Name: ______

To be a millionaire or not to be a millionaire, that is the question.

Last week, Mrs. Addle told her students that they could become millionaires if they followed the rules she provided them. As a matter of fact, she guaranteed that if they followed her rules exactly, they would be millionaires in 47 years! Misha and the rest of her classmates thought that Mrs. Addle was crazy. If she had rules that would guarantee that someone could be a millionaire, why was she teaching seventh-grade math? Why wasn’t she rich and retired? Why didn’t she follow her own rules? Mrs. Addle told the students to go home and talk to their families about what she had said.

Misha went home and told her family what Mrs. Addle had said. Misha’s mother knew a lot about money and financial matters. She just smiled at Misha and said that Mrs. Addle was correct. When Misha returned to class the next day, Mrs. Addle asked what the students’ families said. Of the 25 students in Mrs. Addle’s class, 20 students said that their parents and other family members agreed with Mrs. Addle. The other five students forgot to ask.

Questions #1: Summarize the story above using only five words.

Question #2: What kind of rules do you think Mrs. Addle gave her students?

When people earn income, they can spend it or save it. When they are spending, they spend their money today for goods and services, but they give up the chance to use that money to buy goods and services now to have other goods and services in the future. When people make choices, the highest-valued alternative choice that is given up is their opportunity cost.

Question #3: Pick out the three most important words in the paragraph above. Explain why you picked them.

Question #4: Explain what opportunity cost is using only five words.

Questions #5: Complete the table below for Tom, Mary, and Monica. Tom saves $40 a month. Mary saves $25 a month. Monica saves $65 a month. Do not calculate interest.

1st Month / 2nd Month / 3rd Month / 4th Month / 5th Month / 6th Month / 7th Month
Tom’s Total amount of money / $40 / $80
Mary Total amount of money / $25 / $50
Monica Total amount of money

Question #5: Using the table determine if Tom’s total amount of money and Mary’s total amount of money is proportionate.

Questions #6: Using the table determine if Tom’s total amount of money and Monica’s total amount of money is proportionate.

Question #7: How much more money did Tom save than Mary?

Questions #8: How much more money did Monica save than Mary?

When people make deposits to savings accounts, banks are able to use the money to loan to others. In return, the banks pay interest to savers. Interest is a payment for the use of the money. Bankers don’t usually tell people that they will earn a specific sum of money. Savers are told the interest rate to be received. The interest rate is the annual interest payment on an amount expressed as a percentage.

Explain using only five words what an interest rate is.

Question #9: Assume that Tom, Mary, and Monica all go to the same bank which gives them 4% every month for banking with them. Fill in the table to display how much Tom, Mary, and Monica save including the interest they earn each month. *You have to recalculate interest after every month because the amount you have increased*

1st Month / 2nd Month / 3rd Month / 4th Month / 5th Month / 6th Month / 7th Month
Tom’s Total amount of money / $40 + $1.6 = $41.60 / $84.86
Mary Total amount of money
Monica Total amount of money

Question #10: Use the table to determine if Tom’s total amount saved and Mary’s total amount saved create a proportion?

Question #11: Use the table to determine if Tom’s total amount saved and Monica’s total amount saved create a proportion?

Questions #12: How much more money did Monica save than Mary?

Question #13: Determine how much money Monica could save after 14 years.

Two rules for becoming a Millionaire: Start saving early and start saving as much as you possibly can.