Motivation for Saving

While you might think that saving for college, retirement, or buying home are the reasons Americans save, according to a recent survey, travel was reported as the top priority.  In a study of 2,500 adult Americans representing varied demographic, geographic, economic, and social groups, 45 percent of respondents set aside money for traveling.  This was especially true among younger respondents, who prefer travel experiences over savings to buy a home.

After travel, the main priorities for saving by Americans are:

  • for an emergency fund (37 percent)
  • for retirement (30 percent)
  • to buy a house (21 percent)
  • to buy a car, truck or motorcycle (20 percent)

For additional information on saving priorities, check out these two resources:

Article #1

Article #2

 

Teaching Suggestions

  • Have students conduct a survey among people they know to determine the main reasons for saving.
  • Have students talk to others to obtain ideas for building a person’s savings account.

 Discussion Questions 

  1. What do you believe are reasons people prefer saving for travel over other financial goals?
  2. Describe other actions that might be taken to motivate people to build their savings?

Why Buy When You Can Rent?

While car ownership has been a cultural milestone in our society, this tradition is diminishing with a trend toward renting or borrowing rather than owning. This situation is partially related to fewer teenagers opting to obtain a driver’s license. Also, fewer young people are buying homes, giving preference to the flexibility of renting.

The owning of “stuff” is shifting toward “decluttering” and choosing instead to rent items as needed. A strong belief that overconsumption is putting our planet at risk is driving the rise of the sharing economy. In addition, there is a growing trust to value exchanging items with “real people” rather than buying from major companies.

In addition to Zipcar, which rents vehicles by the hour, other rental business models include:

  • Ann Taylor’s Infinite Style service that allows a person, for a $95 monthly fee, to rent up to three garments at a time.
  • SnapGoods rents cameras, power tools and home appliances, such as blenders.
  • Frankfurt airport has a service that allows travelers to store winter coats when flying to warmer climates. Other businesses are considering a service to rent cold weather clothing to travelers arriving from tropical areas.
  • Since about one-third of new vehicles are leased, Cadillac created the “Book By Cadillac” program allowing a person to exchange up to 18 vehicles a year.

The many empty stores in malls create opportunities for “swap meets” and “rental fairs” for various products, using these spaces to also build connections in the local community.

For additional information on renting instead of buying, click here.

Teaching Suggestions

  • Have students locate examples of sharing economy businesses and rental companies in your community and online.
  • Have students talk to others to obtain ideas for new types of rental businesses.

Discussion Questions 

  1. What do you believe are the benefits and drawbacks of renting instead of owning?
  2. Describe actions that might be taken to determine needs and ideas for rental businesses in a community.

 

Pokémon Go Can Cost You

Pokémon Go has resulted in a loss of money and other concerns.  In this popular game, users interact virtually with Pokémon characters placed in real world settings. The app is free to download, however there are in-app purchasing opportunities. Players are encouraged to pay for hints and tips for a competitive advantage.

In addition to financial losses, the Pokémon Go app has been used to lure robbery victims.  Other players have been robbed of their phones.  Police departments caution players to be aware of their surroundings.

Be warned that “free isn’t the same as no cost.”  Users may pay in the form of data use, legal confrontations, injuries, and reduced work productivity.  Higher insurance costs can also occur when playing the game while driving, which might result in an auto accident. Social concerns include disturbing church services and other occasions with players capturing creatures during the events.

For additional information on the cost of Pokémon Goclick here.

Teaching Suggestions

  • Have students suggest ways that an app game might be used for improved learning or assisting others in need.
  • Have students describe safety precautions when playing Pokémon Go.

Discussion Questions 

  1. Why are people attracted to the game, often with a personal or financial cost?
  2. What actions might be taken to avoid the financial and personal dangers of the game?

House Rich, Cash Poor: How One Couple’s “American Dream” Home Nearly Tanked Their Finances

“While our original $150,000–$170,000 price range would have put our housing costs at a manageable 30% of our total income, springing for a $200,000 loan shot that number up to just shy of 50%.

For many people, a logical step after completing college is often purchasing a home and inching closer to the American dream.  And yet, there are pitfalls to obtaining a home that can lead to financial stress and the inability to reach important short-term and long-term financial goals.

This article describes how one couple took all the right steps to prepare for a home purchase, but eventually decided to purchase a home that cost more than they planned to spend on housing.  The reason was simple:  They fell in love with a home that was too expensive when compared to their total income.  The article continues to describe what happens next in their attempt to regain their financial health.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the necessity of preparing a realistic budget that reflects mortgage payments, insurance, taxes, repairs, etc when purchasing a home.
  • Share the advantages and disadvantages of owning versus renting a home.

Discussion Questions

  1. Given your goals and lifestyle, how important is home ownership to you?
  2. What steps should you take to prepare for purchasing your dream home?
  3. Assume you have found your dream home and you can afford the payments, insurance, taxes, repairs, etc. What steps are necessary to negotiate the purchase and obtain financing?

Plunging Crude Prices Hammer Energy Companies

“A decision by OPEC this week to maintain current levels of oil production is hammering major energy companies in the U.S. and abroad.”

This article explores the winners and losers of lower energy prices.  For consumers, lower energy and gas prices means increased discretionary funds for purchasing consumer goods including food, clothes, electronics, and presents for friends and relatives during the holiday season.  Also, both large and small retailers benefit because consumers have more money to spend.  And airlines, package delivery services, cruise lines, and other companies are spending less on fuel.

The disadvantages of lower energy and gasoline prices are already causing the stock prices of big oil companies including Chevron, ConocoPhillips, Exxon Mobil, Marathon Oil, and British Petroleum to decline.

For more information go to http://finance.yahoo.com/news/plunging-crude-prices-hammer-energy-companies-123639239–finance.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the impact of the cost of energy and gasoline on a consumer’s budget.
  • Describe alternatives uses for the savings that result from lower energy and gasoline prices.

Discussion Questions

  1. What is the current price for a gallon of gasoline? How does this compare with the cost 6 months ago?  What impact does this have on your spending patterns and your personal budget?
  2. While you are saving money at the pump, the big question may be how you plan to use the savings. Are there alternatives to spending the money on clothes, entertainment, or holiday gifts?
  3. Now that the value of energy company stocks has declined, would you invest in a company like Exxon Mobil or Chevron? Explain your answer.