Day 12

Lesson Objectives

  • Identify the Five Foundations of personal finance.
  • Understand the purpose of having an emergency fund.
  • Explain the three basic reasons for saving money.
  • Understand the importance of saving for both long-term and short-term goals.
  • Describe what a sinking fund is and identify purchases for which you would use a sinking fund.
  • Demonstrate how compound interest works and understand the impact of annual interest rate.
  • Describe the difference between simple and compound interest.
  • Understand the importance of beginning to save now.

Assignment 2.R.1

  1. Obtain a partner from your teacher.
  2. Make a copy of this document and share it with your partner. Name the file Rate of Return-(Your Initials).
  3. Work with a partner to calculate the future value of a one-time investment, which should be a practical investment amount for someone your age ($250-$1,500) and it should be the same amount for each investment, using three different interest rates. Then, using a Google Spreadsheet and your data, design a graph that compares the impact that the interest rate has on the investment. Use each of the methods to help you understand how compound interest works. Use 40 years as the amount of time for your investment.

Chapter 2 Folder

  • Your Chapter 2 folder should have the following files in it:
    • Personal Finance Journal-C2
    • Five Foundations (poster)
    • Saving A Way to Build Wealth
    • 3 Reasons to Save
    • Short Answer 2
    • Case Studies 2
    • Rate of Return
    • Investment 2