Math 8 Savings Assessment

I can make smart savings decisions by planning for future expenses, understanding how interest works, and choosing the right type of bank account.

• 6 months of cable TV

• A new cell phone if yours is stolen on the bus

• Valentine's Day gifts for friends and family

• Your back-to-school clothes and supplies

Which statement best describes what it means if your bank is "FDIC insured?"

• Bank customers can buy car or health insurance at their bank

• If you lose your wallet and the cash inside is missing, your bank will pay to replace it up to a certain amount

• If you have money in your checking or savings account and the bank goes out of business, you are guaranteed to get your money back up to a certain limit

• If a bank customer gets hurt while inside the bank, the customer can sue the bank and their FDIC insurance will cover the costs

When you open your first savings account, you will need to bring each of these things EXCEPT...

• An adult if you're under 18

• Proof of your mailing address

• A letter from your employer

• Some form of identification (ID)

What does it mean to "pay yourself first"?

• On payday, take some money out to reward yourself with some fun spending

• Save money when you are young so you can spend more money when you are older

• Any time you get paid, set aside some portion to save before you do any spending

• Spend money on yourself first, then your immediate family, then friends or other relatives

TJ typically cuts 10 lawns per month and earns $10 per lawn. He spends money throughout the month on things like snacks, tickets to high school football and basketball games, and new video games. Somehow, he ends every month with only a few dollars left. Which behavior change is MOST likely to help TJ save more money?

• Spend less time cutting grass and more time saving money

• Ask his parents for an allowance and try to save that money instead

• Before he spends, set aside $2 from every $10 payement

• Spend money on a better lawn mower so he can cut more grass

Diamond makes $200 per month by babysitting her neighbor's son after school. She wants to buy her dad something really special for Father's Day next year, and the holiday is 10 months away. Which strategy will work best to make sure she has enough saved by then?

• Figure out how much she'd like to spend, and then divide the cost by 10 so she knows how much to save each month

• Save all $200 every month until Father's Day without spending anything on herself

• Don't worry about saving until closer to Father's Day -- she'll figure something out

• Spend her money freely, but any time she has spare cash at the end of a month, put it in savings

One benefit of using a savings account instead of a checking account is:

• It usually earns more interest.

• It allows unlimited withdrawals.

• It offers more check-writing privileges.

• It charges higher fees.

One downside of using a savings account instead of a checking account is:

• Lower interest rates

• Limited number of withdrawals

• Higher fees for deposits

• No access to online banking

Cylina's savings account is earning 2% per year. She has a balance of $1000 in the account, and she is planning to leave the money there for 4 years, until she's ready to start college. What equation could she use to determine how much simple interest her account will earn over that time?

• Interest = $1000 + 8%

• Interest = $1000 x 2%

• Interest = $1000 + 2% + 4

• Interest = $1000 x 2% x 4

What is the financial benefit of compound interest?

• The interest rates banks offer for compound accounts are always higher than for simple accounts

• When you earn compound interest, you earn interest on both the principal and any interest you've already earned

• When earning compound interest, you don't accumulate as many bank fees

• When you earn compound interest, you earn interest ONLY on the principal