take full advantage of the time value of money and maximize their return.
20. Slide 21: My Saving Quest Part 3 a. Have participants refer back to their My Saving Quest 2.4.1.A1. b. Based upon their assessment of changes they can make to increase
income or decrease expenses and how realistic these changes are, have participants identify how much they could realistically save each week.
c. Have participants write a financial goal to make their saving plan actionable.
d. Ask participants to also identify one way they will make their saving process automatic.
21. Slide 22: Savings is an Essential Component of a Financial Plan
CONCLUSION OPTIONS There are two conclusion options provided for this lesson. 1. Option 1: Bingo 2. Option 2: Take a Chance
Option 1: Bingo Approximate time: 20 minutes Materials to prepare:
Bingo Active Learning Tool 3.0.16
1 Bingo‐ Side One and 1 Bingo‐ Side Two 3.0.16.H1 printed front to back per person (found in the Bingo Active Learning Tool 3.0.16)
12 bingo markers (could be beans, buttons, glass rocks, etc.) per person
Plastic bag or bowl
Choose to Save Vocabulary List 2.4.1.E1 1. Conduct the Bingo activity – side two, using the word. Directions are included
in the Bingo Active Learning Tool 3.0.16.
Option 2: Take a Chance Approximate time: 45 minutes Materials to prepare: 1 Take a Chance Tracking 2.4.1.A2 per participant Take a Chance Cards 2.4.1.H1 – 1 card per participant 1. Provide each participant with a Take a Chance Tracking 2.4.1.A2. 2. Part 1: My Income by indicating that they work at Indulgence Bakery and this
The graph in the PowerPoint can be used as a standalone demonstration if time and supplies do not allow for the completion of the jelly bean demonstration.
Use the Consumer Jungle website to access a variety of online games about saving.
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is their paycheck stub. Their challenge in this activity is to analyze their spending and saving habits.
a. Have them record their paycheck information in the actual column on the income and expense statement.
3. Part 2: My Spending. a. Point out that column one in their income and expense statement
is their spending plan. b. Have them complete the income and expense statement as
instructed. Have participants color code similar categories to simplify calculations when determining the total expenditure for each category.
c. Have participants reflect on their spending habits and analyze the tradeoff’s to changes they would make if they wanted to start saving for a financial goal by completing the reflection questions.
4. Part 3: Take a Chance a. Let participants know that it is the end of the month and an
unexpected event has occurred. Distribute one Take a Chance Cards 2.4.1.H1 to each participant and have them record their event.
5. Part 4: Reflection a. Instruct participants to complete the Part 4: Reflection Questions
to determine how they would have paid for that expense considering their current Income and Expense Statement.
6. Discuss the reflection questions as a class.
ASSESSMENT OPTIONS There are three assessment options provided for this lesson. 1. Option 1: Reinforcement Worksheet 2. Option 2: To Save or Not to Save 3. Option 3: Elementary Education
Option 1: Reinforcement Worksheet Approximate time: 20 minutes Materials to prepare: 1 Choose to Save 2.4.1.A3 per participant 1. Complete the Choose to Save 2.4.1.A3 reinforcement worksheet.
Option 2: To Save or Not to Save Approximate time: 30 minutes Materials to prepare: The Roommates: Saving Prezi Presentation 2.4.1.E2 1 To Save or Not Save Rubric 2.4.1.B1 per participant 1. Share the story of Hannah and Morgan using The Roommates: Saving Prezi
Presentation 2.4.1.E2. 2. Participants will write a short essay about what advice Morgan would give
Hannah about managing her money. Provide each participant with a To Save or Not Save Rubric 2.4.1.B1 with the writing assignment.
Simplify the activity by providing participants with a completed Income and Expense Statement and focus on the Take a Chance discussion (steps 4‐8).
Provide participants with envelopes with play money representing their spending plan. They must remove money from their envelopes to account for all expenses to determine how much money they have available for their Take a Chance card.
The Roommates: Saving Script 2.4.1.E3 is available to have participant work in small groups rather than using the Prezi.
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Option 3: Elementary Education Approximate time: varies Materials to prepare: Children’s Book Integration Active Learning Tool 3.0.35 Children’s books and workshop supplies
1. Have participants work in small groups to develop a lesson and activity to
educate elementary aged students about the importance of saving. a. Children’s Book Integration Active Learning Tool 3.0.35
i. Facilitation option 4
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Choose to Save Vocabulary List
TERM DEFINITION
1 Compound interest Earning interest on interest
2 Consumption The purchase of goods and services
3 Do it yourself When you complete a task yourself rather than paying someone else
4 Emergency savings Cash set aside to cover the cost of unexpected events
5 Interest Price paid for using someone else’s money
6 Interest rate Percentage rate used to calculate interest
7 Liquidity How quickly and easily assets can be accessed and converted into cash
8 Pay yourself first Saving for the future by putting money aside before paying regular monthly bills or using income for discretionary purchases
9 Principal The original amount of money saved or invested
10 Saving Accumulation of excess funds by intentionally spending less than you earn
11 Savings Portion of income not spent on consumption
12 Time value of money Money available at the present time (today) is worth more than the same amount if received in the future
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My Wish List
My Saving Quest
Total Points Earned
Name
20 Total Points Possible
Date
Percentage
Class
Part 1: My Wish List (7 points)
What are three things on your personal wish list? Include anything of monetary value. Approximately how much does each item cost? Place a star next to the item you would like to start saving for today.
$
$
$
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Part 2: My Current Spending (7 points)
Identify three changes you are willing to make today to your current income or spending to start saving for the future.
What is the trade‐off for each change? Place a star next to items with a realistic opportunity cost.
Part 3: Implementing My Saving Quest (6 points)
•Trade‐off: •Trade‐off: •Trade‐off:
How much can you realistically save each week for your item?
What is one strategy you will use to make the saving process automatic?
What is your financial goal?
Describe how your goal can be reached using the time value of money.
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Why save?
Choose to Save Note Taking Guide
Total Points Earned
Name
Total Points Possible
Date
Percentage
Class
Saving ‐
Results in...
Savings ‐
What type of asset is saving?
Define liquidity How much should be saved?
Identify three ways money can be saved.
By saving money
___________________
You will have financial
security in the
___________________
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Describe pay yourself first.
How can you make the process automatic?
Why is setting a financial goal an important part of
the saving process?
Why should trade‐offs be considered when saving?
Why is time value of money important to saving?
Describe interest.
How does compounding interest work?
How does each factor affect the time value of
money?
Interest Rate
Money
Time
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Take a Chance Tracking
Total Points Earned
Name
Total Points Possible
Date
Percentage
Class
Part 1: My Income Congratulations, its payday! You work full‐time at Indulgence Bakery earning $10.25 per hour and working 40 hours per week. You are paid monthly with direct deposit into your depository institution account. Use your paycheck stub to enter your gross income and deductions on your income and expense statement.
Employee Information Pay Date: 6/11/2013
Name Identification Number Address Pay Rate Pay Period
Your Name 00112233 Your Address $10.25 5/1 – 5/31/2013
Summary
Gross Income Total Personal Deductions Net Income
Current $1,640.00 $473.81 $1,166.19
YTD (year to date)
$8,200.00 $2,369.05 $5,830.95
Earnings
Type Rate Hours Current YTD
Regular $10.25 160 $1,640.00 $8,200.00
Deductions
Type Personal Deduction Employer Contribution
Federal income tax $181.35 0
State income tax $29.00 0
Social Security $101.68 $101.68
Medicare $23.78 $23.78
Retirement plan $50.00 $50.00
Health insurance $88.00 $325.00
Workers’ compensation 0 $11.80
Unemployment insurance 0 $4.26
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Part 2: My Spending 1. You used an application on your phone to create an electronic list of all expenses. Identify the category
each expense would be in the income and expense statement. 2. Use this information to update your actual spending column on your income and expense statement. 3. Once you have entered all of the income and expenses, calculate the expense total and net gain or loss. 4. Calculate the difference for each category in the difference column on your income and expense
statement.
Company Amount Income and Expense Statement Category
Where I Live $325.00
Town and County Grocer $25.30
Keep the Lights On Utility Company $48.20
Quick Stop Fuel $48.90
Edwards Pizzeria $13.50
Pro Sporting Events $52.00
Love to Drive Auto Sales $160.00
Keeping Your Car Insured $42.00
JJ’s Trendy Clothing $48.00
Town and Country Grocer $84.60
Talk all Night Communications $70.00
Savings Account $40.00
Quick Stop Fuel $52.70
The All‐Inclusive Convenience Store $17.38
Town and County Grocer $32.00
The Mongolian BBQ $23.50
Hearts and Homes Charity Donation $50.00
Reflect on your May Income and Expense Statement: 5. How much, if any, money did you have left at the end? What would you use that money for?
6. You have realized that you want to start saving an additional $45 each month for a new tablet. What are at least two ways you would adjust your current spending to free up the $45? What are the tradeoffs to each spending adjustment?
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Income and Expense Statement for: You!
Time Period: May 1‐31st
Spending Plan Actual Amount
Spent Difference
Income
Earned Income
Wages or salary before deductions $1640.00
Commissions/tips/bonuses
Unearned Income
Money from savings and investments to help pay expenses during this time period
Scholarships from non‐government sources
Total Income $1640.00
Expenses
Deductions Often Taken from Paychecks
Federal and State Income tax $210.35
Social Security $101.68
Medicare $23.78
Saving and Investing (Pay Yourself First)
Contribution to emergency savings $40.00
Contribution to savings for a financial goal $0.00
Retirement $50.00
Insurance Premiums
Health insurance $88.00
Automobile insurance $42.00
Life insurance $0.00
Housing Costs
Housing payment (rent or mortgage) $325.00
Utilities (gas, electricity, water, garbage) $50.00
Transportation Costs
Car payment $160.00
Fuel (gasoline/diesel) $110.00
Automobile repairs and maintenance $30.00
Food Costs
Food at the grocery store $135.00
Meals at restaurants $54.19
Other: $0.00
Communication and Computers
Cell phone $70.00
Medical Costs Not Covered by Insurance
Medical care and medications $0.00
Clothing and Personal Care
Clothing $50.00
Personal care (shampoo, haircuts, cosmetics, laundry, etc.) $25.00
Educational Expenses
Tuition for private school or higher education $0.00
Entertainment
Movies, books, toys, and other entertainment $75.00
Credit Costs
Credit card payment $0.00
Giving
Donations $0.00
Total Expenses $1640.00
Net Gain or Net Loss (Income less Expenses) $0
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Part 3: Take a Chance 7. Often, unexpected expenses and situations may arise. Draw a “Take a Chance Card” and record your
event here: Part 4: Reflection 8. Based upon your current spending for the month, how will you pay for this expense?
9. If you did not have savings, how would you have paid for this expense?
10. Was the unanticipated expense a need or want? What alternatives could you choose to avoid spending money on the expense?
11. Why is it important to pay yourself first when creating a spending plan?
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Take A Chance Cards
You have a good friend unexpectedly in town and go out to eat at a
restaurant. $25
You have not had a haircut in months
and decide to pamper yourself. $45
Your car breaks down and you need to
repair it immediately. $100
You have been having headaches and go to the eye doctor. You not only have to pay your insurance co‐
insurance but also buy a new pair of glasses. $200
Your friend needs a loan and you
decide to help out. $25
Your car registration is due this
month. $75
It is your mother’s birthday and you
buy her a gift. $40
You were speeding and got caught!
$80
You get carried away at the online music store downloading music.
$25
You need a new pair of shoes for a
job interview. $60
A friend is moving away and you are asked to bring an appetizer to her
party. $15
You catch a cold and need to
purchase medicine. $25
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© Take Charge Today – August 2013 – Choose to Save Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
Choose to Save
Total Points Earned Name
25 Total Points Possible Date
Percentage Class
Directions: Match the correct term with the correct definition by placing the letter on the appropriate blank. 1. _____ How quickly and easily assets can be accessed and converted into cash. 2. _____The price of money. 3. _____The portion of current income not spent on consumption. 4. _____Everything an individual or household owns with monetary value. 5. _____A measurement of how much a person or household owns once
all debts have been paid. 6. _____The percentage rate paid on money invested or saved. 7. _____The original amount of money saved or invested. 8. _____The end result of something a person intends to acquire, achieve, do,
reach, or accomplish. Directions: Fill in the blank to complete each statement. 9. A saving strategy that states to set aside a predetermined portion of money for saving each time a
person is paid before using any of the money for spending is called:_____________ ______________
________.
10. A _________ __________ is giving up one thing for another.
11. _____________ ____________ is the value of the next best alternative that must be forgone as a
result of a decision.
12. Earning interest on interest is _________________ ___________________.
A. Assets
B. Goal
C. Interest
D. Interest Rate
E. Liquidity
F. Principal
G. Savings
H. Wealth
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© Take Charge Today – August 2013 – Choose to Save Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
Directions: Answer the following questions by writing a short answer. 13. Describe how to use each of the factors affecting time value of money to maximize the amount of savings
earned. (3 points)
Time
Money
Interest Rate
14. Why do experts suggest that your emergency savings be in a very liquid savings tool? 15. Explain why “pay yourself first” is an essential component of personal financial management.
16. What are three ways people can find money to save?
17. Why is it important to set goals when saving? Directions: Determine if each statement is true or false and indicate T for true and F for false. 18. _____It is important to consider opportunity cost and trade‐offs when determining how to save money. 19. _____Experts suggest that emergency savings equal to 6‐9 months of a person’s expenses be held in
liquid assets for unplanned events. 20. _____The longer an individual invests money for, the more compounding interest accrues. 21. _____An important part of the savings process is to write a savings goal. 22. _____It is important to have a low interest rate when saving.
23. _____Savings is an investment asset on the Statement of Financial Position.
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© Take Charge Today – August 2013 – Choose to Save Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
To Save or Not to Save Essay Rubric
Total Points Earned
Name
Total Points Possible
Date
Percentage
Class
Directions: After learning about Hannah and Morgan, imagine that you are Morgan. Hannah is telling you about her financial situation and asking for your advice. Write what Morgan might say to Hannah to explain the importance of intentionally saving money in a savings account.
In your conversation with Hannah, describe why these concepts are important and how they relate to saving:
Opportunity cost Trade‐offs Emergency fund Setting SMART financial goals
Provide at least two strategies Hannah may implement today to begin saving.
Exemplary Satisfactory Unsatisfactory No Performance
Score
Content: Opportunity cost, trade‐offs, emergency
fund and financial goals are all described At least two savings strategies are
identified Answer are thoughtful, reflective and
accurate
9‐7 6‐4 3‐1 0
Writing Skills: Sentences are fluent and effective Very few errors in mechanics,
punctuation and word choice Essay includes an introduction, body, and
conclusion
6‐5 4‐3 2‐1 0
Effectiveness of Presentation: Clearly prepared Easily read and neatly assembled Minimum of one‐page, double‐spaced
with 12 font and 1‐inch margins.
6‐5 4‐3 2‐1 0
Total Points Earned
Total Points Available 21
Percentage
Page | 23 2.4.1.E3
© Take Charge Today – August 2013 – Choose to Save Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
The Roommates: Saving Script
Morgan and Hannah are roommates in their third year of college. They have a lot of fun together, but are
also very different. Hannah has a part time job at a women's clothing store in the mall. She regularly uses a
spending plan to manage her finances and pays all of her bills on time. When Hannah has leftover cash after
paying her bills, she stores it in a piggy bank to pay for unexpected expenses, like going out with friends,
traveling, and when there is a great sale at her job. Hannah is lucky to get a discount at work and takes
advantage of sales on clothing items.
Morgan is Hannah's roommate. She also works part time, but at an insurance office. Morgan takes a different
approach to saving money for unexpected expenses. Each time Morgan gets paid, she puts 20% of her
paycheck into a savings account. This habit has helped Morgan in the past, like the time her car needed
expensive repairs, and again when the landlord raised the price of her rent. Morgan was also really glad to
have established this habit when she lost her job last year. Because she made saving a habit, she was able to
have enough money to pay her bills even though she was out of work temporarily.
Hannah has now found herself in a similar type of emergency. Last month while playing softball, she broke
her ankle and she just received the bills from the hospital and doctor. Because she had health insurance,
Hannah was confident she would have no expenses from the injury, but since then she has learned
otherwise. While her insurance paid the majority of her expenses, after her deductible and co‐insurance,
Hannah was responsible for $1,750 in medical expenses. Unfortunately, she has only $530 in her piggy bank
to help with those expenses.
This problem has created stress for Hannah and has been negatively impacting her well‐being. She shared
her situation with Morgan.
Imagine that you are Morgan. What advice would you have for Hannah about saving for the future? Be sure
to include terms like tradeoffs, opportunity costs, SMART goals, and emergency funds in your conversation.
© Take Charge Today – August 2013 – Choosing to Save – Page 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona
2.4.1.F1
Choose to Save Advanced Level
Saving money is an essen al part your financial plan. When you save you accumulate funds by inten onally
spending less than you earn. Savings is the por on of income not spent on consump on (the purchase of goods
and services).
An important reason to have savings is for emergency expenses. Without savings, paying cash for an unexpected
expense may be difficult. Emergency savings (cash set aside to cover the cost of unexpected events) creates a
sense of financial security. The lack of an emergency fund not only creates financial stress, but also drives the
consumer into debt.
Savings contributes to your net worth (wealth) and is recorded as a financial asset on your Statement of Financial
Posi on. Be sure this financial asset (your emergency fund) is in an “easily‐accessible” account (usually a savings
account) that can be accessed in a day or two without penalty. Financial assets easily converted into cash are called
liquid. Liquidity is defined as how quickly and easily you can access your assets and convert them into cash.
How much money to save
Most experts recommend having between 3‐6 months of expenses put aside in emergency savings. Let’s say your
goal is to save six months of expenses. If you normally have $2,000 in expenses each month then you should try
to build up a total of $12,000 in emergency savings. Be careful
not to confuse the funds you’ve saved for emergencies with
funds you’d like to spend on vaca ons with friends and family or
on big expenses like a new flat screen TV or newer furniture.
Emergency funds are just that; funds set aside only to be used in
an emergency!
How to save money
Saving is an important part of se ng and reaching financial goals. Your
goal may be to build your emergency savings fund or to buy a car, new
furniture or the down payment on your first home. You begin by se ng
your financial goal and working backwards to determine a realis c amount
you can save during a specific me period. Saving money for future
consump on always requires not purchasing something today. You must
ensure the trade‐offs are realis c and the opportunity cost of what you are
giving up won’t nega vely impact your well‐being.
What savings goal do you have in
place?
What are examples of emergency expenses a household may encounter?
© Take Charge Today – August 2013 – Choosing to Save – Page 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona
2.4.1.F1
How to save money con nued…
Your spending plan helps you determine how much you can save based on your income and expenses. A frequent
assessment of what you spend your money on is a good habit to develop.
Here are a few money‐saving sugges ons:
Examine current spending – Examine expenses in your Income and Expense Statement and your Spending
Plan to determine changes that can be made to decrease your spending. Start with small expenses (your daily
coffee shop drink, new clothes) and then review your larger expenditures (cable and cell phone plans and
some mes grocery bills) to see if there are opportuni es to decrease your spending.
The following are ps to decrease spending:
1. Communica on ‐ Could you cancel your cable/satellite television or
reduce the cost of your current package? Could you reduce the cost of
your cell phone package? Could you drop your home Internet and use
public Internet at places such as a library?
2. Food ‐ Could you eat at restaurants less? Could you purchase items in
bulk instead of at a vending machine or gas sta on?
3. Transporta on ‐ Could you use public transporta on instead of owning
a vehicle?
4. Housing ‐ Would you consider moving to a smaller or less expensive
home or apartment in order to reduce your mortgage/rent payment and/or u li es?
A er reviewing your monthly expenditures, if you s ll can’t reach your saving goal you might consider:
1. Increasing your income by lobbying for a raise, switching to a job that pays more or taking on a part me
job if even only for a short period of me to increase your savings.
2. DIY – You’ve seen the “do it yourselfers” on TV, so why not try a couple of personal tasks on your own.
Not only can this save you money (if you do it right the first me!) it but it can also give you a sense of
accomplishment! However, the cost to you of doing something on your own is your investment of me
(and materials) in place of the money you otherwise would spend. Make sure you are willing to give up
the me and have the proper skills needed to complete do it yourself tasks.
The following examples are Do It Yourself (DIY) ac vi es:
Food ‐ Pack your lunch and prepare food/beverages from scratch instead of purchasing ready‐to‐eat
items such as coffee and frozen meals.
Transporta on – Develop skills that allow you to take care of very basic vehicle maintenance and
repairs.
Housing ‐ Maintain the inside and outside of your home; visit your local home improvement center to
learn about home DIY projects.
It may be difficult to decrease
or remove contractual
expenses from your spending
plan. With a contractual
expense, you have signed a
contract that requires you to
pay that expense for a specific
amount of me. Make sure to
consider the consequences of
a contract before signing.
What are three ways you could start saving today?
© Take Charge Today – August 2013 – Choosing to Save – Page 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona
2.4.1.F1
Having solid savings habits helps you reach your financial goals. A successful saving
strategy for many is to “pay yourself first.” Paying yourself first means saving for
the future by pu ng money aside before paying your regular monthly bills or
using your income for discre onary purchases.
Make paying yourself first automa c. Ways to accomplish this include:
Automa c transfers ‐ Most depository ins tu ons allow you to set up
automa c transfers among accounts within their depository ins tu on or to
accounts at other ins tu ons. Once the ini al setup is complete, the money is
automa cally moved from one account to another on dates designated by
you.
Payroll Deduc on ‐ Many employers offer payroll deduc on to employees.
With this type of payroll deduc on, you designate a certain percentage or
specific amount of your paycheck to be deposited into an account of your
choice.
Many resources are out there to help you reach saving goals. Websites like h ps://secure.piggymojo.com and
h p://www.s ckk.com, help you develop goals and s ck to them with peer support. Internet‐based spending
plan programs such as h ps://www.mint.com, and programs offered by depository ins tu ons offer goal
tracking through online/mobile banking.
Increasing the value of money
Saved money can increase in value while providing for your future. Time value of money is the idea that money
available at the present me (today) is worth more than the same amount if received in the future. That’s
because if you have it today, it can grow over me. Understanding this core principle of personal finance will help
mo vate you to save early and o en. The factors that affect the size of your savings balance in the future are
me, the interest rate, and the amount you save each period.
Interest rate
Interest is the price paid for using someone else’s money. The interest rate is the percentage rate used to
calculate interest. Interest is earned (if you are the lender) or paid (if you are the borrower). When you save
money in an interest earning account you earn interest. Savings tools are products offered by depository
ins tu ons that, in most cases, allow your deposits to earn interest.
If you don’t withdraw the interest earned from an account, the interest has an opportunity to earn addi onal
interest. Earning interest on interest is known as compound interest.
Graph 1 is an illustra on of how higher interest rates and compound interest
increase the value of savings.
$1,000 Saved for 5 Years with Compounding Interest
To maximize your return:
Save at the highest
interest rate possible!
Save for as long as
possible!
Save as much as
possible, as o en as
possible!
© Take Charge Today – August 2013 – Choosing to Save – Page 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona
2.4.1.F1
Your present self impacts your
future self. By saving money
today you will have financial
security in the future
Time
Time is necessary for money to increase in value. The longer you save, the more me your money has to grow. Take
Felix and Savannah for example:
Felix
Saved for: 18 years
Contributed: $50/month
Total Contribu on: $10,800
Interest Earned: $8,856
Total Balance: $19,656
Savannah
Saved for: 4 years
Contributed: $350/month
Total Contribu on: $16,800
Interest Earned: $2,676
Total Balance: $19,426
Felix’s parents began saving $50.00 per month for
Felix’s college educa on when he was born, and
saved un l he was 18. Savannah’s parents waited
un l she was a freshman in high school and only
had 4 years to save un l she turned 18. Both
accounts earned the same interest rate (6%) and
had the same balance when the students turned 18
(about $19,500). However, Savannah’s parents had
to save significantly more ($350/month) to reach
the same savings goal, because they started later.
Amount of Money
The more you save, the larger the value of your
savings will be. The principal is the original amount
of money saved or invested. Table 3 illustrates the
difference in value for different amounts of
principal if le to grow at 3% interest for 5 years.
3% interest for 5 years
Principal Value of Savings
$100 $115.93
$1,000 $1,159.27
$10,000 $11,592.74
Saving is an essen al component of your
financial plan. Having savings reduces future
financial uncertainty and nega ve emo ons
such as stress by helping to ensure you will
be able to immediately pay for unexpected
expenses with cash. An added bonus of
saving money is the opportunity for savings
to increase in value if saved in an interest‐
earning account... Saving money will require
that trade‐offs be made. Saving money for
future consump on will always means that
you give up the purchase of something in
the present. Once a commitment to saving
money has been made, saving is best
accomplished if you automa cally pay
yourself first.
What are you willing to give up today to start saving for your
future?