Lesson 8

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Personal Finance

In this lesson, students learn about the basic monthly expenses adults must pay for. They imagine what kind of lifestyle they will have as young adults on their own, and what nonessential expenses this lifestyle might incur. They develop a monthly expense budget for themselves at age 25 as a means of understanding the concept of discretionary income and the role of salary when considering a career. Next, students learn basic concepts about banking, including the difference between checking and savings accounts, interest accrual, how to write a check, and the advantages of a bank or a credit union compared to a check cashing or payday loan store. Students develop flash cards to help them review all the content they have learned in this lesson, and then take a test.

Make It Local  | This lesson requires the use of accurate financial information about the cost of living in your community. Make sure to obtain this information before beginning this lesson. See Teacher Resource 8.1 for more detail.

Advance Preparation

–   Before Class Period 1, glue the cards for the game onto poster board to make them easier to handle and more durable.

–   Class Period 3 focuses on an interactive PowerPoint presentation. Prepare the notes you will use during this presentation using Teacher Resource 8.2, Interactive Presentation Notes and Instructions: On Banking (includes separate PowerPoint file).

This lesson is expected to take 6 class periods.

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Lesson Framework

Learning Objectives

Each student will:

–   Identify common types of expenditures in a monthly expense budget

–   Create a monthly personal expense budget that illustrates what the student projects his expenses to be at the age of 25, single, and living in the local community

–   Compare and contrast potential earnings in selected occupational field to identified needs, wants, and lifestyle choices for monthly budget

–   Display understanding of financial planning skills

–   Summarize the meaning of basic personal finance terminology

–   Display understanding of traditional and online methods of managing checking accounts

–   Describe the purposes of and differences among check cashing businesses, banks, and credit unions

Academic Standards

–   Effective Online Research is a cross-cutting skill that applies to a ranges of inquiry activities, academic projects and assignments.

–   For a relevant correlation, see the 21st century skills listed below and consult the P21 Skills Frameworks, in particular Information Literacy (http://www.p21.org/overview/skills-framework/264).

21^st Century Skills

This lesson focuses on the following 21^st century skills:

–   Communication skills: Students demonstrate listening, speaking, reading, writing, presenting, and non-verbal communication that clearly demonstrates their skills and knowledge

–   Critical and creative thinking, reasoning, and solution seeking: Students demonstrate skills that help them acquire knowledge, comprehend, apply, analyze, synthesize, evaluate, think dialectically and about their thinking (meta-cognition)

Assessment

ASSESSMENT PRODUCT	MEANS OF ASSESSMENT
Test on banking (Teacher Resource 8.5)	Answer Key: Test on Banking (Teacher Resource 8.6)

–   Understanding of basic living expenses

–   Grasp of the relationship between income and standard of living

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Instructional Materials

Teacher Resources

–   Teacher Resource 8.1, Guide: Guess the Cost Game

–   Teacher Resource 8.2, Interactive Presentation Notes and Instructions: On Banking (includes separate PowerPoint file)

–   Teacher Resource 8.3, Flash Cards: Banking (separate Word file)

–   Teacher Resource 8.4, Key: Flash Cards on Banking

–   Teacher Resource 8.5, Test: Banking

–   Teacher Resource 8.6, Answer Key: Test on Banking

–   Teacher Resource 8.7, Key Vocabulary: Personal Finance

–   Teacher Resource 8.8, Bibliography: Personal Finance

Student Resources

–   Student Resource 8.1, Worksheet: Creating a Monthly Budget

–   Student Resource 8.2, Anticipation Guide: Personal Finance Terms

–   Student Resource 8.3, Reading: I Need to Stop at the Bank

–   Student Resource 8.4, Worksheet: On Banking

–   Student Resource 8.5, Reading: On Banking

–   Student Resource 8.6, Guided Practice: Managing a Checking Account

–   Student Resource 8.7, Reading: Online Banking and Bank Statements

Equipment and Supplies

–   Whiteboard, blackboard

–   Small poster boards

–   Index cards (five per student)

–   Computer and LCD projector

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Lesson Steps

CLASS PERIOD 1

INSTRUCTION

Make It Local  | Before beginning this activity, make sure to have the necessary research complete. Revise Teacher Resource 8.1 and Student Resource 8.1 as needed. See Teacher Resource 8.1 for more details.

–   When students enter the classroom, explain that they are going to play a classroom version of the game show The Price Is Right™. Summarize how the game is played.

–   Distribute index cards (five per student).

–   Explain that the “items up for bid” are different average monthly expenses a single person living in their local community might pay.

–   Explain that you will point to one item at a time. Students will have 20 seconds to guess the price of the item, write that number on an index card, and quickly raise the card in the air. The student who gets closest to the right price (without going over) wins the round.

–   Start keeping track of students who win each round on the board. After the class has covered all of the different expenditures, call on a couple of the winning “bidders” to explain their financial savvy. What are their sources of information for how much things cost?

–   Explain that the costs a person anticipates incurring during a given month is called an “expense budget.” Budgets can cover any span of time—a week, a month, a year—but months are a good amount of time to work with, because most bills have to be paid every month. (Note: The terms budget and expense budget will be used synonymously in this lesson.)

–   Have pairs of students calculate the lowest possible monthly budget based on the choices available (i.e., shared apartment rent, no car). Does the amount seem low, high, or just what they expected? Why?

–   If time allows, invite students who have lived in other countries (or even other regions of the United States) to share how the expenses of someone living in the local community compare to living expenses in another region or country. This provides an opportunity for students to gain some perspective on how cost of living varies around the country and around the world.

DIFFERENTIATION Provide instructions for this activity in students’ primary language(s), either through verbal translation or by writing up instructions and having them translated in advance. English learners should be able to identify the items being “bid” on by the images on the poster. If necessary, provide additional images so students fully appreciate what they are bidding on (for example, additional images may make it clear whether they are paying a cell phone bill or a landline phone bill).

 

STEP 2, DISCUSSION CREATING A FUTURE EXPENSE BUDGET

25 minutes

INSTRUCTION

–   Distribute Student Resource 8.1, Worksheet: Creating a Monthly Budget.

–   Have students complete the worksheet individually. Note that, even though the categories in the table are basic monthly expenses, not everyone will use every category listed (e.g., some students may choose to not own a car and will not have car payments, insurance, or gas expenditures). In addition, some students will have more “extra expenses” than others. Extra expenses will include items that are discretionary, or optional, for some students, but will seem necessary to others.

–   For students who choose not to own a car, ask them to figure out how much they save every month by not taking on this expense.

–   If students are not sure what to include as extra expenses, you can suggest examples, such as:

· Eating out, snacks, coffee with friends, etc.

· Clothes

· Entertainment (cable TV, movies, vacations)

· Computer/software/technology

· Fitness (classes or gym membership)

· Gifts

· Hobbies

· Hair cuts, manicures, cosmetics

· Also be sure to mention health insurance (not all employers provide), savings (e.g., emergency fund equal to three to six months of expenses), and retirement

–   After students have tallied the expenses to create their total monthly expense budgets, have them form groups of four to share their budgets.

–   After several minutes, call on one person to speak for each group, citing the highest and lowest budgets in the group, and which expenditures accounted for the differences. Have students consider how much discretionary income they think they will need—money for nonessentials such as a flat screen TV or eating out.

–   Explain to students that they will be keeping these budgets in mind when they explore an occupation in the upcoming activities.

 

CLASS PERIOD 2

INSTRUCTION

–   Begin by distributing Student Resource 8.2. Explain that students probably already know some common personal finance and banking terms. Ask students to read the terms on this worksheet and do their best to predict or guess what each term means. Tell them not to worry about the “What I Learned” column yet. Explain that it is very important to feel comfortable with all of these terms, because they will be using them throughout their adult lives.

–   Give students a few minutes to fill in the “What I Guessed” sections of their chart. Then distribute Student Resource 8.3. Explain that this skit will explain what the terms mean.

–   Call on three volunteers to come to the front of the room to read the first part of the skit aloud. Instruct the rest of the students to follow along on Student Resource 8.3. As they follow along, ask students to circle, underline, or highlight any terms they see that they recognize from Student Resource 8.2.

–   Have the three volunteers read the first part (up until it says “Stop here”). Thank the volunteers and have them return to their seats. Then ask all students to go back and add to or revise their answers to the first part of Student Resource 8.2 based on what they learned from the skit. Use the example provided to help students recognize that even if they correctly defined the term, they may be able to add to their definition. If they guessed wrong, this is their chance to write down the correct definition.

–   Give students a few minutes to complete the “What I Learned” sections of the first chart. Then call on three new volunteers to come to the front of the room to read the second part of the skit. Again, have the rest of the students follow along and circle, underline, or highlight terms they recognize.

–   Have the three new volunteers read the rest of the skit. Thank them and have them return to their seats. Then ask all students to go back and add to or revise their answers to the second part of Student Resource 8.2.

–   When students have finished, divide the class into groups of three or four and have students compare their answers with their group mates.

–   Call on groups to provide their responses on one term; ask for a show of hands to see if everyone else agrees with their answers. Use this opportunity to ensure that everyone has the correct information written down for each term and to clear up any confusion.

–   At the end of the class period, collect Student Resource 8.2 and assess on a credit/no credit basis. Make note of any terms that students seem to be consistently confused on and take time to review those in more detail with the entire class.

 

DIFFERENTIATION This lesson introduces a lot of new vocabulary that can be particularly difficult for English learners because the terms are conceptual and abstract. If you have a large number of English learners, consider making time for one or more of the following vocabulary techniques: –   Have students keep a vocabulary journal which documents new words, definitions, and how to use them correctly. Take time for students to add to the journals on a regular basis and use flash cards, vocabulary quizzes, word games, and other activities to reinforce these terms. –   Create a “word wall” by posting unfamiliar terms on the wall of the classroom. Words can be listed alphabetically, grouped by parts of speech, or organized in some other manner. Consider taking five minutes at the start of class for a “warm-up” or “bell ringer” activity to help students practice using words from the word wall. –   When introducing words that are new to all students, consider introducing them in multiple languages. For example, state the word in English and define it, and then ask an English-fluent bilingual student to translate the word into Spanish, Chinese, Vietnamese, etc., for other less-English-fluent students. This helps the less fluent students to understand the vocabulary better, teaches some non-English words to the English-speaking students, and challenges the bilingual students to make sure they fully understand the words they are translating.

 

CLASS PERIOD 3

INSTRUCTION

–   Tell students that they will now see a presentation about banking and have a chance to use some of the terms that they learned in the previous class period. Have students read through Student Resource 8.4, Worksheet: On Banking, so that they will know what information to look for in the presentation.

–   Show the presentation (or have students read Student Resource 8.5). Use the suggestions in Teacher Resource 8.2, Interactive Presentation Notes and Instructions, to stop at key points and conduct brief activities with the students. These will help students understand the content and help to keep them engaged with the material. Note that students will complete one section of Student Resource 8.6, Guided Practice: Managing a Checking Account, as one of the interactive activities embedded in the presentation.

–   When the presentation is complete, ask students: What is one thing you learned from this presentation that you didn’t know before? Call on volunteers to share. Clarify any misunderstandings. Tell students to keep Student Resource 8.6, Guided Practice: Managing a Checking Account, ready to complete in the next class period.

–   Remind students that they will have a test on this material later in the lesson. Encourage students to take time to review their notes and identify anything that is still confusing for them, so that they can ask questions in the next class period.

 

DIFFERENTIATION If you have a large number of English learners, you may wish to try an alternate strategy. Divide the class into groups, placing at least one or two strong English language speakers in each group. Ask students to read each page silently, and then work together to write a one-sentence summary of that page. Demonstrate the process with the first page or two of the presentation. Then have students complete the process for the entire reading. When students have finished, ask the class to share their summary sentences and compare them to their classmates’ work. This provides an opportunity for you to catch and resolve any misunderstandings right away. Keep in mind that if you use this approach, you will need to allow additional class time to complete Student Resource 8.6.

 

CLASS PERIOD 4

INSTRUCTION

–   When students enter class, ask them to get out Student Resource 8.6, which they worked on during the last class period. Direct them to the check register they helped to fill out and ask them to look for the answers to the questions posted on the board. Call on a volunteer to answer the first question, and repeat the process with the following questions. Correct answers are:

· Current balance: $121.23

· Last check written was: 103

· Only one check has cleared the account: check 101 for $23.00

–   Take this opportunity to clear up any misunderstandings about check registers. Then distribute Student Resource 8.7.

–   Ask students to look at the first section (Tre Learns about Online Banking). Point out that they need to read a little bit about Tre and then answer the questions at the bottom of the page (below the account statement image).

–   Give students a few minutes to answer the questions. Then ask students to pair up and compare their answers. Call on a volunteer to share one thing they noticed was missing from Tre’s online Account Activity statement. Repeat the process until students have answered all the questions at the bottom of that page.

–   Then read through the next section (Tre Receives His Bank Statement) as a class and review the projected example bank statement together. Ask volunteers to come up and point out where the following appear on the statement:

· Account number

· Statement date (note that people find it helpful to file statements according to the date in a folder so that it’s easier to find a specific piece of information when needed)

· Account balance

· Choose other elements at random, as time allows. For example, what is the total amount of withdrawals? You can also challenge students to tell you what “transaction” means, what “itemized transactions” are, and so on.

–   Complete this activity by asking students whether they think they’d use online or paper statements to review their banking activity for the month, and why. Ask volunteers to share their answers; use this opportunity to check that students fully grasp the similarities and differences between paper and online statements versus check registers.

DIFFERENTIATION It may be difficult for English learners to grasp the difference between a check register, an online listing of Account Activity, and a printed bank statement. Consider taking additional time (or providing additional examples) to help students understand the function of each of these account tracking tools. You may wish to help students fill out a chart or graphic organizer that helps them to recognize the similarities and differences between the three tools.

 

STEP 6, TEST PREPARATION MAKING FLASH CARDS

20 minutes

INSTRUCTION

–   Explain to students that, in addition to notes and worksheets such as the ones they’ve filled out with the presentation and readings, flash cards are another effective technique for studying for a test. They will be completing flash cards and using them to study with during this period.

–   Distribute copies of Teacher Resource 8.3, Flash Cards: Banking (separate Word file), so that each student has a set. As an alternative, have students create their own flash cards to save on printing.

–   In pairs, have students read the definition that is printed on one side of the flash card, and then have them write the term it defines on the other side of the flash card.

–   When five minutes remain in class, ask for volunteers to share the term they wrote for each flash card. Make sure everyone is checking to make sure they wrote down the correct term on their own flash cards.

–   When the class period comes to an end, tell students that they can study their flash cards and other resources for homework so that they are well prepared for the test. Tell them that they will also have a chance to study for the test in the next class period.

DIFFERENTIATION For students with extremely limited English, you may wish to create a set of flash cards that already have the terms filled in. Have them spend time adding images or notes in their primary language(s) so that the flash cards are truly useful for them as a study tool.

 

CLASS PERIOD 5

INSTRUCTION

–   Begin class by asking students to get out their completed flash cards. Have students form groups of four. Using their sets of flash cards, instruct group members to take turns holding up a card and having the other three group members come up with the term. Tell students to sometimes ask their group mates to say the definition and sometimes to say the term. Explain that this variation will help them to remember the material more effectively.

–   After approximately 15 minutes, have students return to their seats for you to read some flash cards to the class as a whole, and then call on volunteers popcorn style.

 

STEP 8, TEST PREPARATION STUDY TIME

30 minutes

INSTRUCTION

–   Remind students that in the next class period they are going to take a test on everything they have learned in this lesson. Point out that the information they learned can be divided into three different categories, and they have a tool to help them study for each category.

· One category is “Vocabulary,” and they have just made flash cards to help them study the vocabulary.

· The second category is “Banking Concepts,” which students can review by reading over the worksheet and reading on banking (Student Resources 8.4 and 8.5).

· The third category is “Managing a Checking Account,” including how to write a check, how to update a check register, and how to reconcile a check register with a bank statement. To review this, students can look at Student Resources 8.6 and 8.7.

–   Explain that students have the rest of the class period to study. Ask them to think about which of the three topics they feel they need the most help with. Then point out the signs around the room. Ask students to take their notes, etc., and move to the sign that represents the topic they want to focus on. In other words, if they are still very confused about banks and how banks work, they should go to the sign that says “Banking Concepts.” If students feel that they are equally confused by (or comfortable with) all the topics, they should go to the sign that reads “Everything.”

–   In this way, you should end up with four large groups. Then ask students to think back to Lesson 5, when they took the Multiple Intelligences Survey. Remind students that at the time, they talked about how they might be able to use their intelligences to help them study material for different classes. Point out that this is an excellent opportunity to try to do that. For example:

· If students know they have strong Visual-Spatial Intelligence, they may do better if they color-code their notes or try to picture the flash cards in their head.

· Students with strong Intrapersonal Intelligence may do better studying alone.

· Students with strong Interpersonal Intelligence will probably be more successful at studying in a small group.

· Students with strong Musical-Rhythmic Intelligence may have an easier time memorizing if they set the terms and concepts to a rhythm or make up a song or rap about it.

–   Encourage students to think about these different approaches and to try them out as they take time to study.

–   You may wish to break up the four large groups into smaller groups, but make sure to honor students who choose to work alone or in a group because of their particular intelligence types. You may wish to remind Interpersonal learners that they will only learn if they talk to their group about the content of the test, rather than chatting about their favorite TV show or what happened at last night’s game.

–   While students are working, circulate through the four areas of the room and offer to go over any particular concepts with students or answer any questions. By having the room divided into these four sections, you will have a better chance of reviewing material with students who genuinely need help on that topic.

–   When the class period comes to an end, remind students to study for homework.

 

DIFFERENTIATION If you have a large number of English learners, you may wish to adjust the grouping method to be more accommodating to their needs. For example, you might wish to let them study for 15 minutes with students who speak the same primary language and then ask them to study for 15 minutes with students who only speak English. Alternately, you might wish to form groups based on what content they need to review, but make sure that each group includes some bilingual or English-only students along with some English learners.

 

CLASS PERIOD 6

INSTRUCTION

–   Distribute copies of Teacher Resource 8.5, Test: Banking.

–   Have students take the test. Allow approximately 30 minutes to take the test. After students have finished, collect the tests for assessment using Teacher Resource 8.6, Answer Key: Test on Banking.

–   Then, go over each test question as a class. Call on volunteers to share what they believe to be the correct responses. Clarify any questions or misconceptions students may have about this material.

 

DIFFERENTIATION You may wish to allow additional time for English learners to complete the test. If you have a large number of students with limited English proficiency, you may wish to revise the test so that you can assess the content without requiring students to do so much writing in English. For example, if you have students who speak very little English, revise the questions so that students can respond with a very short answer— yes or no questions, or questions that present a choice (is it Answer A or Answer B?). If your students have developing English skills, you can ask questions that can be answered in a phrase or a short sentence, and make allowances for English errors.

 

STEP 10, REFLECTION WHAT I LEARNED

5 minutes

INSTRUCTION

–   Ask students to look at the questions posted on the board. Call on volunteers, popcorn style, to share their response to one question.

–   Conclude this lesson by noting that the more financially literate they are, the smarter they will be with their money. You may also wish to inform students of additional pathways to financial literacy (e.g., programs and academies that focus on finance) at your school.

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Extensions

Enrichment

–   Make arrangements to have students play online games to help them develop their money management skills. Because these games are interactive and dependent on sound, plan to have students use headsets so that the noise level doesn’t become problematic. Alternatively, you can project one game on your computer and play it as a class. Find game options under the “Games” tab at http://www.practicalmoneyskills.com  

–   “Share inspiring stories about people who are financially responsible and literate—or who have become that way after experiencing the opposite. Example: The one-hour docudrama “Broke and Famous,” first aired on ESPN on November 5, 2009. For more information, see http://www.prnewswire.com/news-releases/iafsca-kicks-off-financial-literacy-campaign-with-vh1-docudrama-65757827.html .

–   Have students take the 12 lessons on financial literacy at http://everfi.com/ . Students will receive a certificate if they complete the course.

–   Using the software programs Paint and Word, have students design their own personal checks and use them to pay “rent” and other bills.

–   Invite a guest speaker from a local bank or financial program and have students prepare questions in advance.

–   Instruct students to explore online banking in further detail. Wells Fargo’s “Online Tour” ( https://www.wellsfargo.com/wfonline/tour/olb/high_flash ) is an interactive guided tour, and other local banks or credit unions may offer similar online interactive tours.

Cross-Curricular Integration

–   Math: Now that they have researched some average salaries and wages for different occupations, have students create a monthly budget for a family of four in your community, living on a single minimum wage income, 40 hours per week. How does this budget compare to one made for the same family living on a single income of $20 per hour, 40 hours per week? How does it compare to $50 per hour, 40 hours per week?

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