How We Save LESSON OBJECTIVES LESSON DESCRIPTION AND BACKGROUND. TIME REQUIRED Two class periods

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1 LESSON How We Save LESSON DESCRIPTION AND BACKGROUND The class hears a story about Nicholas s family as it copes with an unexpected expense. In an activity designed to simulate an experience of scarcity, the students try to fit themselves into a space that is too small to accommodate them. They learn about depositing and withdrawing money as they participate in a savings game. They learn that good savers often have a plan for how and when to save. This lesson correlates with national standards for English language arts, mathematics, and economics, and with personal finance guidelines, as shown in Tables 1-4 in the introductory section of this publication. Scarcity is the condition of not being able to have all the goods and services that you want. It comes about because people have nearly unlimited wants, but limited resources. Scarcity requires people to make choices; in making choices, people incur opportunity costs. People save because they usually do not have enough money to buy all the goods and services they want at a particular time. This lesson illustrates the importance of saving in order to provide for future wants. ECONOMIC AND PERSONAL FINANCE CONCEPTS Banking Choice s Money Opportunity cost Saving Scarcity Spending Withdrawals OBJECTIVES At the end of this lesson, the student will be able to: Define scarcity as not being able to have everything one wants. Use the concept of opportunity cost in making decisions. Distinguish between a deposit and a withdrawal. Demonstrate that good decisions about saving involve planning. TIME REQUIRED Two class periods MATERIALS Storybook: Story, A Savings Problem Activity Sheet.1: s and Withdrawals Activity Sheet.2: Banking Cards Activity Sheet.3: Piggy Bank Activity Sheet.4: Savings Register Masking tape 3 x 5 inch cards one per student Plastic zip-up bags (gallon size) one for each group of 3 to 4 students Dice one die for each group of 3 to 4 students Pennies (or counters or tokens) 50 for each group of 3 to 4 students Pencils one for each group of 3 to 4 students Two craft sticks for each student An overhead projector or document reader Glue 48

2 THEME 2 Lesson : How We Save LESSON Special Instructions for Materials: For Activity 1 Use masking tape to make the shape of a pocket on the classroom floor. Make the outline small enough so that not all students will be able to stand inside it. Or you can draw a pocket shape on a shower curtain liner or other piece of plastic and save it for future use. For Activity 2: Duplicate Activity Sheet.1. Make one copy for each two students. For Activity 3: On cardstock, duplicate Activity Sheet.2, making one copy for each group of 3 to 4 students. Cut out withdrawal and deposit cards from the activity sheets. On paper, duplicate Activity Sheet.3 and Activity Sheet.4, making enough copies for each group of 3 to 4 students to have one of each. Make a game packet for each group of 3 to 4 students by using plastic zip-up bags. Fill each bag with a die, a roll of 50 pennies, a set of deposit and withdrawal cards made from Activity Sheet.2, a copy of Activity Sheet.3, a copy of Activity Sheet.4, and a pencil. Make a transparency or a copy from Activity Sheet.4, to be shown on the overhead or document camera. ADDITIONAL RESOURCES To download visuals, find related lessons, correlations to state standards, interactives, and more visit /lesson. PROCEDURE Read and Discuss the Story: 1. Using the storybook, read Story, A Savings Problem, to the students. 2. After reading the story, or in the course of reading it, ask the following questions: a. Why was Nicholas s mother saving money? (She was saving for a family vacation at Circus World.) b. What unexpected financial problem did the family experience? (Their television set had to be replaced.) c. What decision did Nicholas s family have to make? (They had to decide whether to use their savings for a new television set or for a vacation.) d. What did Nicholas want to do with the saved money? (He really wanted both the vacation and the television set.) e. Could Nicholas and his mom have everything they wanted? (No.) What is that situation called? (Scarcity.) f. How do you feel when you have to face scarcity and can t have everything you want? (Answers may include disappointed, angry, and sad.) g. When people have a scarcity problem, what must they do? (Make a choice.) Activity 1: A Pocket Problem on the Floor 1. To introduce this activity, ask the students what things they like to put in their pockets. List on the board several of the things they mention. (Responses might include money, small toys, rocks, marbles, combs, pictures, gum, candy, pencils, etc.) 2. Give each student a 3 x 5 inch card and ask them to choose which pocket item in the list they would like to have. Have them write or draw the item on their cards. 3. Show the students the small tape outline of a pocket that you have prepared on the floor. Identify it as your (the teacher s) pocket. Call out items one at a time that you want to put in the pocket, and have the students with those items on their cards go and stand in the 49

3 LESSON THEME 2 Lesson : How We Save pocket. Keep calling items until all the students are supposed to be standing in the pocket. As more and more items are called, the pocket will get very crowded space in the pocket will become scarce. 4. Announce that the students seem to have a problem. Tell them to return to their seats, and the class will work on solving the problem. 5. Have the students recall the word that Nicholas s mom used to describe their unfortunate problem. (Scarcity.) Review the meaning of this word. (Not enough of something to have everything you want.) Explain that scarcity applies to the pocket problem because there isn t enough space for all of the items the teacher wants to have in the pocket.. Tell the students that when people have a scarcity problem, they must make choices. Discuss how the pocket problem might be solved by making certain choices. (It might be solved by choosing to put some items but not others into the pocket.) When the teacher has to choose which items to put into the pocket, some items must be left out. 7. Again, fill the pocket with students until all the space is occupied not another student can fit into it. Tell the students that you really want just one more item in the pocket but it won t fit. Identify this next favorite item left out of the pocket as your opportunity cost. Activity 2: Helping Hands: ing or Withdrawing? 1. Have the students cut out the circles on Activity Sheet.1. Write the word on the board. Ask the students to hold up the circle showing the first letter of the word deposit. Explain that when people make a deposit they are putting money into savings. Write the word Withdrawal on the board. Ask the students to hold up the circle showing the first letter of the word withdrawal. Explain that when people make a withdrawal they are taking money out of savings. 2. Have the students lay the circles on their desk with the letters facing down. Have them put glue on the top half on one side of a craft stick. Tell the students to lay the craft stick with the glue on it on the back of the circle with the letter D. While this glue dries, the students should put glue on the top half of one side of the other craft stick. Tell the students to lay this craft stick, the side with the glue on it, on the back of the circle with the letter W. Let it dry. The students now have two signs to use when they answer questions about deposits and withdrawals. 3. To help the students remember the definitions of the words deposit and withdrawal, read the following scenarios; have them respond by showing the letter D or the letter W with their signs. a. Dad took a lot of money out of his savings account to begin paying for a new car for the family. Was this a deposit or a withdrawal? (Withdrawal.) b. Nicholas was saving to buy a toy he wanted, so he put a quarter in his piggy bank each week. Was this weekly event a deposit or a withdrawal? (.) c. Penny s mom put money in her bank account every payday so that she would have money to spend during the upcoming holiday season. Was this a deposit or a withdrawal? (.) d. Ms. Kim will take some money out of her savings account next week to buy a plane ticket for a trip to see her sister in Florida. Will this be a deposit or a withdrawal? (Withdrawal.) e. Mr. Lopez loves peppermint candy canes. Once in a while he will put his spare change in a little box in his sock drawer, so that he will have money to buy some candy canes when he runs out of them. Is this a deposit or a withdrawal? (It is a deposit although students may note that it is not a bank deposit since the money is not placed in the bank.) f. Penny shook her piggy bank to listen to the money rattle one last time. Then she opened it and took the money out and put it in her 50

4 THEME 2 Lesson : How We Save LESSON pocket to spend at the fair. Was this a deposit or a withdrawal? (It was a withdrawal although students may note that it was a withdrawal from a piggy bank, not from a bank account.) Activity 3: Game: Savings Roll Along 1. Divide the class into teams with no more than four students in each group. Give each group a plastic zip-up bag containing a die, a roll of 50 pennies, a set of deposit and withdrawal cards made from Activity Sheet.2, copies of Activity Sheet.3 and Activity Sheet.4, and a pencil. 2. Have the students remove all contents of the plastic bag except the pennies. Tell them to shuffle the deposit and withdrawal cards and stack them face down in the middle of the group. 3. Tell the students to pretend that the school principal has given each group a piggy bank, and he or she has started each group s savings account by depositing 10 pennies in each bank. Tell the students to take the pig from their bag and place 10 pennies on the pig. 4. Demonstrate how the game is played, using a transparency or a copy of Activity Sheet.4. Then tell the students that they must work together to play the game. Explain that the goal is to be the group that has the most money at the end of the game. 5. To play the game, each student takes a turn rolling the die and calling out the total rolled. The student then draws a card from the pile and turns the card over to find out whether to deposit or withdraw the amount shown on the die.. The student then records this information on the group s Saving Register sheet. Using the pennies from the bag, the student deposits or withdraws the money indicated. As each student adds or subtracts pennies from the piggy bank, the student states what he or she is doing and gives a make-believe reason such as: I rolled a five and the card says deposit. I am depositing five pennies that my mother gave me for taking out the trash. (Then the student places five pennies on the piggy bank.) I rolled a three and the card says withdrawal. I am withdrawing three pennies so that I ll have enough money to buy a yo-yo. (Then the student removes three pennies from the piggy bank.) 7. The student then places the card at the bottom of the draw pile and the next person takes a turn. 8. After each group member has had a chance to roll the die, have the group add up the total saved in that round. 9. Optional: To introduce more of a challenge, distribute paper and tell the groups to write equations showing what happened in each round. In this way, they become aware that when people deposit money in a savings account they add to their savings; when people withdraw money from a savings account, they subtract from their savings. 10. At the end of the allotted time or when each group has had the same number of rolls, write the totals on the board and compare the amounts saved by different groups. Ask for volunteers to come to the board and write comparison statements e.g., 32 > In a discussion, emphasize the point that in this game the highest amount saved was determined by luck; in real life, however, good savers are people who plan to save and work hard at it. 12. As an optional writing activity, the students can turn over the Savings Register sheet and work together to write a few sentences that tell what the word saving means to them. CLOSURE Use the following questions to review the concepts presented in this lesson: What kind of a problem do we have when there are not enough resources to satisfy our wants? (A scarcity problem.) 51

5 LESSON THEME 2 Lesson : How We Save We often have scarcity problems in our classroom and don t have enough of something to satisfy all of our wants. What do we have to do then? (Make a choice.) What is the difference between spending and saving? (If you spend your money, you buy something now. When you save, you put off buying until later.) Where do most adults keep their savings? (In banks.) If you put money into your savings, what is that called? (ing money.) If you take money out of your savings, what is it called? (Withdrawing money.) EXTENSION Mathematics: To reinforce a common reason for saving, discuss how people often want something, but do not have quite enough money to buy it. Discuss the point that people usually earn money to save for major purchases. 1. Make a chart with the following columns: (1) Item wanted, (2) Price of item, (3) How much money I have, and (4) How much money I need. 2. Make item cards by pasting cutouts from catalogs or magazines on index cards that have a higher price than the amount of money you will give to the students. Make sure you apply a price to each item 3. Give each student a designated amount of play money, a copy of the chart, and five item cards. 4. Ask them to complete the chart. Options: The students could work as a whole group or in cooperative learning groups. Music: Teach the students the following song about decisions concerning spending or saving. I ve Got Money (Tune: Are You Sleeping, Brother John) Verse 1: What should I do? What should I do? I must make a choice, I must make a choice, Spend or save, Spend or save. Verse 2: I could spend, I could spend, Getting something now, Getting something now, Something small, Something small. Verse 3: I could save, I could save, Getting something later, Getting something later, Something big, Something big. Verse 4: What should I do? What should I do? Spend a little now, Spend a little now, Save some, too! Save some, too! 52

6 THEME 2 Lesson : How We Save LESSON Social Studies: Ask the students who have banks at home to describe their banks for the class. Tell the students about the history of the piggy bank. Explain that the first piggy banks were called pygg banks, named for the type of clay used in making the jars that were used to store money. Have the students draw a picture of what they think the first pygg bank looked like. Language Arts/Writing: Have the students write a story about themselves in one or more of these three situations: (1) spending for something now, (2) saving for something to purchase later, and (3) saving for an unexpected want, using examples of items that are meaningful to them. Use the concept of opportunity cost to assess the decisions made in each of the three situations. Children s Literature: Freeman, Don (1978). A Pocket for Corduroy. New York: Puffin Books, a division of Penguin Books USA, Inc.; ISBN: Corduroy, a toy bear, wants pockets like the ones Lisa uses to store things. Shaw, Nancy (1991). Sheep in a Shop. Boston: Houghton Mifflin Company; ISBN: Five sheep take their piggy bank and go shopping for many things they want. When they dump coins out of their piggy bank, they find they don't have enough money. They decide to clip three bags of their wool and trade the wool for what they want. 53

7 ACTIVITY.1 THEME 2 Lesson : How We Save s and Withdrawals D D W W 54

8 THEME 2 Lesson : How We Save ACTIVITY.2 Banking Cards Withdrawal Withdrawal Withdrawal Withdrawal 55

9 ACTIVITY.3 THEME 2 Lesson : How We Save Piggy Bank 5

10 THEME 2 Lesson : How We Save ACTIVITY.4 Savings Register ROLL STUDENT S NAME DEPOSIT WITHDRAWAL BALANCE 57