09.04 Why Save?

09.04 and 09.05

Why Save?

Money Moves

Saving

When people save money, they give up the opportunity to buy things now, so that they can buy things later. A savings goal is an incentive for people to save their money. 

incentive: something that encourages a person to work harder

Do you have a savings goal?

• Vacation

• School (college)

• Gifts

• Clothing

• Emergency

• New Toy/Video Game

Strategies for Saving Money

• Goal

• Piggy Bank

• Chart

• Visual

• For Fun

• Earning

Goal

Set a goal for how much money you want to save.

Piggy Bank

Put money in a piggy bank or box so that you can’t get to it easily.

As people save money, they have options about where they can put their money. They can save at home or use a financial institution like a bank or credit union.

financial institution: place that handles money

Chart

Make a chart to note how much you save each week.

Visual

Cut out a picture of the product you want to buy and put it on your wall or fridge.

For Fun

Look for free activities to do with your friends instead of spending money.

Earning

Do odd jobs at home or for your neighbors to earn money. Make sure you get permission first.

Multiple Choice

Who Am I?

Clues:

1. I am something you aim to have.

2. Vacations are part of me.

3. I am a reason people save their money.

4. Emergency money can be part of me.

• hotel rooms

• Interest rates

• investment firm

• savings goal

Multiple Choice

What am I?

Clues:

1. I help people save money.

2. Setting a goal is part of me.

3. Using a chart can help.

4. Visualize what you want.

• airport security

• Financial institution

• lending rates

• saving strategies

Put it in the bank

A savings account at a bank is a safe place for your money. It is much safer than hiding it at home where your little brother might get to it! Also, the bank pays interest on money, so you end up with a little more money. 

Interest: money paid out for having borrowed someone else’s money. 

Money at the bank

• deposit money in a savings account

• the bank uses the money to lend to other people

• the bank will charge them interest. This is like a fee for borrowing the money

• the bank then pays you some of that interest. You can get to your money anytime

Give me credit

When people use credit, they are borrowing money to get something of value now and agreeing to pay the lender back in the future. Most people borrow from a bank or a credit union. They will take out loans for large purchases, like homes, cars, and boats. People can also get credit cards from banks for use in stores, restaurants, and online. 

Credit Continued

When people pay with credit, it is not free money. They must pay it back to the financial institution from which they borrowed it. This can be done with monthly payments or all at once, and it will include interest. That is the price of borrowing someone else’s money. It is important for people to include the payments in their personal budgets to help them plan out the money they have on hand.

Why do you think people use credit to buy things?

• Large purchases

• Emergency

• No Cash

• Tracking

Multiple Choice

When people use __________, they are borrowing money to buy something now and will pay it back in the future.

• computers

• credit

• pencils

• smartphones

Multiple Choice

People will take out ________ for large purchases, like homes and boats.

• dogs

• paper

• wallets

• loans

Open Ended

Think about it...

Where have you seen people using credit cards?

Investments

Some people choose to invest their savings. Investing means putting money into something with the hope that it will make a profit.

invest: put money into companies to make more money

Investments

People will invest their money in companies by buying stocks. These are shares in companies, or little parts of companies. If a company does well, the value of the stocks will increase and people’s investments grow, making them more money.

stocks: share or part of a company

Multiple Choice

Investing means putting money into a company with the hope that it will make a ____________.

• sounds

• loss

• cake

• profit

What are some of the reasons people invest their money in companies?

• College

• Home

• Business

• Retirement

• Overall, when people invest their money, they are expecting to make more money that they can use in the future. Investing helps people reach their financial goals.

Risky Stuff

When people invest their money, they are taking an economic risk. This means they are taking the chance that they might lose some money. There are other economic risks as well. If someone is injured and can no longer work, they will not get a paycheck. To protect themselves from this type of risk, a person should save some emergency money. Some call this saving for a rainy day. 

Daily Life

There are other risks in daily life, like accidents, illness, and unexpected events. These can cause loss or harm. People can take steps to protect themselves by avoiding or reducing risk in their lives.

Multiple Choice

What would you do to avoid or reduce a risk in this situation?

• Wear a helmet

• Close your eyes

• Race your friends

Serious Results

Some risks can have serious results. It is important to take steps to avoid or reduce these risks.

Flooding can cause serious damage to homes and put people’s lives at risk. If people know there may be flooding because of a storm, they can move their valuables to a higher location. They can prepare sandbags around their home. Sometimes, it is best to evacuate the home until the storm passes.

Fire can quickly sweep through a field, a forest, or a home. Fire safety rules should always be followed to avoid harm. No one should play with fire. Before leaving a campsite or fireplace, it is important to put out the fire.

To avoid their car breaking down, people have it tuned up regularly. This means they take it to a mechanic to check the engine, tires, and other parts.

Being Prepared...

There are times when, even with all the planning and preparation, emergencies happen and people experience loss. A flood might destroy a home or part of a home even with sandbags in place. Fire might burn part of the kitchen. The car might get a flat tire or lose a muffler. To help deal with these situations, people save their money ahead of time. When people save for emergencies, they can better deal with a situation if it arises. 

Multiple Choice

Investing helps people reach their financial ________.

• goals

• meaning

• location

• ideas

Multiple Choice

There are __________ in daily life, like accidents and unexpected events, that can cause loss or harm.

• risks

• places

• people

• times