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USA National Standards for Concept "Saving"

NATIONAL STANDARD 10 - INSTITUTIONS: Students will understand that: Institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor unions, markets, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy.

Students will be able to use this knowledge to: Describe the roles of various economic institutions.

Institutions play a number of roles in a market economy. Property rights help insure that people bear the costs and reap the benefits of their decisions. Property rights and contract enforcement encourage investment by assuring investors that they will reap the rewards of deferring consumption and assuming risk if these investments perform well. Limiting individual liability and allowing people to pool their investment resources through joint stock corporations also increases investment and future income.

Other institutions lower the costs buyers and sellers incur in their efforts to find each other in different kinds of markets. For example, banks match savers with borrowers; and investment banks match entrepreneurs who organize new firms with investors who provide the needed funds.

Many institutions work to promote the goals of certain interest groups. Labor union, for example, increase the negotiating power of workers in their dealings with employers.

Understanding economic institutions and the purposes they serve will help students use institutions more effectively and help them evaluate proposed new institutions or changes in the existing legal and institutional environment.

You can find additional online lessons on US Standard 10 from the Council for Economic Education Website.

Financial Literacy 2 - BUYING GOODS AND SERVICES: People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed spending decisions, which entails collecting information, planning, and budgeting.

The 4th grade benchmarks introduce the concepts of scarcity, choice, and opportunity cost. Factors that influence spending choices, such as advertising, peer pressure, and spending choices of others, are analyzed. Attention is given to comparing the costs and benefits of spending decisions. The basics of budgeting and planning are introduced. The 8th grade benchmarks expand upon these concepts. More attention is paid to making a spending decision. Payment methods are introduced along with the importance of weighing the costs and benefits of each. Budgeting is discussed in more detail, including the classification of expenses. The 12th grade benchmarks frame a consumer’s decision using economic ideas such as satisfaction, determinants of demand, costs of information search, choice of product durability and other features, and the role of government and other institutions in providing information for consumers.

Financial Literacy 3 - SAVING: Saving is the part of income that people choose to set aside for future uses. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates, and inflation affect the value of savings.

At the 4th grade level, the primary focus is for students to understand the concept of saving. Students should know how people save money, where people can save money, and why people save money, as well as the concept of interest. At the 8th grade level, the focus turns to the role that financial institutions play as intermediaries between savers and borrowers as well as the role government agencies such as the Federal Deposit Insurance Corporation (FDIC) play in protecting savings deposits. The role of markets in determining interest rates is introduced. Finally, the mathematics of saving is covered, including the power of compound interest. All of this is framed around the choices people make about how much to save. At the 12th grade level, more complex concepts are introduced, such as real versus nominal interest rates, present versus future value, financial regulators, the factors determining the value of a person’s savings over time, automatic savings plans, “rainy-day” funds, and saving for retirement.