Our first savings lesson focused on four learning objectives:

• Importance of saving
• Power of compound interest
• Understanding different types of savings accounts
• How to make saving automatic

Here is a summary of this lesson which will be part of a 24 hour curriculum that Sonia is currently packaging and will release later this spring. I provide this summary in case you are teaching savings now and looking for some ideas to supplement what you are currently doing:

1. Discussion Prompt: What has your experience been with saving accounts? Do you have savings goals and/or habits that you have developed? When did you you start? Why?
2. Activity: Create Your Savings Goals: We know the power of goal setting (your students’ response to the Discussion Prompt can be reiterated here); now it’s the student’s turn to develop short/medium and long-term savings goals. Be sure to emphasize what makes a good SMART goal: Specific, Measurable, Actionable. Relevant and Time-Bound.
3. Video: How Much Should I Save? (Kal Penn on Mashable): Now that you have created your own savings goals, let’s watch this video and then discuss an answer to the question: “How much should I save?”
4. Activity: Calculate Your Savings Goals: A long journey starts with a single step and so does a saving goal. In this activity, students will take one of their savings goals and break it down into smaller steps.
5. Discussion Prompt: Now we shift gears to talk about the power of compound interest and ask students to choose one of the two options (the answer usually surprises them): OPTION 1: $1,000,000 in one 30 day month OR OPTION 2: A single penny doubled every day for the period of one 30 day month
6. Data Crunch: Why Should You Start Saving at a Young Age? Let’s look at an example of the compounding effect in action. I found it helpful after completing this to use a student example (one student had saved several hundred dollars) using this calculator projected on the board to show how $1,000 saved at age 18 can grow over a long period of time. Let them guess how much it will grow to by the age of 65. Students will took notice!
7. Video: Compound Interest Explained: Useful to stop throughout the video to explain this concept of interest on top of interest and how it is magnified over long periods of time. Also will need to tamp down expectations that it is not possible to earn 5% interest on savings accounts.
8. Video: Types of Savings Accounts: There are different types of accounts that you can use to save your money. This video describes three of them. I found it useful to go to this site (see “Current Rates”) to show what the current interest rates are for regular savings accounts and CDs and how CD rates vary based on the term that you are giving your money to the bank.
9. Video: Manually Save or Automatically Save?: What a great way to close out the lesson by leaving students with this thought about the importance of making saving automatic and paying yourself first.
10. Discussion: See how many of the learning objectives your students bring up during your discussion of how they can apply this lesson to their lives.

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Looking for more resources on Savings? Check out the NGPF Savings Unit page to find lessons and activities. 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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