Lesson 11: Borrowing versus savings



  • Single class period


Activity One: Review of Lesson 10 Homework Task

Activity Two: Emma’s car

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When people have the choice to save or to borrow for a particular good or service, it can be difficult to make up their minds about the best course of action to take. Usually there isn’t a right or wrong decision, but it is important to think about the best option for you at the time; an option that is affordable and at the same time meets your needs. In this lesson, students examine different scenarios and weigh up whether it is better to borrow or to save.

Step-by-Step Instructions

Activity One: Review of Lesson 10 Homework Task

1.  Review the Lesson 10: Homework Task and display it on the white/blackboard.

2.  Invite a sample of students to discuss the loan they chose to recommend to Elaine and to give reasons for their choice.

3.  Ask the class whether they found the homework task easy or difficult? Which, if any, aspects did they find difficult, and why?

Activity Two: Emma’s car

1.  Remind the class that you pay more for goods or services when you borrow money than you do if you use money you have saved. The cost of borrowing is called the cost of credit.

2.  Divide the class into pairs.

3.  Display Student Worksheet: Emma’s car on the white/blackboard.

4.  Read through the two scenarios and make sure that everyone in the class understands the terminology in the worksheet.

5.  Ask each pair to discuss and agree upon whether Emma should buy a car now or in September and which car they think that Emma should buy. Explain that there is no right or wrong answer, but each pair must decide on the best solutions for Emma and give reasons for their decisions.

6.  Take feedback from a selection of students.

7.  Tell students to imagine that time has moved on and it is one year later. Emma has had some bad luck. She has been made part-time in her job because the business wasn’t doing so well. Her salary has been cut by almost one-third.

8.  Ask each pair to discuss the implications of Emma’s original car choice on the options she has available to her now.

9.  Take feedback from a sample of paired groups.

10.  Conclude by reminding students that if Emma decided to buy car A then she could do so without borrowing, but because car A was an older model, there was the risk that she would end up paying more money for maintenance/repairs etc. Regardless of whether Emma bought car A or car B she could not have anticipated that she would be made part-time in her job a year later, but this change in her circumstances would affect her differently depending on the car she purchased.


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