2. Savings and Spending HS
Sign In
An error ocurred, try again later!
Chapter 2
2.
Savings and Spending HS
This lesson will teach you the theory required to fully understand the topic and will present both exercises and selftests to gauge your understanding.
Show less Show more expand_more 
Lesson Settings & Tools
| | 10 Theory slides |
| | 15 Exercises - Grade E - A |
| | Each lesson is meant to take 1-2 classroom sessions |
Savings and Spending HS
Slide of 10
Saving and spending wisely is key to reaching your financial goals. In this lesson, you'll learn how to create a personal financial plan, track your progress, and build healthy money habits.
Catch-Up and Review
Here are a few recommended readings before getting started with this lesson.
Budgeting fundamentals:
Basic interest concept:
- Understanding that money can grow over time
Delayed gratification:
- Understanding long-term vs short-term reward thinking
Basic spreadsheet knowledge: (optional)
- If you plan to use budgeting software
Discussion
Share
Report error
SMART Goals
SMART goals help you stay on track by making your goals clear and easy to follow. They help you know exactly what you want to do and how to get there.
Check the applet below to see what SMART stands for and how each letter can help you set a savings goal.
Explore
Share
Report error
Goal Sorting: SMART or Not?
Determine whether the goals are SMART or not. Remember, a SMART goal is Specific, Measurable, Achievable, Relevant, and Time-bound. Assess each goal and move it to the correct box!
Theory
Share
Report error
Get SMART!
Let's look at each of the goals that we determined were not SMART and rewrite them so that they are!
a Which of the following is a SMART version of this goal?
| I want to save some money. |
{"type":"choice","form":{"alts":["A. I hope to start saving money soon.","B. I will save $10 a week for 10 weeks to buy a skateboard.","C. I'm trying to save a little when I can.","D. I will not spend my lunch money."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":1}
b Which of these is the best SMART version of this goal?
| I'll buy a new phone sometime this year. |
{"type":"choice","form":{"alts":["A. I want a phone that costs $600.","B. I'll buy a phone when I find a good one.","C. I will save $40 from each paycheck for 3 months to buy a new phone.","D. I'll stop buying snacks at school"],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":2}
c What is a better SMART goal?
| I will stop spending so much money. |
{"type":"choice","form":{"alts":["A. I will delete all shopping apps.","B. I will reduce my clothing budget to $25 per month so I can save $100 by June.","C. I will stop going to the mall.","D. I won't buy anything this month."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":1}
Hint
a How much money do you want to save? Why will you increase your savings?
b How much does the phone cost? Can you set a specific deadline of when you want to make the purchase?
c How much less do you want to spend? Do you have a savings goal in mind?
Solution
a SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound. When we create a SMART goal for ourselves, we should consider things like:
- How much do we want to save?
- Do we have something specific we want to buy?
- When do we want to have the savings goal met?
- How will we achieve our goal?
With those questions in mind, we can see that the better version of this goal is option B — I will save $10 a week for 10 weeks to buy a skateboard.
b Let's think again about the questions that we asked ourselves in Part A. We know that we want to buy a phone, but we don't have a goal, a price, or a deadline. Option C is the SMARTest way to improve on our goal.
"I will save$40from each paycheck for3months to buy a new phone." This goal could be improved even further by adding the cost of the phone, like the one given in option A.
c Wanting to stop overspending is a very smart goal but, unfortunately, it is not a SMART goal. It do not provide any specific information that can be measured or achieved. Option B sets a clear path towards reducing spending. Let's think about how we could make the other options into SMART goals.
| Given | Improved |
|---|---|
| I will delete all shopping apps. | I will cancel my subscription-based apps so that I can save $35 per month and have an extra $210 after 6 months for holiday shopping. |
| I will stop going to the mall. | In order to buy a new $120 pair of sneakers within the next 2 months, I will stop going to the movies at the mall on Fridays where I spend around $20 each time. |
| I won't buy anything this month. | I will save my entire $50 allowance this month so that I can buy $100 concert tickets next month. |
Discussion
Share
Report error
Personal Financial Plan
Discussion
Share
Report error
Financial Record Keeping
To make a financial plan work, you can use financial record keeping. This involves keeping track of all your money decisions — like saving, spending, and borrowing — by writing them down or using an app or spreadsheet. This helps you stay on track with your plan and make adjustments as needed.
Discussion
Share
Report error
Planning and Record Keeping
Effective planning and record-keeping require the right tools and methods. Let's explore some essential ones to help you get started.
Tools and Methods for Creating a Personal Financial Plan
Tools and Methods for Financial Record Keeping
Theory
Share
Report error
Jordan’s Graduation Goal
Jordan wants to save money for graduation week. He plans to go on a trip that will cost $600. He earns $150 every two weeks from his part-time job. He spends about $50 per paycheck on entertainment and $20 on snacks. He wants to save enough in 4 months.
a Jordan starts tracking his spending using a weekly log. What is the main benefit of doing this?
{"type":"choice","form":{"alts":["It prevents him from spending money on anything fun.","It helps him get more hours at work.","It guarantees he will save $600.","It shows exactly where his money is going so he can adjust his spending."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":3}
b Put the steps of creating a personal financial plan in order, based on Jordan's situation.
{"type":"sort","form":{"alts":[{"id":0,"text":"Set a specific savings goal"},{"id":1,"text":"Track current spending habits"},{"id":2,"text":"Adjust spending to meet the goal"}]},"formTextBefore":"","formTextAfter":"","answer":[0,1,2]}
c Which part of Jordan's plan is not SMART and needs to be improved?
{"type":"choice","form":{"alts":["He wants to save $600.","He earns $150 every two weeks.","He spends $50 on entertainment.","He hasn't clearly planned how much he will save per paycheck."],"noSort":false},"formTextBefore":"","formTextAfter":"","answer":3}
Hint
a Think about how knowing where your money goes can help you make better decisions about saving.
b You can't create a plan without first knowing your goal and you can't adjust spending unless you know your habits.
c A SMART goal includes a plan for saving over time, not just an end goal.
Solution
a Let's consider each of the given options.
| Option | Logic | Conclusion |
|---|---|---|
| It prevents him from spending money on anything fun. | Tracking spending shows where money goes, but it doesn't stop spending on wants. | Incorrect. Tracking helps adjust choices, not block them. * |
| It helps him get more hours at work. | Tracking spending doesn't affect how much he earns. | Incorrect. This has nothing to do with budgeting. * |
| It guarantees he will save $600. | Tracking helps control spending, but doesn't guarantee savings — he still has to make decisions. | Incorrect. Tracking is helpful, but not a guarantee. * |
| It shows exactly where his money is going so he can adjust his spending. | By logging spending, Jordan can see patterns and decide where to cut back. | Correct. This is the main benefit of a spending log. ✓ |
The main benefit of tracking spending is to understand where money is being spent, which allows for better financial adjustments.
b Now we want to put the steps in order that Jordan needs to take for creating his personal financial plan.
Track current spending habits Set a specific goal Adjust spending to meet the goal We need to keep in mind that you can't really create a plan without first knowing your goal so the first step that he takes should be to set a goal. We know that his goal is to save $600 for his graduation celebration trip.
- Set a specific savings goal
Next, you can't adjust your spending unless you know what you are spending your money on. Jordan should track his habits and then adjust his spending according to his goal.
- Set a specific savings goal
- Track current spending habits
- Adjust spending to meet the goal
c A SMART goal should be Specific, Measurable, Achievable, Relevant, and Time-bound. Let's think about the given pieces of Jordan's situation.
- He wants to save $600.
- He spends $50 on entertainment.
- He earns $150 every two weeks.
- He hasn't clearly planned how much he will save per paycheck.
Of these, three of them are specific facts about the plan. He knows when his trip is and how much it costs. He knows what his income and expenses are. Also, based on his income, this trip is an achievable goal. What Jordan's plan lacks is clarity on how much he will save per paycheck, which makes it not fully SMART.
Theory
Share
Report error
Marissa's Monthly Spending Check-Up
Marissa earns $400 a month from babysitting.
She has the following expenses:
- $100 for school lunches
- $60 on phone bill
- $80 on makeup and accessories
- $40 on savings
- $30 on streaming services
- $90 on going out with friends
a Which part of Marissa's budget shows she is already practicing financial planning?
{"type":"choice","form":{"alts":["She spends money on going out with friends.","She has included a category for savings.","She uses all her money each month.","She has a lot of wants in her spending."],"noSort":false},"formTextBefore":"","formTextAfter":"","answer":1}
b Match each tool to how Marissa might use it.
{"type":"pair","form":{"alts":[[{"id":0,"text":"Spending Tracker"},{"id":1,"text":"Budget Worksheet"},{"id":2,"text":"Savings Goal Chart"}],[{"id":0,"text":"Write down her spending each day"},{"id":1,"text":"Plan how much to spend in each category"},{"id":2,"text":"Stay motivated to reach $100 in savings"}]],"lockLeft":true,"lockRight":false},"formTextBefore":"","formTextAfter":"","answer":[[0,1,2],[0,1,2]]}
c Marissa wants to save more next month. What is the best first step she can take?
{"type":"choice","form":{"alts":["Ask her friends to lend her money","Delete all streaming services immediately","Review her past spending and find areas to reduce","Set a random savings amount and hope it works"],"noSort":false},"formTextBefore":"","formTextAfter":"","answer":2}
Hint
a Financial planning includes preparing for the future, not just paying for today.
b Think about what each tool helps you do.
c Before you change your habits, it's important to understand them.
Solution
a Financial planning means thinking ahead about how you use your money, not just spending as it comes in. One key part of financial planning is setting aside money specifically for savings before you start spending on other things. Let's consider the given options.
| Option | Reasoning | Conclusion |
|---|---|---|
| She has a lot of wants in her spending. | It shows spending habits, not planning. | Incorrect, doesn't show financial planning. * |
| She uses all her money each month. | Marissa does not use all her money — she saves some. | Incorrect, doesn't show financial planning. * |
| She spends money on going out with friends. | That's part of her wants, not part of a financial plan. | Incorrect, doesn't show financial planning. * |
| She has included a category for savings. | Marissa already puts $40 per month into savings. That shows she's not spending everything she earns. It also means she's prepared for future needs or goals. | Correct, shows financial planning. ✓ |
b To match each tools with the potential use Marissa might have, let's first consider what each tool does.
- Spending tracker: A log where you write down everything you buy so you can see where your money is going
- Budget worksheet: A simple table that helps you list your income and expenses. You can use it to plan where your money will go each week or month.
- Savings goal chart: A visual tool (like a thermometer or progress bar) that shows how close you are to reaching a goal.
Now that we remember how each tool works, we can decide which use case they each have. lcl Spending tracker & → & Write down her spending each day Budget worksheet & → & Plan how much to spend in each category Savings goal chart & → & Stay motivated to reach $$100$ in savings
Why would she use all of these tools at the same time?
Marissa uses the spending tracker because seeing where her money is going helps her spot areas where she spends too much. Her budget worksheet helps her decide ahead of time how much money she wants to put toward needs, wants, and savings. This helps her prepare instead of react. The savings goal chart allows her to watch her goal being met which makes it easier to stick to her plan.
c When someone wants to save more money, they have two basic options.
- Earn more income
- Spend less money
However, before Marissa randomly cuts expenses or chooses a random savings amount, it's smart to first check where her money is going now. This is why the correct option is to Review her past spending and find areas to reduce.
Let's think about why the other options do not work.
-
Set a random savings amount and hope it works
: That's guessing, not planning. -
Delete all streaming services immediately
: This might help her save money, but it's extreme and not the best first step. Reviewing spending helps her make smart cuts, not just quick ones. -
Ask her friends to lend her money
: That doesn't solve the real issue of her spending habits.
If Marissa looks back over last month's spending, she will hopefully notice areas where it makes the most sense to her to make cuts.
Remember, you are the only person who can truly decide if something can be cut from your own budget.
Closure
Share
Report error
When & How to Reevaluate Your Spending and Saving
When to Check In
- At the end of every month
- Anytime your income changes (like getting a raise or losing hours)
- If you're not reaching your savings goal
- When you have a new expense (like a phone bill or subscription)
- Before big life events (graduation, moving out, buying something big)
How to Do It
- Compare your budget to what you actually spent
- Did you stick to your plan?
- Look at your savings progress
- Are you getting closer to your goal?
- Check for spending habits you can adjust
- Spending too much on snacks? Subscriptions you don’t use?
- Update your SMART goals if your situation changes
- Use a tracker, journal, or app to stay organized
Why It Matters
Reevaluating your plan helps you stay in control of your money and make smart choices, even when things change.
Savings and Spending HS
Exercises
Which of the following savings goals is not specific or measurable?
{"type":"choice","form":{"alts":["A. I want to save money.","B. I want to save $500 for a class trip by May.","C. I will save $25 from each paycheck.","D. I will reach my $200 savings goal in 2 months."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":0}
security
report
code
security
report
code
To find out which goal is not specific or measurable, let's think through a few helpful questions.
- What do I want to achieve?
- How will I know if I am making progress?
- Can I really do it?
- Why is this goal important to me?
- When do I want to achieve my goal?
Now let's look at each of the given options.
| Option | Reasoning | Conclusion |
|---|---|---|
| A. I want to save money. | This goal is very general. It does not say how much money, what it is for, or when it should be saved. We do not know if we are making progress or when we're done. | This goal is not specific or measurable. * |
| B. I want to save $500 for a class trip by May. | This goal is clear. It tells us the amount, the reason, and the time limit. | It is specific and measurable. ✓ |
| C. I will save $25 from each paycheck. | This tells us exactly how much will be saved and how often. We can track progress each time a paycheck is received. | It is specific and measurable. ✓ |
| D. I will reach my $200 savings goal in 2 months. | This goal gives the target amount and a deadline. We know when we have reached the goal and how long we have to do it. | It is specific and measurable. ✓ |
The only goal that does not answer key questions like How much?
or By when?
is option A.
security
report
code
Marcus earns $600 each month. He decides to make a budget using a 50/30/20 rule.
- 50 % for needs
- 30 % for wants
- 20 % for savings
{"type":"text","form":{"type":"math","options":{"comparison":"1","nofractofloat":false,"keypad":{"simple":true,"useShortLog":false,"variables":["x"],"constants":["PI"]},"rendered":false},"text":" "},"formTextBefore":"$","formTextAfter":null,"answer":{"text":["300"]}}
{"type":"pair","form":{"alts":[[{"id":1,"text":"Groceries"},{"id":0,"text":"Takeout food"},{"id":2,"text":"College fund"}],[{"id":0,"text":"Needs"},{"id":1,"text":"Wants"},{"id":2,"text":"Savings"}]],"lockLeft":true,"lockRight":false},"formTextBefore":"","formTextAfter":"","answer":[[1,0,2],[0,1,2]]}
security
report
code
security
report
code
Marcus earns $600 each month. He wants to make a budget using a 50/30/20 rule. The total equals the sum of the amounts for needs, wants, and savings. The amount allocated for needs is 50 % of his income. $600 * 0.5 = $300 Marcus should put $300 toward needs each month.
Now, let's match the expenses with their correct budgeting categories. Groceries are essential, so they fall under needs. Takeout food is something you want, not a necessity, so it falls under wants. A college fund is for the future, so it is a savings goal.
Groceries &→& Needs Takeout food &→& Wants College fund&→& Savings
security
report
code
Why is it helpful to track your spending with a daily or weekly log?
{"type":"choice","form":{"alts":["A. It makes money appear in your account.","B. It shows where your money is going so you can adjust.","C. It prevents all spending on unnecessary items.","D. It replaces the need for a budget."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":1}
security
report
code
security
report
code
When we track our spending every day or every week, we write down what we spend money on. This helps us understand our habits. With this in mind, let's analyze each of the given options.
| Option | Reasoning | Conclusion |
|---|---|---|
| A. It makes money appear in your account. | A spending log doesn't create money, it just shows you where your money went. | * |
| B. It shows where your money is going so you can adjust. | Knowing where your money is going helps you make better spending choices and have a better idea of how many things you are buying that are on impulse or outside of your budget. | ✓ |
| C. It prevents all spending on unnecessary items. | A spending log doesn't prevent spending money on things that you don't need, but it can help show you how much money you are actually spending on frivolous items. | * |
| D. It replaces the need for a budget. | A spending log is not the same as a budget. Tracking your purchases actually helps make sure that you are sticking to your budget. They work perfectly hand-in-hand. | * |
The only option that correctly explains why it is helpful to track our spending with a daily or weekly log is option B.
security
report
code
Jasmine wants to save for a new phone and she wants to have the money saved by summer. Which part of her goal is not SMART?
{"type":"choice","form":{"alts":["A. She hasn't said how much she will save.","B. She knows when she wants to reach it.","C. She wants a phone.","D. She is not tracking her spending."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":0}
security
report
code
security
report
code
For a goal to be SMART, it must be Specific, Measurable, Achievable, Relevant, and Time-bound. Let's think about the things we know about Jasmine's goal.
- She wants a new phone — this is a specific item that is relevant to her life
- She wants to save enough money for the phone by summer — this deadline means that her goal is time-bound
What we don't know about her goal is the cost of the phone or if that cost is achievable with her current income. Now we can consider each of the given options.
| Option | How it's SMART or not |
|---|---|
| A. She hasn't said how much she will save. | Not Measurable * |
| B. She knows when she wants to reach it. | Time-bound ✓ |
| C. She wants a phone. | Specific, Relevant ✓ |
| D. She is not tracking her spending. | While it is a good habit, tracking spending is not part of the SMART goal setting process. |
Option A points out that her goal is not measurable, so it is the best choice as to why her plan is not fully SMART.
security
report
code
Which of the following statements shows that someone is planning ahead with their budgeting?
{"type":"choice","form":{"alts":["A.They have a lot of wants.","B.They have accounted for every single dollar they earn in their budget.","C.They have included savings in their budget.","D.They spend $90 going out with friends."],"noSort":true},"formTextBefore":"","formTextAfter":"","answer":2}
security
report
code
security
report
code
To determine which statement shows that someone is planning ahead with their budgeting, let's examine each option.
| Option | Reasoning | Conclusion |
|---|---|---|
| A. They have a lot of wants. | Having a lot of wants does not necessarily mean someone is planning ahead with their budgeting. In fact, having many wants can lead to overspending. | This does not show that someone is planning ahead. * |
| B. They have accounted for every single dollar they earn in their budget. | Having accounted for every single dollar they earn in their budget shows that someone is being thorough and responsible with their finances. However, we don't know what categories they have included in the budget or if these involve planning for the future. | This does not necessarily show that someone is planning ahead. * |
| C. They have included savings in their budget. | Including savings in their budget is a key aspect of planning ahead. By setting aside money for the future, someone is preparing for unexpected expenses or long-term goals. | This shows that someone is planning ahead. ✓ |
| D. They spend $90 going out with friends. | This does not provide any information about their planning or budgeting. | Not enough information is given to determine whether or not they are planning ahead. * |
Option C is the best choice.
security
report
code
Savings and Spending HS
Recommended exercises
To get personalized recommended exercises, please login first.
Loading content
≤
>
■2
■▢
e▢
7
8
9
×
÷■1
=
=
√▢
▢√
∫▢▢
4
5
6
+
−
≤
<
log
ln
log▢
1
2
3
()
∣
sin
cos
tan
0
.
π
x
y
Loading content