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					 Saving 
Live without DEBT!!
   Unit Objectives
• Understand the importance of
  saving
• Define cost-benefit-analysis,
  financial intermediary, disposable
  income, savings, nominal income,
  real income, interest rates, prime
  rates
• Relate interest rates to the
  decision to save or spend
   Today’s Objectives
• Understand the importance of
  saving
• Define cost-benefit-analysis,
  financial intermediary, disposable
  income, savings, nominal income,
  real income, interest rates, prime
  rates
 Discuss- You don’t have to write
 this down…
• What % income do you think
  people save?
• Is this too much? Not enough?
• Do you have savings?
• Why is/isn’t it important to save?
Vocabulary
•Cost-benefit analysis-
 weighing the advantages
 and disadvantages to make
 a choice
•Financial Intermediary-
 lenders
•Disposable income- income
 available after taxes
•Savings- disposable income
 not spent
•Nominal income- income
 measured in $
•Real income- income
 measured by the quantity of
 goods and services you can
 buy
•Interest rate- price paid
 to savers and charged to
 buyer for loans
•Prime rates- interest rate
 charged to trustworthy
 consumers by the bank
  Activity
• Divide exit ticket page in ½ and in ½
  again (creating 4 boxes)
• Choose 4 vocabulary words from
  today to define in the form of a
  picture
   –1 per box, be sure to title the boxes
    with the vocabulary word.
Today’s Objective
• Relate interest rates to the
 decision to save or spend
•Saving is important to both
 businesses and individuals
•People value spending
 today more than saving for
 the future
•Interest is the cost we pay
 to get what we want NOW
• If interest rates are high,
  people will save more
• If interest rates are low,
  people will save less
• Loan rates vary based on
  differences in risk, loan
  duration, etc…
• Banks and financial institutions
  act as intermediaries
• Individuals, firms, and
  governments all borrow
• Consuming more now means
  consuming less later
• Consuming less now means
  consuming more later
 –Retirement? How do you want to
  live now? What do you want for
  later?
What affects the
decision to save or
spend?
•Interest rates!!
Why do interest rates
change?
•Supply and demand of
 money/loans
 –Who indirectly has control
  of this monetary policy?
How do we spend
our disposable
income?
•Bills/Needs
•Impulse Buys
•Savings
Equilibrium
• When supply and demand of
  loans are =
• Changes based on changes in
  supply or changes in demand.
• How much interest are you
  willing to pay??
Activity

• Who benefits from rising interest rates?
  Why?
• Who benefits from decreasing interest
  rates? Why?
• Draw a cartoon representing equilibrium.
    Interpret Saving Packet:
• Saving Options: Venn diagram two options, write
    1 formal paragraph telling me which option
    would best serve your needs.
•   Investment Risk: In complete sentences, tell me
    why you think Government securities are low
    risk.
•   Tax-Deferred Saving: In complete sentences, tell
    me why tax-deferred savings will make you more
    $.
•   Time and $: In 1 formal paragraph, tell me how
    time affects $ based on the table.
•   Future Value: (In complete sentences) How does
    the information presented in this table affect
    your decision to save? Why?

				
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posted:4/24/2012
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