Most of us wish we could save more money, but how do we do it, and how do we get started? Do we first need to understand budgeting? It’s time to start to learn the many ways that we can save more money.
Along with learning about the importance of saving money, we also include some suggested teaching material to help teach money skills, including basic money skills, money management, and personal finance.
Upon completion of this lesson, students will be able to:
?
Differentiate between savings and investing.
?
Identify reasons to develop a savings plan.
?
Define the 70-20-10 rule associated
with savings and investing.
Introduction
Saving is difficult for many people because it involves decreasing current consumption and investing in a future standard of living. Some individuals incorrectly view savings as what is remaining after their current wants and needs have been satisfied. The future is an unknown risk for people, which is one of many reasons why they have such difficulty saving money. Without developing a savings and investing plan and making savings a priority by paying
yourself first, individuals will not have the financial means to meet future financial goals such as purchasing a car, putting a down payment on a home, and meeting retirement needs.

Brainstorm with participants future financial goals they may have. Goals could include purchasing a car, buying a stereo, paying for college, etc.
2.Discuss with the participants how they plan on achieving these goals.
a.These goals cannot be achieved without developing a financial plan which includes saving.

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Slide 6: Reasons People Should Save
i.
Emergencies – It is recommended individuals
have a minimum of three to six months of
salary in savings accounts for emergencies.
Examples of emergencies can include illness,
losing a job, or immediate need to replac
e a large item such as a washing machine.
ii.
Expenses – Savings accounts can
be used as a budgeting tool to manage monthly expenses.
iii.
Future purchases – Money can be used to meet
future goals such as a college education, new
car, down payment on a home, or a new stereo.
iv.
Investing – After an individual has established
a savings account, money should be invested
monthly for future income.
d.
Slide 7: Why People Don’t Save
i.
Brainstorm with participants reasons
why people do not begin a savings plan.
1.
People are not having their current
consumption needs and wants met.
2.
People do not know how much they need to
be saving or investing for future goals.
1.14.1
© Family Economics & Financial Education – Revised March 2009 – Saving Unit – Introduction to Saving – Page 3
Funded by a grant from Take Charge America, Inc. to the Norton Sc
hool of Family and Consumer Scie
nces Take Charge America Insti
tute at The University of Arizona
3.
Money in savings accounts earns such poor in
terest rates. It barely (if at all) keeps
up with inflation.
a.
Investing usually gains higher interest rates.
4.
Individuals justify not needing money for
emergencies because they have credit
easily available.
5.
People feel they have adequate insuranc
e and job security; therefore they do not
need money for emergencies.
e.
Slide 8: Developing a Spending Plan
i.
If a person is not already saving, track spendi
ng for one month to determine where money is
currently going.
ii.
Then evaluate spending and dete
rmine where money can be saved.
iii.
Decide how much will be put into savings each month.
iv.
Put a plan in writing and stick to it!
v.
Be willing to make adjustments. If the savings
plan is not working evaluate why. Perhaps, an
individual needs to earn more incom

The ability to save money is the cornerstone of building wealth. It’s also essential for one’s sense of security. The math is simple: in order to save money, you need to spend less than you earn. However, this is often easier said than done, especially when you have to give up or forego things you want. But, if you are mindful, there are plenty of ways you begin saving money whatever your age or income level.

• 01
The Importance of an Emergency Fund

•••
The first and probably most important savings goal you need to consider is building up an emergency fund. You can’t always predict what life has in store for you. A financial emergency may take the form of a job loss, significant medical or dental expense, unexpected home or auto repairs or something unthinkable, such as one of the country’s recent super-storms. The last thing you want to do is rely on credit cards with their hefty interest fees or be forced to take out a loan.
Historically, the formula for an emergency account is enough readily available cash to cover three to six months of living expenses. And, when calculating your expenditures, be sure to consider both fixed and variable expenses so you know exactly how much to set aside.
• 02
Where to Keep Your Savings
Once you’ve decided to save some money, the next question you need to ask yourself is where you should keep it. From depositing a set amount of money into a basic savings accounts at your local bank to certificates of deposit (which can have a duration of anywhere from three months to five years) you need to weigh all your available options to find out what’s right for you.
• 03
Make Saving Automatic
With so many bills, expenses, and day-to-day expenses to take care of, saving money can seem nearly impossible. One of the best ways to get around this conundrum (and get into the habit of saving money) is to create an automatic savings plan. Setting up automatic transfers directly from your checking account into your savings account takes all the guesswork (and temptation to spend) out of your hands.
• 04
The Difference Between APR and APY
When you’re saving money, one of the key things you need to consider is how much money your money is earning for you. You worked hard for your money, so now your money needs to work hard for you. Two of the most common terms that are used to discuss interest rates are APR and APY, and as a smart saver, you need to know the difference between the two.
• 05
Cut Spending Leaks
Even if you’re saving money, you can always find ways to save more. Sometimes it is simply the little things that add up and the best way to gauge that is to question all of your purchases. Most people are mindless (not mindful) consumers. For instance, you may be used to getting a $7 latte every morning on your way to work but do you really need that $7 latte? A good rule of thumb is that if it’s not a necessity (like food, shelter, and clothing) and it’s not making you any happier or helping you, cut it from your budget. Find out what your spending leaks are and learn how to trim those expenses so you can save even more money.
If you are thinking of becoming a regular saver, you are going to have some questions. We can help you get started with this handy Introduction to Saving guide.
It is not easy to be a saver these days. Deposit rates just aren’t what they used to be. If you want to see growth in your nest egg, a standard deposit account is unlikely to deliver. You need to look at other options that can give you results.
So how do you decide what is right for you? Let’s take it step by st
Identify your goals
If you are working towards a short-term goal such as a new car, then saving your money in a medium to long-term fund is not going to suit you. But if you are planning for the future, maybe the children’s education, then it is worth considering a savings option that aims to give you better results over a longer term.
You can use our Investment Suitability Tool to help you figure out if saving is the best way to achieve your goals but we suggest you also talk to an expert. A Financial Broker can talk you through the risks associated with this type of saving so you can decide if it is the right option for you.
Work out a plan for your money
You will generally get the best returns if you save regular amounts (at least €150 a month) over a medium to long term (at least 5-7 years). Don’t choose this option if you think you are going to need this money in the near future.
You need to have enough savings to put money away comfortably, cover your basic living expenses and still have an emergency fund you can access, just in case.
Understand your risk profile
Your attitude to risk will be a major factor in how you choose to save for your future.
If you are cautious about your money, then maybe you need to consider alternative saving options, or at least choose low-risk options. But if you are prepared to take on some risk, you may be willing to speculate if there is a possibility of a good return on your money.

We talk a lot about saving, both here and on our campaign site for America Saves. We offer advice, encouragement, and education about saving for the future. Today, in honor of Financial Literacy Month, we’re talking about the concept of saving at a broader level—we want to give a basic understanding of saving to help readers get a handle on the topic.
Why Save
It seems obvious; we save to be able to afford something in the future. For most of us, the big savings goal is retirement. But people save to afford vacations, a home, a new vehicle, a college education, etc. Incentives have developed in our economy over time that encourage us to spend rather than save. (As we discussed in our post about Inflation, savings can diminish in value due to inflation, so it seems like a better idea to spend the money today rather than save.)
But if we don’t save, we end up relying on debt or a guaranteed income to get by. But if our income stream stops, and we max out our credit, then we’re facing financial disaster. We don’t want to see people having to lose their homes to foreclosure or max out all of their credit cards to get through a crisis. And Social Security is not meant to be one’s sole income in retirement—it’s merely a supplement to help prevent abject poverty.
Saving money is important. Firstly, it helps individuals create a healthy future. It has been observed that an economic crisis can ruin individual’s finances if they do not practice the art of saving. Secondly, wealth is created through savings. Specially, saving continually can provide an amount of capital for future investments. Thirdly, saving helps people make wise decisions on various purchases. When an investment idea is not yet well thought of, it is advised that people save up their money and only spend it when they have considered all the dynamics. Though it is easier to spend money than to save it, there are several ways of going about it.
Firstly, an individual can save money through the traditional ways. This is done by putting money in a jar or accounts on a daily basis. For the idea to work, the individuals should be disciplined and set goals on the amount of money to save on a monthly basis. Secondly, there are the newer ways of saving money. An individual is advised on paying themselves first before thinking of spending the rest of their income. This money is hence deposited in an account. Since it is difficult to set aside such an amount because of pending financial obligations, people should consider the option of requesting their employers or the bank to deduct the amount directly.
In order to save more money regularly, coming up with a budget is inevitable. In so doing, the income and the expenditure are determined first and evaluated. From hence, an individual can determine how to reduce the spending and increase the income. The amount to save will be increased as the individual follows the budget strictly. Savings can also be increased when one receives bonuses and large commission or the money paid after overtime.
It is important to open up a savings account while trying to save money. The advantage of such an account is that it becomes impossible to withdraw the money within a short period. Most of these accounts also offer interests after a particular period. The option of investing in bonds, stocks and money market is also a good way to save money.
It is important, however, that the individuals find a way to save money without being exposed to many risks. The stock market for instance is risky because it fluctuates regularly. Importantly, the savings should be accessible when necessary. In any case, there are many ways of saving money, and people should choose the most appropriate one.

Emergency fund
A common savings goal we urge people to set is establishing an emergency savings fund. This creates a cash reserve that is quickly accessible in the event of an emergency.
As for how much to save, experts advise having enough income on hand to get you through a period of joblessness. The average duration of unemployment for American workers is just over 6 months. So a good starting point for an emergency fund is six months’ income.

Simple Saving Money Tips and Advice
________________________________________
It always seems difficult to save more, and spend less. There is always somewhere else to spend your money — that is why so many people are in debt, and why they don’t save as much as they should. To help improve your saving money habits, here are some spending and saving tips and advice.
Also, along with saving money, it’s important to learn good budgeting skills. See our budgeting section for some helpful teaching and learning worksheets and lessons.
AVOID COMPULSIVE PURCHASES
Don’t buy things you really don’t need. When shopping, only purchase what you planned on buying. If you find something else you want, hold off on the purchase until the next time. That way, you can have some time to think if the item is really something you need. Also, you can then check if it is within your budget.
PREPARE MEALS AT HOME
Instead of eating breakfast on the way to work, try eating breakfast at home instead. Also, make your own lunch at home and bring it with you to work. It is amazing how much money you will save by preparing your own meals. Also, instead of drinking soda, drink water instead — it will also help you watch your weight. Snacks are something you can bring from home as well. Choose healthy snacks, such as fruit.
AVOID CONVENIENCE STORES
Try not to spend money on groceries at convenience stores unless it is really necessary.
DO ONLINE PRICE COMPARISON
Check prices online before making any large purchases. Online prices are very competitive, and by checking prices online first, you will know if buying at your local store makes sense or not.
TURN DOWN THE TEMPERATURE
Turn down the temperature in your house in the winter, and raise it during the summer. Also reduce the temperature of your hot water heater.
PAY OFF CREDIT CARD DEBT
Credit card debt has one of the highest rates of interest you can pay. Don’t just pay the minimum monthly charge, but try to pay your credit card in full.
KEEP A BUDGET
A great way to help save money is to create a budget, and then stick to it. Even by just tracking where the money is going, you will be more aware of your spending habits, and eliminate unnecessary spending.
SWAP TOYS
If you have kids, instead of buying lots of expensive toys, consider buying less toys, and then swapping toys with friends and family. Kids often lose interest with their toys, but have a

greater interest in new toys. By swapping, you can increase the frequency of new toys without spending any additional money.

Making Savings a Priority
________________________________________
Whether you are saving for a major purchase or for your retirement, you will never reach your goals unless you make saving a priority.
Many people may think they can never find the extra money to save for a new home, a dream vacation or even a much needed new car. They may think that putting small amounts will never really add up, but it is true when it comes to saving that little changes can add up to big savings on expenses. Those savings can then be put to good use for achieving your long term savings goals.
The Latte Factor
There is a coined phrase called the “latte factor.” This comes from the notion that many people will think nothing of spending $2.50 each and every work day on an afternoon latte. It is true that $2.50 is not that much money. Not when you spend it once in a while. However, if you were to add up that $2.50 each day, it becomes $12.50 per work week. Then, you multiply that by roughly 21 work days per month and now you are up to $52.50, a fairly significant amount of money for most people. Right there, that person, by simply switching to bottled water brought from home, could save about $630 per year!
You probably think that you can’t possibly save any more money than you actually do. You live pretty much paycheck to paycheck, like the rest of us, and your meager savings is for emergencies only. Here are a few tips to begin saving more than you thought possible, and the first trick is to rethink your spending habits!
In order to get a good idea about your spending habits compared to a society who was bent of frugality (out of necessity) you can go online and find out what saving during the depression and the war was like. Ever wonder why your Grandma saved aluminum foil and wrapped it back around the roll? My Grandmother rinsed out Ziploc baggies and turned them inside out, dried them in the dish drainer and reused them. Now I know why. Do a little research, and if you’d like, do a little research on how all the things we throw away (especially clothing) ends up in landfills and hurts the environment.
Okay, enough said about that. One of the best ways to save money is to never see it. That’s where direct deposit comes in. when you sign up for direct deposit through your company, you can designate that some of your money go directly into your savings account. After working up a realistic budget, you can choose the amount and you don’t have to think about it again.
Did you have a parent who threw all their change into a jar or tray each night? It’s a great way to save up money. You can even get a cool, beautiful jar (at a garage sale, please, not Pier One) and make a game of filling it up. The Coinstar machines at your grocery store alleviate the need to roll your change before cashing it in, as well.
Did you know that when you over pay your taxes that you are in effect loaning the government your money– tax-free? Just once, instead of doing your own taxes, take a tax company up on their offer to recheck past tax papers when you hire them to work out this years refund. And ask them for advice on how to save on taxes.
If you raise the deductible on your insurance, your premiums will drop. Interest rates for home owners are low right now; maybe it’s time to look into refinancing. Those are big expenses that you can save on. There are little expenses that chip away at money you could be saving, too. Late fees for movie rentals, ATM surcharges, that Latte you buy every morning along with your paper? Buy an espresso machine, and have the paper delivered and take them both with you out the door. You may have to get up a little earlier but that never hurt anyone. (Being caught in the rain because your car broke and you don’t have bus money because you bought another latte is kind of a drag, though…)
One more: Barter. If you like to paint and your neighbor spends a lot of time in her garden, exchange chores. Hire the neighbor boy to mow the grass, not some landscaping company! Okay, that was two, but you get the idea.

Five Ways to put $50 into Savings each Month
________________________________________
Are you trying to squeak another $50 out of your budget for savings? Then try any of the quick and simple tips listed below and you’ll see that it’s possible to add not just $50 to savings each month but quite possibly more.
Look for Recreation Instead of Entertainment
Movies, shows, concerts and theme parks are not only expensive but also only last for a few hours or one day. If you shift your thinking to recreational activities such as hiking, camping, skiing, beachcombing or low cost hobbies, you’ll find many of these activities offer a no cost or low alternative to high cost entertainment.
Go to the Library
Did you know that you can find not only movies but also DVD movies at your public library? If you are an internet fiend, you can do all your email and net surfing on the library system and even tap into fee-for-service databases for genealogy research. Don’t buy that latest book but check out the library shelves. With most paperback books retailing at $5 – $25 and hardcover books selling at $20 – $35, you can realize savings quickly.
Avoid the mall
Really, it might sound a bit crazy but it’s true. The whole country might decide that fringed curtains in shades of olive green are the must-have décor for this year but if you don’t go browsing then chances are those curtains won’t show up on your credit card statement a month later.
Shop the outer aisles of grocery stores
Take a good look at your grocery store. Produce, dairy, meats tend to be placed on the outer aisles with all the junk food and processed products in the center aisles. Avoid as many of those inner aisles as possible and you’ll see both your waistline and expenditures drop.
Skip the chai tea, pizza deliveries, lattes, specialty shops, and gourmet aisles
Ok, we’ve heard that speech before but we also know that life is meant to be lived and enjoyed. So as Ben Franklin advised, use moderation in all things even moderation. Though, don’t deny yourself too many treats or you’ll never stick to that budget.
How about giving two lattes a week for a savings of $24 and one pizza delivery for a savings of another $25? Start a rotation of items which break the budget and don’t give them up all at once but instead just buy some or a few on occasion as a treat instead of making each one a weekly ritual.
Set Savings Goals and be Smart
When it comes to setting your savings goals, be smart— make goals that are specific, measurable, achievable, realistic and can be accomplished on a timed basis. It’s your money so have some fun with the process and above all, be creative!

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