1. Savings
Cents make Euros
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2. Aim of the Lesson
To help students understand what savings are, the necessity of savings in certain situations, different methods of saving, the advantages of savings and the need to save for a pension.
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3. What are savings?
Savings occur when people do not spend all their income.
This can be done deliberately or it can just happen.
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4. Interest
Most banks pay you for the privilege of having your money, provided you put it in a deposit account. This is known as interest.
Fixed interest means the rate of interest is agreed for a period in advance and even if the normal interest rates that most banks are giving goes up or down that interest rate remains the same.
Variable interest rates change and can go up or down.
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5. Why do people save? Because they have too much income.
In case of emergencies. For example health problems.
For something in the future. For example their children’s education.
For an upcoming event. For example holiday or daughter’s wedding.
For something that they really need, but cannot afford at the moment and they know to buy the item using credit is too expensive.
For their old age, when they can no longer work.
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6. What can people do with their savings?
Put it under the bed and hope the thief does not visit.
Put in a current account. Problem here is one receives no interest and the bank will charge them a fee for looking after the account.
Put it in a deposit account, where it will earn interest, but the interest rate needs to be higher than the inflation rate in the country or the money will loose it’s real buying power.
Buy property, antiques or shares. (More about that next lesson.)
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7. Choice depends on
Do you want to be sure your investment (capital) is safe or are you prepared to risk it.
Tax implications.
Rate of inflation in comparison to the rate of interest you get in a bank.
How fast you might need access to your money.
The amount of hassle you are prepared to undertake in order to increase your wealth or preserve your spending power.
The amount of money you have.
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8. I save a regular amount and my piggy gets fatter and fatter.
Instalment Savings
Here the saver puts in a certain amount every week or every month for an agreed period.
I save a regular amount and my piggy gets fatter and fatter.
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9. DIRT (Deposit Interest Retention Tax)
This is the tax collected by the government, on the interest earned on money invested in financial institutions.
It is collected by the financial institution so the saver never gets it.
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10. Post Office Savings Visit this website for more info:…
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11. Security of Capital
Most customers will be concerned that the money, they invested known as their Capital will be secure.
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12. How quick can you get access to your money?
The longer a saver agrees to give their money to the bank the greater the interest.
If the money is on demand, meaning the saver can go into the bank and ask for the money any day, the interest rate will be low.
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13. The larger the amount of money
Some banks offer a greater rate of interest, if the amount lodged is a large amount.
I have very little money, so banks will give me a lower rate of interest.
I have a spare million, so I have lots of money to give the bank and they will give me loads of interest.
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14. Benefits of savings to the country
Without savings banks would have no money to lend to people, who want to borrow.
Hence property prices would fall due to lack of demand.
If people were not buying property or repairing it, jobs would be lost.
Large businesses would not be able to borrow to build factories etc, so less jobs and less spend power in the country.
Less tax collected by the government, so less money for roads, health, education etc.
People would have no money for emergencies and the government may have to step in.
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15. To open an account in Ireland at the moment you need:
Current Photo Id (For example passport or driver’s licence.)
Proof of residence (For example an ESB bill.)
Why do you think these are necessary to open an account?
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16. Pensions
When people save for their old age, they are saving for their pension.
The government encourages this because, if people have enough money to pay for their expenses in old age the government will not have to help them.
The earlier one starts to save for a pension the better, because they will have more money and the pension company will have had the money for longer, hence they have been able to make more money with it.
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17. Government Pensions
In Ireland at the moment the government will only give an Old Age Contributory pension, if you have paid PRSI for a certain period of your working life.
If you are not entitled to an Old Age Contributory pension and pass a means test by having very little income, savings or property, you will get the Non-Contributory Old Age Pension.
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18. Savings
The End
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