Intro. to Savings

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Intro. to Savings

  1. 1. Savings Lesson 1:<br />Intro. To Savings<br />Consumer Education<br />Grand Ledge High School<br />Miss Opland<br />
  2. 2. Objectives<br /><ul><li>Critique financial information displayed on the Internet
  3. 3. Examine how various definitions for the word “savings” reflect personal/cultural paradigms
  4. 4. Compare and contrast saving and investing, according to various views
  5. 5. Describe the importance of saving & investing </li></li></ul><li>The “Average” <br />American Family<br /><ul><li>Check out this link:</li></ul>http://www.visualeconomics.com/the-american-familys-financial-turmoil_2010-04-29/<br /><ul><li> Reactions?</li></li></ul><li>The “Average” <br />American Family<br /><ul><li>What is the goal of the person who designed this web image?
  6. 6. What did they do a good job with?
  7. 7. What did they do poorly?
  8. 8. Do you think this is trustworthy information?
  9. 9. Are any valid points made?</li></li></ul><li>
  10. 10. Why SAVE?<br /><ul><li>What are the advantages of saving?
  11. 11. Top 4 Reasons to Save – create your own list first!
  12. 12. Check out this link: http://www.visualeconomics.com/savings-accounts/</li></li></ul><li>Reasons People Should Save<br />Emergencies – It is recommended individuals have a minimum of three to six months of salary in savings accounts for emergencies. Examples of emergencies can include illness, losing a job, or immediate need to replace a large item such as a washing machine.<br />Expenses – Savings accounts can be used as a budgeting tool to manage monthly expenses.<br />Future Purchases – Money can be used to meet future goals such as a college education, new car, down payment on a home, or a new stereo.<br />Investing – After an individual has established a savings account, money should be invested monthly for future income.<br />
  13. 13. Your Definitions…<br />Think of a def. for both savings and investing and write under“My Definition”.<br />
  14. 14. Definitions of “Savings”<br /> “…the amount left over when the cost of a person's consumer expenditure is subtracted from the amount of disposable income that he or she earns in a given period of time.” Dictionary.com, Financial Dictionary<br />
  15. 15. Definitions of “Savings”<br /> “For those who are financially prudent, the amount of money that is left over after personal expenses have been met can be positive...those who tend to rely on credit and loans to make ends meet will have negative savings. Savings can be turned into further income through investing.” <br />
  16. 16. Definitions of “Savings”<br />Personal saving: (S) Saving is what is left over from disposable personal income after consumption. <br />
  17. 17. Definitions of “Savings”<br /><ul><li>What common pieces do these definitions all share?
  18. 18. How well do these definitions seem to align with the “Pay Yourself First” principle?
  19. 19. Even these DEFINTIONS from fairly legit. sources convey a common cultural attitude about saving / our financial priorities!</li></li></ul><li>Definitions of “Savings”<br />A more objective definition… <br /><ul><li>“Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan.Saving also includes reducing expenditures, such as recurring costs. In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher.”</li></li></ul><li>Saving vs. Investing<br />Our curriculum asserts these commonly<br />accepted differences between saving and<br />investing: <br />Savings<br />Investing<br />Def: Purchase of assets with the goal of increasing future income<br />Def: Portion of income not spent on consumption<br />
  20. 20. Saving vs. Investing<br />Our curriculum asserts these commonly<br />accepted differences between saving and<br />investing: <br />Savings<br />Investing<br />Used to pay for:<br />Emergencies<br />Large Purchases<br />Used to pay for:<br />Higher Education<br />Retirement<br />
  21. 21. Liquidity<br />Assets: Everything an individual owns with monetary value.<br />Liquidity: How quickly and easily an asset can be converted to cash.<br />Examples of Assets<br />Cash<br />Clothing<br />Houses<br />Electronics<br />Savings Accounts<br />Furniture<br />Automobiles<br />Make a list of your assets.<br />
  22. 22. Liquid Assets<br />In most cases, investments are not as liquid as savings. <br />Savings are known as liquid assets, because they are easily accessible in emergency situations.<br />Of your assets, <br />which are the most liquid? <br />
  23. 23. Saving vs. Investing<br />The Importance of Each…<br />Savings<br />Investing<br />Enhances and helps build wealth.<br />Provides the foundation for financial security.<br />
  24. 24. Saving vs. Investing<br />Click the image below to watch a video on YouTube that spells out the key differences between saving and investing.<br />
  25. 25. Saving vs. Investing<br />Other points mentioned in video:<br />Investing<br />Savings<br />(generally) Long Term<br />Higher Risk<br />(generally) Short Term<br />Lower risk<br />
  26. 26. Saving vs. Investing<br /><ul><li>Some financial experts do not differentiate so much between the two!
  27. 27. Podcast from PBS Newshour:</li></ul>http://www.pbs.org/newshour/rss/media/2009/05/05/financefallacy.mp3<br />
  28. 28. Saving vs. Investing<br /><ul><li>So what’s the bottom line?
  29. 29. “Pay Yourself First”
  30. 30. Understand reasons to save/invest
  31. 31. Know the options</li></ul> (We’ll explore these <br /> in future lessons!)<br />
  32. 32. Where to Begin…<br />Saving Tips:<br />http://www.practicalmoneyskills.com/personalfinance/savingspending/saving/<br />
  33. 33. Any Questions?<br />
  34. 34. References<br />Dollar Sign (used on title slide)  <br />http://www.flickr.com/photos/adriarichards/4369276799<br />Twenty Dollar Bill <br />(used in background)<br />http://www.flickr.com/photos/badwsky/3377160997<br />Family on Couch (gif)<br />http://search.coolclips.com/media/?D=wb030670#<br />Pay Yourself First (gif)<br />Created by myself, Marie Opland<br />Hand Holding Money (gif)<br />http://www.gifs.net/gif/index.php3?n=image.php3&image_id=8218&image_name=Money_in_hand<br />Student Raising Hand (gif)<br />http://dir.coolclips.com/Education/School/Classroom/Students/Students_wb030423.html<br />All other images are from <br />Other images from Microsoft Clipart, available in PowerPoint<br />Information on slide 12http://www.fefe.arizona.edu/<br />

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