LESSON
5
Saving Starts with Wanting More
LESSON DESCRIPTION AND
BACKGROUND
ECONOMIC AND PERSONAL FINANCE
CONCEPTS
This lesson provides activities designed to help
students think clearly about decisions related to
saving money. The students set a goal, determine a strategy for saving, and decide how they
will save to achieve their goals. They also learn
the basics of using savings accounts.
• Economic want
Saving involves trade-offs. When we save, we
give up some present consumption in order to
provide for future consumption. Doing so is
often difficult for adults, and it is certainly difficult for children. But knowing about savings
plans, savings goals, and interest-bearing savings accounts can help even children to develop
a savings routine. They can be encouraged to
put away pennies, nickels, dimes, or more—for
a vacation, a big purchase, or a college education.
• Short-term goals
When adults require children to save, children
may perceive saving as a negative experience,
focusing on what they forgo today instead of
what they gain in the future. However, when
children make the decision to save for reasons
they choose and in a manner that they choose,
they position themselves to experience a key
benefit of saving. They may attain a goal they
could not have achieved without saving.
Lesson 5 correlates with national standards for
English language arts, mathematics, and economics, and with personal finance guidelines, as
shown in Tables 1-4 in the introductory section
of this publication.
• Incentive
• Interest
• Long-term goals
• Savings
OBJECTIVES
At the end of this lesson, the student will be
able to:
• Define savings, economic want,
incentive, short-term goals, long-term
goals, and interest.
• Explain the elements of a savings plan.
• Give examples of short-term and long-term
goals.
• Give examples of incentives.
• Compare the advantages and disadvantages
of various savings options.
TIME REQUIRED
Two or three 45-minute periods
MATERIALS
• A transparency of Visual 5.1, 5.2, and 5.3
• A copy of Exercise 5.1, 5.2, 5.3, 5.4, and 5.5
from the Student Workbook for each student
• A copy of an actual bank statement
• A piggy bank
• A coffee can or coin purse with coins in it
• A photograph of a local bank
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©Council for Economic Education
THEME 2 | Lesson 5: Saving Starts with Wanting More
Optional materials:
• A transparency of Visual 5.4 and 5.5
• A copy of Exercise 5.6 and 5.7 for each
student
ADDITIONAL RESOURCES
To download visuals, find related lessons, correlations to state standards, interactives, and more
visit http://fffl.councilforeconed.org/3-5/lesson5
PROCEDURE
1. Display a coffee can or coin purse with coins,
a piggy bank, and a picture of a local bank. Ask:
What do these three things have in common?
(All are places to keep savings.) Explain that
in this lesson the students will learn about savings.
2. Explain that many people earn income when
they work. Ask:
a. How many of you earn income by doing
work at home or working for someone else?
(Answers will vary.)
b. What do you do with the money you earn?
(Answers will vary. Some students may
save some of the money they earn.)
3. Explain that many people spend some of their
income and save some of it. Money saved is
commonly called “savings”—that is, income that
is set aside, not spent to buy goods and services
now. Point to the coffee can and explain that
some people might keep their savings in a can, a
sock, or a drawer; some children keep their savings in a piggy bank. Show the students a picture
of a local bank, if possible, and explain that many
people keep their savings in an account in a
bank. Discuss the following questions:
a. Where can students keep their savings? (In
piggy banks, purses, small safes at home,
savings accounts in banks, etc.)
b. Do you decide whether or not you will save
money, or do your parents make that decision
for you? (Answers will vary.)
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LESSON
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c. Why do you save? (To purchase something
in the future.)
4. Introduce the concept of “goals.” Ask: What
is a goal? (Answers will vary. Some students
may say that it is a point scored in soccer or
hockey.) Explain that the kind of goal we are
interested in is something a person plans to
achieve in the future. For example, a student
may have a goal of learning to play a musical instrument or learning to shoot three-point shots
accurately in basketball.
5. Ask the students to provide examples of
goods or services for which they have saved. Explain that when people are saving to buy something in the future, they have a savings goal.
6. Explain that people save to reach “shortterm” and “long-term goals.” Short-term savings goals are established for things people
plan to buy soon (in less than a year). Long-term
savings goals are established for things people
plan to buy in the more distant future (more
than one year away). For example, a person
might save for a vacation that he or she plans to
take within a year. This is a short-term goal. A
person might also save for his or her college education. This is a long-term goal.
7. Tell the students that in this lesson they will
think about things they want in the future; they
also will think about their savings goals. With appropriate strategies and practice, they will be able
to improve their approach to decisions about saving for their future.
8. Point out that people use their income to buy
goods and services. Most people can obtain
some of the goods and services they want in the
present. Other goods and services, however,
may be unaffordable in the present and require,
therefore, a period of saving. For example,
many people save money for several years before they are able to buy a home.
9. Give each student a copy of Exercise 5.1
from the Student Workbook. Review the directions and have the students work on their lists of
goods and services in Part 1 of the exercise.
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LESSON
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THEME 2 | Lesson 5: Saving Starts with Wanting More
After the students have completed their lists,
ask: Do you have the ability to purchase all the
good and services you have listed? (Not likely.)
10. Remind the students that even if people
save money, they most likely can’t have everything they want. Because people usually want
more than they can afford to buy, they must
make choices. They must decide what to buy
now, what to save for in the future, and, perhaps, what to take off the wish list entirely. Have
the students read the directions for Part 2 of
Exercise 5.1 and complete the exercise.
11. Tell the students to look at the two lists and
circle one good or service from either list that (a)
they really want but (b) they could not afford
now and could obtain later only by saving
money for a future purchase. (You may want to
suggest here that the students should choose
an item that they would like to have in less than
one year [that is, a short-term saving goal]. This
time frame may make the goal seem realistic.)
12. Give each student a copy of Exercise 5.2
from the Student Workbook and review the instructions with the class. Allow time for completion of the work.
13. Explain that, at this point, the students have
taken a first step toward developing a successful
savings plan. They have set a goal! Discuss the
following questions:
a. Why will setting a goal make it easier for you
to save? (Answers will vary; some students
may say that setting a goal will motivate
them to save.)
b. How will your goal affect your everyday
spending decisions? Will you have to change
your day-to-day spending, because of your
goal? (Answers will vary; some students
may say that they will have to cut back on
current spending in order to achieve their
savings goal.)
14. Introduce the concept of “incentives.” An
incentive is a reward or penalty that influences
how people behave. Use the following ques-
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tions to highlight the role incentives play in students’ lives in school and at home:
a. Can you name some incentives at school that
influence whether students behave in halls,
arrive on time, return library books, or complete homework? (The class may earn points
toward a prize when everyone behaves.
Individuals may receive tardy marks on
their report cards or have to stay after
school if they are late. Individuals may lose
points or receive a zero if their homework
isn’t completed. Points, detentions, good
and bad marks—all may influence how students behave.)
b. What are some incentives at home that influence whether you do your homework, do
chores, earn good grades, or get along with
your brothers and sisters? (You may be
grounded if you don’t do your homework.
You may receive an allowance if you do
your chores. You may receive money or a
prize if you earn good grades. You may be
grounded or not permitted to talk with
friends on the phone if you fight with your
brothers and sisters, etc.)
15. Explain that incentives also play a role in decisions people make about saving. Having a savings goal clearly in mind creates an incentive to
save. For many people, achieving a goal provides satisfaction, and anticipation of such satisfaction can be an incentive. Another sort of
incentive comes into play for people who save
money in bank accounts. When people deposit
money in bank accounts, the banks pay “interest.” Interest is money depositors earn for allowing a bank to use their money. The prospect
of earning interest encourages many people to
save. Their money “grows” while it is on deposit
in a savings account.
16. Display Visual 5.1. This visual shows an
example of a savings account statement from a
bank. The statement is a record of the balance in
a savings account at the beginning of a month,
the deposits the saver has made during the
month, the withdrawals the saver has made
©Council for Economic Education
LESSON
THEME 2 | Lesson 5: Saving Starts with Wanting More
during the month, interest earned on the balance, and the new balance at the end of the
month. (Note: If you have a copy of a real bank
statement, you can show it to the students or
pass it around the classroom for them to view.)
17. To clarify how savings accounts work, walk
the students through an examination of Visual
5.1, using the following questions:
a. What was the beginning balance on October
31, 2009? ($560.25)
b. How much did Ms. Savealot deposit during
November? ($125)
c. How much was withdrawn during November?
($30)
d. How much interest was earned this month?
($3.20)
e. What is the ending balance in the account on
November 30, 2009? ($658.45)
18. Refer the students again to Exercise 5.2.
Remind them that in this exercise they identified
a savings goal and set a date for achieving the
goal; they also estimated how much it will cost
to achieve this goal. Tell the students that they
are now ready to take the next step. They will
determine how much they must save each week
or month in order to achieve their goals.
19. Display Visual 5.2. Also give each
student a copy of Exercise 5.3 from the
Student Workbook. In Part 1 of Exercise 5.3,
the students follow the steps required to calculate Mark’s monthly savings requirements,
given his goal, while the teacher works through
the same steps on the visual. (In Mark’s
example, $6 x 6 months = $36 [or add $6 +
$6 + $6 + $6 + $6 + $6 = $36].) After determining Mark’s savings requirement, have the
students move on to Part 2 of Exercise 5.3. Explain that if they complete Part 2 of the worksheet correctly, the amount they must save in
each time period multiplied by the number of
time periods will equal the amount they must
save to reach their savings goal.
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5
20. When the students have finished their calculations for Exercise 5.3, ask the following questions:
a. Is your savings target realistic? Can you really
set that amount of money aside each week or
month? (Answers will vary.)
b. What can you do if the targeted amount is
too much or too little? (Change the date you
have set for reaching the goal, or change
the amount to be saved, or plan to save
more often.)
c. What will you give up by saving the targeted
amount each week or month? (The next
most-valued use you could have made of
the money saved.)
21. Pair the students up into teams of two. In
these teams, each partner should explain his or
her savings plan to the other. After these explanations, congratulate the students for having
taken a second step toward establishing a savings plan: They have determined how much
they will need to save, and for how long a time,
to reach their goals.
22. Explain the next step. The students must now
decide where they will keep their savings. Remind them that they have already identified
some alternatives—a piggy bank, a bank savings
account, a coffee can, etc. Note that there may
be other alternatives, such as U.S. Savings Bonds,
that are more suitable for long-term goals.
23. Given the alternatives, how should the students choose where they will keep their savings? Introduce the concept of “criteria.”
Criteria are important factors people consider
when making a decision. Ask: What might some
criteria be for deciding where to keep the
money you save? Discuss the students’ responses briefly. Drawing upon the responses
and elaborating as necessary, list the following
criteria on the board:
• Will my money be safe?
• Will my savings earn interest?
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LESSON
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THEME 2 | Lesson 5: Saving Starts with Wanting More
• Will I be able to get my money whenever I
want it?
24. Discuss the criteria. Ask: Why are these
criteria important? (Answers probably will
emphasize safety and access to the money.
Students at this age probably have not
thought much about the importance of
earning interest.)
25. Give each student a copy of Exercise 5.4
from the Student Workbook and display Visual
5.3. Explain that this grid is a tool people can
use to organize their thoughts when they are
making a decision. Tell the students that they
will use the grid to decide where they should
save their money. Explain this exercise as follows:
a. Focus first on the left column of the grid,
labeled “Savings Location Alternatives.”
In the four boxes in this column, the students
should enter four savings options: piggy
bank, savings held by parents, bank savings
account, U.S. Savings Bond. The teacher
should also enter these options on Visual 5.3.
b. Look next at the middle three boxes across
the top of the grid, under the heading
“Evaluation Criteria.” In these boxes the
students should list criteria to be used in
evaluating savings location alternatives.
(The three criteria should be “Will my money
be safe?,” “Will my savings earn interest?,”
and “Will I be able to get my money whenever I want it?”) While the students enter the
criteria into their grids, the teacher should
enter the criteria into the three corresponding
boxes at the top of the visual.
26. Give each student a copy of Exercise 5.5
from the Student Workbook. Explain that the
exercise describes four savings options—one
each for Brett (piggy bank), Talia (parents hold
savings), Kate (bank savings account), and
Kendra (Savings Bond). Ask the students to
read these descriptions. Then work through the
options with the class, evaluating each option
against the criteria shown on Visual 5.3 and
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Exercise 5.4. (Older students may be able to
work at this task independently.) Begin with the
example of Brett and the piggy bank:
a. Will the money be safe in the piggy bank?
(The class will probably answer “no.”)
Write a minus sign [-] in the “Will my money
be safe?” box in the piggy bank row on Visual
5.3, and have the students enter a minus sign
[-] in the correct box on their own grids.
b. Will I be able to get my money whenever I
want it? (Yes, assuming the piggy bank is
safe.) Write a plus sign [+] in the “Will I be
able to get my money whenever I want it?”
box in the piggy bank row on Visual 5.3, and
have the students locate and enter a plus
sign [+] in the correct box on their own grids.
c. Will my money earn interest? ( No.) Write a
minus sign [-] in the “Will my money earn interest?” column of the piggy bank box on
Visual 5.3, and have the students place a
minus sign [-] in the correct box on their grids.
27. Help the students complete the evaluation for
the other alternatives, entering the pluses and minuses, according to the criteria, for each of the remaining savings options. Tell the students to add
all the pluses across in a row to determine the net
value for each alternative. Subtract the minuses
from the summed-up pluses in determining the
net value for each option (taking this approach
should not change the relative ranking of the options under consideration). Enter each calculated
amount in the appropriate box for the “Net
Value” column on the far right side of the grid on
Visual 5.3, and have the students do the same on
their grids. The alternative with the highest net
value is the best savings option for the students.
28. Underscore the conclusion this evaluation
suggests. Ask: What did we select as the best
option for saving? (Probably the bank savings
account.) Identify local banks in the community
where the students could open a savings account
if they wished to save in a bank. If possible, show
the current interest rates for accounts held at local
banks.
©Council for Economic Education
THEME 2 | Lesson 5: Saving Starts with Wanting More
29. Optional Activity: Give each student a copy
of Exercise 5.6 and 5.7 from the Student Workbook, and display Visual 5.4. Explain that the
students will learn how to keep track of money
deposited in a bank savings account so that
they’ll be ready to keep track of their money
when they open their own savings accounts.
Discuss the following:
• The table in Exercise 5.6 represents a bank savings account register. In the first column, bank
customers can note whether they are making a
deposit or a withdrawal. When people make a
deposit, they add money to the account. When
they make a withdrawal, they take (subtract)
money from the account to spend or use in
some other way.
• When the bank adds interest to the account,
the saver enters the interest in the register
under the deposit category.
30. Explain that this savings account belongs to
Ms. Mae Savalot. When Ms. Savalot checked
her last bank statement, the balance was
$562.50. That amount is listed in the first row of
the “Balance” column on the sheet.
31. Turn to Exercise 5.7. Have one of the students read the first statement on Exercise 5.7
to the entire class; then ask the following
questions:
a. What is interest? (Money the bank pays a
customer for saving.)
b. When the bank pays interest, is the interest
added to Ms. Savalot’s account or taken away
from her account? (It is added to her account.)
32. Write “interest earned” in the second row
of the first column on Visual 5.4. Explain that
because the interest is added to the account by
the bank, it is like a deposit. Enter the interest
amount ($2.25) in the deposit column. Have
the students enter the same amount on their
Exercise 5.6 Savings Account Registers. Add
the interest to the balance and record the answer (the new balance) in the second row of the
“Balance” column ($564.75) on Visual 5.4. Have
the students record the new balance on their
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LESSON
5
Exercise 5.6 Savings Account Registers.
33. Ask a student to read the second statement
on Exercise 5.7 to the class. According to this
statement, is Ms. Savalot adding savings or subtracting savings from her account?
(Subtracting.)
34. Write “Withdrawal” in the third row of the
first column on Visual 5.4, and have the students do the same on their Exercise 5.6 Savings
Account Registers. Then enter $26.00 in the
third row of the withdrawal column, and have the
students do the same.
35. Remind the students that Ms. Savalot is
taking money from her account, so the amount
she is withdrawing must be subtracted from the
balance. Have the students do the calculation
($564.75 - $26.00); call on a volunteer to report
the new balance ($538.75). Tell the students to
record that amount in the third row of the
“Balance” column on their Exercise 5.6 Savings
Account Registers, and record the amount in
the corresponding place on Visual 5.4.
36. Call for a volunteer to read the third statement on Exercise 5.7 to the class. Ask:
a. According to this statement, is Ms. Savalot
adding savings to her account or taking savings from her account? (Adding.)
b. Where should we enter this information on
the register? (Write Deposit in the fourth
row of the first column. Enter the deposit
amount in the fourth row of the Deposit
column.)
c. Should we add the deposit to the balance in
the account or subtract it? (Add.)
d. What is the new balance? ($563.75)
37. Pair the students up into teams of two.
Have them read the remaining statements on
Exercise 5.7 and complete the necessary entries on Exercise 5.6. When they have finished
this task, display Visual 5.5 and tell the students
to check their work.
©Council for Economic Education
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LESSON
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THEME 2 | Lesson 5: Saving Starts with Wanting More
CLOSURE
1. Use the following questions to review the
lesson:
• What is savings? (Income not spent to buy
goods and services now.)
• What is a goal? (Something a person plans
to achieve some time in the future.)
• Why do people save? (To buy something, or
use their money otherwise, in the future.)
• If a person is saving to buy something in two
months, does this person have a short-term or
a long-term savings goal? (A short-term
savings goal.)
• Give an example of a short-term savings goal
you have now, or have had in the past.
(Answers will vary—to save money for an
outing at an amusement park, to buy a
video game, to buy new shoes, etc.)
• If a person is saving to buy something in two
years, does this person have a short-term or a
long term savings goal? (A long-term savings
goal.)
• Give an example of a long-term savings goal
you have now, or have had in the past.
(Answers will vary—to save money for
an expensive bike, to pay for college, to
purchase a new computer, etc.)
• What is an incentive? (A reward or penalty
that influences how people behave.)
• Name some incentives that may encourage
people to save money. (Achieving a savings
goal, earning interest.)
• What is interest? (The money people earn
for allowing a bank or someone else to use
their money.)
2. Remind the students that in this lesson each of
them developed a savings plan. First, they decided on a goal by choosing a good or service
they would like to buy in the future. Second, they
determined how long they would have to save,
how often they would have to save, and how
much they would have to save each week or
month to reach their goals. Finally, they
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evaluated different places to keep the money
they would save. Emphasize the point that planning of this sort this is something that people
must do frequently. The students will have many
occasions in the future to establish and implement savings plans.
3. Tell the students that children may have savings
accounts. Usually, for children under 18, an adult
must accompany a child and help him or her in
opening a savings account, and an adult is usually
required to sign his or her name on a child’s savings account.
ASSESSMENT
At the end of the Saving Theme, select
appropriate assessment questions for this
lesson.
EXTENSION
• Encourage the students to read one or more
of the following books about savings and
money: From Beads to Bank Notes:
The Story of Money, by Neale S. Godfrey.
A New Coat for Anna, by Harriet Ziefert.
Round and Round the Money Goes, by
Melva and Gilda Berger.
• Have the students use information from online
sources or newspapers to determine the interest rates currently offered by local banks and
credit unions. Have them make a chart of the
rates, ranking them from lowest to highest.
• Read Less Than Zero, by Stuart Murphy, to
learn about Perry's savings goal, how he handles borrowing, and his opportunity cost along
the way. Visit the St. Louis Federal Reserve
Bank website at www.stlouisfed.org under
“Education Resources” for a complete lesson
plan to use with this book. Other lesson plans
for using children’s literature applicable to
economics and personal finance are also available on this website.
©Council for Economic Education
THEME 2 | Lesson 5: Saving Starts with Wanting More
LESSON
5
• Help the students find the location of banks or
other savings institutions like credit unions in
their community. Provide them with a community map; have them mark the locations on the
map. Then have them determine the route
they could follow to get to the bank—the route
that would take the least amount of time or
“save” the most time. The students should include a compass rose on the map.
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©Council for Economic Education
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VISUAL
5.1
THEME 2 | Lesson 5: Saving Starts with Wanting More
Savings Account Statement
SAVINGS ACCOUNT STATEMENT
MyBank
100 4th Avenue North
MyTown, MO 63000
Ms. Mae Savalot
1 Canyon Court
Clarkson, MO 63111
If you have any questions about your statement, please call us at 123-456-7890
Statement date: November 30, 2009
Taxpayer ID: 987-65-4321
Account: 1233142736
Account Summary
Beginning Balance on October 31, 2009
$560.25
Deposits and other credits
$128.20
Withdrawals
$30.00
Ending balance on November 30, 2009
$658.45
Interest Summary
Interest paid this statement period
$3.20
Interest paid year to date
$25.94
Descriptions of Deposits and other Credits
Date credited
Amount
Deposit
11/15/09
$125.00
Interest payment
11/28/09
$3.20
11/16/09
$30.00
Description of Withdrawals
Withdrawal
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©Council for Economic Education
VISUAL
THEME 2 | Lesson 5: Saving Starts with Wanting More
5.2
Mark’s Savings Plan
Mark wants to buy a video game that costs $36.00.
He would like to have the game by ________________________.
This is six months from today. To achieve his goal, he must save $ ___ each month.
I want to save for ___________________________________________
The price is $ ___________.
I have __________ (days, weeks, months, years) to save.
TOTAL PRICE
[
]
=
=
NUMBER OF
DEPOSITS
(deposit dollars)
[
]
x
x
AMOUNT OF
EACH DEPOSIT
($ amount)
[
]
To achieve my goal, I should save $ __________
for __________ (days, weeks, months, years).
Now I have a Savings Plan.
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©Council for Economic Education
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VISUAL
5.3
THEME 2 | Lesson 5: Saving Starts with Wanting More
Decision-Making Grid
Savings Location
Alternatives
Evaluation Criteria
Net
Value
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©Council for Economic Education
VISUAL
THEME 2 | Lesson 5: Saving Starts with Wanting More
5.4
Savings Account Register
ITEM DESCRIPTION
Beginning balance
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DEPOSIT
WITHDRAWAL
BALANCE
5 62. 50
©Council for Economic Education
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VISUAL
5.5
THEME 2 | Lesson 5: Saving Starts with Wanting More
Savings Account Register
Answers to Exercise 5.6
ITEM DESCRIPTION
Beginning balance
Interest from the bank
Withdrawal to buy new tea m sweatshirt
Birthday gift from Aunt Ida
Withdrawal for weekend movie
One-half income from babysitting
Loan to Bob
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DEPOSIT
2. 2 5
2 5. 0 0
6. 0 0
WITHDRAWAL
BALANCE
5 6 2. 50
5 6 4. 75
2 6. 0 0 5 3 8. 75
5 6 3. 75
1 5. 0 0 5 4 8. 75
5 5 4. 75
3 0. 0 0 5 2 4. 75
©Council for Economic Education
ASSESSMENT | Theme 2 | Saving: Lessons 4-5
Assessment: Saving
Select appropriate items to assess your
students’ understanding of the concepts in
this theme.
WORD BANK
Read the following:
Sally and Carrie are 12 years old. They used to
be neighbors, and they still are good friends.
Sally lives in Chicago and Carrie lives in Denver, so they don’t see each other very often.
Sally is saving money to buy a train ticket for a
visit to Denver next month. She mows lawns
and rakes leaves to earn income. She spends
some of her money and saves the rest. To
have enough money to buy the ticket, she recently had to spend a little less so that she
could save a little more. She gave up going to
the movies for one month. She packed her
lunch for school each day instead of buying
her lunch.
Use the following word bank to complete the
sentences below. (Not all words are used; answers in parentheses.)
income, short-term, long-term, opportunity
cost, trade-off
1. Sally had a ___________________________
goal. (short-term)
2. By spending a little less in order to save a
little more, Sally is making a ____________.
(trade-off)
3. Because going to movies was the mostvalued thing that Sally gave up in order to
save for the train ticket, movies are Sally’s
_______________________. (opportunity cost;
some students may also point out that this
refers to a trade-off)
FINANCIAL FITNESS FOR LIFE: Teacher Guide Grades 3-5
http://fffl.councilforeconed.org/3-5
MULTIPLE-CHOICE QUESTIONS
1. In the fable about the grasshopper and the
ant, the grasshopper was spending all his
money now, in the present. When people
spend all their money now, they:
a. give up the chance to buy more goods and
services in the future.
b. give up the chance to buy goods and services
now.
c. have more money left to spend in the future.
d. are saving their money.
Answer: a
2. Miss Smith told her students that if they
turned in their homework every day for a week,
the class could have a special treat on Friday afternoon. The special treat is _______.
a. interest
b. a service
c. a trade-off
d. an incentive
Answer: d
3. Susie can either play soccer or basketball during recess. If Susie decides to play basketball,
soccer is her _______.
a. interest
b. incentive
c. opportunity cost
d. choice
Answer: c
©Council for Economic Education
43
ASSESSMENT | Theme 2 | Saving: Lessons 4-5
4. Andy saves his money in a savings account at
the bank. Andy is really happy because the bank
pays him to save. The money that Andy earns
from the bank is _________.
a. interest
b. opportunity cost
c. a good
d. a trade-off
Answer: a
WORD SCRAMBLE
Read the definitions below (1-4), and locate
your answers in the word scrambles. (Answers in
parentheses.)
fsfoedart, merttrohs, gnisvas, otscttuniyorppo
1. Income not spent to buy goods and series
now. (savings)
2. The next-best choice that is given up when a
decision is made. (opportunity cost)
3. A goal that can be reached quickly. (short
term)
4. Giving up some of one thing in order to have
something else. (tradeoffs)
SHORT-ANSWER QUESTIONS
Read the three paragraphs below and follow the
directions after each paragraph.
1. Lisa has been saving money to buy new topof-the-line inline skates, knee and elbow pads,
and a helmet. Lisa’s friend Charisse has invited
Lisa to go on vacation with her family. Charisse’s
family is traveling by plane to the Grand
Canyon. They plan to stay in a cabin and cook
their meals there. Lisa is very excited about the
trip and really wants to go. However, she must
pay for her airfare. The price of the equipment
she wants to buy is the same as the airfare.
Draw two pictures that illustrate Lisa’s alternatives. Decide which you think Lisa should choose.
44
FINANCIAL FITNESS FOR LIFE: Teacher Guide Grades 3-5
http://fffl.councilforeconed.org/3-5
Draw a circle around Lisa’s choice; then draw an
X through Lisa’s opportunity cost. Explain your
reasons for this decision.
2. LaShauna baby-sits for a neighbor every Saturday afternoon. The neighbor pays LaShauna $10
for each Saturday. LaShauna puts $3 in her piggy
bank each week. Every two weeks, she has
enough money in her piggy bank to go to a
movie. LaShauna also puts $2 in her bank account
each week. In three weeks, LaShauna will have
enough money in the bank to buy a new video
game. LaShauna uses the $5 she has left each
week for snacks and items from the school store.
a. Write a declarative sentence showing the
amount of income LaShauna earns. (LaShauna
earns $10 per week.)
b. Write an interrogatory sentence about one of
LaShauna’s short-term goals. (Why does
LaShauna go to a movie every two weeks?)
c. Write an exclamatory sentence about the
total amount LaShauna saves each week.
(LaShauna saves $5 each week!)
3. Colin earns $15 each week doing chores
around the house and walking the neighbor’s
dog. He really wants to go to the Battle of the
Bands concert. Tickets are $35. The concert is in
three months. Right now, Colin uses his income
to buy lunches at school, to buy model airplanes, to buy snacks, to rent movies, and
sometimes to go to the movies with his friends.
Colin’s mom said, “Colin, you should save some
of the money you earn if you want to buy a
ticket to the concert.”“But, MOM!” Colin
replied, “That isn’t fair. I just don’t have enough
money as it is. Please, please buy the ticket for
me.” After talking for a while, Colin and his
mom agreed that he should save $20 to pay for
the ticket and his mom would “chip in” the remaining $15. Colin doesn’t know what to do. He
isn’t even sure he knows what saving means.
You are his friend, and he asks you to help him.
Write a savings plan for Colin. In the plan, explain what saving is. Include Colin’s goal, and
explain whether it is a short-term or a long-term
goal. Tell Colin about some trade-offs he can
©Council for Economic Education
ASSESSMENT | Theme 2 | Saving: Lessons 4-5
make to reach his goal. Tell Colin how much he
must save each week to reach his goal in twelve
weeks.
(Saving is income not spent now. Colin, you
have a short-term savings goal. That goal is
to save $20 to buy a ticket for the concert.
You have twelve weeks to reach your goal.
This means you will have to save $1.67 each
week. To save this amount, you will have to
spend a little less on other things each week.
This is called a trade-off. You could pack your
lunch so that you don't spend as much buying lunches. Instead of going to the movies
with your friends or renting movies, you
could watch movies on television. You could
bring snacks from home instead of buying
snacks.)
EXTENDED-RESPONSE QUESTIONS
1. Write a fable illustrating the use of opportunity cost and trade-offs in making a good decision about a personal finance issue or problem.
Be sure that your fable ends with a moral that
provides good advice for others in similar decision-making situations.
2. Your friend Harry keeps the money he doesn’t
spend in a shoe box under his bed. He likes to
have it nearby so he can count it. However, he
worries that someone might find it and take the
money or accidentally throw the shoe box away.
Write a three-paragraph persuasive letter to Harry.
Explain the advantages of using a savings account.
Use information about incentives and interest. Use
correct grammar, capitalization, and punctuation
as well as correct friendly-letter format.
(Letters should include definitions of interest
as well as advantages of keeping savings in a
bank—e.g., earning interest, savings are
safe, more difficult to spend it on something
on the spur of the moment, and less likely to
lose it. One possible disadvantage: keeping
the money in a bank may make it more difficult to get the money when you need to
have it.)
FINANCIAL FITNESS FOR LIFE: Teacher Guide Grades 3-5
http://fffl.councilforeconed.org/3-5
©Council for Economic Education
45