Module 5: Why Save Money?

FINANCIAL LITERACY LEARNING RESOURCES 

Beginners Guide For Savings

Objective:In this lesson, children will learn the importance of saving money. They will explore the differences between short-term and long-term savings, and understand why saving is a smart way to manage the money they earn.

1. What Does It Mean to Save Money?

Saving money means putting aside a part of what you earn instead of spending it all right away. You keep this money in a safe place so you can use it later when you need it. Saving helps you reach goals, prepare for unexpected situations, and make smart decisions with your money.

2. Why Should We Save Money?

There are many reasons why it’s important to save. Let’s explore some of them:

A. To Buy Things You Want or Need

Sometimes, the things you want are too expensive to buy right away. By saving a little bit of your money over time, you can eventually afford to buy those bigger things. For example:

• Short-term savings: If you want a new toy or video game, you can save your allowance or money earned from small jobs for a few weeks or months until you have enough.

• Long-term savings: If you want something more expensive, like a bike or a computer, it may take a longer time to save up. But the more you save, the closer you get to reaching that goal.

B. For Emergencies

Sometimes, unexpected things happen that cost money, like if you lose or break something important. Having savings means you’re prepared for emergencies. For example:

• If your pet needs to go to the vet, your savings could help cover the costs.

• If you lose your favorite book, you can use some savings to buy a new one.

By saving money, you make sure you have enough when you really need it, even if you weren’t expecting to spend it.

C. To Plan for the Future

Saving isn’t just about buying things you want now; it’s also about preparing for the future. As you grow older, you might have bigger goals, like going to college, starting your own business, or buying a car. Saving a little now helps you get closer to those future goals.

3. Short-term vs. Long-term Savings

When saving, it’s important to think about whether you’re saving for something soon (short-term) or something further in the future (long-term). Let’s break it down:

A. Short-term Savings

This type of saving is for things you want to buy in the near future, like in a few weeks or months. You can use short-term savings to buy smaller things that don’t cost as much. Examples include:

• A toy or a new game

• A special gift for a friend or family member

• Tickets to a movie or event

Short-term savings help you practice setting small goals and working toward them. It teaches you to be patient and to think before spending all your money right away.

B. Long-term Savings

Long-term savings are for bigger goals that take more time to reach, sometimes even years. Long-term savings are for things that cost a lot more money or are important for the future. Examples include:

• Saving for a bike, tablet, or phone

• Saving for college or a big trip when you’re older

• Saving to start a business when you grow up

Since these goals take longer to achieve, it’s important to save regularly. Even small amounts add up over time!

4. How to Start Saving?

Starting to save is easy once you understand the benefits. Here are some steps to help kids begin their saving journey:

A. Set a Savings Goal

Think about something you want to save for. Is it something you want soon (short-term), or something you’ll need in the future (long-term)? Write it down so you can remember what you’re saving for.

B. Decide How Much to Save

Once you have a goal, think about how much money you need. If it’s something small, like a toy, you might not need to save for very long. If it’s something big, like a new bike, you’ll need to save a little bit each time you earn money until you reach your goal.

C. Save a Portion of Your Income

Whenever you earn money, whether it’s from an allowance, chores, or a small business, set aside a part of it for savings. For example, if you earn $10, you could decide to save $2 and spend the other $8. This way, you’re still enjoying your money while also building up savings.

D. Use a Piggy Bank or Savings Account

You can keep your savings in a piggy bank or ask your parents to help you open a savings account at a bank. A savings account is a safe place where your money can even grow a little over time.

E. Stay Consistent

The key to reaching your savings goal is to save regularly. It might be tempting to spend all your money right away, but if you save a little bit each time, you’ll see your savings grow faster than you expect!

5. Why It’s Fun and Rewarding to Save

Saving money can be exciting when you start to see your savings grow. The best part is when you finally reach your goal and can buy that special item you’ve been saving for! Saving teaches important life lessons like patience, planning, and making smart choices with your money. Plus, it feels great to achieve something you’ve worked hard for.

Activity:

Ask kids to think about something they’d like to save for. Have them write down whether it’s a short-term or long-term