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Semester Course3.3 Strategies to SaveStudent Activity PacketName: In this lesson, you will learn to: Identify various rules of thumb and strategies to save moneyDetermine whether a direct deposit or manually saving is the better strategy for themUnderstand how compound interest works to increase savings. ResourcesQuestions1 CREATE: Your Savings GoalsFollow the directions on this worksheet to complete the activity. Estimated time: 10 mins2New to Budgeting? Why You Should Try the 50-20-30The 50-20-30 budgeting rule is a well known rule of thumb and considered easy to follow. Read the article, then answer the questions at right. Estimated time: 5 minsWhy is the 50-20-30 rule easy for people to follow, especially those who are new to budgeting and saving? This article recommends that 20% of your income is meant for your savings, investments, and payments to reduce debt. What are the potential risks of having all three of these buckets belong in the same category?3Automatic Savings or Manually Save? Some people like to set up a direct deposit while others like to manually transfer their money into their savings account. Watch this video and answer the questions at right. Estimated time: 5 minsWhat does it mean to “pay yourself first”? The last speaker in the video says something that’s factually not true. What makes him wrong? Which option would YOU prefer: automatic or manual? What is one benefit AND one disadvantage of using your preferred method?4NerdWallet’s 4 Best Money Saving AppsAnother way to make saving easier? Use an app that automates saving small amounts. Read about one of the 4 apps in this article and answer the questions at right. Estimated time: 5 minsWhat app did you read about, and how does it work? Does the app save or invest the money for you? Would you be likely to use this app? Why or why not? 5Compound Interest ExplainedWhen you save in an interest bearing account, accumulating savings becomes even easier. How can you use compounding to increase your savings? Watch this video and then answer the questions at right. Estimated time: 5 minsSummarize how compound interest helps you to accumulate savings even faster. How does the age at which a person starts saving impact the amount they can earn in compound interest? Today’s savings accounts typically offer interest rates below 1%. How does this impact the power of compounding?6CALCULATE: How to SaveFollow the directions on this worksheet to complete the activity. Estimated time: 10 mins7Exit TicketEstimated time: 5 mins How do you distribute your money when using the 50-20-30 rule? Explain how compound interest is different from simple interest.What does it mean to set up an “automatic deposit” and why is this a good savings strategy? ................
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