Saving money means we can plan for the future and set goals about what we would like to buy in the longer term. Writing a budget is a vital step in learning to manage money. Teach young people the value of saving for the future rather than spending everything now, or buying on credit.
The concept of saving is a simple one. If we put aside a little bit of money each time we earn, we will have a bit left over to spend later. Unfortunately, as more and more people use credit as an alternative to saving, young people forget this vital life skill.
Introduce this session by bringing in a money box filled with coins. Show it to your students, and ask them how many have something similar at home. Discuss the concept of saving, and why people in the past used to have a little jar or box of money to spend on small items.
Next, ask students to think about their own personal budgets for a week. List their expenses, including transport, activities, clothing, sports, entertainment and food. Total this amount (a good refresher from the session on budgets). Then work out how much is left over as savings. Ask students to multiple the amount they can save for a week by 52, to get a yearly value. Lastly, ask them to think of five things they could buy that would be approximately that value.
It is challenging to teach compounding interest to young people, as the math behind it is difficult to do by hand. However, students can gain some understanding of the value of putting their savings into a bank in two ways:
1. Ask them the question 'how often do you make an impulse purchase, and what do you buy on impulse?' Then develop this into a discussion about how bank accounts can prevent impulse buying because the money is not so easily available. Money in the bank cannot be used straight away, providing young people avoid the 'credit trap' of using a card to make purchases on impulse.
2. Use simple interest math to show how $100 invested in a bank account at the current interest rate will grow over time. Discuss key terms such as simple, compound, annual, term deposit and variable rate interest.
As a tangible reminder of the importance of saving, ask students to bring in a jam jar or some other sort of tin from home, and a coin. Provide students with a range of colored balls of wool and some colored paper. Paste the paper onto the outside of the tin, then use the wool to wrap around and around the tin to create a unique pattern. These tins can then be used at home as a savings tin. Ask students to place their coins into the tin, and then challenge them to fill their tin over time, rather than ever letting it get empty.
Try these links for some further resources on saving:
http://www.understandingmoney.gov.au/content/media/releases/
http://www.practicalmoneyskills.com/english/resources/games/
There are also some great activities in my book published by Phoenix Education 'Maths Skills for Living' (Anne Vize) at www.phoenixeduc.com