what are some things your family does on a regular basis ...€¦ · article; 50-20-30 rule this...

INTRODUCTION: HOW WE SAVE

What are some things your family does on a regular basis to save money? How do they accomplish this?

Compare prices onlineCar PoolChange cable (TV) and phone plansPack meals instead of eating out

INTRODUCTION: HOW WE SAVE

Which saving practices have you found to be the most effective when it comes to saving money? Why

Shopping online can be effective. Compare prices, save transportation cost (if free shipping)

TV options; Hulu, Netflix, Amazon, YouTube…

ARTICLE; 50-20-30 RULE

Why is the 50-20-30 rule easy for people to follow, especially those who are new to budgeting and saving?

It is a straightforward way to save/. The 50 and the 30 allow you to spend on essential items of your choice and the 20 allows you to save an pay off debts

ARTICLE; 50-20-30 RULE

This article recommends that 20% of your income is meant for your savings, investments, and payments to reduce debt. What are the potential risks of having all three of these buckets belong in the same category?

You might as well invest all 20% and save none. Alternatively, you may need more than 20% to reduce debt, leaving you no money to save or invest

VIDEO: AUTOMATIC SAVINGS OR MANUAL SAVESome people like to set up a direct deposit while others like to manually transfer their money into their savings account. Which is better for you? Watch this video and answer the following questions.

What does it mean to “pay yourself first”?

Which option would YOU prefer: automatic or manual? What is one benefit AND one disadvantage of using this method?

VIDEO: AUTOMATIC SAVINGS OR MANUAL SAVE

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VIDEO: AUTOMATIC SAVINGS OR MANUAL SAVE

What does it mean to “pay yourself first”?

Paying yourself first means putting a portion of your income into a savings accounts so you can have money when you retire or when you have an emergency. This needs to be done when you get your paycheck so you’re not tempted to spend the money and save what’s left (if any).

VIDEO: AUTOMATIC SAVINGS OR MANUAL SAVEWhich option would YOU prefer: automatic or manual? What is one benefit AND one disadvantage of using this method?

Automatic. One benefit to take out time from your schedule to save money - it happens automatically. One disadvantage is controlling how much goes into my savings each time. This is difficult, because with an hourly salary, income varies each week.

ARTICLE; HOW TO SAVE FOR MULTIPLE GOALS AT THE SAME TIME

Another strategy you can use to meet your savings goals is to open a savings account for each goal. Find out if this is a method you want to use by reading this article. Then, answer the following questions.


The article states, “Shannon certainly knows what her dollar amounts are, but she’s mostly unclear as to the timeframe.” Why is it important to know the timeframe when working towards your savings goals?

Knowing the timeframe of your goals is important, because you need to know how fast you need to save the money. You can budget your savings amount accordingly.


Your friend, Alicia, is a graduating senior about to head to college in the fall. Alicia has a single checking account and is eager to open a savings account. After reading this article, she is inspired to open up multiple savings accounts to work towards her goals. Do you think it’s a good idea for Alicia to do so? Why or why not?

Alicia should focus on one savings account at a time. Because she is just starting out, she may not be able to avoid fees that many savings accounts charge when you don’t meet a minimum balance.

VIDEO: HOW TO SAVE MONEY EVERYDAY

Watch this video to see and come up with --- ideas on how to save money.

VIDEO: HOW TO SAVE MONEY EVERYDAY

VIDEO: HOW TO SAVE MONEY EVERYDAYWatch this video to see and come up with 5 - 7 ideas on how to save money everyday?

Check unit priceCouponsSpend less on things that are not important for youMake a shopping listPlan your meals ahead of timeUse electricity on off-peak hoursUse technology to find cheap gas prices

DATA CRUNCH; WHY ARE YOUNG PEOPLE SAVING LESS


Which age group had the lowest savings rate in 2014?Under 35 (-1.8%)

What has been the recent trend with student debt for those under the age of 35?

The amount of debt has been rising from $10,000 in 2001 to $17,200 in 2013


What typically happens to savings rates during recessions? Why do you think this happens?

Savings rates go up rapidly. This happens because people reduce their spending and start saving instead. They may be concerned about losing a job and want to save for emergencies. It also may be harder for them to get credit as banks become less willing to lend as they are nervous too.


What is the relationship between age and savings rates? What might be some explanations for this?

The higher the age the higher the savings rate. Older people typically make more money so they are able to save more money (they have more extra money after paying for living costs). As retirement draws closer, they may also see an increased to have money when they stop working.


We know that the longer a person saves, the more time their savings have to compound and grow. Given that fact, why do you think the young save the least and the older generations save the most?Older people are wiser and have understood that their savings have grown. Younger generations have not experienced that so they save the least. Also, younger generations may not be as financially stable and have lower pay which may difficult for them to save.

VIDEO; COMPOUND INTEREST EXPLAINEDWhat is compound interest? How can you use it to increase your savings? Watch this video and then answer the following questions.

How does the age a person starts saving at impact the amount they can earn in compound interest?

Today’s savings accounts do not offer interest rates much higher than 1%. How does this impact the power of compounding?

VIDEO; COMPOUND INTEREST EXPLAINED


How does the age a person starts saving at impact the amount they can earn in compound interest?

Compound interest is interest made from interest. Therefore, the earlier you start saving, the more you earn in compound interest.


Today’s savings accounts do not offer interest rates much higher than 1%. How does this impact the power of compounding?

Your savings compound at a rate that is slower than the rate of inflation, so your money ends up losing value over time. In other words, your money will buy less in the future than it can today.

VIDEO; THE RULE OF 72The Rule of 72 is a well known trick that you can use when determining your financial goals. Watch this video to learn more about it and then answer the following questions.

Finish this sentence: The Rule of 72 tells me...

It took Samantha 6 years to double the money in her account. What interest rate was Samantha receiving on her account?

You are trying to pick an account to put your money in. Why is the Rule of 72 useful during this process?

VIDEO; THE RULE OF 72

VIDEO; THE RULE OF 72Finish this sentence: The Rule of 72 tells me...

The number of years required to double my money at a given annual rate of return.

It took Samantha 6 years to double the money in her account. What interest rate was Samantha receiving on her account?

72/r = 6 r = 12Samantha was receiving an interest rate of 12%.

VIDEO; THE RULE OF 72

You are trying to pick an account to put your money in. Why is the Rule of 72 useful during this process?

The Rule of 72 is useful, because I can use it to determine which account will double my money in the shortest amount of time.

VIDEO; INFLATION AND ITS EFFECT ON YOUR SAVINGSWhile it’s important to put away money into your savings account each month, it shouldn’t be the only place you put it. Why? The answer is: INFLATION! Watch this video to find out how inflation impacts the money in your savings account. Then, answer the following questions.

What causes inflation to occur in the first place?

Why does your savings account “lose value” if the rate of return you receive is lower than the rate of inflation?

An alternative to saving would be investing your money for a higher rate of return. How would this work to reduce the impact of inflation on your savings?

VIDEO; INFLATION AND ITS EFFECT ON YOUR SAVINGS


What causes inflation to occur in the first place?

Demand-Pull Inflation: Demand for products increase, but supply is the sameCost-Pull Inflation: Production costs increase, but demand is the sameMonetary Inflation: Economy is booming, so people have more money to spend on products


Why does your savings account “lose value” if the rate of return you receive is lower than the rate of inflation?

If the rate of return, or interest, you receive from your savings account is lower than the rate of inflation, then your money does not grow as quickly as the rate of inflation. As a result, the purchasing power of your money in the future is lower than it is today.


An alternative to saving would be investing your money for a higher rate of return. How would this work to reduce the impact of inflation on your savings?

Having a higher rate of return on your investments means your money will grow at a rate that is faster than the rate of inflation. So, even if inflation is working to decrease the value of your investments, the rate of return you are receiving counteracts the impact, and actually continues to increase the worth of your savings over time.

SMALL STEPS

Small Steps for saving money: Set yourself the goal of saving just one dollar per day. One way to do this is to modify one daily purchase. Give three examples…

TAKEAWAYS

It is best to start saving as early as possible so that your money has more time to grow using compound interest.

Today’s inflation rates for savings accounts are often lower than the rate of inflation. Thus, investing your money in addition to saving it is a good strategy.

Use the Rule of 72 to easily and quickly determine how long it will take for your money to double.

what are some things your family does on a regular basis ...€¦ · article; 50-20-30 rule this...

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