Earlier this week, we had our first lesson of the year on personal finance. It is part of my unit on series, which is the sum of terms of a sequence. This leads nicely into the mathematics of savings and borrowing on loans.
The main concepts that I went through in the class were pretty much what we mention in here:
- the cost of school (about $16,000 per year with an annual increase of 4.5%)
- OSAP (government loans that are paid over ten years)
- bursaries and scholarships
- how to pay of loans more quickly (lower interest rates, lump sum payments, round up your payments to the nearest $20 or $100)
- good loans versus bad loans (good loans are things that give you the potential for more assets, such as a house, or an education or a loan for a business. All of these give you the potential to make more money. Bad loans are everything else: cars, trips, big screen televisions. Although these things are fine to have, if you are able to save for them, it makes more sense)
- saving and investing (save 10% of your salary and you will be rich. As well, try to save half of your raises. This is an extremely easy way to increase your savings and not notice it)
- the three main ways of getting rich: savings (slow and steady and guaranteed), real estate, and starting your own business.
We will go through the mathematics of savings and borrowing in this class, but the idea for that lesson was the discussions that came out of it. They couldn't believe that banks would give you interest to save your money. I simplified it for them and said that banks will give you 2% interest on your money, and then go loan your money out to someone else for 4%. They have made money on your money. This was unbelievable to the kids in the class, but I hope that logically they got it.
I will post more frequently throughout this unit (if the snow ever stops...we have had two snow days in a row) when the students have good questions or comments. One of the students in the class said that I can be her financial planner, which although I am vastly unqualified for, made me feel good.