LESSON 1: SAVINGS

Savings refers to the portion of income not spent on current consumption but instead set aside for future use or investment. Saving is setting aside a portion of income for future use rather than spending it immediately. It serves multiple purposes, including building an emergency fund, funding long-term goals such as education or retirement, and preparing for unexpected expenses. Saving allows individuals to accumulate financial reserves and achieve financial independence over time. Strategies for saving effectively include budgeting, automating savings transfers, cutting unnecessary expenses, and exploring investment opportunities to grow savings.Bottom of Form

IMPORTANCE OF SAAVINGS

1. Financial Security: Savings provide a safety net in case of emergencies, such as unexpected medical expenses or job loss, reducing the need to rely on credit or loans.

2. Achieving Goals: Whether short-term (like buying a new gadget) or long-term (such as purchasing a house or funding retirement), savings allow individuals to reach their financial objectives.

3. Financial Independence: Accumulating savings helps in achieving financial independence by reducing reliance on others and providing freedom in decision-making.

4. Emergency Fund: Setting aside savings ensures you’re prepared for unexpected expenses, like car repairs or medical bills, without disrupting your financial stability.

5. Big Purchases: Saving money allows you to make significant purchases without going into debt, such as buying a car or paying for higher education.

6. Retirement: Saving for retirement ensures financial security and a comfortable lifestyle after you stop working.

7. Opportunities: Having savings means you can take advantage of investment opportunities or career changes without financial stress. 

SAVINGS AUDIO

Readings and Viewings

Khan Academy (2024)

https://www.khanacademy.org/college-careers-more/financial-literacy/xa6995ea67a8e9fdd:budgeting-and-saving/xa6995ea67a8e9fdd:saving-money/a/why-and-how-should-i-save-money

Saving Money – Why it is Important to Save Money

https://www.youtube.com/watch?v=pHnkfADAH1M

LESSON 2: PLANNED AND UNPLANNED EXPENSES

Instructions: The learners are to study the note, reading and watch the video. Learners can also listen to the audio. The learners are to answer the multiple choice questions that follow

Planned Expenses

Planned expenses are those expenses that are anticipated and for which funds are intentionally allocated in a budget or financial plan.

Examples of Planned Expenses:

  1. Monthly Bills: Rent/mortgage payments, utilities (electricity, water, and internet), and insurance premiums.
  2. Routine Expenses: Groceries, transportation (gas, public transit), phone bills.
  3. Periodic Expenses: Annual subscriptions, memberships, and quarterly taxes.
  4. Specific Goals: Saving for vacations, home renovations, or purchasing a new car.

Unplanned Expenses (Emergency Expenses): Unplanned expenses, also known as emergencies, are unexpected and require immediate attention.

Examples of Unplanned Expenses:

  1. Medical Emergencies: Hospital visits, unexpected medical treatments.
  2. Car Repairs: Mechanical failures or accidents requiring repairs.
  3. Home Repairs: Plumbing issues, roof repairs, appliance breakdowns.
  4. Job Loss: Unexpected loss of employment leading to loss of income.
  5. Legal Issues: Unexpected legal fees or fines.

Managing Planned and Unplanned Expenses

Strategies for Managing Planned Expenses:

  1. Budgeting: Allocate funds for planned expenses in advance based on income and spending priorities.
  2. Prioritization: Rank planned expenses based on necessity and allocate resources accordingly.
  3. Comparison Shopping: Research and compare prices to optimize spending on planned purchases.
  4. Regular Review: Review and adjust the budget periodically to accommodate changes in income or expenses.

Strategies for Managing Unplanned Expenses:

  1. Emergency Fund: Maintain an emergency fund equivalent to 3-6 months of living expenses to cover unforeseen costs.
  2. Insurance: Consider insurance policies (health, auto, home) to mitigate financial risk associated with unexpected events.
  3. Prioritize Savings: Regularly contribute to savings to build a financial cushion for emergencies.
  4. Seek Professional Advice: Consult financial advisors for guidance on managing and preparing for unplanned expenses effectively.

Understanding the distinction between planned and unplanned expenses is essential for effective financial planning and management. By budgeting for planned expenses and maintaining an emergency fund for unexpected costs, individuals can better navigate financial challenges and achieve greater financial stability and security. Adopting proactive strategies and seeking professional advice when needed can further enhance financial resilience and preparedness.

PLANNED AND UNPLANNED EXPENSES AUDIO

READINGS AND VIEWINGS

Khan Academy (2024)

https://www.khanacademy.org/college-careers-more/financial-literacy/xa6995ea67a8e9fdd:budgeting-and-saving/xa6995ea67a8e9fdd:saving-money/a/smart-saving-strategies

Planned and Unplanned Spending

https://www.youtube.com/watch?v=F8oUQSoRM7o

Assessment on planned and unplanned expenses

BUDGETING AUDIO

Long and Short Term Goals Audio