This article shows how to teach high school students to save for future purchases rather than relying on credit and risking getting into debt. I The focus in this article is on how to write a savings goal and plan income and expenses to meet the savings goal.
Goal Setting
Introduce this session by asking students to work in pairs to write a list of larger items or activities that people may use credit to purchase. Examples might include:
- flat screen televisions
- computers
- holidays
- cars
- houses
- going to college
- moving out of home costs
- white goods - fridge, microwave, dishwasher
Then ask students to write an estimate of roughly what they think each item might cost. For some items they may need to give more information and detail (for example, if they were estimating costs for a holiday, they may need to write where the holiday is to, where they might stay and how long the holiday is for).
Lastly, ask students to nominate one of the items from their list to use as their example for the rest of the activity.
TImeline
Savings plans only work if there is an allocated timeline associated with them. A goal which has no timeline lacks meaning, and is impossible to measure in terms of whether or not the goal has been met.
Ask students to individually write a timeline for their savings goal item. For example:
Savings goal item - flat screen TV
Estimated cost - $1200
Timeline for purchase - 26 weeks (six months)
Students then use simple division to work out how much they would need to save per week in order to purchase their savings goal item.
For example:
$1200 divided by 26 = $46.15 per week
Students then ask themselves if this is a reasonable amount for them to save each week, given their other expenses such as general living costs, travel, schooling costs, entertainment and so on.
The timeline can then be adjusted as needed to account for students' ability to save the nimnated amount each week.
For example:
$1200 divided by 52 weeks = $23.07 per week
Going into debt discussion
The last part of this activity is a whole class discussion of the alternatives to savings. Young people are surrounded by advertising which aims to persuade them that debt is a necessary part of life, and that it should be used for everyday purchases as well as larger items and activities. Focus this discussion on the pros and cons of going into debt, and encourage students to talk freely about their ideas and experiences.
Some students may find this activity challenging if they have seen people they love getting into trouble with managing money, such as in families where someone has lost a job or has lost their house due to finance problems. Tread carefully here, and avoid topics which may cause distress to some students. Remind students that they are free to talk or not talk during the discussion, and that they should only disclose non personal information which is not likely to cause harm or upset to another person.
Lesson outcomes
By the end of this session, students should be able to:
- write or name a savings goal of their own
- estimate the cost of reaching their goal
- calculate the time it will take them to save for their goal
- make an informed choice about the best way to reach their goal
Money skills
Money skills, understanding personal finance, and having the ability to save and budget are important life skills. This series looks at how to teach young people who have never seen a recession before how to manage when financial times are tough.
