Bell Ringer• What is the difference between a want and a need? Fill in

the table below with examples.

Wants Needs

SAVING AND BUDGETING Mr. Perez

Want vs. Need• A want is something we would like to have.

• What examples of “wants” did you write down on your table?

• A need is something we need to survive.• What examples of “needs” did you write down on your table?

Want vs. Need• Five basic needs:

• Shelter• Food• Water• Health care & hygiene products• Clothing

• Everything else is considered a want

Working and Saving• Working and saving are the only ways to buy what you

need or want• Jobs offer people the opportunity to work.

• A career is a job that a person holds for a long period of time, with room to progress (or move up)

teaching

acting

managing a company

Working and Saving• Saving is important once you start to work

• Saving allows you to hold on to your money until you need it or want to purchase an expensive item.

• When you save money in the bank, you earn interest on the amount you’re saving• Interest is a fee that the bank pays you for

keeping your money with them.• The interest is usually a percentage paid

over a year.

Interest • For example…

Mr. Perez places $5,000 into a savings account that has an interest rate of 5% (or 0.05) per year.

After the first year, how much money would Mr. Perez have in his bank account?

• Easy, the formula for interest is I = P*r*t• I = amount of money earned after a certain time has passed• P= amount of money in bank account• r = rate (interest rate)• t = amount of time

Interest• So, if Mr. Perez puts in $5,000 in a savings account with a

5% interest rate for 1 year, how much money will he have after that 1 year?

• We know…• I = ??• P = $5,000• r = 5% or 0.05• t = 1

I = 5,000 * 0.05 * 1

I = 250 * 1

I = $250

Interest• After 1 year, Mr. Perez would have earned $250 in his

savings account. How much money would he have in his savings account?

• After 2 years, how much money will Mr. Perez have in his savings account?• Try it out on your own…

I = ??

P = $5,250

r = 0.05

t = 1

I = $5,250 * 0.05 * 1I= $262.50

$5250 + $262.50

After 2 years = $5512.50

Budgeting • Budgeting is the process of making your needs and wants

fit with the money you have.• Budgeting can be tough, but it is necessary in order to make sure

you have your money under control

• Look at this budget:• http://www.tdbank.com/wowzone/lessons/Monthly_Budget.pdf

• Answer the following FIVE questions on a separate sheet of paper to turn in.

• You do not have to write the questions, but you MUST show all your work.

• Remember the formula for interest

I = Prt

Practice Problems

1. John received $100 as a gift from his grandparents for his middle school graduation. He decided to save it in the bank until he decided what he would do with the money. The interest rate on his savings account is 4.9%. How much interest will he earn the first year?

2. Nicole received a check for $50 when she won a local essay contest. Her mother told her to save it for college. If it earns interest at a rate of 6%, how much money will Nicole have after one year?

Practice Problems

3. When Mary’s new baby sister was born, her relatives gave her $25 to start a savings account. How much will Mary’s sister have when she turns 1 if her money is kept in the bank earning 5% interest?

4. Eduardo earned $520 over the year for doing chores around the house. He decided to take $200 to the bank where it will earn 8% interest. How much interest will he earn if he leaves it there for 1 year?

5. When Lori and Jeff got married, they put $1,000 of their gifts into a savings account in the hopes of purchasing a bigger home sometime in the future. If they get a rate of 5.5%, how much will they have toward their home in 1 year?

Homework• Ask your parents how much

you spend on the following needs & wants in a month:• Groceries• Water bill• Electricity bill• Phone bill• Cable/TV bill• Internet bill• Car insurance• Doctor’s visits (health

insurance)• Hygiene (hair cuts, nails, etc)

• Entertainment• Other expenses (gifts, eating

out, etc)