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2.11BM Challenges to Savings

Last updated 2 months ago
20 questions
Note from the author:

QUESTION OF THE DAY: What percent of Americans would cover a $400 emergency with cash (or an equivalent)? 📷5 min

Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions on the last slide.
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Your guess?_______%
Answer: _______ %

ARTICLE: Does Using a Credit Card Make You Spend More Money?

ARTICLE: 61% of the US Population Living Paycheck to Paycheck 📷9 min As you saw from the Question of the Day, many Americans are not able to cover an emergency expense! There are many factors that make it challenging to save.  Follow your teacher's instructions to dig deeper into one of the above articles.

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Main idea of Credit Cards:

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Main idea of Living Paycheck to Paycheck:

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Brainstorm with your partner some other challenges to saving that are not covered in these resources.

VIDEO: It's A Money Thing: How to Counter the Effects of Inflation 📷7 min
Another challenge to saving money is that over time, the value of money goes down due to the impact of inflation. Watch this video to learn more about how inflation can impact your savings and what you can do to counteract its effect. Then, answer the questions.
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In your own words, explain how inflation impacts the purchasing power of your money over time.

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If inflation causes both prices and wages to increase over time, then why would someone need to take inflation into account at all?

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How can you counteract the impact of inflation?

ACTIVITY: INTERACTIVE: Living Paycheck to Paycheck 📷30 min Let’s take a deeper look at how living paycheck to paycheck can make it challenging to save.  Play Spent to experience the tough decisions that you have to make when every dollar is needed to make ends meet.

Interactive: Spent

Part I: Set the Stage

Living paycheck to paycheck means that you need every bit of your paycheck to meet your expenses which drains your balance back down to near $0 before your next paycheck arrives...and then you start the cycle again. As a result, you don’t have savings to fall back on, every dollar counts, and you’re faced with tough decisions on a daily basis. In this activity, you’ll experience what it’s like to live paycheck to paycheck by playing the game Spent. At the start of the game, you are faced with the following scenario:
Millions of Americans are unemployed. Now imagine you’re one of them. Your savings are gone. You’ve lost your house. And you’re down to your last $1,000. Can you make it through the month?
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How do you feel about your situation? Do you think you can live 30 days with $1,000? Explain.

Interactive: Spent
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Part II: Play the Game

  1. Go to playspent.org. Click on Continue to Spent on the right side of the screen to start the game and play it all the way through.
PRO TIP: Keep an eye on the left-hand bar which keeps track of your progress and includes 3 options to get more money during the month:

Which one would you use first?

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Part III: Your Experience

  1. Did you make it through the entire month? If so, how much money did you have left? If not, on what day did you run out of money?
Screen shot your game ending..

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How did some of your initial decisions (job, health insurance, where to live) impact the rest of your month in ways you did not expect?

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Did you ever reach out to a friend for help? Why or why not?

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Describe a scenario in which you thought you were making a good decision but there was still a negative outcome.

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Describe a scenario that forced you to wrestle with your values. What was your ultimate decision and how do you feel about it? Explain.

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Did you ever use any of the 3 options on the left-hand side of the game to get more money?


  1. If yes, which one(s) and why?
  2. If no, why not?

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What is your main takeaway from playing Spent?

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When developing a savings plan, which is TRUE about saving and inflation?
  1. In order to avoid losing purchasing power over time, the rate of return for savings accounts should be at least as high as the rate of inflation
  2. In order to avoid losing purchasing power over time, the rate of return for savings accounts should be lower than the rate of inflation
  3. To maximize saving, the rate of return for savings accounts should be exactly equal to the rate of inflation
  4. There is no relationship between saving and inflation

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What does it mean to live paycheck to paycheck?
  1. Saving a portion of your paycheck for emergencies
  2. Having multiple sources of income to cover expenses
  3. Struggling to cover your financial needs with each paycheck
  4. Enjoying a comfortable lifestyle without worrying about money

1

How can credit cards make it more challenging to save?
  1. Many banks will not let you open a savings account when you have a credit card
  2. You will be charged a fee for every credit card transaction
  3. Retailers mark up purchases if you use a credit card
  4. Credit cards make it easier to spend money