Lesson 9:
How to Save
Saving for a new phone or laptop isn’t unusual for teens, but thinking beyond immediate wants can be a bigger challenge. This lesson introduces you to the concepts of saving for an emergency and other long-term expenses such as college, a home, and retirement. You will learn the benefits of saving for a rainy day and explore various saving and investing strategies.
Learning Objectives:
- Learn the pros and cons of savings and investing strategies
- Exercise skills needed for saving and investing
- Examine how saving and investing is a part of financial well-being
Essential Question: “What strategies should I use to save and invest my money?”
Investigate: Rainy Day Savings
[Time Required: 10 minutes]
- What do you think the phrase “saving for a rainy day” means? The expression refers to creating an emergency fund to pay for unexpected expenses, such as an illness or car repairs.
- Why is an emergency fund important? What do you gain by being prepared for the unexpected? What would you do if you didn’t have an emergency fund and something actually happened? Preparing for emergencies can increase your sense of security.
- What other long-term expenses might you incur in the future? Are you planning to go to college? Just as we set aside money for emergencies, we should also set aside money for long-term needs like college, buying a home, and retirement. The younger you start saving, the more your money will grow.
Student Preparation: Where to Keep Money
[Time Required: 20 minutes]
- Part of creating a good savings plan, whether for an emergency fund or long-term goals, is assessing where your money is best kept for maximizing savings.
- What do you do with the money you receive from jobs, allowance, or gifts? Do you spend it? Save it? Keep it at home? Deposit it in a bank account? What choices do you make with your money and why?
- Not all banks or savings accounts are the same and you have many choices when it comes to saving and investing your money. Download the Where to Save tip sheet and review it.
Challenge: Comparing Options
[Time Required: 30 minutes]
- Download the student activity sheet Bank It and complete the activity.
- Money grows differently depending on the savings strategy. An individual’s life needs will affect their savings strategies (e.g., younger people often take more savings risks than older people; saving for college tuition and books would be best done in an account that allows access to your assets without penalty, while saving for retirement could be done in an account where funds aren’t as easily accessible).
Reflection
[Time Required: 5 minutes]
Reflect in your notebook about which strategies you would consider using to save for a rainy day. Would you put your money in a CD, a 529 account, or a savings account? Why?
Americans aren’t typically known for their financial responsibility – yet many are already using complex financial strategies. For example, shopping at the mall calls for cost comparisons, and saving for a skateboard requires budgeting. To learn about responsible money management, it’s important to take a look at the building blocks of financial decision-making. In this lesson, we will examine the spending decisions students already make. Then examine real-life spending scenarios and research, analyze, and present their recommendations.
Learning Objectives:
- Explore personal financial choices
- Learn to make informed financial decisions
- Consider what it means to be financially responsible
Worksheet One:
Where to Save
Worksheet Two: