SAVINGS TOOLS Advanced Level

Transcription

1 Page SAVINGS TOOLS Advanced Level RECOMMENDED GRADE LEVELS AVERAGE TIME TO COMPLETE Anticipatory Set & Facilitation: 50 minutes Conclusion/Assessment Options: 45 minutes Time does not include optional items. EACH LESSON PLAN IS DESIGNED AND CONTINUALLY EVALUATED BY EDUCATORS, FOR EDUCATORS. THANK YOU TO THE FOLLOWING EDUCATORS FOR DEVELOPING COMPONENTS OF THIS LESSON PLAN. Kimberly Knoche, Family and Consumer Sciences Educator, Forsyth, Montana Glenda Seward, Family and Consumer Sciences Educator, Wellman, Iowa NATIONAL STANDARDS The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts LESSON PLAN OBJECTIVES Upon completion of this lesson, participants will be able to: Compare the characteristics of savings tools Analyze which savings tools are appropriate for reaching different financial goals MATERIALS PROVIDED IN THIS LESSON PLAN Savings Tools Presentation Planning A1 Savings Tools reinforcement worksheet A2 Letter to Jane A3 Savings Tools Presentation Rubric B1 Letter to Jane Rubric B2 Savings Tools Vocabulary List E1 Savings Tools Information Sheet F1 4 of a Kind Labels Which Savings Tool Would You Use? H2 4 of a Kind Answer Key K1 Savings Tools Note Taking Guide L1 MATERIALS MATERIALS SPECIFIC TO THIS LESSON PLAN BUT AVAILABLE AS A SEPARATE DOWNLOAD Savings Tools Answer Key C1 Savings Tools PowerPoint presentation G1 Saving and Investing Multiple Choice Test Bank & Answer Key M1 & C1 MATERIALS TO ACQUIRE SEPARATELY DEPENDING ON OPTIONS TAUGHT Internet access Labels Decks of cards Large sheets of paper Markers

2 Page RESOURCES EXTERNAL RESOURCES External resources referenced in this lesson plan: Start Saving Ways to Save, from the PBS Series Your Life, Your Money: life your money Similar lesson plan at a different level: None available TAKE CHARGE TODAY RESOURCES Optional lesson plan resources: Technology Integration Options Active Learning Tool Tablet Applications for the Personal Finance Classroom Active Learning Tool True or False Active Learning Tool EDUCATOR MATERIALS Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website. CONTENT PARTICIPANT READING Savings Tools Information Sheet F1 OPTIONAL ADVANCE INSTRUCTION This lesson is designed to be taught as a stand alone lesson. However, background content knowledge from the following lesson plans is directly related to this lesson and may be helpful for participants. Introduction to Depository Institutions Lifelong Employment LESSON FACILITATION PREPARE Visual indicators to help prepare the lesson INSTRUCT Instructions to conduct the lesson facilitation VOCABULARY ACTIVITY Savings Tools Groups Approximate time: 5 minutes prior to instruction. Materials to prepare: None CUSTOMIZE Potential modifications to lesson facilitation 1. Break participants into groups of Assign one savings tool to each group. Savings tools include checking account, savings account, money market deposit account and certificate of deposit. a. Participants will remain in these groups for the remainder of the lesson. 3. Instruct each group to engage in a 1 minute discussion of what they know or have heard about their groups assigned savings tool. 4. Ask each group to share. ANTICIPATORY SET

3 Page Your Life, Your Money Approximate time: 10 minutes Materials to prepare: Start Saving Ways to Save video clip (URL found in the supplemental resources section) 1. Show Part 4: Start Saving Ways to Save, from the PBS Series Your Life, Your Money. This is part of a 6 part series. Chapter 4 contains two sections: Ways to Save, with D. Woods and Saving for Retirement, with Maria Cortez. Only the first section (Ways to Save) should be shown for this lesson. 2. After the video, discuss how using savings tools helped D. Woods. Example questions include: a. What methods did D. Woods use to save money? b. Do you agree with all of D. Woods financial decisions? Why or why not? c. Why is it necessary to save money? d. If D. Woods had a job that paid her on a regular basis, would she want to save as much money? e. If you were D. Woods, would you change any of the financial decisions that she has made so far? 3. Explain to participants that D. Woods used various types of savings tools, such as checking accounts, savings accounts, and Certificates of Deposit, to help her save money. Participants will learn about each of these savings tools and why they should be used throughout the remainder of the lesson. RECOMMENDED FACILITATION OPTIONS There are two recommended facilitation options provided for this lesson. 1. Option 1: Small Group Presentations 2. Option 2: Savings Tools PowerPoint Presentation Option 1: Small Group Presentations Approximate time: 45 minutes Materials to prepare: 1 Savings Tools Information Sheet F1 per participant Optional: 1 Four of a Kind Answer Key K1 Per group (4 groups total) o 1 set of Four of a Kind Cards Four of a Kind Labels are provided o 1 marker o 1 large sheet of butcher paper o 1 Savings Tools Presentation Planning A1 o Optional: Savings Tools Presentation Rubric B1 1. Pass out one Savings Tools Information Sheet F1 to every participant. 2. Read page one of the Savings Tools Information Sheet F1 together as a class. Stress key points: a. Each tool has different features and it is very important to choose the appropriate savings tool to assist in reaching financial goals. b. Savings tools are ideal for emergency savings because they are Rather than a deck of cards, place labels on index cards and laminate. Use a talking avatar to convey key points. Refer to Technology Integration Options Active Learning Tool for assistance.

4 Page insured. c. Understanding the features of savings tools will help individuals choose the appropriate tool for their goals. d. Savings tools will vary between and within depository institutions, making it very important to compare savings tools in order to find the best option. 3. Divide participants into small groups and assign each group one savings tool. a. If the Savings Tools Groups vocabulary activity was completed have them continue working in that group. 4. Instruct each group to prepare a presentation about their assigned savings tool that will be presented to the rest of the class. a. Groups should read the corresponding section (on page two) of the Savings Tools Information Sheet F1 and prepare a presentation explaining the various characteristics of the savings tool. b. Provide each group with a Savings Presentation Planning A1. Presentations should include all content prompted. This includes discussing the: definition, interest, liquidity, features, and any additional information about the savings tool. c. Every member of the group should participate equally in the presentation. d. Optional: Use the Savings Tools Presentation Rubric B1 to score each group s presentation. 5. Provide each group with a set of cards labeled with the Four of a Kind labels, a large sheet of butcher paper, and a marker. a. A Four of a Kind set of cards contains each of the 4 savings tools as well as 5 characteristics of each savings tool. 6. Instruct each group to create a 6x5 grid on their butcher paper and label the top of the grid with the following labels: Savings Tools, Definition, Interest, Accessibility, Feature, and Feature. The Savings Tools Note Taking Guide L1 can be used as a guide to complete the chart. a. The butcher paper should resemble the following: Savings Tools Definitions Interest Liquidity (accessibility) Feature Feature Reduce instruction time by making the charts in advance. 7. Have participants work in their groups to organize the cards correctly onto the butcher paper grid. a. To provide additional guidance, provide participants with the grid label color coding information, as follows: i. Savings Tools = maroon ii. Definition = pink iii. Interest = gold iv. Liquidity (accessibility) = blue v. Features = green b. Some characteristics may apply to more than one tool. Match a card to the tool best described by the card.

5 Page Instruct each group to present their section to the class. 9. After each group is finished with their presentation: a. Discuss the information presented and add any missed information or clarify any possible confusion. b. Instruct groups to reorganize their Four of a Kind Cards (if needed) on the butcher paper according to their new knowledge regarding each savings tool. 10. After all groups have presented, ask the groups to re evaluate their butcher paper, making sure all characteristics correlate with the correct savings tool. a. Display the Four of a Kind Answer Key K1 to have groups check their butcher paper. Or, have each group check their butcher paper using the Savings Tools Information Sheet F Instruct participants to work as a group to organize the four maroon savings tools cards from the most liquid to the least liquid. Discuss. 12. Instruct participants to work as a group to organize the four maroon savings tools cards from highest interest rate to the lowest interest rate. Discuss. a. Stress that higher interest rates are a trade off for lower liquidity. After the presentations, have participants complete their Savings Tools Note Taking Guide L1. Option 2: Savings Tools PowerPoint Presentation Approximate time: 30 minutes Materials to prepare: 1 Savings Tools PowerPoint presentation G1 1 Savings Tools Note Taking Guide L1 per participant Present the Savings Tools PowerPoint presentation G1. Provide each participant with a Savings Tools Note Taking Guide L1. 1. Slide 1: Savings Tools 2. Slide 2: Types of Savings Tools a. There are four common types of savings tools that will be featured in this lesson. 3. Slide 3: Ideal for Storing Emergency Savings a. Ask participants how a consumer will know if their depository institution offers secure accounts. i. They are insured by the Federal Deposit Insurance Corporation or the National Credit Union Association. 4. Slide 4: Savings Tools Characteristics a. The goal is to determine the savings tool most appropriate for reaching a financial goal. 5. Slides 5 6: Checking Account a. Ask participants to determine common ways to access funds in a checking account. i. Writing checks, using a debit card or withdrawing cash from the account. b. Checking accounts may have minimum balance requirements, they may charge transaction fees, and there can be limits on the number of checks that can be written each month. c. Checking accounts are not recommended as the only account used to save money because they do not typically earn interest. Have participants use an online graphic organizer to identify the definition, interest, liquidity and features of each tool. Refer to Technology Integration Options for assistance.

6 Page Slides 7 8: Savings Account a. Ask participants what are common ways to access funds in a savings account? i. Funds may be accessed or transferred by ATM, telephone, and on the internet. b. They are effective for storing emergency funds because the money is not as accessible as a checking account yet still very liquid. 7. Slides 9 10: Money Market Deposit Account a. Ask participants which would typically earn a higher interest rate. An account with a $10,000 or $2,500 balance. i. The account with the $10,000 balance because the higher the balance, the higher the interest rate. b. They are less accessible than savings or checking accounts because they usually have a very limited number of transactions allowed each month. Because of these restrictions, interest rates are often higher. 8. Slides 11 12: Certificate of Deposit a. Higher interest rates are usually paid for money saved for longer periods of time. b. Ask participants why a depository institution would typically offer a higher interest rate for a CD with a longer time period or more money saved. i. The depository institution has access to those funds for a longer period of time. 9. Slide 13: Matching Savings Tools to Goals a. There are several factors to consider when determining the most appropriate savings tool for your financial goal. 10. Slide 14: You Decide: Which Tool is Best a. Ask participants which tool they would recommend for Avery. i. A savings account is the most appropriate because the funds are easily accessible in case of emergency. b. Ask participants which tool they would recommend for Javier. i. A money market account is appropriate because the funds will be earning a higher interest rate with easier access to the funds than a CD. However, if Javier does not have the minimum balance ($1,000) than he may have to start with a savings account and work into a money market account. 11. Slide 15: Depository Institutions a. In addition to analyzing the features of a savings tool, individuals should also closely examine different depository institutions. b. Terms and conditions for each account may vary such as interest rates offered, fees, minimum balance requirements, etc. c. Remind participants that they are not limited to use only one depository institution. 12. Slide 16: Liquidity a. Direct participants to look at the graphic that illustrates that in general, the more liquid a savings tool is, the lower the interest rate it earns. The opposite is also true; the less liquid a savings tool is, the higher the interest rate it usually earns.

7 Page b. Higher interest rates are a trade off for lower liquidity. 13. Slide 17: Summary a. By understanding the features of different savings tools, an individual can choose which tools would best help them reach their financial goals. CONCLUSION OPTIONS There are two conclusion options provided for this lesson. 1. Option 1: Four of a Kind Activity 2. Option 2: Which Savings Tool Would You Use? Option 1: Four of a Kind Activity Approximate time: 20 minutes or longer depending on the number of rounds completed Materials to prepare: Per group of 4: o 2 sets of Four of a Kind Cards Four of a Kind Labels are provided o Optional: 1 Four of a Kind Answer Key K1 Instructions: 1. The object of the activity is to get a four of a kind with four cards describing the same savings tool. a. For example, if a player is collecting Certificate of Deposit cards, he/she would have to have four of the six following cards: i. Certificate of Deposit ii. Used for a fixed period of time iii. Interest rate will vary depending upon the specified time length and amount deposited iv. Access to the funds deposited is restricted v. Time length usually ranges from seven days to ten years vi. Penalties are most likely assessed if the funds are withdrawn early b. Each row of the Four of a Kind Answer Key K1 describes the six eligible cards for each savings tool. 2. Divide the participants into groups of four. 3. Provide each group with a set of cards labeled with the Four of a Kind labels. 4. Each group should identify a dealer who will deal four cards to each player, put the rest of the cards face down as the draw pile and turn one card face up to be the discard pile. 5. For each player s turn, the player will draw a card from either the draw pile or the discard pile. a. The player will determine if that card is a characteristic of the savings tool for which they are trying to get four of a kind for. b. If they want to keep the card, they discard a different card and it is the next person s turn. If they do not want to keep the card, they discard it and it is the next person s turn. c. Players must always have four cards in their hands at all times. 6. Rotate to the next player. Visit the Take Charge Today website for a video classroom demonstration of this activity. A helpful tip for participants is to look at the label colors. A four of a kind for the same savings tool occurs when each labeled card is a different color with the exception of green (they may have up to 2 green cards in a four of a kind. Provide participants with the Four of a Kind Answer Key K1 the first few rounds of play to provide additional support. Simplify the activity by adding Jokers as wild cards.

8 Page To win, a player must say four of a kind during his/her turn after collecting four of a kind. a. They must have four cards describing the same savings tool. b. Verify the four of a kind by checking that all cards are from the same savings tool row of the Four of a Kind Answer Key K1. Option 2: Which Savings Tool Would You Use? Approximate time: 15 minutes Materials to prepare: 1 set of Which Savings Tool Would You Use? H2 cards 1. Divide participants into small groups. 2. Randomly choose a Which Savings Tool Would You Use? H2 card and read it to the class. 3. In small groups, have participants determine what savings tool is the most appropriate for that scenario. a. Consider having groups write 1 2 reasons why they selected the tool they did on the back of the Which Savings Tool Would You Use? H2 card. 4. Ask groups to identify why they selected the tool they recommend. 5. Repeat until all Which Savings Tool Would You Use? H2 cards have been discussed. Discussion points: Mariah and the Twins a. 2 year Certificate of Deposit they don t need the money and the interest rate will likely be the highest available. Conner and Lisa a. Money Market Account to earn interest on the money while waiting to buy the furniture. Aran a. Money Market Account this will allow him to make regular deposits while earning some interests in the 2 years he is saving the money. Brittany a. Checking Account because of the accessibility and the ability to pay bills directly from the account. Bryan a. Savings Account Good accessibility in case of an emergency. Amani and Grace a. Savings Account, possibly evolving into a Money Market Deposit Account when they get enough money saved for the minimum deposit. They need it to be accessible and have the option to make additional deposits. Have groups use a brainstorming/ discussion tool to identify which savings tool they would use and why. Refer to Technology Integration Options Active Learning Tool for assistance. Provide each group with all or one Which Savings Tool Would You Use? H2 as an alternative. Give each group 1 2 scenarios and have them create an avatar explaining the situation. Play the avatars for the class and conduct small group discussions to make recommendations. Refer to Technology Integration Options Active Learning Tool for assistance. ASSESSMENT OPTIONS There are two assessment options provided for this lesson. 1. Option 1: Reinforcement Worksheet 2. Option 2: Letter to Jane

9 Page Option 1: Reinforcement Worksheet Approximate time: 20 minutes Materials to prepare: 1 Savings Tools A2 per participant 1. Complete the Savings Tools A2 reinforcement worksheet. Use the True or False Active Learning Tool to reinforce key concepts. Option 2: Letter to Jane Approximate time: 45 minutes Materials to prepare for assessment option 1: 1 Letter to Jane A3 per participant 1 Letter to Jane Rubric B2 per participant 1. Complete the Letter to Jane A3 worksheet and write a short letter using the Letter to Jane Rubric B1 to describe choices made.

10 Page E1 Savings Tools Vocabulary List TERM DEFINITION 1 Certificate of deposit An account at a depository institution that is used for a fixed period of time and allows restricted access to the funds deposited 2 Checking account An account that allows quick access to funds for transactions 3 Depository institution Businesses that provide financial services 4 Liquidity How quickly and easily an asset can be converted into cash 5 Money market deposit account A account at a depository institution that usually has minimum balance requirements and tiered interest rates 6 Savings account An account at a depository institution that is designed to hold money not spent on current consumption 7 Savings tools Accounts offered by depository institutions whose main purpose is to help people manage their money 8 Tiered interest rate The amount of interest earned depends on the account balance

11 Page L1 Savings Tools Note Taking Guide Total Points Earned Total Points Possible Percentage Name Date Class Savings tools are: Describe two reasons why savings tools are ideal for storing emergency savings: Why is it important to understand the features of a savings tool?

12 Page L1 Savings Tools Definition Interest Liquidity (accessibility) Features Additional Information Checking Account Savings Account Money Market Deposit Account Certificate of Deposit

13 Page L1 What are five factors to consider when determining which savings tool is the most appropriate for meeting a financial goal? List the savings tools from most liquid to least liquid. List the savings tools from highest interest to lowest interest. What does higher interest rates are a trade off for lower liquidity mean?

14 Page 14 4 of a Kind Labels Preparing the Activity Cards Supplies: Approximately one set of cards will be needed per group of four participants. The following supplies are needed per group: 1 deck of playing cards (does not need to be a complete deck) OR 24 3x5 index labels Print one set of 4 of a Kind Labels o o Labels are formatted to be printed on a sheet of 1.83 x 3.06 labels. Labels are provided in color. However, the color of each label is noted in the bottom left corner if the cards are printed in black and white. Preparation: Place one 4 of a Kind Labels on each playing or index card. There are 24 labels total. Reference the 4 of a Kind Answer Key for a list of all labels included in a set. If using playing cards: o The focus of the activity is on the savings tool described by each label, not the playing card. Therefore, it is okay to cover the playing cards numbers and symbols. o Discard any extra cards (so the only cards remaining in the set are those labeled).

15 Checking Account Savings Account Maroon Maroon Money Market Deposit Account Certificate of Deposit Maroon Maroon Pink Usually has minimum balance requirements An account to hold money not spend on current consumption Pink Money deposited is easy to use on a daily basis Pink Used for a fixed period of time Pink Gold May or may not earn interest Lowest interest rates of all savings tools except checking accounts Gold

16 Gold Tiered interest rates Interest rate will vary depending upon the specified time length and amount deposited Gold Easily accessible use a check, debit card or withdraw money Blue Blue Easily accessible but less accessible than checking accounts Limited to a certain number of transactions each month Blue Access to the funds deposited is restricted Blue Green The most liquid savings tool May require a minimum balance or have a limited number of withdrawals each month Green Usually have to deposit a minimum amount to open the account ($1,000) Green Time length usually ranges from seven days to ten years. Green

17 Reduces the need to carry large amounts of cash Great savings tool for an emergency fund Green Green Green Less liquid than savings accounts but earns higher interest rates Penalties are most likely assessed if funds are withdrawn early Green

18 Page K1 Four of a Kind Answer Key Tools (maroon) Definition (pink) Interest (gold) Liquidity (accessibility) (blue) Feature (Green) Feature (Green) Checking Account Money deposited is easy to use on a daily basis May or may not earn interest Easily accessible use a check, debit card, or withdraw money The most liquid savings tool Reduces the need to carry large amounts of cash Savings Account An account to hold money not spent on current consumption Lowest interest rates of all savings tools except checking accounts Easily accessible but less accessible than checking accounts May require a minimum balance or have a limited number of withdrawals each month Great savings tool for an emergency fund Money Market Deposit Account Usually has minimum balance requirements Tiered interest rates Limited to a certain number of transactions each month Usually have to deposit a minimum amount to open the account ($1,000) Less liquid than savings accounts but earns higher interest rates Certificate of Deposit Used for a fixed period of time Interest rate will vary depending upon the specified time length and amount deposited Access to the funds deposited is restricted Time length usually ranges from seven days to ten years Penalties are most likely assessed if funds are withdrawn early

19 Page B1 Savings Tools Presentation Rubric Total Points Earned 18 Total Points Possible Percentage Group Members Date Class Directions: Use this rubric to evaluate each group Savings Tools presentation. Presentation Each individual was well prepared for their portion The group worked well together Each individual presented a portion of the presentation Content All essential content points from the Savings Presentation Planning Guide were presented including: o Definition o Interest o Liquidity (accessibility) o Features o Any additional information about the savings tool Quality of Presentation Easy to understand Accurate (no errors in content or grammar) Well organized Exemplary Satisfactory Unsatisfactory No Performance Score Total Points Earned Total Points Available 18 Percentage

20 Page A1 Savings Tools Presentation Planning Total Points Earned Total Points Possible Percentage Group Members Date Class Directions: Use Savings Tools Information Sheet and this guide to plan the group savings tools presentation. What is your savings tool? Characteristics of your savings tool: Definition Interest Liquidity Features Choose at least two of the following discussion prompts to address in your presentation: At what point in the life cycle would this tool be used and why? What is a situation when this tool would be effective for reaching a financial goal? When would the tool not be a good fit for reaching a financial goal? When researching this tool at a depository institution, what types of questions should consumers ask? Plan your presentation: Section Talking Points Presenter Tool and definition Interest and liquidity Features Answers to prompts Answers to prompts

21 Page H2 Which Savings Tool Would You Use? Mariah and the twins H2 Mariah has twin daughters that will be graduating from high school in two years. They both have a goal to attend college after graduation, and Mariah wants to help them reach this goal by paying for some of their schooling. She has $2,000 for each daughter that she would like to save and then be able to access in two years. Which savings tool would you recommend Mariah utilize and why? Conner and Lisa s wedding present H2 Conner and Lisa were recently married and purchased a new house. They received $1,000 as a wedding present from Lisa s parents. They want to use this money to buy new furniture for their house in six months. Which savings tool would you recommend Conner and Lisa utilize and why? Aran s first paycheck H2 Brittany s first apartment H2 Aran is a high school student who just received his first paycheck from his new part time job at the local grocery store. He currently has no expenses to pay, and his goal is to save half of every paycheck from his job to buy a new car in two years. He needs to find a savings tool that will help him reach his financial goal. Which savings tool would you recommend Aran utilize and why? Brittany recently moved into her first apartment. Before, she was living with her parents and had very few expenses to keep track of. Now that she has to pay rent and utilities for her apartment, she needs to find a savings tool that will help her manage her money and ensure she can pay her bills every month. Which savings tool would you recommend Brittany utilize and why? Bryan s goal H2 Amani and Grace save for a house H2 Bryan has a goal to become financially secure by developing an emergency fund. He has been saving twenty percent of his net income for the past year and now has $2,000. He plans to maintain this balance and only use this money for emergency expenses. Which savings tool would you recommend Bryan utilize and why? Amani and Grace want to purchase a house in two years. They want to begin saving money to use for the down payment on a home. They are able to save $300 per month and need to know which savings tool would be the best option for them to put their money in. Which savings tool would you recommend Amani and Grace utilize and why?

22 Page A2 Savings Tools Total Points Earned 32 Total Points Possible Percentage Name Date Class Directions: Match the following savings tools with the correct definition. 1. A depository institution account that is designated to hold money not spent on current consumption. 2. An account at a depository institution that is used for a fixed period of time and allows restricted access to the funds deposited. 3. An account at a depository institution that provides an easy method for withdrawing and depositing money. A. Certificate of Deposit B. Checking Account C. Money Market Deposit Account D. Savings Account 4. An account at a depository institution that usually has minimum balance requirements and tiered interest rates. Directions: Answer the following questions using complete sentences. 5. Why are savings tools ideal for storing emergency savings? Identify at least two reasons. (2 points) 6. When evaluating a savings tool, what are two examples of terms and conditions that may vary between depository institutions? (2 points) 7. Describe how a tiered interest rate works.

23 Page A2 8. Complete the chart below by listing the most liquid savings tool to the least. (4 points) Savings Tool Most liquid Least liquid Complete the chart below by listing the savings tool with the highest interest rates to the lowest interest rate. (4 points) Savings Tool Highest Interest Lowest Interest 4. Directions: Determine which savings tool each feature describes. Each savings tools will be used more than once. 10. Reduces the need to carry large amounts of cash. 11. Easily accessible, but less liquid than checking accounts. 12. May require a minimum balance or have a limited number of withdrawals each month. 13. Penalties are most likely assessed if funds are withdrawn early. 14. Interest rates are tiered. A. Certificate of Deposit B. Checking Account C. Money Market Deposit Account D. Savings Account 15. Time length usually ranges from seven days to ten years. 16. Less liquid than savings accounts but earns higher interest rates.

24 Page A2 Directions: For each of the following scenarios, determine which savings tool should be used and explain your decision. (2 points per question) 17. Glenn recently graduated from college and accepted his first career position. He received a signing bonus of $1,000 for his new job. He plans to buy a new car in one year and has decided to save that $1,000 to use as a down payment on a new car. Which savings tool would you recommend Glenn utilize and why? 18. Micah is a high school senior who works part time earning $500 per month. He is responsible for paying several of his own expenses including entertainment, automobile insurance and eating out. He needs a flexible account which allows him easy access to his money. Which savings tool would you recommend Glenn utilize and why? 19. José and Gabriela were recently married. They received $1,500 from wedding presents and want to use the money wisely. They have decided to save $1,000 and use it to take a vacation next year for their one year anniversary. They want the remaining $500 to be the start of an emergency fund for their new life together. Which savings tool(s) would you recommend José and Gabriella utilize and why? 20. Roland is a sophomore in high school. He has started his first job and is paying himself first by setting aside 20% of each paycheck (approximately $100 per month). Roland is saving this money for future continuing education expenses when he graduates high school. Which savings tool(s) would you recommend Roland utilize and why?

25 Page A3 Letter to Jane Total Points Earned Total Points Possible Percentage Name Date Class Directions: Answer the questions that follow. After the questions have been answered, write a letter to Jane explaining the savings tool choices. 1. Jane recently moved to a new city. She is adjusting her current spending plan to fit her new lifestyle. She needs to find new depository institutions and savings tools to fit her new financial needs. She already has a checking account to help her manage her everyday spending. She has $3,000 she wants to use as an emergency fund. Although, she does not plan to use this money very often, Jane knows unexpected expenses always occur in life. Therefore, she wants to be able to have quick and frequent access to the account with the $3,000 emergency fund. Jane also has $500 that she wants to save to buy a new computer in one year; her goal is to not use this money in the next year, so she wants to get the highest interest rate she can. Which savings tool(s) would you recommend Jane utilize and why? 2. Jane has been researching depository institutions in her new city. It is her goal to find a depository institution close to either her apartment or her place of work, offering both in person and ATM services. From these criteria, she has narrowed her search down to two depository institutions, Many Choices Credit Union and the Smart Savings Bank. She has $3,000 she wants to use as an emergency fund. She does not plan to use this money often but realizes she may have unexpected expenses. Jane wants to be able to have quick and frequent access for this account. Jane also has $500 that she wants to save to buy a new computer in one year. Her goal is to not use this money in the next year, so she wants to get the highest interest rate she can. She knows she wants to utilize either a Savings Account, Certificate of Deposit, or Money Market Deposit Account.

26 Page A3 Complete this table by referring to the banking brochure comparison information below to determine Jane s best options for saving her money. $3000 Emergency Fund Which Savings Tool (savings, money market deposit or certificate of deposit)? Which depository institution (Many Choices or Smart Savings Bank)? What type of account within the selected depository institution would be used? $500 Computer Saving 3. Using the answers on your table in question two, write a letter to Jane explaining the savings tools, depository institutions and accounts that you would recommend for her. View the Letter to Jane Rubric 2.4.3B2 for detailed instructions. Banking Brochure Comparison Information Many Choices Credit Union Basic Savings Account Interest rate 0.15% compounded monthly Amount needed to open account Minimum balance required Fee if minimum balance is not maintained Withdrawals Allowed Other Features Savings Accounts Many Choices Credit Union Regular Savings Account 0.28% compounded monthly Smart Savings Bank Basic Savings Account 0.25% compounded monthly Smart Savings Bank Premier Savings Account 0.45% compounded monthly $25.00 $ $ $4, $25.00 $ $ $ $1.00/month $2.00/month $2.00/month $9.95/month 6 per month ($1.00 for each withdrawal beyond 6) 24 hour ATM access 6 per month ($2.00 for each withdrawal beyond 6) 24 hour ATM access 6 per month ($2.00 for each withdrawal beyond 6) FREE 24 hour access to account via Internet, telephone, or ATM 6 per month ($5.00 for each withdrawal beyond 6) FREE 24 hour access to account via Internet, telephone, or ATM

27 Page A3 Interest rate Amount needed to open account Minimum balance required Fee if balance is not maintained Withdrawals Other Features Money Market Deposit Accounts Many Choices Credit Union Money Market Deposit Account Tiered interest rate compounded monthly based on balance: $1, $9, = 0.40% $10, $25, = 0.90% $25, or more = 1.40% Smart Savings Bank Money Market Deposit Account Tiered interest rate compounded monthly based on balance: $1, $9, = 0.45% $10, $25, = 1.00% $25, or more = 1.55% $1, $1, $1, $1, $10.00/month 3 per month ($2.00 for each withdrawal beyond 3) Check writing capabilities (limited to 3 per month) $20.00/month 3 per month ($5.00 for each withdrawal beyond 3) Check writing capabilities (limited to 3 per month) Length of Time Certificate of Deposits Many Choices Credit Union Interest Rate Minimum balance required to open and maintain account 1 month 0.50% $ months 0.80% $ months 1.25% $ months 1.65% $ months 2.15% $ Length of Time Certificate of Deposits Interest Rate Smart Savings Bank Minimum balance required to open and maintain account 1 month 0.60% $10, months 0.90% $7, months 1.30% $5, months 1.60% $ months 2.05% $500.00

28 Page B2 Letter to Jane Rubric Total Points Earned 18 Total Points Possible Percentage Name Date Class Directions: Write a letter to Jane explaining the savings tools, depository institutions and accounts that you would recommend for her. The letter should answer the following questions: Which savings tool did you recommend Jane use to save her $3,000 emergency fund? Why did you choose this savings tool and depository institution? Which account did you recommend Jane use to save her $500 computer fund? Why did you choose this savings tool and depository institution? Content Both required questions are answered An accurate and thoughtful justification is provided for each savings tool, depository institution and account choice. Quality of Letter Easy to understand Accurate (no errors in content or grammar) Well organized with an introduction, body and conclusion Presented as a one page letter, typed, double spaced, 12 font and 1 inch margins Exemplary Satisfactory Unsatisfactory No Performance Score Total Points Earned Total Points Available 18 Percentage

29 2.4.3.F1 Savings Tools Advanced Level Depository ins tu ons offer secure accounts to store money that is saved. These accounts are known as savings tools. There are four common types of savings tools: checking accounts, savings accounts, money market deposit accounts, and cer ficates of deposit, ordered from lowest to highest rates of interest typically paid. Cer ficates of deposit (CD) generally pay the highest rate of interest, but they have specific maturity dates (for example, 6 months, 12 months, 24 months). This means the bank agrees to pay a specified interest rate for the me period, but if you want to withdraw your funds early (prior to the full maturity) you would typically pay a penalty in the form of lost interest. Savings tools are ideal for storing emergency savings because: Savings tools are secure As long as the specific depository ins tu on is insured and you stay within the coverage limits your money is secure when deposited in one of the four savings tools. Savings tools are liquid Liquidity is defined as how quickly and easily an asset can be converted into cash. The degree of liquidity varies for each savings tool, but in general, it is quick and easy to withdraw money. Each savings tool has different features including interest rates and liquidity. View the Choosing a Savings Tool table to learn about the features of each tool. Choosing a Savings Tool When determining which savings tool is the most appropriate for your financial goal consider: Amount of funds you have available Purpose of the money saved When the money saved is needed Liquidity of the savings tool Interest earned Specific requirements of the savings tool, such as minimum balance requirements and me restric ons Fees charged Other factors specific to your financial goals It is important to match your specific needs to the appropriate savings tool. For example, if you would like to build emergency savings, liquidity is important so the money must be easily accessible. A savings account would work well to reach this goal because the funds in a savings account are very liquid. A cer ficate of deposit (CD) would most likely not be the most appropriate savings tool because the funds in a CD aren t accessible (without penalty) un l the maturity date. In addi on to choosing a specific type of savings tool, you will also want to analyze the features of specific savings tools among depository ins tu ons. The terms and condi ons (such as interest rates, fees, minimum balance requirements, etc.) vary between depository ins tu ons. Page 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona

30 2.4.3.F1 Choosing a Savings Tool Defini on Interest Liquidity (accessibility) Features Checking Account An account at a depository ins tu on that provides an easy method for withdrawing or deposi ng money. Some earn interest but most do not. If a checking account does earn interest, the interest rate is usually the lowest of any of the savings tools. The most liquid of all the savings tools. A checking account allows you to deposit money for safe keeping and then use that money at any me by wri ng checks, using a debit card, and/or withdrawing cash from the account. Popular among consumers, because checking accounts reduce the need to carry large amounts of cash and are easy to use and manage. Different types of checking accounts are available and the requirements for each are different. Some require a minimum balance, charge transac ons fees, or have limits on the number of checks wri en each month. Learn all of the requirements and restric ons before opening a checking account. Also known as a share dra account at a credit union Because checking accounts are very liquid and most likely don t earn interest, they are not recommended as the only account in which to save money. Savings Account An account at a depository ins tu on that is designed to hold money not spent on current consump on. Earn interest, but have lower interest rates compared to other savings tools except checking accounts. More liquid than everything except checking accounts. Money is easily accessed via the depository ins tu on or an ATM. Great account for storing emergency savings funds Savings accounts may help a person save money easier than a checking account, because the money isn t as accessible. The number of monthly withdrawals may be limited. If the withdrawal limit is reached, the owner of the account will be charged a fee. There are different types of savings accounts with different features and some may require a minimum balance. Learn about all requirements, restric ons, and fees before opening a savings account. Also known as a share account at a credit union Money Market Deposit Account An account at a depository ins tu on that usually has minimum balance requirements and ered interest rates. Offer ered interest rates. Tiered interest rates mean the amount of interest earned depends on the account balance. For example, a balance of $10,000 may earn a higher interest rate than a balance of $2,500. Interest rates for all deposited fund amounts are usually higher than savings accounts. Less liquid than checking and savings accounts, because money market deposit accounts have minimum balance requirement and are limited to a certain number of transac ons each month. Similar to a savings account but earn higher interest rates and has higher minimum balance/deposit requirements. Customers are usually required to deposit a minimum amount to open a money market deposit account (typically $1,000) and maintain that minimum balance. Cer ficate of Deposit (CD) An account at a depository ins tu on that is used for a fixed period of me and allows restricted access to the funds deposited. Varies depending upon the specified me length and amount of money deposited. In most cases, the longer the length of the CD and the higher the deposited funds, the higher the interest rate will be. The least liquid savings tool. If the funds are withdrawn before the end of the designated me period, the owner will be assessed penalty fees. Deposits have to be held for a certain length of me; me periods usually range from seven days to ten years or more. However, specific me periods offered will vary between depository ins tu ons. Deposits can range from $100 to $250,000. If funds are held for the designated me period, then there is limited risk and no fees. Page 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona