Lesson 3

Growing What I Have


Lesson Overview:

Lesson 3 discusses: 1) saving; 2) financial institutions; and 3) savings instruments.


Learning Objectives:

The students will:

  • List reasons for saving one's money.
  • Compare and contrast financial institutions.
  • Explain that interest grows savings over time.
  • Define savings account, certificate of deposit (CD) and savings bond.


Content Standards Addressed: 

Common Core State Standards

National Standards



  • Bank - financial institution that accepts money deposits, loans money, keeps money safe and provides other financial services.
  • Certificate of deposit (CD) - savings instrument of a specific monetary amount offering a fixed interest rate for a certain period of time.
  • Compound interest - interest paid on both the principal and the accumulated interest.
  • Credit union - a cooperative financial institution. Customers are considered members and vote on policies and directorship.
  • Emergency fund - savings set aside for emergency needs.
  • Savings bond - a financial instrument for a specific amount, issued and backed by the U.S. Treasury.
  • Sinking fund - savings set aside for nonemergency needs.



To reinforce Lesson 2, review these points:

  • Successful entrepreneurs often take advantage of an area of specialization.
  • Understanding the principle of supply and demand helps an entrepreneur make wise business decisions.
  • Successful entrepreneurs have certain qualities.

Part 1: Why Should I Save?

Materials Needed:

Ask: How many of you save money you receive or earn? (Invite volunteers to share how much and why they've saved.)

Children this age usually don't have much money, except for the money gifts they receive on holidays and birthdays. It may be hard for them to save money, but there are good reasons to develop a savings habit.

Emergency funds

Discuss: Have you ever faced a time when you really needed money?


  • A friend accidentally spilled soda on your game system (or computer keyboard), and it needed to be repaired.
  • You lost your purse (or wallet) at the mall food court and needed a new place to stash your cash.
  • You forgot about your mom's birthday! You needed to shop for a card and gift.
Adults also face serious financial emergencies, for example:
  • Unexpected car or house repairs.
  • Unforeseen medical expenses, like a broken arm, chipped tooth or emergency surgery.
  • Loss of a job.
Experts suggest adults put aside a minimum of 3-6 months' worth of living expenses "just in case." As future young adults, how much money should they put aside?
Use the completed Facing the Future worksheets from Lesson 1 to facilitate the following discussion:
  • Ten years from now, what will the income be for an adult under the age of 25? ($40,000)
Ask a volunteer to divide the $40,000 figure by 4 (there are four 3-month periods of time in one year). The answer - $10,000 - is the minimum suggested amount for an emergency fund. The group may find this figure unbelievable. Assure them $10,000 would be quickly used up in a real financial emergency.
  • Without an emergency fund, what might people do in a financial emergency? (They might have to borrow money from someone or from the bank.)

Sinking funds


  • What are needs? (Things we must have in order to live.)
  • Which of the items listed on the worksheet are needs? (Housing, utilities and supplies, food, health care, transportation, personal care, and clothing.)
  • What are wants? (Things that aren't necessary but make our lives more pleasant.)
  • Which of the things listed on the worksheet list are wants? (Entertainment, sports/fitness, gifts.)

The children's needs are provided by their families now. As adults, they'll be responsible for providing all their needs and wants. (Remind them Lesson 1 showed their income will cover their needs but not all their wants.)

Divide the students into groups of two or three and assign each group one of the categories of needs. Give them just a minute to brainstorm some options in that category. For instance, in the category of Clothing, the options might be:

  • Designer clothes.
  • Department store clothes.
  • Discount store clothes.
  • Secondhand (or consignment shop) clothes.
  • Garage (or yard) sale clothes.

Ask each group to share their list.

Considering all our options may help us save money.

  • Ten years from now, what might you spend on clothing? ($2,000)

Consider some options. Buying designer clothes might require the entire $2,000. But buying secondhand clothes might mean money left over at the end of the year.

This remaining money could be saved in a sinking fund. A sinking fund keeps a saver from dipping into the emergency fund for nonemergency needs or "sinking" into debt to afford a future need. The money saved could buy an expensive clothing item in the future, like a business suit for a job interview, or it could go toward another need, like a new bike or computer.

  • Name something else sinking fund savings could buy. (Household appliances, furniture, a new car or car repairs, a down payment on a house, etc.)
Referring to the Facing the Future worksheet again, ask:​
  • What is the cost of one year of college 10 years from now? ($34,000)
College is an investment in one's future. Experts estimate people with a bachelor's degree will earn more than those with only a high school diploma.
Saving money for educational purposes could also pay for opportunities like:
  • Soccer and other sport or fitness camps and lessons.
  • Scout camps, equipment and supplies.
  • Music, dance and art lessons, equipment, supplies, and camps.
  • College for Kids.
  • Community education classes (like a cooking class).


  • What types of educational opportunities have you taken part in? Invite volunteers to share their experiences.



In 1900, the average person lived 47.3 years. By 2000, average life expectancy rose to 76.9 years. Experts say that by 2050, the average person may live 87.5 years!

Many seniors say they can't afford to retire from full-time work. But they can face serious health issues that prevent them from working as much as they need or want. So it's very important to save as much as possible before retirement.


Part 2: Where Should I Save?


  • Where do you save your money? Why?
  • What are the advantages and disadvantages of saving at home? In a bank or other financial institution?

An advantage of saving money in a piggy bank or jar at home is also a very big DISadvantage: the money is available anytime ... too available! It's tempting to take out a little here for a fast food meal and a little there for a movie ticket. Before long, the bank or jar is empty!

Banks and other financial institutions:

  • Keep money safe. Many accounts are insured to a minimum of $100,000 by the federal government.
  • Pay interest on savings. Deposits are invested or loaned to others. Interest is paid to customers for the privilege of using their money.
  • Make loans. Customers borrow money to purchase cars and other items. College-bound students take out educational loans. Larger banks loan money to companies.
  • Offer checking accounts. (See Level 3, Lesson 5 for more on checking accounts.)
  • Offer other services like financial advice, and credit and debit cards. 

Banks usually offer more services and a greater variety overall than credit unions and savings and loans. Large banks serve corporations and offer financial advice and trust services to help individuals organize and manage their money (they pay bills, keep records, etc.).

Credit unions require membership. Members have something in common, like the same kind of church, company or neighborhood, and vote on the leadership and policies of the credit union.

Savings and loans (or thrifts) accept deposits from individuals and specialize in loaning this money to small businesses and to people who want to buy homes, pay for college, etc.


Part 3: How Should I Save?


Materials Needed:

How much should children this age save? Since family members provide for their needs, it's wise for children to save about half their money for goals like a video game or toy.

Financial institutions pay interest on savings. Interest is a percentage of the money that is added periodically. Over time interest grows the savings. How much depends on: 1) how long the money is saved; 2) the rate (or percentage) of interest; and 3) how often the interest is compounded.

Compound interest is earned on the deposited amount (or principal), plus all the accumulated interest. Compounding grows savings even more, especially when money is saved for long periods of time.

The following example shows the advantage of saving in a financial institution versus saving at home.


Saving at home

Kaitlyn, age 10, begins saving $5 every week in a bank or jar at home.

  • How much money will she save in 52 weeks (one year)? ($5 x 52 weeks = $260)
  • How much will Kaitlyn save in five years? ($260 x 5 years = $1,300)
Saving in a bank
If Kaitlyn deposits her money in a bank at 5 percent interest and never withdraws (takes out) money, in one year she'll have earned $273. In five years' time, she'll earn $1,508.49.
The calculations for these five years are:
  • End of Year 1: $273 ($260 + $13 interest)
  • End of Year 2: $559.65 ($273 + $260 + $26.65 interest)
  • End of Year 3: $860.63 ($559.65 + $260 + $40.98 interest)
  • End of Year 4: $1,176.66 ($860.63 + $260 + $56.03 interest)
  • End of Year 5: $1,508.49 ($1,176.66 + $260 + $71.83 interest)
By saving $5 each week, Kaitlyn saved $1,300 in 5 years. But if she saved her money in a bank savings account instead of at home, she would have earned an extra $208.49.
The more frequently Kaitlyn's savings are compounded, the more she earns. Banks offer different interest rates and compound interest quarterly (every three months), monthly or daily. They can also use computers to compound continuously.
Children can also save money in:
Money market deposit accounts. Money market accounts pay a little more interest than traditional savings accounts because they require a higher minimum of savings. Withdrawals are limited, and banks may charge a monthly fee. They're insured just like ordinary savings accounts.
Certificates of deposit (CDs). CDs require a one-time investment of money, usually $500 or much more. Their rate of interest depends on how long the money is invested. There is a fee for withdrawing money early. CDs are insured.
Savings bonds. Savings bonds are issued by the U.S. Treasury, so they're completely safe. They're easy to purchase and are sold in amounts from $25 to $5,000. They continue earning interest for 30 years and can be cashed anytime after one year.
Reproducible: Savings Word Search 
Make copies of the reproducible. You may wish to review the terms before assigning the word search as an independent activity. ​The answers are found here. ​