Savings: Part II & III

Do you think people who make more actually save more?  Think again.  Harris Interactive conducted a survey for CareerBuilder.com [November/December 2006] of 6,169 full time adult workers.  The survey, according to a Reuters news release, found that 19% of workers who make over $100,000 live paycheck to paycheck.

Today we are continuing with our lesson on Savings.  You should continue your Microsoft Word document from yesterday.

  1.  You should save money for three basic reasons:

• ___________________
• ___________________
• ___________________

EMERGENCY FUND

  2.  _________________ are going to happen.  Count on it.

  3.  Baby Step 1, a beginner emergency fund, is __________________ in the bank (or $500 if your household income is below $20,000 per year).

  4.  Baby Step 3 is a fully funded emergency fund of __________ of expenses.

  5.  A great place to keep your emergency fund is in a __________ ___________ account from a mutual fund company.

  6.  Your emergency is NOT an _____________, it's ______________.

  7.  Do not ______________ this fund for purchases.

  8.  The emergency fund is your ______________ savings priority.  Do it quickly!

  9.  The second thing you save money for is ______________.

PURCHASES

  10.  Instead of __________ to purchase, pay cash by using a __________ __________ approach.

  11.  What is the average monthly car payment in the U.S.?

After the video is over, take a few minutes to answer the following questions:

  12. What is a "sinking fund"?

  13. Why isn't "90 days same as cash" really "the same as cash".

Knowledge of the importance of an Emergency Fund has been around for centuries.  Consider the quote:

"In the house of the wise are stores of choice food and oil, but a foolish man devours all he has." -- Proverbs 21:20

WEALTH BUILDING

  14.  The third thing you save money for is __________ __________.

  15.  _____________ is a key ingredient when it comes to wealth building.

  16.  Building wealth is a __________________, not a sprint.

  17.  Pre-___________________ (PACs) withdrawals are a good way to build in discipline.

  18.  __________ ___________ creates a mathematical explosion.  You must start _________.

After the video is over, take a few minutes to answer the following questions:

  19.  Discuss the idea of "Wants vs. Needs" in a short paragraph.

  20.  Discuss why someone who put less money into savings ended up with almost a million dollars more than someone who put in more money for more years.

Why worry about what "might" happen?  Consider the quote:

"If you do the things you need to do when you need to do them, then someday you can do the things you want to do when you want to do them." -- Zig Ziglar

Save your assignment, print it out, and turn it in to the box.  

Why is Personal Finance an Important Class?

As you have probably heard me say many times, I truly believe that "Life Skills and Personal Finance" is the single most important class you will ever take in high school.  It demonstrates principles of spending, saving, and money management as well as career research and planning and preparing you for living on your own.

Some of the major components of this course include:

• Professional Portfolios: Our first portfolio check was last week.
• Personal Finance: We will be working through budgeting, spreadsheets, etc. and will begin a series of videos by Dave Ramsey, a nationally syndicated financial planning expert. We will also be working through a banking simulation unit using checks, ATM cards, etc.
• Life Skills: These will include renting an apartment, buying a car, looking for roommates, dealing with babies, handling stress, exploring college choices, etc.

Today will be watching a few short video clips by Dave Ramsey.

Before we begin, let's quickly discuss the following:

1. About what percentage of marriages end in divorce? 
2. What is the number one cause for divorce in America?
3. What is the number one cause for male suicide in America?

[Watch: GETTING STARTED > ORIENTATION]

Before the next video let's discuss the following:

1. "Griffs financial experience." or... "Why you should listen to me."
2. "I wish someone had told me..." or... "What would you tell yourself if you could go back in time?"

[Watch: GETTING STARTED > DAVE'S PERSONAL TESTIMONY]

Before watching the next video, let's discuss the following:

1. Have you ever played a game with someone who didn't tell you the rules?
2. Ever have someone change the rules while you were playing because you didn't know any better?
3. Would you like to play a game where those you were playing the game with knew the rules better than you did?
4. How likely is it that you could win a game you didn't know how to play?

This video clip from the movie "Stripes" demonstrates this point:

While watching the next video [Chapter 1: Savings - Part 1] answer the following questions in Microsoft Word -- but don't print yet.  We will continue next week.  (Let me know if we need to pause for a moment or if you have a question.)

1. The best way to become a millionaire is _____________.
2. Baby Step 1 is __________ in an emergency fund.  
3. If you make under $20,000 a year, put ____ in an emergency fund.
4. ___________ must become a priority.  Always pay ________ first.
5. What country saves the most money?
6. The United States has a _________ savings rate.  Which means we are __________ more than we ____________.
7. Saving money is about __________ and ____________.
8. Money is __________________.

Next Week:  Remember the bring in the "Ask Someone Who's Been There" (4 people) page and the "Ask Someone Who Knows: Budget Questions" by Tuesday.