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| WHAT
YOU WILL LEARN IN THIS LESSON |
| 1. |
What
it means to save and why this is important. |
| 2. |
What
you can gain in both the future (long-term) and right
away (short-term) from saving money. |
| 3. |
What
the difference is between needs and wants. |
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Question: |
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If
your family wanted to buy a house in 10 years,
how much would you need to save each month to
pay a down payment of $15,000? (Once you make
a down
payment on a house, you can live there while
you continue to pay your mortgage.) |
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| How
to figure this out…. |
| 1. |
Calculate how many months are in 10 years: |
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12
months/year X 10 years = 120 months. |
| 2. |
 Use
the savings calculator. Click
the calculator on the left!
- In
the first box, enter your Savings
Goal-- this is the amount you want
to save <$15,000>.
- In
the next box, put in the amount that you
have Currently
Saved-- this is the amount that you
have ready to put in the bank <$250>.
- In
the third box, place the amount that you wish to
Save Monthly--
this is the amount of money <for
example, $75>that you will put into the
bank every month until you reach your savings goal.
- In
the following box, type your Expected
Rate of Return--the
percentage of interest that the bank pays you on the money
that you have saved with them <5%>.
Note:
A five percent return is considered good.
- In
the last box, enter the Months
to Save--the amount of time that you give
yourself ,or that you are given, to save your desired amount
<120 months>.
Your
Results: The last two boxes that are labeled Savings
Calculator Results
contain the number of months or the amount of money that would
be needed to reach your savings goal on time.
Note: If you want to save $75 a moth
to reach your goal of$15,00 you would need to save for 142
months. If you wanted to save $15,000 in 120 months you would
have to save $93 a month.
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EXPLORATION
QUESTION #1 |
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So,
using what you have learned about savings in the
previous example, WHO will have saved the
most money by the time they are 60 years old?
How much will they have saved? (Assume that your
annual rate of return*
is 10%. |
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Answer: |
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Answer:
Jimmy will have the largest nest
egg: $194,630 |
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NAME
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AMT.
SAVED/
PER MONTH
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BEGAN
TO
SAVE AT AGE:
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AMOUNT
SAVED AT AGE 60
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| Jimmy |
$20 |
12 |
$194,630 |
| Juanita |
$40 |
20 |
$187,252 |
| Jason |
$160 |
36 |
$162,166 |
| Jazmine |
$640 |
52 |
$89,508 |
Jazmine
will have the smallest nest egg: $89,508 |
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*
These amounts were calculated assuming a 10% annual return on their
investment (the annual average for the stock market since 1929). This
is
a general example. In real life, you will need to consider tax rates
also. |
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Follow
up Question: |
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Do
you notice a pattern on how the numbers are increasing?
What does this tell you about saving for the future?
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Answer: |
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| TIME
is the important factor in building wealth. The earlier
you start saving, the more you can make. Sure, Jimmy might
have a tough time coming up with $20 per month at age
12 but over the long run... it amounts to a great deal
of money. |
 Note |
| Saving
for retirement is an example of a long-term
goal. You can also have short
term goals, for example new
sneakers, a new bookbag, a trip to the zoo, hiring
a DJ for your birthday party. |
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TEST
YOUR KNOWLEDGE!
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EXPLORATION
QUESTION |
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So,
what do YOU
want to save for? You can save for something you
NEED for survival (like food or a warm winter
coat) or something you WANT (like a new video
game or a trip to Disney World-something you would
like to have but can live without). |
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EXPLORATION
QUESTION: |
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Which
of the following items is a need and which is want?
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TRY
THESE TIPS FOR $AVING: |
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TIP
#1 |
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Saving
should be a high priority, just like paying your
bills. $AVING is a form of PAYING YOURSELF
FIRST. Remember to pay yourself first. |
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TIP
#2 |
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$et
goals. Keep a list of what you are saving
for. As you reach your savings goals, check them
off, and create new ones. |
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TIP
#3 |
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Don't
$top $aving. There are always emergencies and
unforeseen events that come about. Even if you feel
you "have enough, in reality you probably don't. |
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FOR
MORE TIPS ON $AVING CLICK HERE!: |
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CLICK
THE ARROW TO JUMP TO LESSON 2 
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Money
Center 
Saving
Money
