Spotted on my Facebook newsfeed: New Year’s resolution to save, based on this blog post, which shows a money challenge that results in an extra $1378 at the end of the year.
The original blog post comments have become a flame war of sorts. Folks call $1378 practically nothing and others pipe up to defend saving at all. There are arguments about luxuries versus necessities. Some say that putting money in bank accounts is stupid.
However, there are some comments that could spark a discussion related to arithmetic sequences and series and the feasibility of doing these savings challenges in real life:
1) “I’d think it would be easier to deposit $25 per week = $1300. I’d think the larger amounts would be more difficult for some people to cough up each week, and they’d give up. Now if they can add $2 more per week, that would give them $1404 in the end. Or give them several options just to show what they could end up with in different denominations, ie $50 and $100. $2600 and $5200….”
2) “yes, people living in poverty are not in a position to save for a ski holiday. the beauty of this idea is that
it makes it a bit more fun
in the first month or so, it helps form a painless (for most people) habit. the difficulty of putting in $25 per week (and more) is balanced by the difficulty in letting yourself down by abandoning the dream/ project. personally, I’d find putting $25 in a jar hard to start, but I’d also find giving up on my habit of the past 6 months hard.”
3) “We have done this the last few years but do it backwards, for us it was much more feasible to save the bigger amounts earlier in the year compared to during the holiday season.”
4) “So do it in different increments instead. You could do $0.25 or $0.50 increments. You won’t save as fast, but it’s better than nothing.”
5) Someone even suggested a geometric sequence: ““DOUBLE IT”
Starts off in cents so you may be able to do it day after day at first however when as the game gets further just do it when you budget and save to finish your game goal. Challenge yourself make it a great goal of money.
Day 1. -One little penny. “Double it” Day 2- two pennies
Day 3 – only four lousy pennies (it’s small now oh but wait there’ more.
Day 5 – 8 pennies (Don’t cheat now and put all of it in for the week this is where the game comes into play and you start building your discipline for when it starts getting difficult. It makes it so you want to participate all the way through starting with only a penny. you will want to be putting money aside for the days to come because it starts growing fast after we are on day 11.
Day 6 – 16 cents. Day lucky 7 – 32 cents
Day 8 – 64 cents Day 9 – $1.28
Day 10 – $2.56. Day 11 – $5.12
Day 12 or day of 12th deposit – $ 10.24 and so on”
One of the syllabus topics in IB Math Studies is financial mathematics. I teach this unit in 12th grade (right around the time of college applications). This year I had the students research a college to which they are applying so that they could examine costs of college using the math they have learned (particularly inflation and compound interest). I wish I’d been able to include more of the topics (depreciation, currency conversion, simple interest, loan repayment tables).
How Much Will College Cost Me?
The goal of this project is to prepare you for the costs of college life. After high school graduation, it will be very important to keep track of your money. If your family is providing you with financial support or you are paying for your own college education, it is best to know what expenses to expect!
1) College Research
For a college to which you are applying, research the following and provide screenshots and URLs as evidence.
2) Loan Repayments
Calculate monthly repayments for tuition and fees for all your years of college. For instance, you might go to a college for four years or attend community college for two years and transfer. Assume inflation of 7% per year for tuition and fees to calculate the total amount owed. You can use the calculator at http://www.finaid.org/calculators/loanpayments.phtml and provide a screenshot.
Is the college of your choice near your home? If so, would you consider living at home? List at least three reasons for why/why not.
If the college of your choice would not allow for living at home, compare two housing options (on-campus, off-campus). What are advantages and disadvantages of each?
4) Freshman Classes
Find four freshman classes that you are interested in taking. Explain why you chose these classes. Find the syllabi and what books are required, then find the prices of these books online (with screenshots and URLs).
Find three scholarships that you can apply to. Explain how much money they are awarding, why you chose them, and what the major requirements are (due dates, essays, etc.). Provide URLs.
6) Part-time Jobs
Find two potential part-time jobs near your college. Explain why you are interested in those jobs. What are the salaries? How much would you make, before taxes, if you worked up to 20 hours per week during the school year?
7) What If…
What if you had to put one semester’s worth of tuition on a credit card because of an emergency? Choose a credit card and provided screenshots and a URL of the interest rate and any late fees. What would your balance become if you could only pay $100 per month for a year? Show your calculations.
8) Ask a College Student
Ask a JQUS alumnus/alumna about their freshman year experience with college expenses. What expenses surprised them the most? How did they learn how to deal with finances on their own?
Unit 2 Project – College Expenses
In the project submissions, I found that the students had a hard time applying the math concepts in Questions 2 and 7. For Question 2, I should have said “leave the loan interest rate at 6.8% and compute it for 30 years of repayments.” Some students put 7% in because they thought inflation was the interest rate. Many students put in a short repayment (e.g., 4 years) and ended up with monthly payments over $3500. Many students put in only for one year’s worth of tuition rather than 4. For Question 7, some students found cards with 0% intro APR but put in the regular interest rate anyway. Many students calculated interest for a single month and assumed that it would be for the whole year of attempting to pay it off. Not a single one did the calculations that showed how $100 payments for each month would impact the compounding and what would happen to the balance at the end of a year. I’d like to expand more upon this question in future iterations of the project.