Spend, Save, Invest or Donate (9-12)

9, 10, 11, 12

This lesson teaches and reinforces the “economic way of thinking” along with the personal finance terms: spend, save, invest and donate--in the context of making economic decisions or choices with money. The concepts of philanthropy and contributing to the common good are integrated into the lesson and unit. Incentives relating to why people spend, save, invest and donate will also be explored.

PrintThree or Four 45-50 Minute Class Periods

The learner will

  • define philanthropy (philanthropist) as giving time, talent, or treasure, and taking action for the common good.
  • describe the economic and financial concepts of: resources, scarcity, choice, benefits, costs, opportunity cost, interest, interest rate, principal, simple interest, compound interest, compounding.
  • define the vocabulary words spend, save, invest, and donate.
  • discuss motivations for giving, and options for donating.
  • describe choices one can make with money.
  • Chart paper and markers
  • Economics and Money Visual Organizer (Handout One)
  • Personal Finance Definitions: Save, Invest, Spend, Donate (Handout Two)
  • Creating A Spending Plan (Handout Three)
  • Understanding Philanthropy and Nonprofits (Handout Four)
  • Choosing Your Nonprofit (Handout Five)
  • Letter to Families (Optional) (Handout Six)
  • Hand calculators for Day Three (optional)
  • A large jar or clear container for collecting money.
Home Connection 

Interactive Parent/Student Homework:Optional - Send home a note introducing the unit and explaining that the class will be raising money for a donation to a charitable cause. (See Handout Six: Letter to Families.)Homework:A short writing assignment, based on reading (Handout Five: Choosing Your Nonprofit, is included at the end of Day Two. The assignment is due before beginning Day Three activities.

  • The National Endowment for Financial Education® (NEFE®): a non-profit 501 (c) (3) foundation dedicated to helping all Americans acquire the information and gain the skills necessary to take control of their personal finances.
  • http://youth.fdncenter.org/youth_stories.html - Foundation Center, From the Front Lines: Stories from Children & Youth, An extensive listing of brief, fascinating, and inspiring stories of how young people have gotten involved in philanthropy. [no longer available] 
  • https://www.themint.org/kids/ - Excellent explanations and online activities relating to saving, investing and interest, including simple and compounding interest, with a Compounding Interest Calculator.  The When Will You Become a Millionaire challenge and The Power of 72 Calculator are particularly appealing and instructive.
  • https://www.councilforeconed.org/ National Council on Economic Education (NCEE) Economics Minutes, excellent lessons or short reinforcement activities for Grades 6-12 on the concepts of saving, investing, interest, compounding interest


  1. Go through the Economics and Money Visual Organizer (Handout One) to bridge to student prior knowledge about economics. Tell the class that today, and in succeeding lessons, they will be learning about the four things people can do with money with the goal of becoming better money managers themselves. Teacher note: Prior to class, review Personal Finance Definitions: Save, Invest, Spend, Donate (Handout Two). Have students follow along as you discuss the four terms.

    Prior to class, review Personal Finance Definitions: Save, Invest, Spend, Donate (Handout Two). Have students follow along as you discuss the four terms.

  2. Review the definitions using personal or student examples whenever possible.

  3. On four separate pieces of chart paper, list the words: Spend, Save, Invest, and Donate as headings. (Save these charts for later use)

  4. Group Activity (approximately 10 minutes) Arrange the class into four groups to read, research, and take notes regarding key points for each term. Hand out Handout Three: Creating A Spending Plan to students. Ask students to read and highlight important information from the definitions and from Handout Three for transfer to their group’s chart paper, using only the upper two-thirds of each chart paper. On the bottom third of each chart paper, leave room to make a simple T-chart showing Benefits on one side and Opportunity Cost on the other side.

  5. Groups prepare their chart for whole class reporting and viewing. Each group summarizes their findings for the class.

  6. Lead a brief follow-up class discussion after each group reports, generating new ideas/key points to remember for each word. Add words or short phrases to each group’s chart paper as based on whole group contributions.

  7. Teacher Note: Remind students that opportunity costs are individually determined, depend on the ‘eye of the beholder’, and vary according to individual values, preferences, and perceptions.

  8. For each word, consider asking the following questions at the appropriate discussion time:

    1. Why save money? What are some benefits and costs of saving? What is a possible opportunity cost (the next best alternative you give up) of saving? Why should it be the first consideration to “pay yourself first”?
    2. What does it mean to spend money? Why is balance needed between wants and needs? What are some benefits of spending? Some costs? What is an opportunity cost of spending your income?
    3. What does it mean to invest money? When does saving become investing? What are some benefits and costs of investing? What is an opportunity cost of investing? (Money may not be readily available for use).
    4. What does it mean to donate money? What are some benefits and costs of donating? What is a possible opportunity cost for donating to a charity/nonprofit? Why is giving important?
  9. After the discussion, display the four charts in the following manner in the front of the classroom:

  10. Spend Save Donate Invest

  11. Use the charts visual positions to explain that:

  12. Donating is a subset of spending, and donating or giving wisely contributes to the common good.

  13. Investing is a subset of saving. Investing a portion of savings results in higher returns, through compounding of interest.

  14. (Optional) Hand out and review Handout Six: Letter to Families.

  15. Day Two: About Donating Anticipatory Set: Write the definition of common good, “for the benefit of all,” on a display area. Ask students: Who has a responsibility for the common good?

  16. Display the definition of philanthropy: giving time, talent, or treasure, and taking action for the common good. Challenge the class to pronounce “philanthropy” quickly three times?

  17. Discuss the idea that people can give time, talent, or treasure for the common good. They can be philanthropic without having to be wealthy in monetary terms.

  18. Ask what the students’ philanthropic treasure, time and talent might be (money, personal goods of value, time to offer help to someone, talents they might use to help someone in need, etc.)

  19. Discuss how people of all ages donate time, talent, and treasure to a cause, individuals or nonprofit organizations. Use personal, student, or local examples. If time permits, share one of the many inspiring stories of youth philanthropy (see Bibliographical References).

  20. Explain to students that they will be reading about philanthropy and will have an opportunity in the next few days to decide if they want to raise funds for a philanthropic cause. Hand out Handout Four: Understanding Philanthropy and Nonprofits and read together as a class.

  21. Discuss with the class:

    1. Who benefits from philanthropy?
    2. What benefits does the school, neighborhood, community, nation, or world receive?
    3. Is philanthropy a choice? How valuable is this freedom to be philanthropic to our democracy?(If needed, explain that “common good” is an important fundamental democratic principal.)
  22. (Optional) Use the Anne Frank quote from The Common Good section of Handout Four: Understanding Philanthropy and Nonprofits to enhance the discussion: “How wonderful it is that nobody needs to wait a single moment before starting to improve the world."

  23. Brainstorm with students a list of local examples of philanthropy or of charities/nonprofits working for the common good in your community. (Examples could include various school fund drives, local programs for hungry and homeless people, arts events, faith based programs, local parks, environmental groups, etc.)

  24. Assign Homework: Hand out and review the assignment using Handout Five: Choosing Your Nonprofit. Writing assignment should be completed before beginning Day Three of this lesson.

  25. Researching specific local charities/nonprofits by your local zip code(s) can be done at: www.guidestar.org. Type in the zip code in the Find Nonprofits Search box for a list of nonprofits in your area. To locate further information about the nonprofit’s mission, register free for Guide Star Basic by submitting your e-mail address and a password.

  26. Ask students to reflect on:

    1. how what they have learned thus far might impact their attitudes and behavior regarding money.
    2. whether or not the act of philanthropy can be considered as an “investment.”
  27. Conclude Day Two by explaining that what you have done today is preparation for making a choice in Day Three of the charity(ies) the class wishes to support in a class fund-raising campaign.

  28. Teacher Note: Prior to Day Three, research an Internet interest calculator (Search by using keyword: interest calculator, or compound interest calculator) to demonstrate to students how small amounts of savings can provide big returns when left alone with interest compounded.

    Part One: Saving and Investing (20-35 minutes) Part Two: Choosing a Nonprofit (10-15 minutes)

    Teacher Note: Part One is designed to address the concepts of investing, interest, and computing simple interest and compound interest. Basic math percentage and decimal computations are involved, mental math, paper and pencil calculations, and also calculators, so students may better appreciate the power that compounding interest has for their own investing futures. Assess how much of this content is appropriate for your students and adjust the lesson accordingly. If more time is needed to effectively learn the concepts, the Part Two activities can be postponed to another day. See Bibliographical References for other resources to teach compounding.

    Anticipatory Set: Write the following sentence on a display area and discuss: “It isn’t what you make, but what you save and invest, that determines your wealth.” Ask students to suggest what things affect how saved and invested money work for people in the long-term. Lead the discussion to include these three things:

    1. the amount you save
    2. the rate of interest you receive
    3. the length of time you leave money and interest earnings in an account
  29. Refer to the “invest” chart paper from Day One and explain that when it comes to money invested, there are only two broad types of investments, you can either “loan it “or you can “own it”.

    1. When you “loan it”, you let someone use your money for a period of time. Your money grows by receiving additional money payments (interest) from other individuals or groups such as banks, companies, governments, etc., who pay you for the privilege of being able to use the money you loaned (invested) with them. Examples are checking accounts, savings accounts, money market accounts, Certificates of Deposit (CD’s), Treasury bills, notes, and bonds, corporate and municipal bonds. Money payments received over and above what was originally loaned out, (invested by you), is called interest. It is like being paid “rent” for being able to use your money.
    2. When you “own it”, you exchange your money for something else, usually something like common stock in a company, a mutual fund, real estate property of some kind, gold, or collectible items such as rare coins, etc. When you “own it”, you are not promised a return on your money. To get your money back, you would have to sell it with the hope of getting more than you paid for it. There is no guarantee here.
  30. Explain that “interest is interesting” because it can go two ways, it can be a benefit and a cost. As well as being a source of income (benefit), it might also have to be paid to someone else for the privilege of borrowing (cost).

  31. Explain that interest is simply the money payment for being able to use someone else’s money. Interest is either “payments spent for the use of borrowed money or payments received (income) for invested money”, depending on which side of the transaction one is on. When one saves and then invests money, it is the money received. When one borrows, it is the additional money one spends for that privilege.

  32. Explain to students:

    1. Principal is the original amount of money set aside to invest such as in a savings account, without including interest earned.The interest rate (expressed as a percentage of the principal) is the price paid for using someone else’s money.
    2. Simple interest is paid to the depositor when it is earned and is not added to the principal.
    3. Compound interest is interest earned on savings that includes previously earned interest. Interest earned in any time period is added to the principal.Future interest calculations are made on the higher amount of the original principal plus the interest that was added to it.Over the long- term, this is like a snowball that keeps getting bigger, as long as the interest earned is reinvested.
  33. Show on a display area or use an Internet interest calculator to show appropriate computations of simple interest earned on principal and compounding of interest differences.

  34. Ask students to calculate various simple interest rate percentages, properly converting percents to decimals, and correctly multiply to obtain the interest amount.

  35. Ask students what will happen, if interest is added to the principal from the first time period. (Interest earned will be higher because the principal has increased due to interest being added to it from the previous time period.)

  36. Now calculate a compound interest example through at least three time periods with the same interest rate and the same principal amount, so students can see and follow the compounding process. Students should notice that each time period they earned interest; they earned more than they did the last time.

  37. Assign a compound interest calculation for student practice over at least three time periods. Check their work to be sure they understand. Then check with calculators to see if they come up with the same answers.

  38. An online Compounding Calculator, such as the one found at http://www.themint.org/kids/compounding-calculator.html can be used to show students the power of compounding interest stretched over more years. Simply type in the amount saved each year, the interest rate earned, and the number of years invested and click on “Calculate” to see the power of investing and compounded interest.

  39. Part Two of Day Three: Choosing a Nonprofit (10 -15 minutes)

  40. Ask the students to reflect on some reasons why people give time, talent, or treasure.Challenge the students to raise money to make a class donation. Review the benefits of donating from the chart.Talk about the costs of donating and remind students that every choice they make has an opportunity cost.

  41. Review the economic reality of scarcity, “the condition of not being able to have all of the goods and services that you want.” Tell the students that many nonprofits exist in response to scarcity.

  42. Remind students that because of scarcity, everyone is forced to make choices. Emphasize that every choice, even the choice to choose a nonprofit, has an opportunity cost.

  43. Refer to the Homework from the previous lesson. Ask the class to determine their top three philanthropic causes by taking a class opinion poll. Read the list of categories from Handout Five: Choosing Your Nonprofit and ask students to raise their hands for their top three causes. Count the number of votes for each cause to determine the class’ priorities. (Add others as appropriate from student suggestions.)

  44. If time permits, brainstorm, using the original “donate” chart, local people, organizations, and/or charitable groups who could make good use of donations for those three charitable causes.

  45. Tell students they will decide on another day about a specific nonprofit charity (or possibly more than one) to benefit from their class fund-raising efforts by using an economic decision making model.

  46. Show the students the jar for collecting money. Talk with the students about where the money might come from. They are not to solicit money—it should come from them, families, peers, or from an organized class fund-raising activity. Students could donate spare change, offer to do jobs to earn money to donate, work with parents to come up with ideas, or conduct a fund-raiser in the school or community.

  47. Place a small financial contribution of your own in the jar so all can see. Tell students you are confident they will make a good decision in choosing a specific cause for the donation.

  48. If time permits, debrief Day Three by posing questions such as:


Ask students to identify real life examples of scarcity and opportunity cost. Ask students to reflect in writing on why people give, or why they personally think it is important to give or donate.

Philanthropy Framework

  1. Strand PHIL.I Definitions of Philanthropy
    1. Standard DP 03. Names and Types of Organizations within the Civil Society Sector
      1. Benchmark MS.2 Discuss examples of civil society organizations from a list of categories of organizations.
  2. Strand PHIL.II Philanthropy and Civil Society
    1. Standard PCS 03. Philanthropy and Economics
      1. Benchmark MS.3 Give examples of <i>opportunity cost</i> related to philanthropic giving by individuals and corporations.
  3. Strand PHIL.III Philanthropy and the Individual
    1. Standard PI 01. Reasons for Individual Philanthropy
      1. Benchmark MS.5 Describe the responsibility students have to act in the civil society sector to improve the common good.
      2. Benchmark MS.6 Identify and explain how fundamental democratic principles relate to philanthropic activities.