PUTTING YOUR MONEY TO WORK

Financial Literacy 10

Savings and Investing

Introduction

You have extra money, what are you going to do about it?

What kind of spender are you?

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Saving, Goals, Financial Independence, Different money story, Why, Tips, Pay yourslef first, delayed gratification, mindset cartoons, investments, the power of compound interest, emergency, save young and invest if possible

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Introduction

Lesson Outline

Savings

Investments

Introduction

Are you a saver or a spender?

• Imagine this: You just found $100 on the ground.
• What would you do with it? Would you stash it in your wallet, spend it immediately, or try turning it into $200?

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Emergency Fund

Avoid Debt: Without an emergency fund, you might have to rely on high-interest credit cards or loans to cover unexpected expenses, leading to long-term financial challenges.

Protect Your Long-Term Savings: An emergency fund can help you from dipping into your mid/long-term savings goals in case of emergencies.

Peace of Mind: Knowing you have a financial cushion for unexpected expenses like car repairs, medical bills, or job loss (reduce stress and anxiety)

Start small, it takes time to build an emergency fund. Nothing worth doing comes easy and it takes works and commitment. I also had a very hard time getting this in place for myself! I does NOT HAPPEN OVERNIGHT.

Key Words

Trade off

Inflation

Interest

Interest Rate

Simple Interest Calculations

Compound Interest Calculations

Compound formula

Goal Sheets

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The Power of Compounding

Refers to the amount of money to which an investment will grow over a finite period of time at a given interest rate.

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Put another way, future value is the cash value of an investment at a particular time in the future.

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YOU CAN ALWAYS MAKE MORE MONEY, BUT YOU CAN’T MAKE MORE TIME!

Financial Goal

Setting Sheet

Saving Strategies

• Pay yourself first
• Goals (emergency, short term, long term)
• Savings methods:
• Large amounts, or smaller at regular intervals, or pre-authorized, or random contributions, deductions at the source
• Tips on how to save money!
• How can you save money?

How money works - Pay Yourself First: Primeica https://www.youtube.com/watch?v=K2OnLC8YfuA

Ideas:

• Understand the 50% needs/30% wants/20% savings. (next slide)
• Auto-Withdrawal
• Deposit Only
• Round up programs (next next slide)

THE POINT - start small and now

Auto-Withdrawal: If you struggle with savings, setting up automatic transfers can help. Talk to your bank or credit union about setting up automatic transfers, decide how much and how often. They forget about it!

Optional Video: https://youtu.be/PgFvgK-enfA

Deposit-Only Account:

• This type of account makes it harder to withdraw money, so you're less likely to spend your savings.
• One-Way Street: You can deposit money into the account, but you can't easily take it out. Limited Access: There might be restrictions on how often you can withdraw money or how you can access it (e.g., only at a bank branch, not through ATMs).
• Goal-Oriented: These accounts are often designed for specific goals, like saving for a down payment on a house or a major purchase.

Optional Video: https://youtu.be/XdreD8kXZTA

Deductions at Source:

• This means your employer or bank automatically takes money out of your paycheck or account and puts it into savings.
• Hidden Savings: Your employer or bank takes a certain amount of money directly from your paycheck or account and puts it into a designated savings account or investment.
• Out of Sight, Out of Mind: You don't see the money in your everyday accounts, so you're less likely to spend it. Customizable: You can usually choose how much money gets deducted and where it goes (e.g., RRSP, TFSA, company savings plan).

Optional Video: https://youtu.be/L1IAJSJYKj8

• The program rounds up your debit card purchases by a minimum of fifty cents to a maximum of five dollars, as set by you, and places the extra rounded-up funds into your designated savings account.

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• TD - Simple Save Program
• RBC - Save Matic
• Scotiabank - Bank the Rest
• BMO - Saving Builder

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Round Up Options

Research and list 25 ways teenagers and young adults can save money.

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Smart saving tips:

• save first, spend later; shop smart; loose change; transportation tricks; eating smart; set app limites, kick the habit; avoid impulse buys;
• Handout 98 ways to save
• Research how teens can save $$

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Save a toonie a day - It could add up to $730 a year. You might not find that you don’t have to give up much to save $2 a day. And if you did, and saved it from age 15 to 30, and earned 3% interest, that would end up at about $15,000!

Assignment 5.2 Exploring Saving Strategies

Cartoon Assignment - saving strategies and also family, cultural, social influences and personal experiences shape an individual's attitude towards saving.

Saving Philosophies

Instant vs delayed gratification

• Learning to analyze, understand, be aware can help you with your financial independence. You can’t always have what you want and waiting, and planning/waiting can help you achieve more.

Paying Yourself First

• Learning to make your money work for you

Saving for a rainy day/emergency fund

• Reducing anxiety and stress

Planning for “Future Me”

• Goals! SMART goals! Write them down, dream, plan and get to work:-) Be okay with the changes and the new opportunities that God might have for you:-)

Delayed Gratification

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Ted Talk - Don’t Eat the Marshmallow! Joachim de Posada�https://www.youtube.com/watch?v=M0yhHKWUa0g

Learning Guide: Questions

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Save now for rewards later.

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Remember success isn’t if you go to university/college.

Assignment 5.3

Saving Philosophies Case Study

INVESTMENTS

Financial Literacy 10

The most important investment you can make is in yourself. Warren Buffett

Risk comes from not knowing what you are doing. Warren Buffett

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Purpose of Investing

Lesson Outline

Various Types of Investments

Tax Saving Investment Accounts (TFSA, RESP, FHSA)

Investing Early & Diversification & Ethics

Risk Tolerance vs Reward

Activities

Teacher Handbook and student - terms

In no particular order!

Introduction

Investing is what you do with your savings to try and:

• protect the value of your savings over time against the effects of inflation (purchasing power).
• increase value of your savings and acquire great purchasing power by earning a return greater than inflation (put your money to work for you).
• save enough, and earn enough to be able to achieve your goals.

Savings - is the portion of current income not spent on consumption.

Low risk, low return, high liquidity

Investments - is the purchase of assets with the goal of increasing future income.

H/L risk, high return, low liquidity at times

• Live within your means (reduce debt first)
• Insurance (many types and purpose for them)
• Emergency Fund (3-9 months of living expenses)
• Have access to other sources of cash for emergencies
• Prioritize goals (write them down, be specific, action plans, time lines, start small!)
• Pay off debt (especially credit card debt, high interest rate debt - FIRST)!

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Preparing an �Investment Program

Tips:

• Begin early
• Reinvest earnings
• Maximize your savings
• 8th wonder of the world

Risk - Reward Activity

Risk - The chance that the value of an investment will decrease.

Return - The profit or yield from an investment.

Liquidity - The ability of an investment to be converted into cash quickly without loss of value.

Assets - Anything that you own that adds financial value (house, stocks, savings, cash, car, mutual funds).

Liability - A financial obligation, such as debt/you owe someone or an organization money.

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Risk Tolerance

Balloon Activity - 6 trials - Prize for the winner - (google: NGPF Balloon and risk game) https://www.ngpf.org/blog/interactive/interactive-the-balloon-test-measures-your-risk-tolerance/

Pre-game question: How do you feel about risk when it comes to investing? How would you feel if the stock you bought dropped by 20%?

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Post Questions: How many points did you earn after 10 trials (rounds)? What was your strategy to play the game? Did your first or second trial impact how you played the game? Compare the emotional reaction you had having the balloon burst to COLLECTING $. Which was stronger?

If like most people, losses we experience about twice as strongly as we enjoy gains. That phenomenon is known as loss aversion.

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NOT REQUIRED BUT FUN TO DO AND THINK ABOUT

Inflation, Savings & Investments

Inflation can work against your money. You need to learn to invest wisely, follow the rate of inflation, and make sure your investment rates are higher than those of inflation.

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So you aren’t losing purchasing power.

THE POINT

Time Value of Money

Why?

Inflation and opportunity cost.

Again, start paying yourself first and making your money work for you.

A dollar today is better than a dollar tomorrow.

Inflation: Is the rate of increase in prices over a given period of time (image to left)

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Opportunity Cost: Trade offs, the value of the best alternative that is sacrificed when a decision is made.

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Purchasing Power: is the value of a currency in terms of the goods or services one unit of it can power

JACK AND JILL ACTIVITY

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HTTPS://DOCS.GOOGLE.COM/DOCUMENT/D/1OAOKF9XA2C0XLRHXJEMHCQMFDA7_BGSF/EDIT?USP=SHARING&OUID=108380426669268166546&RTPOF=TRUE&SD=TRUE

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HANDOUT

Compounding Interest - GREAT

ASKING FOR A FRIEND - TD BENEFITS OF COMPOUND INTEREST

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https://www.youtube.com/watch?v=c6kLOIDyRAs

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Future Value

Refers to the amount of money to which an investment will grow over a finite period of time at a given interest rate.

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Put another way, future value is the cash value of an investment at a particular time in the future.

�Hint: start when you are young if you are able so compound interest can work for you (Jack and Jill)

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YOU CAN ALWAYS MAKE MORE MONEY, BUT YOU CAN’T MAKE MORE TIME!

Rule of 72

Important Investing Concept

Rule of 72: Formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return (%)

The Rule of 72 - Alliance

(https://www.youtube.com/watch?v=53LBNbmXlGg

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Review

https://www.getsmarteraboutmoney.ca/calculators/compound-interest-calculator

Compounding Interest Assignment - NGPF

Investment Compound Calculator: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

TYPES OF INVESTMENT ALTERNATIVES

Click on the link below to get to the video:

https://drive.google.com/file/d/15ASxWRV6ccibR_SishJQGk6jttONXt5H/view?usp=sharing

Link to the PowerPoint that follows the video from Cindy Lowe on INVESTMENTS!

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PowerPoint that goes with Video: https://docs.google.com/presentation/d/1Lw0ZzgcNaik7Nr1cWnArafJHmXC-F9Oq/edit?usp=sharing&ouid=108380426669268166546&rtpof=true&sd=true

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Watch the VIDEO Review - Handout:

• Risk, Return, Liquidity, Time
• Safest Investments: savings accounts, Govt Saving Bonds, Canadian Treasure Bills, Guaranteed Investment Certificates (GICs), Term deposits, Certain negotiable govt and corporate bonds (low risk low return, get money back quick, time depends)
• Equities/Stocks: buying ownership into the company, possibility of the return, low risk and high risk, return fluctuates, liquidity somewhat quick but may not get what you started with, time - short and long term. How you make money? dividends or realized gain on stock price if you sell.
• Stocks can go up and down (market, economy, political situation, brand reputation)
• Don’t put all your eggs in one basket - DIVERSIFY
• TSX, NYSE, NASDAQ, and Dow Jones (buyers and sellers - traders) - Stock Market Crashes (sell high and buy low)
• Time is on your side when you are young and you invest (compound)
• Safer option - Mutual Funds: investors’ money is pooled and invested by a professional fund manager, risk varies, return varies, provides diversification to reduce risk, match your needs, fund options. Ex: Balanced Fund (2000 stocks in this mutual fund around the world), RBC Global Technology Fund (ETF) - lots of neat stocks that you can owned when pooled.
• Alternative investments: antiques, real estate, cryptocurrency - be careful!, gold/silver, etc.

Assignment on Research Investment Options

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Use video and links to help you answer the questions in the assignment.

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Links:

• https://www.ciro.ca/office-investor/investing-basics/types-investments-and-types-accounts
• REALLY GOOD: https://www.getsmarteraboutmoney.ca/learning-path/getting-started/types-of-investments/

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Four Basic Types:

Pay Interest – savings account, Canada Savings Bonds, Guaranteed Investment Certificates (GICs)

Professional Help Is Important

Shares in a Company – Stocks, Mutual Funds that invest in stocks, etc.)

Property – real estate, art, precious metals, etc.

Direct Investment – investing into a business directly

Cryptocurrency

• Cryptocurrencies are an up and coming asset class that many of you and even your parents, have never used!
• There are many potential advantages to using crypto but it also has tones of risk!
• Notes:
• You don’t need to use a bank
• Crypto is VERY risky! Volatile and people have lost large amounts of money investing in it!
• Threats - hacks, phishing attacks, no protection! no regulation!
• Ex: Bitcoin, Ethereum, Solana

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Cryptocurrency

What is a crypto wallet?

• Each individual cryptocurrency has two parts: A wallet and a blockchain. A blockchain is used to buy and a wallet to store crypto. Examples:
• Types of wallets:
• Exchange wallets
• Hot wallets
• Cold wallets
• Paper wallets
• Pros and Cons to each wallet

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https://www.youtube.com/watch?v=qnyqQvIii0U

Cryptocurrency Explained for Kids and Beginners: A simple and fund guide

https://www.youtube.com/watch?v=qnyqQvIii0U

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Should You Invest in Crypto? Easy Peasy Finance

https://www.youtube.com/watch?v=S-z2nasKLGIb

Types of Tax Saving Investments

Tax Free Savings Account (TFSA): earn income from investments without paying taxes on the income (18 years)

Professional Help Is Important

Registered Retirement Savings Plan (RRSP): invest money for retirement, have money work for you in mutual funds/etc, defer paying income tax until retirement

Registered Education Saving Plan (RESP): invest money, and the government will match some of it, invest and make more money for child/children's’ education fund, shift the tax to a student

Direct Investment – investing into a business directly

Research

• TFSA (Tax Free Savings Account)
• RRSP (Registered Retirement Saving Plan)
• RESP (Registered Education Saving Plan)

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Use the following site to help you with the assignment:

1. https://www.sunlifeglobalinvestments.com/en/insights/investor-education/getting-started/tfsas-rrsps-resps-and-non-registered-accounts-a-comparison/
2. https://thestgeorgesgroup.ca/blog/rrsp-tfsa-resp-investment-advice/

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Tax Free Saving Account

• Must be Canadian, SIN and 18 years or older
• TFSA is the best savings/investment account you can have. It allows you to set money aside tax-free throughout your life. You can pull money out of the account without paying additional taxes.
• You can hold investments in your TFSA (bonds, stocks, GICs, and mutual funds. Any income you earn from these investments become tax free!
• Ask your financial planner or bank for help!

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NETFLIX

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OPTIONAL

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The Stock Market Explained

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18 minutes

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https://www.youtube.com/watch?v=ZCFkWDdmXG8

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O P T I O N A L

STOCK MARKET �Talk to Christa Lapointe if you want to learn and do more.

Join the Market

• You worked all summer long with the goal of making some money to invest in the stock market. By the end of the summer, you’ve got $1800 available to invest. In your city’s downtown, a Ravioli Den has just opened. Ravioli Den is a fast food chain restaurant specializing in, you guessed it, ravioli.
• Since Ravioli Den opened a few weeks ago, there is consistently a line out the door; everyone is raving about how good the food is and how many ravioli options they offer.
• In this project, you’ll use your $1800 to invest in Ravioli Den. Your teacher will then progress through a series of slides, describing current events impacting your investment. At each interval, you’ll have the option to buy or sell shares, and then you’ll complete this worksheet regarding your decisions and the value of your investment.

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Activity: Ravioli Den - link (PRINT and HANDOUT)

New Teacher Folder Link (PP and other resources)

Assignment:

Optional

Saskatchewan SK Market Simulation & SK Poly

Optional

SK DLC Information, Link and Password - https://resourcebank.ca/courseware/lesson/1661/overview

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Finviz.com

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Reading a Stock Quote Table

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Assignment in Learning Guide

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Assignment:

https://www.rphsbusiness.org/pdf/readingstockquotetable.pdf

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Resource:

Do they have the right stuff?

Next slide - watch

• This humorous vignette reminds us of the need to carefully consider who we trust to give us valid guidance in investing our money. Most of us either don’t have the expertise or the time to manage our investments. As a result, as we begin to build an investment portfolio, we look for help.
• Some rely solely on family members or friends to guide them while others look for professional help.
• Regardless of the course you take, it is crucial to understand the background and experience of those offering the guidance and advice.
• It is important that we give our trust to those who deserve it and not simply rely on friendship or whim. After all, you have worked hard for that money and you want to make sure that it is well managed.

Video: Moneylaughs.com (https://moneylaughs.com/videos/do-they-have-the-right-stuff/#target)

• Good money decisions could require help and advice.
• Appreciate that you should use only trusted and reliable sources.
• Need to check qualifications claiming to be able to assist you
• Recognize related costs, terms and fees.

Questions to Ask a Prospective Financial Advisor

• What is your background, experience and track record?
• Is your firm registered with a securities commission or other formal body?
• What can you do for me? Provide advice only, sell products, help me build a financial plan?
• What products do you sell?
• How do you get paid?
• How do you work with your clients?
• Can you provide references?

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Who? Make sure you feel comfortable with them and they know their stuff!

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Where: Banks, Credit Unions, Independent Financial Planning Companies, etc.

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https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html

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• Read the article and answer questions in the learning guide.
• https://drive.google.com/file/d/1pvF_0d0kPcECWLwwLbMqv8tbL5C7GY3T/view

Play the Lottery or Save

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• Assignment is in the learning guide.
• Read Article: https://www.investopedia.com/managing-wealth/worth-playing-lottery/
• Assignment Link: https://docs.google.com/document/d/1F17Gs6K1NS1EOlWGr6mU7ObwDJm6rEe4/edit?usp=sharing&ouid=108380426669268166546&rtpof=true&sd=true
• Compound Interest Calculator http://www.moneychimp.com/calculator/compound_interest_calculator.htm

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Assignment:

Look up two questionable sources of information on savings and investments. Critical thinking and analysis.

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�Possible Activities:

• Either alone or with a partner, make a list of what you think should be the qualifications of any financial advisor and then check your list against those of some advertised professional advisors.
• Research what a financial advisor actually does.
• Arrange a meeting with a bank employee to discuss opening an investment portfolio and see what he or she would recommend.
• Decide what type of investment you might be willing to make and then look for an advisor who has expertise in that area.
• To avoid “putting all your eggs in one basket” look at the various ways you can invest your money and determine what your interest and comfort level is with each.
• Interview more than one advisor to determine their credentials and what they have as proposed investment strategies before you engage one of them.

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The End

FINANCE

The Financial System

Lenders – anyone, from corporations to individuals. As the name suggests, they lend money. Most charge interest to make it worth their while.

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Borrowers – people who borrow money (called loans) from lenders with the intention of paying it back, with interest.

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Money is borrowed to invest in capital for businesses, purchase property, and to pay for other goods and services. Lenders and borrowers usually come together through banks, bond markets, or stock markets.

The financial system is a network of institutions, markets, and contracts that bring lenders and borrowers together.