lesson ten - Practical Money Skills

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savings and investing teaching notes10-2 The student will identify advantages anddisadvantages of common saving methods.what kind of savings plan is right for you?■■■■■Define the concept of “pay yourself first” as aconsistent habit of saving money to reachfinancial goals.Use overhead 10-2a to illustrate how savings addup. Discuss how students might modify theirspending habits in order to save. Emphasize thatthe amount saved is not as important as gettinginto the habit. Talk about possible methods forachieving this.Explain that opening a savings account andmaking regular deposits is the easiest way to earninterest on small amount of money while keepingmoney readily accessible. Outline various types ofsavings accounts using overhead 10-2b.Outline other saving methods using overheads10-2c and 10-2d. Explain that there areadvantages and trade-offs for every savingsoption.Discuss factors to consider when choosing asavings account. (overhead 10-2e)discussionpay yourself first1. Why?■ To make a habit of saving money to reach yourfinancial goals2. What it takes:■ Commitment■ Discipline■ Delayed gratification3. Ways to do it:■■From each paycheck or allowance, deposit a setamount or percentage into your savings accountbefore spending money on anything else. At theend of the day, put all your change in a “savings”container. Once a month, deposit the money in asavings account.Whenever you get unexpected money, put aoverhead 10-2a:pay yourself firstwww.practicalmoneyskills.com savings and investing teacher’s guide 10-2
savings and investing teaching notesportion of it into savings.4. Remember, the amount saved isn’t as important asgetting into the habit.choosing a savings accountFactors to consider:■■■■Interest rateFees, charges, and penaltiesBalance requirementsBalance calculation methodoverhead 10-2e:choosing a savings accountPassbook account – a savings account in which thedepositor receives a booklet to record deposits, withdrawals,and interest.Statement account – a savings account in which thedepositor receives monthly statements.Interest-earning checking account – a checking accountthat earns interest, combining the benefits of checking andsavings.overhead 10-2b:types of savings accountsMoney-market account – a savings account that requires alarge minimum balance, pays a higher interest rate than aregular savings account, and allows the depositor to write alimited number of checks.Minimum balance – the amount the customer must keepin an account to avoid service charges.overhead 10-2c:money-market accountsCertificates of Deposit (CDs) – similar to a savingsaccount except that the bank pays the depositor a fixedamount of interest for a fixed amount of money during afixed amount of time. It pays a higher interest rate than amoney market account.Maturity Date – the date when money can be withdrawnfrom a CD without losing interest.Early withdrawal penalties – the amount of interest lostwhen money is taken out of an account before the specifiedtime period is up.overhead 10-2d:certificates of deposit(CDs]lesson 10 quiz: saving your moneyquiz 10-2 | quiz key 10-2www.practicalmoneyskills.com savings and investing teacher’s guide 10-2
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lesson ten - Practical Money Skills

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