4.1.8 Use Money Wisely

Use Money Wisely

​Learners can: 

• identify the different ways that people use their money

Vocabulary: budget-a plan to organize money over time

​Sophia is counting the money that she earned from her allowance. She decided to put her money in 3 different jars. Each jar represents how she will use her money. Sophia is collecting and saving her money for 3 different reasons.

She wants to eventually use her money in these ways: 

1. to buy a new bicycle

2. to donate to a local animal shelter

3. to buy gifts for family and friends during a school field trip

4. Which jars do you think Sophia should use for each idea?

   You might think that one choice is more important than the others and that Sophia should use the jar with the most money for that choice.

   How do you use the money that you have?

   Today, you will learn how money is earned and how it can be used.

What Is Money?

Economy is a system in which goods and services are bought and sold. People trade money to buy or sell goods and services. When you trade, you are giving something to get something else. People trade to get things that they want or need. There are different kinds of money that you can use to trade for goods and services. Press through the screens below to learn about the different kinds of money that you use in the United States of America, such as coins and paper money.

​If you live in the United States of America, the money you use looks different from the money that is used in other countries. The system of money used in different places is called currency. In the United States, the currency is called the U.S. dollar.

Earning Money

To be able to buy or sell goods and services, people need money. Many people work to earn money. They can use their money to pay for their needs and wants.

You might earn money by doing things around your home. Look at the images and read the text below to see ways to do so.

​When adults work to earn money, it is called their job or occupation. People have many different occupations. When people earn money, they have to make a choice and decide what to do with their money.

Word Cloud

What occupation or job do you want to have?

Ways to Use Money

There are three main ways people can use their money:

• They can spend it.

• They can save it.

• They can share it.

Match

Match the following

• 
  

  Darren puts $50 a month toward his vacation next year.

• 
  

  Rachel bought a new book.

• 
  

  Blake gave some of their money to help people affected by a hurricane.

Save

Spend

Share

• Save

• Spend

• Share

Budgeting Your Money

It is important to be responsible with the money you earn so that you can afford the things that you need and want.

When you earn money, you have to make choices about how it is used.
Many people create a budget to help them decide how much money they will spend, save, or share.

A budget is a plan to organize money over time.
One popular budgeting rule is the 50/30/20 rule. For this rule, you take the total amount of money earned and use it in three ways:

1. Spend 50 percent on the things that you need.

2. Spend 30 percent on the things that you want.

3. Save 20 percent for future goals or unexpected needs.

Raina earns about $4,000 each month.

If she followed the 50/30/20 rule to budget her money, she would divide the money she earned in this way:

1. Needs: 50 percent of $4,000 is $2,000.

2. Wants: 30 percent of $4,000 is $1,200.

3. Savings: 20 percent of $4,000 is $800.

Before making her budget, Raina must know how much money she earns each month. That amount is how much she can afford to distribute to her needs, wants, and savings.

Once she has the amount she earns, Raina should list all her expenses or ways she will spend or save her money according to the 50/30/20 rule. If she does not have enough money for her needs, she should:

1. identify ways to lower her bill payments; or

2. allow some of the money she budgeted for her wants to be used for her needs.

Budgeting your money is responsible.

If you do not budget your money, you might overspend, thinking you have more money than you do. Or, you might have more money, and you could have made a plan to use that money wisely.

Multiple Choice

If Raina wanted to donate $25 of her money to a local animal shelter, in which category of her budget would Raina list that amount?

• needs

• save

• wants

Multiple Choice

When creating a budget, which of the following is the most important first step?

• 
  List all of the things you want to buy.

• 
  Determine how much money you will need to spend.

• 
  Determine how much money you have or will receive.

• 
  Decide what things you want to save your money for in the future.

Today, you learned that people earn money to spend it on things they need or want.

Many people also save their money so that it can be used in the future.

Oftentimes, people create a budget to help them decide in advance how much money they will spend, save, or share.

Keeping a budget to organize your money is responsible!

Great job today!