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Intro. to Savings

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