Why Is Saving Money Important?

Grade 5 Lesson # 6

Why is saving money important?

How does saving money help you achieve your personal and financial goals?

SS.8.FL.3.7 Discuss the different reasons that people save money, including large purchases (such as higher education, autos, and homes), retirement, and unexpected events. Discuss how people’s tastes and preferences influence their choice of how much to save and for what to save.

Correlated Literacy Standards:

LAFS.5.SL.2.4 Report on a topic or text or present an opinion, sequencing ideas logically and using appropriate facts and relevant, descriptive details to support main ideas or themes;

speak clearly at an understandable pace.

LAFS.5.W.3.7 Conduct short research projects that use several sources to build knowledge through investigation of different aspects of a topic.

LAFS.5.W.3.8 Recall relevant information from experiences or gather relevant information from print and digital sources; summarize or paraphrase information in notes and finished

Saving Money

Correlated Florida Standards (See Full Text on Cover Page)

LAFS.5.SL.2.4
LAFS.5.W.3.7
LAFS.5.W.3.8

Essential Questions

Why is saving money important?
How does saving money help you achieve your personal and financial goals?

Learning Goals/Objectives

Students will…

Understand that making and saving money takes time and effort
Identify and classify immediate, short term, and long term savings goals
Understand the differences between a need and a want
Compare the average cost of living today with that of 1938
Practice developing their owns short term savings goal

Overview

Students will explore the implications of saving money and how one’s income and cost of living impacts ability to save. Students will practice identifying wise money practices which include the development of an emergency fund, paying yourself first, and being a wise consumer.

Materials

Promethean Board
PowerPoint Presentation (Included in Lesson 6 file)
Handout: My Short Term Savings Plan (Included)

Time

30 Minutes

Activity Sequence

INTRODUCTION/HOOK (2 minutes)

Do: Have students analyze the cartoons about the importance of saving for retirement. Have students identify what is humorous about this cartoon. Select volunteers to share.

Say: Today we are going to learn about the importance of saving to achieve your personal and financial goals. By the end of the lesson you will learn how to plan for short and long term savings goals and have an emergency fund available for life’s unexpected events and emergencies.

Do: Select volunteers to share answers. Create a brainstorming web on board with student ideas.

ACTIVITY

Discuss PowerPoint slides 4-6. (3 minutes)
Say: You might have heard adults use the expression, “Money doesn’t grown on trees.” Making money takes time and effort. Whether you old a job or own a business, managing your money wisely will better prepare you to achieve your personal and financial goals in the future. Most of us cannot afford to buy those things we want the moment we want them. Saving money makes it possible to purchase those things we cannot currently afford at a later time.
Do: Ask students to share some personal short and long term savings goals.
Do: Guide students in classifying which types of savings goal will be needed in order to purchase the items below. Help them make the correlation between the value of the item and the length of time needed in order to save for that item.
Clothing: Purchasing clothing can be achieved short term.
Meal: Your next meal is a basic need which needs to be satisfied immediately.
Home: Homes cost hundreds of thousands of dollars and do require years of savings in order to save up for a down payment and finance the remainder of the cost over the home over a thirty year period.
Computer: Most people save short term in order to prepare for the purchase of a computer.
Automobile: Cars range in price, but most Americans finance the purchase of the vehicle for five years.
Vacation: A typical family vacations can be saved up for in the short term – usually in less than a year. If you are planning a more exotic travel destination, you may need to create a more long term savings goal.
College: Most Americans save up for their child’s college education from the moment they are born as college tuition and room and board is costly.
Sneakers: Designer “kicks” can cost hundreds of dollars, but it’s mainly a short term saving goal.
Movies: Going to the movies does not necessitate much saving as your typical visit to the movies costs about $30.
Do: Guide students in exploring the average cost of living in Miami. Have them think about the costs of housing, food, transportation, etc. Remind students that most income goes towards paying for basic needs and the remainder is used for wants and savings. Ask students to analyze the pie graph and explain how most our expenses are distributed. Have students classify each of the expenses represented on the pie graph as a need or a want.

Discuss PowerPoint slides 7-10. (8 minutes)
Do: Explain to students that it’s okay to like luxurious things. The media definitely does a brilliant job of glorifying lifestyles of the rich and famous, however, most Americans find happiness in the little luxuries they can afford and being patient in saving up for their bigger wants over time, such as purchasing a home. Ensure students are cognizant of the consequences of not being able to make that monthly payment on that sports car you always wanted, or not paying your credit cards on time, or pay your mortgage. If you are not wise about your money, you will quickly fall into a trap of debt that can ultimately cause to the loss of your credit and possessions, including your home and car.
Say: Inflation is defined as a general increases in prices for goods and services and the value of money over time. As inflation rises, the purchasing value of your dollar declines. For example, in 1938 cost about $4,000, today a new home costs about $350,000.
Do: Explain the concept of inflation to students and have them contrast the cost of living of the 1930’s depicted in the image with the costs of living today. Have students infer what the costs of living might look like in the future. Encourage students to explain why inflation further supports the need for saving for the future.
Say: In addition for big purchases you’d like to make in the future, you also need to save up for unexpected events and emergencies.
Do: Have students brainstorm possible scenarios such as an individual’s car may breakdown, their dishwasher could begin to leak, a medical emergency, property damage or loss, unemployment, etc. Explain to students that without savings, unexpected events can become large financial burdens. Therefore, savings helps an individual or family become financially secure.
Say: Most experts believe you should have an emergency fund to cover the cost of living for 3 to 6 months. To reach this amount, it is recommended that 10- 20% of net income should be saved until the appropriate amount of savings is reached.
Purchasing insurance is one way Americans help protect their valuable possessions and received payment for a specific loss.
Do: Help students understand that when you buy insurance, you are having money put aside to pay you later if something were to happen in the future. For example, let’s say you had a piece of jewelry and you paid insurance to protect that jewelry. If someone stole the jewelry, you would get money from the insurance company to cover the amount you lost. Remind students that having insurance doesn’t completely eliminate risks – it simply helps provide us with the finances needed to manage them. Having health insurance won’t prevent you from falling ill, but it will definitely help you stay healthier through preventative care and will help address any medical needs that may arise without compromising your finances.
Say: Despite rising inflation, it is still possible to live the American dream. Today’s average American will become a first-time homeowner by age 33 and nearly 50% will graduate college. What are your personal and financial goals for your future? Your future success relies upon the choices you make today. Be smart with your money; control your spending to maximize your savings.
Do: Guide students through the process of “paying yourself first”, meaning setting aside 10-20% of income for savings before spending any of it. Work collaboratively to calculate the possible savings if you were to set aside 10-20% of your $500 income per week, per month, and per year. Tell students that they will be learning how to apply this strategy in their personal lives.

Discuss PowerPoint slides 11-15. (8 minutes)

Say: Paying yourself first is one great way to maximize your spending capacity, but if you cannot afford to save 10-20%, any amount you can save can grow into lots of money over time as well. Provide the example of reaching millionaire status by saving just $1 per day for the next 65 years. When it comes to savings, every penny counts.
Do: If time permits have students take the millionaire quiz to identify common misconceptions about the wealthy.
Say: Paying yourself first is one great way to maximize your savings, but spending your money wisely is another way to watch it grow over time.
Do: Encourage students to think about their spending and saving habits by answering three questions: Are you a saver or a spender? Do you think about how to get the most for your dollar? Provide examples. Have you done things to try to make your money grow over time? Describe what you have done.
Do: For question 2, examples of how to get the most value for your money may include:
clipping coupons
buying things on sale
avoiding designer/name brands
researching the product before heading off to the store to avoid false sales pitches
avoiding using credit cards when possible to save on compounding interest fees
prioritizing your needs and wants carefully
Say: Let’s find out which of these individuals is making wise spending choices. Read and describe what wise financial choices the individual is making. Is there anything the individual could do to stretch his/her dollars?
Alexandra:She uses the income from her part-time job to subsidize the costs of her studies.
Jose: He should consider only spending a portion of his allowance on those things he likes, such as downloading music and apps.
Chris: He holds two part-time jobs while attending college. The income from his second job is used to pay for his music hobby.
Megan: She purchased a laptop on sale that she will be using to earn extra income.
Dawn: She clips coupon to save money where she shops. She is also educating her children about the importance of making wise spending choices by having them participate in clipping coupons with her and letting them keep the money they save.

Discuss PowerPoint slides 11-15. (8 minutes)

Say: It’s time for you to brainstorm a short term savings plan for something you would like to have in the near future.
Do: Distribute copy of savings budget handout and decide whether you would like students working collaboratively or independently on this activity. Read and clarify instructions on handout as needed. Have students look at the example table illustrating sources of income, frequency, and expenses, for question number 2.

CLOSURE (2 minutes)

Revisit cartoon depicting saving for retirement at age 16 and have students discuss how their initial interpretations have changed. Encourage students to support their answers with evidence from the lesson.

OPTIONAL EXTENSION SUGGESTION/HOME LEARNING

Language Arts Extension (Have students write in their journals):

Read the following quotation.

The famous American author, inventor and founding father Benjamin Franklin once coined the phrase, “A penny saved is a penny earned.”

Now think about saving money.

Expository Writing Prompt: People save for money for many different reasons. Think about the importance of saving money. Now, write about why saving money is important to you.

SOURCES/BIBLIOGRAPHIC RESOURCES THAT CONTRIBUTED TO THIS LESSON

Life Happens Lesson Resources from Scholastic

•

Supplemental lesson content on teaching kids to save money.

Lesson content adapted from:

Article on emergency funds:

Article on what is savings and why it is important:

Name ______Date ______

My Short Term Savings Plan

Directions: Think of something you would like to save up to buy within the next few months. Consider any sources of income you may have when answering the questions below.

What would you like to have and how much does it cost?

Chart your sources of income in a table. Consider the frequency of each source of income and any recurring expenses you may have.

Calculate the amount you plan to save and how long it will take you to reach your savings goal.

Explain why developing a short term savings plan is necessary. What trade-offs will you need to make in order to be able to be able to save for this item?

Is there anything you can do to pay less for the item you want to purchase? Explain what and how this impacts your savings plan.