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Financial Literacy View details
2. Savings and Spending JHS
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Chapter 1
2. 

Savings and Spending JHS

This lesson will teach you the theory required to fully understand the topic and will present both exercises and selftests to gauge your understanding.
Problem Solving Reasoning and Communication Error Analysis Modeling Using Tools Precision Pattern Recognition
Lesson Settings & Tools
12 Theory slides
15 Exercises - Grade E - A
Each lesson is meant to take 1-2 classroom sessions
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Savings and Spending JHS
Slide of 12
Every time you get money — like from an allowance, a job, or as a present — you have to decide: should I spend it now or save it for later? This lesson will explore how balancing your spending and saving helps you make smart choices with your money.

Catch-Up and Review

Here are a few recommended readings before getting started with this lesson.
Basic Money Concepts:

  • What is money?
  • How do people earn, receive, and use it?


Needs vs Wants
Simple Arithmetic with Money:

  • Adding, subtracting, and comparing dollar amounts


Decision-Making Basics:

  • Understanding trade-offs (If I buy X, I might not afford Y)
Challenge

Maya's Budget Challenge

Maya has a part-time babysitting job that pays $100 per week.

Girl-babysitting.png

She has some regularly occurring expenses:

  • School lunch
  • Fun activities (like going to the movies or playing video games)
  • Miscellaneous things (like downloading songs or buying snacks)

Maya also has savings goals:

  • Buy a new laptop within the next year
  • Start growing her college fund
Can you help Maya create a budget that will help her achieve her goals?
Discussion

Understanding Wants and Needs

When it comes to money and making choices about how to spend it, it is helpful to understand the difference between wants and needs.

Wants-needs.png

Needs are essential things that we require to live and be healthy. They include:

  • Food and water
  • A place to live
  • Clothing and shoes
  • Basic school supplies

These are things that we cannot do without. We need them to survive and to participate in daily activities. Wants, on the other hand, are things that we would like to have, but we can live without them. They include:

  • Toys and games
  • Entertainment, such as movies or concerts
  • Treats, such as candy or snacks
  • Luxuries, such as a new phone or a vacation
Understanding the difference between wants and needs can help you make smart choices about how to spend your money. By prioritizing your needs and saving for your goals, you can make sure that you have what you need to be happy and healthy.
Theory

Wants vs. Needs: What's What?

Sort the items into wants or needs. Remember: needs are essential, wants are nice to have!

Discussion

Income vs. Expense

The money you earn or receive regularly, like from a part-time job, chores, or a weekly allowance, is your income. On the other hand, the money you spend on things like food, rent, gas, or phone bills goes towards your expenses.

Income-expense.png
Pop Quiz

Income or Expense?

Identify whether each situation describes an income or an expense.

Discussion

Understanding Savings and Spending

Savings is money that is put aside instead of being spent right away so that you can use it later for emergencies or big goals. On the other hand, spending refers to using your money to buy things you need or want. In particular, planned spending is when you decide to spend money on wants, like a new game or concert tickets, and make sure to include it in your budget.

Discussion

What is a Budget?

A budget is a plan for how to use your money wisely. It shows how much money you will get, how much you expect to spend on things you need and want, and how much you plan to save over a set time.

Example

Budgeting a Weekly Allowance

Emma gets $20 a week for her allowance. She needs to use $10 to pay for her school lunches. She also wants to spend $5 renting movies and $4 on snacks when she hangs out with her friends.

Emma-scene-1.png

a Which expenses are wants?
b How much money does Emma have left after paying for her needs?
c If Emma wants to save at least $5 each week, what can she cut from her spending?

Hint
a A need is something necessary. A want is extra or fun.
b Subtract her needs from her total allowance.
c Focus on things she could live without.

Solution
a To determine which expenses are wants, we need to recall that a want is something that is extra or fun and is not necessary. Emma's expenses are:

&School Lunches:&$10 &Movie Rentals:&$5 &Snacks:&$4 School lunches are necessary, but movie rentals and snacks are not. The expenses that are wants are movie rentals and snacks.

b To find out how much money Emma has left after paying for her needs, we need to subtract her necessary expenses from her total allowance. We know that her necessary expense is $10 for school lunches. Emma's total allowance is $20. We will subtract her needs from this amount.

$20 - $10 = $10 Emma has $10 left after paying for her needs.

c To find out what Emma can cut from her spending, we need to focus on things she could live without, which are her wants. We know that she wants to save at least $5 and she has $10 left after paying for her needs. Emma's wants are movie rentals and snacks.

Total Cost of Wants $5 + $4 = $9 She can cut either snacks or movie rentals — or both — to free up at least $5 for savings.

Example

Emma's New Backpack

Emma wants a new backpack that costs $40. She plans to save $5 each week.

Emma-Scene-2.png

a How many weeks will it take for Emma to save enough money?
b Emma decides that she would also like to buy a new pair of shoes that cost $20. How many total weeks does she need to save now?
c Suppose the new semester starts in one month. How much money would she need to save each week in order to have her new backpack and shoes in time for classes to start?

Hint
a How many times does she need to save $5 before it adds up to $40?
b Add the prices together before dividing.
c Divide the total amount of money needed by the number of weeks in a month.

Solution
a The backpack costs $40, and Emma saves $5 per week. To find out how many weeks it will take Emma to save enough money for the backpack, we need to divide the cost of the backpack by her weekly savings.

40/5 = 8weeks It will take Emma 8 weeks to save enough money for the backpack.

b The backpack costs $40, the shoes cost $20, and Emma saves $5 per week. First, we add the prices together to find the total cost.

$40 + $20 = $60 To find the total number of weeks Emma needs to save money to buy these things, we divide the total cost by her weekly savings. $60/5 = 12weeks Emma needs to save for 12 weeks to buy both the backpack and the shoes.

c The backpack and shoes together cost $60 and there are about 4 weeks until the semester starts. To determine how much Emma needs to save each week, we divide the total cost by the number of weeks.

$60/4=$15 Emma needs to save $15 each week in order to buy the backpack and shoes before school starts.

Example

Earning Extra to Save Faster

Emma wasn't going to be able to save enough money each week to buy all of the things she wanted for the new semester so she decided to help out her next door neighbor to earn the extra money. Now her weekly income includes:

  • $5 savings from her allowance
  • $5 for walking their dog
  • $10 for mowing their lawn
a With her new income, how much can Emma save each week now?
b How many weeks will it take for Emma to save the $60 she needs for her new backpack and shoes?
c Remember that the new semester starts in four weeks. How much extra money will Emma have at the beginning of the semester if she continues to help her neighbor after she has reached her savings goal?

Hint
a Add her savings from her allowance to her income.
b Divide the cost of her items by the amount saved each week.
c How many weeks are left until the new semester after she's met her savings goal?

Solution
a Emma's weekly income now includes $5 from her allowance, $5 for walking the dog, and $10 for mowing the lawn. To find out how much Emma can save each week now, we need to add her savings from her allowance to her new income.

$5 + $5 + $10 = $20 Emma can save $20 each week now.

b Emma needs is $60 in total to buy her backpack and shoes and she can now save $20 each week. To find out how many weeks it will take her to save enough money, we divide the total cost by her new weekly savings.
Time = Total cost/Weekly savings
SubstituteValues

Substitute values

Time = 60/20
CalcQuot

Calculate quotient

Time = 3weeks
It will take Emma 3 weeks to save the $60 she needs.
c Emma saves $20 per week and has 1 week left until the semester starts after reaching her goal. Emma will have $20 extra at the beginning of the semester. 1 week* $20 = $20
Example

Making Maya's Budget

Now that we've learned so much about what it means to make a budget, let's look back at Maya's situation. Remember that she has a part-time job that pays her $100 per week. She wants to make sure she uses her money wisely so that she can afford her regular expenses and meet her savings goals.

Lunch-expenses.png

We need to know how much each of her expenses cost her on a weekly basis to help her make her budget. This is what she tells us.

Expense Weekly Cost
School lunch $25
Fun activities $20
Miscellaneous things $10

Now let's remember her savings goals!

  • Buy a new laptop within the next year
  • Start growing her college fund

If we want to decide how much money can be set aside for each of her goals, we need some more information about each one. Her goals need to be more specific. Let's see what she says when we ask her for some more details.

a How much money should Maya save each week for her new laptop in order to meet her goal?
b How much money will Maya have saved for college by the time she starts classes in 3 years?

Hint
a There are 52 weeks in a year.
b How much does she save each week before she purchases the laptop? And how much does she save each week after she purchases the laptop?

Solution
a Since we are setting a weekly savings goal for Maya, we need to remember that there are 52 weeks in a year. Now we will divide the total cost of the laptop by the number of weeks.

$780 ÷ 52 = $15 She needs to save $15 each week to reach her goal of $780 in 52 weeks.

b First, let's determine Maya's total weekly savings. She earns $100 and has three expenses that total $55 per week.
Lunch+Fun+Miscellaneous=Total $25+$20+$10=$55 We can subtract this from her income to find the amount of money she saves. $100 - $55 = $45 per week Remember that for the first 52 weeks, $15 per week will go towards her new laptop. This means that $30 per week can be put into her college fund. $45 - $15 = $30 Let's calculate how much money she will save for college during the first year.
$30 * 52
Multiply

Multiply

$1 560
During the second and third years, the entire $45 will go into her college fund each week. Let's see how much she will save during those two years!
$45 * 52 * 2
Multiply

Multiply

$4 680
Next, let's add these numbers together to see how much money she will have saved after three years. $1 560 + $4 680 = $6 240 Maya will have saved $6 240 for college.
Level 1
Level 2
Level 3
Savings and Spending JHS
Exercise 1.1

Jason earns $15 each week. He spends:

  • $6 on school lunch
  • $4 on snacks
  • $3 on mobile game purchases
  • $2 on savings
 Which expenses are wants?
How much does Jason spend on needs?

Let's categorize Jason's expenses.

  • School lunch: This is a need because it is essential for his daily nutrition.
  • Snacks: These are wants because they are not essential.
  • Mobile game purchases: These are wants because they are for entertainment.
  • Savings: This is neither a want nor a need, but a financial goal.

His expenses that are wants are snacks and mobile game purchases.


From the given expenses, Jason's only need is school lunch. School lunch= $6 Jason spends $6 on needs.

E
Hint & Answer
S
Solution

Classify each item as a need (N) or a want (W), in order.

  1. Bus fare to get to school
  2. Streaming subscription
  3. Toothpaste
  4. Designer sneakers

Needs are essential things that we require to live and be healthy. Wants, on the other hand, are things that we would like to have, but we can live without them. We will analyze each of the items below to determine whether they are needs or wants

Item Why It Is a Need or a Want? N or W?
Bus fare to get to school We need to go to school for education, and bus fare is necessary N
Streaming subscription It is for entertainment, and we can live without it W
Toothpaste We need it to keep our teeth clean and healthy N
Designer sneakers We need shoes, but designer ones are a luxury, not essential W
E
Hint & Answer
S
Solution

Liam gets $10 per week. This is how he typically spends it.

  • $3 on lunch
  • $2 on candy
  • $4 on gaming

He wants to save at least $3 each week.

Is Liam currently able to save $3 each week?
How much money does he need to cut from his spending to save $3?
If he stops buying candy, how much would he save each week?

To determine if Liam can save $3 each week, we need to calculate his total spending and see if his remaining money meets his savings goal. First, let's add all of his expenses to find his total weekly spending. $3 + $2 + $4 =$9 Liam gets $10 per week. If he spends $9, then he has $1 left. $10 - $9 = $1 Since he wants to save at least $3 each week, and he only has $1 left, he is not currently able to save $3 each week.


We want to know how much Liam needs to cut from his spending. We know that he already saves $1 and that he wants to save $3. The difference between these values is how much more he needs to save. $3 - $1 = $2 He needs to cut $2 from his spending if he wants to save $3.


If Liam stops buying candy, he will save $2. His new total weekly spending will be the $3 for lunch and the $4 for gaming. $3 + $4 = $7 He will have $10 - $7 = $3 left each week for savings.

E
Hint & Answer
S
Solution
Match the tool to how it helps with saving.

Let's match each tool with how it helps with saving. A budget is a plan for how we spend and save our money. It helps us see how much money we have, how much we need to spend, and how much we can save.

Budget → Helps plan how much to spend and save

A savings jar is a fun and visible way to save money. We can see our money growing as we add more coins and bills. This makes it easy to track our savings.

Savings jar → Stores saved money in a visible way.

A goal tracker helps us see how close we are to achieving something we want to buy. It shows us our progress and motivates us to keep saving.

Goal tracker → Shows progress toward something you want to buy.

E
Hint & Answer
S
Solution

Ella earns $25 each week and spends:

  • $12 on school lunches
  • $5 on snacks
  • $3 on entertainment
How much money does she have left for savings?

Ella earns $25 each week. To find out how much money she has left for savings, we first need to calculate her total weekly expenses. Let's add up the amounts she spends on school lunches, snacks, and entertainment. $12 + $5 + $3 = $20 Ella's total weekly expenses are $20. We can subtract this amount from her total earnings to find out how much she has left for savings. $25 - $20 = $5 Ella has $5 left for savings.

E
Hint & Answer
S
Solution

Savings and Spending JHS

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