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JA Finance Park®
Teacher Guide
©Copyright 2019Junior Achievement USA®
Colorado Springs, Colorado
All rights reserved. Any text of this publication, or any part thereof, may not be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, storing in an information-retrieval system, or otherwise, except in the course of conducting a registered Junior Achievement USA class or with the permission of the publisher.
All Web links in this guide were correct at the time of publication; however, some may have become inactive or otherwise modified since that time. If a link is no longer active or has changed, please email [email protected] with the words “Link Update” in the subject line. Include the page number on which the link appears in this guide. Current Web links used throughout this guide also are available on the CrossKnowledge Learning Suite at learn.ja.org (contact your local JA Area for access).
First Edition 2005
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Getting StartedAcknowledgments ...................................................................................... 1
Foreword .................................................................................................... 3
Program Overview ...................................................................................... 4
Program Goals ........................................................................................... 5
How to Use This Guide .............................................................................. 5
Lesson Descriptions ................................................................................... 6
Option 1–Traditional Lesson Format .......................................................... 8
Master List of Materials .............................................................................. 9
Option 2–Project-Based Learning (PBL) Format ..................................... 10
JA Finance Park Suggested Timelines ..................................................... 11
Traditional Lesson Implementation ..................................................... 12
Project-Based Learning Implementation ............................................ 13
Glossary ...............................................................................................Tab 5
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Sponsorship
Junior Achievement USA® (JA®, JA USA®) gratefully acknowledges KPMG LLP’s commitment to the development and implementation of the JA Finance Park program.
JA appreciates its relationship with KPMG LLP, the national title sponsor of the JA Finance Park curriculum, in providing students with academically enriching, experiential–learning lessons based on financial literacy and work-readiness education.
Junior Achievement USA acknowledges Gus and Frances Stavros, the Pinellas County School Board, and Pinellas Education Foundation for their support of JA Finance Park.
Sources
Junior Achievement USA is committed to developing and implementing vital and innovative programs designed to help students understand the importance of their career decisions. These programs help build a foundation for making intelligent, lifelong financial decisions.
Sources of information for the JA Finance Park program include:
• Common Core State Standards, www.corestandards.org
• Congressionally chartered Federal Financial Literacy and Education Commission, www.mymoney.gov
• GSA Office of Citizen Services and Innovative Technologies, Consumer Action Handbook, www.usa.gov/consumer
• The Occupational Information Network (O*NET), https://www.onetcenter.org
• U.S Department of Education, www.ed.gov
• U.S. Department of Labor, Bureau of Labor Statistics, www.bls.gov
• Federal Trade Commission (Consumer Information), https://www.consumer.ftc.gov
(continued)
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Sources (continued)
Developed by the Junior Achievement USA Education Group, JA Finance Park was piloted in classrooms across the United States. Education Group members hold postgraduate degrees in education and are experienced in the classroom and in curriculum development and design.
Junior Achievement USA acknowledges the following JA Area Offices for their work in piloting JA Finance Park:
• JA of Central Maryland
• JA of Dallas
• JA of Greater St. Louis
• JA of Greater Washington
• JA of Kentuckiana
• JA of New Jersey
• JA of Northern Indiana
• JA of South Texas
• JA of Tampa
• JA of the Upper Midwest
• JA of Washington
• JA of Wisconsin
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Get
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Junior Achievement USA (JA; JA USA) is a nonprofit organization financed by businesses, foundations, government, and individuals. Since its founding in 1919, Junior Achievement has contributed to the business and economic education of more than 100 million young people around the world.
Junior Achievement USA is the nation’s largest organization dedicated to educating students in grades K–12 about entrepreneurship, work readiness, and financial literacy through experiential, hands-on programs designed to help them understand the economics of life. In partnership with businesses and educators, JA brings the real world to students, opening their minds to their potential.
For more information about Junior Achievement USA programs for high school, middle school, and elementary school, visit JA online at https://www.juniorachievement.org.
Thank You, Teachers!Junior Achievement USA appreciates the commitment you have
made to the success of this program. We are certain you and yourstudents will find JA Finance Park to be an informative, worthwhile,
and enjoyable experience.
Online SurveyAt the program’s conclusion, you may access an online survey
on the CrossKnowledge Learning Suite at https://learn.ja.org (contact your local JA Area for access). Please take a moment to
complete the survey. Your comments will improve the quality of Junior Achievement programs.
Pre-/Post-Program SurveyTo measure student understanding of this program and its content, your local
JA Area Office may ask that a Pre-/Post-Program Survey be administered to students. The survey is available on the CrossKnowledge
Learning Suite https://learn.ja.org (contact your local JA Area for access). The Pre-Program Survey should be administered prior to the first session,
either by a teacher or a JA staff member, and the Post-Program Survey should be done after students have completed the program. If your local JA
Area Office has asked that the surveys be completed, your program manager will collect the results at the end of the program.
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Program OverviewJunior Achievement’s middle school and high school programs are developed with a primary emphasis on financial literacy, work readiness, and entrepreneurship, while providing a strong secondary emphasis on mathematics, reading, and writing skills. The 13 classroom lessons included in the JA Finance Park sections are closely aligned with the Common Core State Standards (CCSS). Correlations for the program are available at https://www.juniorachievement.org/web/ja-usa/correlations.
The JA Finance Park lessons provide a highly relevant learning opportunity to “model with mathematics,” one of the eight Standards for Mathematical Practice based on the CCSS, in which students apply mathematics to solve problems arising in everyday life. The lessons also address fundamental business and economic concepts, explore career interests and opportunities, and develop work-readiness skills.
JA Finance Park helps students build a foundation for making intelligent, lifelong personal financial decisions, including issues related to income, spending, saving, and credit. The JA Finance Park program provides two curricula implementation options:
Option 1) A traditional teacher-taught, in-class lesson format encompassing financial planning and career exploration with accompanying PowerPoint slides. Feel free to choose the content and slides that work best for your class. Student Workbook required.
Option 2) A Project-Based Learning (PBL) format that encompasses the financial planning and career exploration topics but in a nontraditional approach. This implementation option was designed specifically for high school students; however, it can be adapted for middle school students. PowerPoint slides are used in the PBL Income section only.
The JA Finance Park traditional and Project-Based Learning curriculum is composed of 13 required lessons, organized in the Teacher Guide by five thematic, color-coded sections. Each teacher-taught, in-class lesson is 45 minutes in length. The fifth section in the curriculum includes the experiential simulation, the culminating centerpiece of this Capstone Program. During the simulation, students practice hands-on budgeting at a JA Finance Park facility, mobile unit, or virtual site. The simulation section includes culminating project preparation and debriefing.
Note: In addition to the required lessons, optional extension activities are included in the teacher guide for use in either curriculum.
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The goals of JA Finance Park are to:
• Teach students to develop and follow a monthly budget.
• Help students to research and understand the actual “costs of living” for the basic necessities of life.
• Encourage students to develop and demonstrate personal responsibility for learning and self-management.
• Communicate and work with schools to promote the highest level of student achievement.
• Challenge students to think creatively, analyze tasks, and solve problems.
How to Use This GuideThe JA Finance Park Teacher Guide is organized by tabbed sections for easy access.
• Pages are numbered to help you locate lessons, answer keys, and student worksheets.
• Extension activities for each section appear immediately after the traditional lessons.
• Student Workbook pages (and answer keys) are located within the guide.
• The Project–Based Learning lessons are located in their own section for ease of use.
• The alphabetical glossary at the end of the guide contains vocabulary terms found in each section.
• The Visit and Volunteer sections of the guide include information about communication and procedures related to the JA Finance Park Simulation.
Note: Online resources are suggested throughout the curriculum. Please preview suggested websites and check your local school policies about student use of any online resources you choose to use. Current web links used throughout this guide also are available on the CrossKnowledge Learning Suite at https://learn.ja.org.
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Lesson DescriptionsIncome (Section One)Students recognize the fundamental role of income in their personal finances and the factors that affect income and take-home pay. They will identify their interests, abilities, and work preferences. This will help them realize their decisions about education and career have an impact on their potential income and quality of life.
Saving, Investing, and Risk Management (Section Two)Students explore saving and compare investments as a part of their overall financial planning. Students also examine risk and how insurance may help protect savings.
Debit and Credit (Section Three)Students compare financial institutions and their services. Through discussion and a game activity, they also weigh the advantages and disadvantages of debit and credit. Lastly, students examine the role credit scores and credit reporting have on personal finances.
Budget + (Section Four)Students discover the importance of spending money wisely and identify a budget as a valuable tool. Students create personal budgets and evaluate other budgets through case-study analysis.
Simulation and Debriefing (Section Five)Students experience the JA Finance Park simulation, where they apply classroom learning by creating a family budget based on a hypothetical life situation. They recognize the impact of credit history on budget planning and purchase options. Following the simulation, students revisit their career goals to see how the JA Finance Park experience may have changed their goals or plans for the future. It is an opportunity for students to retain what they learn by thinking about the key concepts and how those concepts are relevant to their lifestyle.
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JA Finance Park
Income(Required: 3 traditional lessons
or 4 PBL lessons; Optional: 8 Extension Activities)
Saving, Investing, and
Risk Management(Required: 2 traditional lessons
or 2 PBL lessons; Optional: 5 Extension Activities)
Debitand Credit
(Required: 4 traditional lessons or 3 PBL lessons;
Optional: 5 Extension Activities)
Budget+(Required: 3 traditional lessons
or 3 PBL lessons; Optional: 3 Extension Activities)
Simulation(4 required hours)
Debriefing(Required: 1 traditional debrief
lesson or PBL culminating project presentation)
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Each section includes:
• An overview
• Lesson objectives
• Preparation steps
• Teacher introduction
• Summary and assessment
• Activity material lists and PowerPoint slides
• Additional resources needed to present the lesson activities
• Visual references to Student Workbook pages
Set the Stage
Provides teachers with open-ended questions or thought-provoking ideas to encourage innovative thinking. Feel free to share your financial wisdom with your students, which can provide a framework of support for those students with little or no experience managing money.
Lesson Steps
Includes discussion ideas, guided practice, vocabulary, and hands-on activities for students. Activities include games, demonstrations, small-group discussion, and other interactive learning opportunities.
Summary and Review
Prompts students to reflect on and extend their knowledge. This time also allows teachers to check for student understanding and to gauge the depth of concept review needed during subsequent lessons.
Extension Activities
Each section offers multiple extension activities for use in either curriculum. The time required to implement these activities ranges from 20 minutes to an hour or longer. These activities are designed to extend or support the concepts presented in the section. Teachers may tailor the activities by choosing the best fit for their personal teaching style, the students’ abilities, or time constraints. Generally, extension activities are optional unless required by a local JA Area or by school curriculum guidelines.
Option 1Traditional Lesson Format
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of Materials(Traditional Lessons)
The following is an inventory of items included in the JA Finance Park traditional curriculum. Items with an asterisk* will be provided by the local JA Area office in sufficient quantities for teacher and student use in the classroom. Local JA offices will provide one Student Workbook per student.
Qty Item# Item
* M1210 Teacher Guide Tabs • • • • •
* M1201 Teacher Guide • • • • •
* M1202 JA Finance Park Student Workbook • • • • •
* M1203 PowerPoint Deck–Income •
* M1211 Career Cluster Card Sheets (a-p) •
* M1204PowerPoint Deck–Saving, Investing, and Risk Management
•
2 M1207 Savings Options Posters •
* M1205 PowerPoint Deck–Debit and Credit •
6 M1208 Savvy Shopper Game Boards •
6 M1209 Savvy Shopper Game Card Sheets (10 cards/sheet) •
* M1206 PowerPoint Deck–Budget + •
* M1212
Certificate of Achievement(Note: This is an optional item that JA Areas can provide electronically to teachers or volunteers.)
•
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Savi
ng, I
nves
ting,
and
Ris
k M
anag
emen
t
Debi
t and
Cre
dit
Budg
et +
Sim
ulat
ion/
Debr
iefin
g
Start
Collect $50
WILD Cards
Place cardsface down
Discardpile
SavvyShopper Game
Savvy Shopper Game GoalTo be the first player to buy a hat, jeans, DVDs, shoes, and a bike and have $0 debt.
Directions 1. Place game pieces on the START square. Collect $50. Mark your tally sheet.
2. Roll the die. The player rolling the highest number goes first. Play proceeds counterclockwise.
3. Follow the directions on the squares as you land on them. Fill in your tally sheet after each turn.
4. If you land on a hat, jeans, DVDs, shoes, or bike square, you may buy the item with a debit or credit card. If you have the cash, pay the debit price. If you don’t have the money, pay the credit price. You may choose not to purchase the item.
5. With each item purchased, circle the item at the bottom of your tally sheet.
6. Each time you pass START, collect $50.
7. Keep a running tally of your purchases and what you owe.
Continue play until one player has bought a hat, jeans, DVDs, shoes, and a bike, and is debt free.
Move backone space
Buy Shoes
Debit price $100
Buy now; pay later
Credit price $120
Bu
y a B
ike
Debit p
rice $150
Buy now; p
ay laterCredit p
rice $180
Buy
DV
Ds
Deb
it p
rice
$50
Buy
now
; pay
late
rCr
edit
pri
ce $
60
Buy
Jean
sD
ebit
pri
ce $
50Bu
y no
w; p
ay la
ter
Cred
it p
rice
$60
Deb
it c
ard
over
dra
ftfe
e
Pay
$25
ATM overd
raft fee
Pay $25
Buy a Hat
Debit price $20Buy now; pay later
Credit price $24
Pay Day!
Collect $50
Pay Day!
Collect $50
Pay
Day
!
Colle
ct $
50
Late p
ayment
feePay $35
Late
p
aym
ent
fee
Pay
$35
Bo
un
cedcheck fee
Pay
$25
Pay
Day
!
Collect $50
1% back Credit
Card Reward
Collect $30
Savi
ngs
Acc
ount
inte
rest
ear
ned
Colle
ct $
10
JA Finance Park®
© 2014 Junior Achievement USA, M1208 Savvy Shopper Game Board, Section 3
Savvy Shopper Game.pdf 1 5/16/14 4:17 PM
© 2014 Junior Achievement USA, M1210a Teacher Guide Tabs
Getting Started
JAFP Teacher Guide Tabs.indd 1 5/16/14 4:16 PM
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Option 2Project–Based Learning (PBL) FormatIn a Project–Based Learning (PBL) classroom, students are actively engaged in asking questions, reading, analyzing concepts, and creating products. They participate in large groups, small groups, or work independently toward the goal of producing a publicly exhibited presentation, publication, or product. The PBL format provides a structure for students to demonstrate mastery of a topic while they prepare for real-world challenges and the demands of life.
Each section presents:
• Quality content: Standards and key concepts are the focus.
• 21st century skills: Critical thinking, communication, and collaboration skills are taught and assessed.
• Set the stage: Open-ended questions capture students’ attention at the beginning of each lesson.
• Minutes of “Need to Know”: This is the time to check for student understanding and for students to ask questions, support answers with research, and find solutions to problems.
• Voice and choice: With the teacher’s approval, students make choices about their creativity and the end result.
• Revision and reflection: Students have time to think about and revise their work as necessary.
• Public audience: Students present their work to an audience other than their class.
• Technology use: Students actively think about online information, make choices, and develop workplace skills. In each of the PBL lessons, integration of technology is required.
At the end of section four, Budget +, the PBL Culminating Project is finalized and then presented in section five, Simulation and Debriefing. Students will demonstrate the connection of school to the real world by:
• Individually creating a My Life Scenario (a portfolio).
• As a team, developing and presenting work to an audience outside their classroom.
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Note: The Culminating Project assignment should be reviewed and explained to students at the beginning of each section. Details of the assignment are introduced in each section.
Extension Activities
Each section offers multiple extension activities for use in either curriculum. The time required to implement these activities ranges from 20 minutes to an hour or longer. These activities are designed to extend or support the concepts presented in the section. Teachers may tailor the activities by choosing the best fit for their personal teaching style, the students’ abilities, or time constraints. Generally, extension activities are optional unless required by a local JA Area or by school curriculum guidelines.
Junior Achievement USA Website
To learn more about Junior Achievement USA and to access additional resources and activities, visit https://www.juniorachievement.org/web/ja-usa/educator.
JA Finance Park Suggested TimelinesThe scheduling of JA Finance Park curriculum is flexible. The following schedules are provided as options. The timeline will vary depending on whether the Traditional or Project–Based Learning lessons are implemented; whether the local JA Area requires specific extension activities to be included; and whether local curriculum standards and teacher interest dictate specific content. The following five–week schedules are provided for each of the two curriculum delivery options.
The minimum requirement is: 12 classes prior to the simulation, the visit day to JA Finance Park, and one class following the simulation. The following schedules illustrate possible scenarios for implementation. JA strongly recommends allowing for extra days on the planning calendar to accommodate schedule changes, lesson flexibility, and student needs.
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Monday Tuesday Wednesday Thursday Friday
Week 1
IncomeLesson 1
IncomeLesson 2
IncomeLesson 3
Extension Activity(optional)
Extension Activity(optional)
Week 2
Extension Activity(optional)
Saving, Investing, and Risk
ManagementLesson 1
Saving, Investing, and Risk
ManagementLesson 2
Extension Activity(optional)
Extension Activity(optional)
Week 3
Debit and CreditLesson 1
Debit and CreditLesson 2
Debit and CreditLesson 3
Debit and CreditLesson 4
Extension Activity(optional)
Week 4
Extension Activity(optional)
Budget +Lesson 1
Budget +Lesson 2
Budget +Lesson 3
Extension Activity(optional)
Week 5
Extension Activity(optional)
SimulationDebriefingLesson 1
Extension Activity from prior sections
(optional)
Extension Activityfrom prior sections
(optional)
Traditional Lesson Implementation
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Monday Tuesday Wednesday Thursday Friday
Week 1
IncomeLesson 1
IncomeLesson 2
IncomeLesson 3
IncomeLesson 4
Culminating Project
Preparation(recommended)
Week 2
Saving, Investing, and Risk
ManagementLesson 1
Saving, Investing, and Risk
ManagementLesson 1 Part 2(recommended)
Saving, Investing, and Risk
ManagementLesson 2
Saving, Investing, and Risk
ManagementLesson 2 Part 2(recommended)
Culminating Project
Preparation(recommended)
Week 3
Debit and CreditLesson 1
Debit and CreditLesson 1 Part 2(recommended)
Debit and CreditLesson 2
Debit and CreditLesson 3
Debit and CreditLesson 3 Part 2(recommended)
Week 4
Budget +Lesson 1
Budget +Lesson 2
Budget +Lesson 2 Part 2(recommended)
Budget +Lesson 3
Culminating Project
Preparation(recommended)
Week 5
Culminating Project
Preparation(recommended)
Simulation
Culminating Project
Preparation(recommended)
Culminating Project
Presentation Lesson 1
DebriefingLesson 1, Part 2
Project-Based Learning Implementation
Income Overview .................................................................... 1
Introduction ................................................................ 3
Traditional Lesson PlansLesson One: Plan Your Future ................................... 5
Lesson Two: Careers ............................................... 13
Lesson Three: Taxes and My Income ...................... 29
Extension ActivitiesCareer Exploration Tools ....... 47Students take an online career assessment to learn about their interests and work values.
Career Choice Research ....... 51Students access career information online and use the Occupational Outlook Handbook to record their findings on a Career Critique Chart.
Being an Entrepreneur ........... 55Students examine entrepreneurial skills and present new business ideas to the class.
Starting a LawnCare Business ....................... 59Students identify a business and figure fixed and variable costs.
STEM Careers ....................... 63Students explore STEM occupations and use creativity and problem solving to make a pencil holder from a single sheet of paper.
Social Securityand Medicare ......................... 69Students read a brief history of Social Security and Medicare and review tax tables for income examples.
Sales Receipt Analysis .......... 75Students examine the cost of sales tax for items in their shopping cart.
How to Complete a 1040 Income Tax Form .......... 79Students complete an IRS Form 1040 and examine the equity of a progressive tax.
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neStudents recognize the fundamental role that income plays in their personal finances and the factors that affect income and take-home pay. They discover how their decisions about education and careers impact their potential income and quality of life.
ObjectivesStudents will be able to:
• Rate their interests, abilities, and values.
• Determine work preferences and match them to career choices.
• Define taxes and explain their purpose and impact on income.
• Figure net monthly income.
PreparationDecide whether you will use the traditional classroom presentation or the Project-Based Learning option. Also, review and organize the materials for the extension activities you plan to teach.
Optional: You may wish to share with students that their participation in JA Finance Park will include a simulation experience. To introduce and build interest in the program, show the introductory video. Go to the CrossKnowledge Learning Suite to access the video. Select the correct video for the simulation your class will use. Your local JA staff also may have a video available.
Summary and AssessmentUse the lesson summaries at the end of each lesson to review concepts. To assess knowledge learned, administer the Income Assessment on Pages 40–41. (Answer Key is on Pages 42–43.)
Income Overview
Required Lessons Lesson One: Plan Your Future
Lesson Two: CareersLesson Three: Taxes and My Income
TimeThe lessons can typically be completed in three 45-minute sessions.
ConceptsCareerGoalsGovernmentIncome ValuesSalaryTaxesWages
SkillsActive listening, critical thinking and reasoning, collaboration, employing valid research strategies, information literacy, invention, self-knowledge and self-reflection, math computation, reading, speaking and listening, using technology to enhance productivity
Extension Activities1. Career Exploration Tools
2. Career Choice Research
3. Being an Entrepreneur
4. Starting a Lawn Care Business
5. STEM Careers
6. Social Security and Medicare
7. Sales Receipt Analysis
8. How to Complete a 1040 Income Tax Form
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neIncome Introduction
We know that students gain a better understanding of money and financial management when they see how earning money affects their lives. Earning money babysitting or working part time will increase confidence, boost standard of living, and teach valuable skills. With income, students begin to ask important questions: When can I buy a car? How much will I need for college? What will I do after college? What’s a good salary? What’s a great salary?
As students consider these questions, they will need to think about what kind of work they want to do in the future and how different careers often require specific education and skills. Students participating in JA Finance Park will examine their abilities, interests, work preferences, and values. They will consider career goals and what steps must be taken to achieve them in a highly technical world. Finally, they will investigate the training needed for their chosen careers.
Teacher Introduction
Students are generally aware of the concept of income, the money received for work or through investments. They might receive a small amount of money from their parents or caregivers or from part-time jobs, government assistance, or profits from a small business. And like adults, teens understand that life is often easier as income increases. They may be less cognizant of the importance of the choices they’ll make in the next few years and how those will largely determine their income during adulthood.
In this lesson, students will consider their own personal traits and learn about a variety of occupations that may someday earn them an income. They will match a combination of abilities (skills), aptitudes (natural talents), interests, and values with occupational clusters.
Students should think about who they are and what occupations best suit them before they commit to a career path. Their abilities and traits will help them define their work preferences and find work that satisfies them. If they have a natural inclination toward one field, they’ll adapt to it quickly. Conversely, attempting to work in an occupation where they have little interest or ability can cause unhappiness and stress. Identifying one’s interests, abilities, aptitudes, and values is the first step in career planning.
Materials
o Student Workbooks
o JA Finance Park Income Slides 1–5
o Optional: Access to computers and the Internet
Income Lesson One: Plan Your Future
Vocabulary
AbilitiesThe things you do well.
AptitudesYour natural talents.
IncomeMoney received on a regular basis for work or through investments.
InterestsThe things you like and enjoy doing.
ValuesThe ideals that are important to you and your career choice.
Lesson Time: 45 minutes
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Lesson Preparation
• Review the Set the Stage talking points. Personalize the lesson by sharing your own experience in career exploration.
• Review Plan Your Future: Lesson Steps.
• Review the Student Worksheets on Pages 9–12.
• Consider the amount of time you want to use in class to complete the four worksheets, because some students may race through them and invalidate the importance of each step. You may want to assign one or more of the Student Worksheets for homework, although some students may need teacher assistance to complete them. If you choose to use the worksheets as homework, take the time to introduce each of them in class and answer any questions the students may have.
• Note: The hands-on activity sheet on Page 7 of the Student Workbook, called My Worker Profile, may take a large portion of one class. Once clearly explained, it could be better suited for homework.
Plan Your Future: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
• Let’s talk about you. Where do you see yourself after high school?
• What kind of job do you think you’ll eventually have? What skills will the job require? What will you need to know going into the job?
Rate Your Interests
Worksheet
Rate Your Abilities
Worksheet
Rate Your Values
Worksheet
My Worker Profile
Worksheet
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• Do you think someday you will have a family to support? Will you have student loans to pay off?
• Do you see yourself doing one job for many years, or do you think you will try different kinds of jobs?
Plan Your Future: Lesson Steps | 35 Minutes
1. Share with students that it was an exciting day when you began earning income from your first job. Present Slide 1. Ask students if they plan to work a summer job and why. Present Slide 2 and briefly describe how adults typically receive income.
• Employees who work for an employer earn wages or a salary.
• Income also can be received through the sale of goods or property, or through the profit from financial investments, such as stocks or bonds.
• Those who possess a strong work ethic and an entrepreneurial spirit may wish to start their own business and be self-employed.
2. Explain that one of the most important decisions students will make will be about their future career. Because their chosen field will consume a lot of their time, they will want to select a career that makes them happy—with an income that meets or exceeds their lifestyle. It is important to select an occupation that suits their interests, abilities, and values.
3. Present Slides 3 and 4 with the lesson’s vocabulary. Have students highlight the words in their Student Workbooks on Page 3 as you introduce them.
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4. Ask student volunteers to read the Interests, Abilities, and Values discussion points in their Student Workbooks on Page 3. Solicit student feedback.
5. Have students complete the Rate Your Interests, Rate Your Abilities, and Rate Your Values Worksheets in their Workbooks on Pages 4–6.
6. Present Slide 5, My Worker Profile Worksheet. Using their completed Student Workbook sheets, students identify their top three interests, abilities, and values and fill in Page 7, My Worker Profile Worksheet, in their Workbooks. Students fill in the triangle with their top choices, one per triangle.
7. Have students find a partner or assign partners and ask them to discuss their career preferences based on their interests, abilities, and values.
Summary and Review | 5 Minutes
During this lesson, students used self-directed surveys to determine their interests, abilities, and values. These instruments helped them identify their skills and will help them in the future to explore occupations that most closely relate to those attributes.
Ask students if they spotted a trend in their responses that would narrow a choice for a future career. Emphasize that their personal preferences are only part of the puzzle when it comes to being career-ready. They will need to apply what they learn in school today and in their education after high school to have the knowledge and technical skills needed for a 21st century career.
Digging Deeper: Reflective Writing Activity
Have students find connections between their passions and future careers by writing a first-draft essay that explores a particular passion. Topics could include using cooking skills to feed the homeless, creating a comic book to teach reading, or using music for a social cause like protecting the environment. Students will then write a persuasive
essay that turns their passion into a future career.
Career Exploration Tool
In place of worksheets, have students use the career exploration tool. The online assessment will take from 15 to 30 minutes.
The Extension Activity instructions start on Page 16 of the Student Workbook (Page 47 of this guide).
Activity
Teacher IntroductionEquipped with knowledge about their interests and work preferences, students are ready to think about careers that someday will provide them with an income. They will gain insight into occupations from various career clusters.
Being career-ready means doing a number of things well. Creativity is essential for many twenty-first-century jobs. Students also will need strong academic and problem-solving skills and the ability to apply those skills to the workplace. Once employed, they will need job-specific and technical skills to advance in their careers and increase their pay.
Selecting an occupation does not mean choosing one job for a lifetime. It’s possible to select a job within a general occupational area, then branch out and try a related job. The Department of Education’s career cluster model has 16 broad categories that link to more specific career pathways, each with its own knowledge and skill requirements. The categories encompass virtually all current occupations from entry through professional level. The various jobs within an occupational cluster are connected by skill sets. Although workers in related jobs may share some of the same interests, skills, or abilities, each job is different. In this lesson, students will consider their own personal traits and match them to a variety of occupational clusters.
Materials
o Student Workbooks
o Career Cluster Cards reductions (Pages 22–27) are available on the CrossKnowledge Learning Suite.
o JA Finance Park Income Slides 6–11
o Optional: Copy paper in various colors, scissors, markers, and tape
o Optional: Access to computers and the Internet
o Optional: Timer
Vocabulary
Career clusterA grouping of jobs and industries related by skills or products.
Income Lesson Two: Careers
Lesson Time: 45 minutes
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Lesson Preparation
• Download the Career Cluster Cards and tape them around the room.
• Review the Set the Stage talking points.
• Review Careers: Lesson Steps.
• Review the lesson materials on Pages 20–27.
Careers: Lesson Begins
Set the Stage | 10 Minutes
• Present Slide 6 as you discuss the following: How you manage your life today will help shape your future success. What skills or talents do you see in yourself that lead you to believe you will have a successful future?
• Present Slide 7 with the Bureau of Labor Statistics job growth chart. Have students point out the occupations expected to have the fastest job growth (healthcare support, personal care and service, healthcare practitioners and technicians, and community and social services).
• Discuss projected job trends. Ask students to suggest reasons why the eight broad professions shown on the slide are expected to increase by more than 15 percent.
Career Clusters
Career Cluster Card
Memory Sheet
Career Cluster Cards
Enjoy building things? Workers in this cluster solve problems and use creative ideas to build homes, businesses, and infrastructure, such as roads and bridges.
Carpenter: constructs and repairs building frameworks and structures. Salary: $45,170/$21.71 hourly
Building inspector: inspects and oversees the construction of bridges, buildings, dams, highways, and other types of construction work to ensure that procedures and materials comply with codes, plans, and specifications.Salary: $59,090/$28.41 hourly
Surveyor: locates and marks sites selected for conducting geophysical and prospecting activities.Salary: $61,140/$29.40 hourly
Architecture and Construction
©2019 Junior Achievement USA, M1211a Career Cluster Card, Section 1
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• Present Slides 8 and 9. Point out the pie chart in Slide 8. Ask students why it is important that they stay in school and earn a high school diploma. Show the chart on Slide 9. Pose the question: What are the employment and salary prospects for those without at least a high school diploma? Based on education levels, who makes the most money and has the greatest job security?
• Discuss how higher education, which requires money for tuition, books and living expenses, is needed for many careers and how more education usually means more take-home pay. Paths to more income often include a traditional college degree but also may include a certificate program for occupations such as construction, drafting, car maintenance, cosmetology, woodworking, or welding.
• Optional: Demonstrate the paths careers can take by gathering the job histories of two or three people you know, beginning with their first job, (paid or as a volunteer, such as mother’s helper, lawn mowing, babysitting, dog walking) to their current position. Most adults will have had many smaller jobs that led to a career or significant occupation, which would best illustrate this activity.
Look for work histories that show how one job may lead to another from elementary, middle, high school, and college depending on a person’s interests and work preferences. For example, a person may start work as a babysitter, followed by work as a youth camp counselor, then finally becoming a nursery school teacher.
• Optional: Have two or three student volunteers ask their parents about their work history and then report to the class. As the histories are being presented, record the various jobs on the white board. Show the links of learning gained from one job to the next by asking the students to direct you in making the connections. A job history may contain a gap in which a link
Wanted: SkillsA job seeker must have certain knowledge and skills an employer is looking for.
Academic knowledge and technical skills: This includes college or technical training, math, written and verbal skills, and technology skills to increase workplace productivity.
Success skills: These include critical thinking—the ability to make sense of problems and help to solve them—as well as creativity and honesty.
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seems to be absent. Ask the students to speculate about the reason for the gap. What skills were needed in the previous job(s)? What skills were learned in middle school, high school, or college that were used on the job? This discovery step is important for students to begin to think about what they are doing now or could be doing to become employable.
Careers: Lesson Steps | 30 Minutes
1. Present Slide 10. Let students know that they will take a look at how each of them can begin to make career choices.
2. Explain to students that selecting an occupation does not necessarily mean choosing one job for life. It is possible to select a job within a general occupational area, then branch out and try a related job.
3. Present Slide 11. Have students highlight the vocabulary word in their Student Workbooks on Page 8 as you introduce it.
4. Inform students that the Department of Education’s career cluster model has 16 broad categories that link to more specific career pathways, each with its own knowledge and skill requirements and which encompass all occupations from entry through professional level.
Have students turn to Page 9 in their Workbooks to see the 16 career cluster categories. Have them read aloud one or two and then circle the top cluster that interests them.
The various jobs within an occupational cluster are connected by skill sets. Although workers in related jobs may share some of the same interests, skills, or abilities, each job is different.
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5. Explain to students that they will now play a memory game to learn more about career clusters.
• Point to the Career Cluster Cards you taped around the room. Tell students that each card describes one of the career clusters they read about in their Workbooks.
• Separate the class into groups of two or three students. Assign each group a Career Cluster Card. If your class is small, play with half the cards.
• Explain that each card has three careers with job descriptions and salaries that can be found within that cluster.
6. The activity starts with one representative from each group going to the group’s assigned card. He or she will have 30 seconds to memorize as much information as possible from the card, including the career cluster title, one or more job names, job descriptions, and yearly and hourly salaries. The representative will then return to the group to relay the information. Group members will record everything they hear on their Career Cluster Card Memory Sheet on Page 10 of their Workbooks. On your cue, another group member will then be sent to memorize even more information from the card. If the groups have three members, the final member will do the same. Groups will record the information on their sheets solely on the verbal communications of their teammates.
7. Start the activity by calling “begin” and setting the timer.
8. After all groups have taken a turn, have students remove their Career Cluster Card from the wall and bring it back to the group. Using the rubric found on the student’s Career Cluster Card Memory Sheet, students judge how well the group did capturing the information for one or more jobs from the card. Ask groups to share the points they learned. Congratulate the winning group. Ask why some information was missed. How was the winning group’s work different from the others?
9. Finally, explain that when students choose to go to college or earn a technical certificate or industry certification after high school, they invest in their future earning potential. Education and training produces skilled labor. Training and experience usually increase earnings over a lifetime.
Career Research Online Option
Have students research the education requirements for the career(s) of their choice.
The Career Choice Research Extension Activity instructions start on Page 51.
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Activity
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To learn more about the 16 career clusters, allow extra class time to have a representative from each group read aloud the name of their assigned cluster and the one- or two-sentence description of the cluster found under the cluster title. Ask the class to guess what careers might fit in that cluster. If there is a cluster that students struggle to list a career for, you can share one or all of the jobs listed on the Career Cluster Card.
Optional: Tape each of the 16 Department of Education career cluster categories around the room. Organize the students into small groups of three or four. Give each group a few sheets of paper. Have each group generate a list of job titles and then cut them into individual pieces to determine which cluster the titles fit under. Groups should make every effort to generate jobs for each of the 16 clusters. Each group will need scissors, markers, and tape to tape each of their job titles under the correct job cluster category. The group with the most interesting and accurate job titles is to be congratulated.
Optional: Once the students become familiar with the 16 career cluster categories, have them use the job histories presented earlier during class and place those jobs under the 16 career clusters.
Optional: For further study on careers, have students visit https://www.usa.gov/jobs-careers and select different occupations to see featured videos on popular careers.
Summary and Review | 5 Minutes Review with students that a general exploration of career goals—coupled with their interests, abilities, and values—helps teens narrow the focus of possibilities when planning their future. Education and specialized training will help students be successful workers no matter what occupation they choose to earn an income.
Ask the students why it was important for team members to work together. Discuss why giving clear and precise verbal instructions lead to a successful outcome. Ask the class to give you examples of careers where working as a team and giving specific instructions could be important.
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oDigging Deeper: Career Goal-Skill Components Activity
Have students identify a career that interests them today. Ask them to research it to get more information and prepare a report to share. Suggest they visit colleges or technical schools with programs in their career field and prepare a visual presentation to share. Finally, encourage students to volunteer, intern, or shadow someone in the occupation to get firsthand experience.
For more information about careers, have students visit:• https://careerwise.minnstate.edu/careers/clusterSurvey
• https://www.onetonline.org
Digging Deeper: Extension Activities
Three extension activities are available to help students further explore career options.
1. Being an Entrepreneur on Page 55
2. Starting a Lawn Care Business on Page 59
3. STEM Careers on Page 63
Ask the students to interview an appropriate adult (one who is employed and is known by the student and the student’s family) about his or her job history. Have the students do an evaluation piece of writing about the skills and knowledge this person gained from middle school through high school.
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Career Cluster CategoriesIncomeLesson TwoStudent Worksheet, Page 9
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oCareer Cluster Card Memory SheetIncomeLesson TwoStudent Worksheet, Page 10
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Career Cluster CardsIncomeLesson Two
Enjoy building things? Workers in this cluster solve problems and use creative ideas to build homes, businesses, and infrastructure, such as roads and bridges.
Carpenter: constructs and repairs building frameworks and structures. Salary: $45,170/$21.71 hourly
Building inspector: inspects and oversees the construction of bridges, buildings, dams, highways, and other types of construction work to ensure that procedures and materials comply with codes, plans, and specifications.Salary: $59,090/$28.41 hourly
Surveyor: locates and marks sites selected for conducting geophysical and prospecting activities.Salary: $61,140/$29.40 hourly
Architecture and Construction
©2019 Junior Achievement USA, M1211a Career Cluster Card, Section 1
This cluster is about agriculture, studying plants and animals, providing a source for food, and the business of making, marketing, and selling food.
Forest worker: cares for and manages woodland areas and forests. Salary: $27,650/$13.30 hourly
Wildlife biologist: studies basic principles of plant and animal life, such as origin, relationship, development, anatomy, and function.Salary: $62,290/$29.95 hourly
Farmer/rancher: produces food for people and animals.Salary: $69,620/$33.47 hourly
Agriculture, Food, and Natural Resources
©2019 Junior Achievement USA, M1211b Career Cluster Card, Section 1
If you appreciate the dazzling special effects in movies, enjoy talking into a microphone, or are wowed by creative magazine layouts, this cluster may have the career for you.
Announcer: hosts radio and television programs; memorizes scripts, reads, or ad-libs to introduce and close shows; and announces station breaks, commercials, or public service information.Salary: $31,500/$15.15 hourly
Editor: determines final content; reviews manuscripts and coordinates publication; determines demand based on consumer trends and industry knowledge.Salary: $58,770/$28.25 hourly
Computer system analyst: analyzes an organization’s computer and data processing systems to make them run efficiently.Salary: $88,270/$42.44 hourly
Arts, A/V Technology, and Communication
©2019 Junior Achievement USA, M1211c Career Cluster Card, Section 1
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Like to keep detailed, accurate records or work with the public? Workers in this cluster understand that successful business is about relationships, planning, organizing, selling, and making a profit.
Bookkeeper: keeps records of financial transactions for a business. Salary: $38,240/$18.87 hourly
Retail salesperson: sells goods and services to individuals and businesses. Salary: $23,370/$11.24 hourly
Management analyst: proposes ways to improve an organization’s efficiency. Salary: $82,450/$39.64 hourly
Business Management and Administration
©2019 Junior Achievement USA, M1211d Career Cluster Card, Section 1
Ever thought of being a teacher, a coach, or a counselor? Workers in this cluster teach, study human behavior and how people learn, and explore ways to improve the education process.
High school teacher: teaches students academics; helps prepare students for life after graduation. Salary: $59,170/$26.60 hourly
Coach: analyzes athletic performance and instructs athletes in game strategies and techniques. Salary: $32,270/$15.10 hourly
Psychologist: diagnoses or evaluates mental and emotional disorders and administers programs of treatments; interviews patients in clinics and hospitals. Salary: $77,030/$37.03 hourly
Education and Training
©2019 Junior Achievement USA, M1211e Career Cluster Card, Section 1
$
Do you like counting and managing money, keeping financial records, and preparing reports? This cluster may have the career for you.
Accountant/auditor: applies principles of accounting to analyze financial information and prepare financial reports.Salary: $69,350/$33.34 hourly
Loan officer: interviews applicants and examines, evaluates, and authorizes approval of customer applications for lines of credit, commercial loans, real estate loans, consumer credit loans, or credit card accounts.Salary: $64,660/$31.09 hourly
Teller: receives and distributes money; keeps records of money; receives checks and cash for deposit; verifies amounts; and examines checks for endorsements. Salary: $28,110/$13.52 hourly
Finance$
©2019 Junior Achievement USA, M1211f Career Cluster Card, Section 1
Career Cluster CardsIncomeLesson Two
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If giving advice or planning what goes where in a city interests you, consider this cluster about public service at the local, state, national, or international level.
Tax attorney: advises and represents people, businesses, and the government in legal disputes. Salary: $119,250/$57.33 hourly
City planner: develops plans and programs for the use of land and physical facilities of cities, counties, and metropolitan areas. Salary: $71,490/$34.37 hourly
Correctional officer: oversees people who have been arrested or convicted of a crime.Salary: $43,510/$20.92 hourly
Government and Public Administration
©2019 Junior Achievement USA, M1211g Career Cluster Card, Section 1
Like making people feel and look better? Workers in this cluster perform wellness and health diagnosis, therapy procedures, and conduct scientific research.
Dentist: diagnoses and treats diseases and injuries of the teeth and gums. Salary: $158,120/$76.02 hourly
Physical therapist: plans and administers medically prescribed physical therapy treatment for patients suffering from injuries. Salary: $86,850/$41.76 hourly
Radiologist: diagnoses and treats diseases of the human body using X-rays and radioactive substances. Salary: $60,070/$28.88 hourly
Health Science
©2019 Junior Achievement USA, M1211h Career Cluster Card, Section 1
People enjoy vacations and dinners out thanks to workers in this industry.
Janitor: keeps buildings clean and in good order. Salary: $24,990/$12.02 hourly
Travel agent: helps people and groups plan trips; also sells transportation, lodging, and tickets to entertainment activities. Salary: $36,990/$17.78 hourly
Umpires and Referees: presides over competitive athletic and sport events. Salary: $26,800/$12.80 hourly
Hospitality and Tourism
©2019 Junior Achievement USA, M1211i Career Cluster Card, Section 1
Career Cluster CardsIncomeLesson Two
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If you like working with and counseling young children, teenagers, and adults, this cluster may have a career for you.
Fitness trainer: instructs people on proper weight training and fitness programs. Salary: $39,210/$18.85 hourly
Childcare worker: organizes and leads activities of prekindergarten-age children. Salary: $22,290/$10.72 hourly
School and career counselor: counsels people and provides group educational and vocational guidance services. Salary: $55,410/$26.64 hourly
Human Services
©2019 Junior Achievement USA, M1211j Career Cluster Card, Section 1
Designers and technocrats take notice. This cluster offers careers as computer support specialists, database administrators, information security analysts, Web developers, network architects, and software developers.
Software developer: designs and creates websites and is responsible for a site’s technical performance and capacity.Salary: $103,560 per year/$49.79 hourly
Media artist and animator: creates animated cartoons for motion pictures or television. Salary: $70,530/$33.91 hourly
Computer programmer: converts data from project specifications to create or modify computer programs. Salary: $82,240/$39.54 hourly
Information Technology
©2019 Junior Achievement USA, M1211k Career Cluster Card, Section 1
Want to protect and serve people or investigate crimes? Workers in this cluster enjoy helping others and are interested in law, public safety, and security concerns.
Highway patrol officer: patrols and guards highways for protection and safety. Salary: $62,960/$30.27 hourly
Private detective: plainclothes investigator who gathers facts and collects evidence for criminal cases. Salary: $50,700/$24.38 hourly
Court reporter: records examination, testimony, judicial opinions, or other proceedings in a court of law. Salary: $55,120/$26.50 hourly
Law, Public Safety, Corrections, and Security
©2019 Junior Achievement USA, M1211l Career Cluster Card, Section 1
Career Cluster CardsIncomeLesson Two
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This cluster is right for people who enjoy hands-on physical work or who play a supportive role in the manufacturing process in which finished products reach consumers.
Industrial production manager: oversees the daily operations of manufacturing and related plants; coordinates, plans, and directs activities used to create goods such as cars, computer equipment, or paper products. Salary: $100,580/$48.36 hourly
Welder: joins metal parts using gas-welding equipment as specified by the layout, welding diagram, or work order. Salary: $40,240/$19.35 hourly
Major appliance repair person: repairs, adjusts, and services major appliances in businesses or homes.Salary: $47,080/$22.64 hourly
Manufacturing
©2019 Junior Achievement USA, M1211m Career Cluster Card, Section 1
Marketing, Sales, and Serivce
If you like to manage a business’s brand, sales, merchandising, marketing, communications, and market research, consider this career cluster.
Real estate agent: helps clients buy, sell, and rent property. Salary: $47,880/$23.02 hourly
Graphic designer: creates visual concepts, by hand or using computer software; develops layout and production design for ads, brochures, magazines, and corporate reports. Salary: $48,700/$23.41 hourly
Floral designer: cuts and arranges live, dried, or silk flowers and greenery to make decorative displays. Salary: $26,350/$12.67 hourly
©2019 Junior Achievement USA, M1211n Career Cluster Card, Section 1
Career Cluster CardsIncomeLesson Two
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Science, Technology, Engineering, and Mathematics
Like math? Think it would be fun to design an airport? Workers in this cluster provide scientific research and technical services, including studying the structure of the earth.
Civil engineer: designs and supervises large construction projects, including roads, bridges, tunnels, airports, dams, water supplies, and sewage systems. Salary: $84,770/$40.75 hourly
Chemist: conducts research, analysis, synthesis, and experimentation on substances for product and process development and application. Salary: $76,280/$36.67 hourly
Geological engineer: studies the composition, structure, and history of the earth’s crust; examines rocks, minerals, and fossil remains.Salary: $94,240/$45.31 hourly
©2019 Junior Achievement USA, M1211o Career Cluster Card, Section 1
If you’re interested in driving a delivery truck, piloting a plane, steering a ship, or arranging schedules and checking inventory, a career in this cluster may be for you.
Automotive mechanic: uses diagnostics and experience to repair automobiles. Salary: $39,550/$19.02 hourly
Airplane pilot: flies airplanes to transport passengers, mail, or freight, or for other commercial purposes. Salary: $111,930/$51.10 hourly
Delivery truck driver: pick up, transport, and drop off packages and small shipments. Salary: $29,250/$14.06 hourly
Transportation, Distribution, and Logistics
©2019 Junior Achievement USA, M1211p Career Cluster Card, Section 1
Career Cluster CardsIncomeLesson Two
Teacher Introduction
The idea of a future career with a steady paycheck is inspiring to teens. What they may not know is that their take-home pay will be reduced by taxes that are automatically withheld by their employer from wages, salaries, and tips. Those taxes are paid to the Internal Revenue Service (IRS) and most state governments. The IRS enforces tax laws enacted by the U.S. Congress, which is responsible for the nation’s tax system.
Most everyone who holds a job pays income tax. Students need to develop an understanding of taxes and be prepared to deal with their impact on income. Tax knowledge is an integral part of personal financial management.
In this lesson, students will learn the three main sources of tax revenue: income, sales, and property tax. They also will learn that certain taxes are automatically withheld from the paychecks of U.S. citizens and residents. Then, between January and April of each year, citizens and residents are required to file annual income tax forms. If the amount that has been withheld from each paycheck is greater than the tax they owe, they receive a refund. If the amount withheld is less than the tax they owe, they must pay the additional amount. Finally, students will determine their net monthly income (NMI) using income tax and Social Security and Medicare deductions (also known as FICA, the Federal Insurance Contributions Act).
IncomeLesson Three: Taxes and My Income
VocabularyIncome taxA portion of one’s personal income paid to a government.
MedicareA social insurance program that extends health coverage to almost all Americans age 65 and over.
Social SecurityA social insurance system that provides benefits to most Americans who are retired, sick, or too disabled to work, and to families of workers who have died.
TaxesRequired payments to a government.
Lesson Time: 45 minutes
JA Finance Park Simulation Connection
During the JA Finance Park simulation, students will subtract federal and state/local income taxes from the money they receive in wages. They will calculate their net monthly income (NMI) using federal and local income
taxes and Social Security and Medicare deductions.
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Materials
o Student Workbooks
o JA Finance Park Income Slides 12–21
o Receipts from stores showing sales tax or make enough copies for students to share
o Copies of property tax bills and pay stubs showing various deductions
o Calculators
o Index cards, one per student, used in the Summary and Review portion of the lesson
Lesson Preparation
• Optional: Make copies of the Income Assessment, Pages 40–41, one for each student. Students will take the assessment at the conclusion of this lesson. The assessment takes 12–15 minutes to complete.
• Review the Set the Stage talking points.
• Review Taxes and My Income: Lesson Steps.
• Review the Student Worksheets on Pages 36–39.
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What Are Taxes? Overview
If you earn $10 per hour and work 40 hours a week, you’ll have $400 to spend, right? No. Gross income (the $400) is different from net income. Net income is the amount you have left after you pay your taxes; it’s what you actually have to spend.
Taxes are funds, or money, that local, state, and federal governments collect to pay their bills. Taxes, which are required, pay for the services government provides.
Income tax, sales tax, and property tax are the three main sources of tax revenue.
Many of these services are for things people could not afford individually, such as maintaining an army or building a highway system. The federal government (sometimes in partnership with states) uses tax money to pay for programs to help the country and its citizens.
Is it preferable to pay for these items with tax dollars or be charged as each is used? What do you think?
What is federally supported?
• Social Security, Medicare, and other retirement programs.
• National defense, veterans, and foreign affairs.
• Interest payments on the national debt.
• Physical, community, and human development programs (natural resources, environment, transportation, job training, and education programs).
• Social programs (Medicaid, food stamps, health programs, unemployment compensation, and assisted housing).
• Law enforcement and government administration (federal prisons, FBI, CIA, and the general costs of the federal government, including the collection of taxes).
What is state or city supported?
• Public schools
• Local libraries
• Police, jails, and courts
• Local parks and recreation
• Social services
• Firefighters
• Elections
• Mass transportation
What do
you think?
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Jason’s Paycheck
Jason has landed a summer job working as a paid intern for a medical research company. His paycheck shows the deductions from his pay. More than likely, his paycheck will be automatically deposited into his checking account through direct deposit. See Jason’s sample earnings statement below.
Social Security Number 111-11-1111Taxable Marital Status: Single
ABC Medical Corporation1 Corporate Rd.Anytown, USA 10001
Period Ending: 06/14/19Pay Date: 06/28/19
Jason Winters555 Pine CourtAnytown, USA 10001
RegularOvertimeVacationHolidayGross Pay
Deductions:Federal Income TaxState Income TaxMedicare TaxSocial Security Tax
Other:Health Insurance401K*Transfer to Savings
Net Pay (Checking ACH)*Excluded from federal taxable wages
Earnings Rate Hours This Period Year to Date
Exemption/Allowances:Federal: 0State: 0Local: 0
$12.0000.0000.0012.00
80.0000.0000.0000.00
$960.0000.0000.0000.00
$960.00
$960.0000.0000.0000.00
$960.00
$114.14$42.24$13.92$59.52
$114.14$42.24$13.92$59.52
00.0000.0000.00
00.0000.0000.00
$730.18
Pay Period
06/01/19 - 06/14/19
Earnings
$960.00
Taxes
$229.82
Other
$0.00
Deposit Number
1211111111111
Check Amount
$730.18
Tear Here
SAMPLE CHECKABC Medical Corporation
SEVEN HUNDRED THIRTY DOLLARS AND 18/100 $730.18
CHECK NUMBER12345678
DATE06/28/19
PAY TO THE ORDER OFJason Winters555 Pine CourtAnytown, USA 10001
If Jason lived in your state, what would the state income tax deduction be? _________________________
Is there a county tax deduction where you live?_____________If yes, what amount would be deducted from Jason’s paycheck? _________________________
Calculate Jason’s net pay, given the deductions for your state. What is the new amount?_________________________
What Are Taxes? Overview Worksheets
Jason’s Paycheck Worksheet
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Using the information below, calculate each worker’s net monthly income (NMI). GAI is gross annual income, and GMI is gross monthly income.
Jamal works at the recreation center 15 hours a week during the school year. He earns $8.75 an hour. In a typical month, he works 63 hours. Calculate his monthly taxes below.
Gross Monthly Income $
Monthly Federal Income Tax (10%) $ Monthly Social Security (FICA) (6.2%) $ Monthly Medicare (1.45%) $
Monthly State Tax (4%) $ Monthly Local Tax (0.1%) $ Total Monthly Deductions $
Jamal’s NMI = $
A college student, Trey works part time for an annual salary of $13,500 a year.
Gross Monthly Income $
Monthly Federal Income Tax (11.6%) $ 168.75 Monthly Social Security (FICA) (6.2%) $ 69.75 Monthly Medicare (1.45%) $ 16.31
Monthly State Tax (4%) $ 45.00 Monthly Local Tax (0.1%) $ 1.12 Total Monthly Deductions $ 300.93
Trey’s NMI = $ 824.07
Marie is a college professor. Her annual salary is $66,000.
Gross Monthly Income $
Monthly Federal Income Tax (18.7%) $ Monthly Social Security (FICA) (6.2%) $ Monthly Medicare (1.45%) $
Monthly State Tax (4%) $ Monthly Local Tax (0.1%) $ Total Monthly Deductions $
Marie’s NMI = $
Paycheck Calculations
Paycheck Calculations Worksheet
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Property TaxProperty taxes are based on a property’s value. This includes homes, cars, commercial buildings, and factories. Property value is determined by local governments. Property taxes are often the primary source of local government income.
Local and state governments use their sales and property tax revenues to pay for services and facilities, such as:
• Public schools and libraries
• Streets and streetlights
• Police, jails, courts
• ______________
• ______________
• ______________
Income TaxAn income tax is a tax on earnings from wages, salaries, tips, interest, rents, and capital gains and dividends from stocks. It is the largest source of revenue for the federal government. Each year on or before April 15, American citizens calculate what they owe in taxes and pay an amount due (beyond what was withheld from their pay) or request a refund.
Federal income tax is based on the income of individuals or businesses. This is called progressive taxation: The higher the income, the greater the percentage paid.
The IRS relies on citizens to be honest and responsible about paying their income taxes. This is called voluntary compliance.
Income taxes are figured on a pay-as-you-earn basis; the tax is an estimated amount. It is an employer’s responsibility to withhold tax from wages and deposit it with the IRS.
Sales TaxSales taxes are a source of revenue for most state governments. Each state decides its own sales tax. Counties and cities also may charge a sales tax. Some items are taxed, and some are not. Items not taxed are called tax-exempt.
Some taxable items:• Household items
• Restaurant food
• _____________
• _____________
• _____________
• _____________
• _____________
• _____________
Nontaxable items:• Groceries*
• Medicine
• Medical services
• Insurance
*Not all states exempt groceries from sales taxes. Additionally, the other items listed may or may not be exempt in some states. What is taxable in one state may not be taxable in another.
What do
you think? Fill in the blanks
What Are Taxes? Overview
Taxes and My Income: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
• Who pays taxes? Any ideas? (Answer: People who hold jobs, buy things, or own property.)
• True or false: Students like you are too young to pay taxes. (False. Shoppers of all ages pay sales tax in the 45 states that have such taxes. Sales tax adds an extra cost to nearly everything we buy, though groceries and medicine are often exempted.)
» Distribute the receipts you brought to class and have students find and circle the sales tax on each. Point out that whenever consumers buy something, sales tax is automatically included in the total bill if the item is purchased in a state with a sales tax.
The money collected is sent to local and/or state tax collectors.
» If students receive pay from a summer job, income taxes are automatically withheld by their employer and set aside in a tax account to be paid to the IRS.
Taxes and My Income: Lesson Steps | 30 Minutes
1. Present Slides 12 and 13, with some of the lesson’s vocabulary. Have students highlight the words in their Student Workbooks on Page 11 as you introduce them.
2. Income, sales, and property taxes are the three main sources of tax revenue for governments. Direct students to Pages 12–13 in the Student Workbook to read and discuss the What Are Taxes? Overview Worksheets.
Sales Receipt Analysis Option
Students in most states pay sales tax. Have them compute the sales tax and final cost for items in their shopping cart. Extension Activity instructions start on Page 75.
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3. Present Slides 14–16, Income Tax Uses, Property Tax Uses, and Sales Tax Uses. Discuss how taxes are withheld from take-home pay to cover the costs of local, state, and federal government services.
Making It Real
Ask students to share activities they’ve done over the past two or three days. List them on the board. Ask them to tell you what goods or services they or their family used for those activities. For example, when students go to soccer practice, they use public roadways, and the playing field may be on public property (a park or school).
Tax money is pooled and used to pay for government services. Roads, the military, public schools, police and fire protection, parks and playgrounds, certain summer job programs for youth, student loans for college, and Social Security benefits are examples of services funded with tax revenue.
4. Explain that taxes tied to the ability to pay are considered “progressive.” Taxes that remain the same regardless of ability to pay are “regressive.” The United States has a progressive income tax. Sales taxes are usually considered regressive. If you spend $10.00, the sales tax is the same, whether you are a millionaire or an unemployed teenager.
5. Present Slide 17, Jason’s Paycheck.
Taxpayers
Explain to students that employees can adjust the amount that is withheld from their paychecks if they think they’ll be paying too much or too little each month. The goal for taxpayers is to pay just the right amount each month so they neither owe additional taxes nor receive refunds at tax time.
Social Security Number 111-11-1111Taxable Marital Status: Single
ABC Medical Corporation1 Corporate Rd.Anytown, USA 10001
Period Ending: 06/14/18Pay Date: 06/28/18
Jason Winters555 Pine CourtAnytown, USA 10001
RegularOvertimeVacationHolidayGross Pay
Deductions:Federal Income TaxState Income TaxMedicare TaxSocial Security Tax
Other:Health Insurance401K*Transfer to Savings
Net Pay (Checking ACH)*Excluded from federal taxable wages
Earnings Rate Hours This Period Year to Date
Exemption/Allowances:Federal: 0State: 0Local: 0
$12.0000.0000.0012.00
80.0000.0000.0000.00
$960.0000.0000.0000.00
$960.00
$960.0000.0000.0000.00
$960.00
$114.14$42.24$13.92$59.52
$114.14$42.24$13.92$59.52
00.0000.0000.00
00.0000.0000.00
$730.18
Pay Period
06/01/18 - 06/14/18
Earnings
$960.00
Taxes
$229.82
Other
$0.00
Deposit Number
1211111111111
Check Amount
$730.18
Tear Here
SAMPLE CHECKABC Medical Corporation
SEVEN HUNDRED THIRTY DOLLARS AND 18/100 $730.18
CHECK NUMBER12345678
DATE06/28/18
PAY TO THE ORDER OFJason Winters555 Pine CourtAnytown, USA 10001
Direct students to Jason’s Paycheck Worksheet on Page 14 in the Student Workbook. Ask the following questions:
• What is the name of the employee on the Earnings Statement? (Jason Winters)
• Who is his employer? (ABC Medical Corporation)
• What is Jason’s hourly pay? ($12.00)
• What is Jason’s take-home pay? ($730.18)
• How much Social Security (or FICA) was taken out of Jason’s pay? ($59.52)
• True or false: Jason did not make a 401K contribution. (True)
Have students research the state and local income tax rate(s) that apply in your area, or provide them with the percentages, so they can answer the four questions in the inset box on Jason’s Paycheck Worksheet.
Define the net monthly income (NMI) terms shown. Walk through the NMI calculation example.
Inform students that deductions for state and local income taxes vary by community. Share current local tax rates—including state payroll, state disability, county, and city taxes—with students so they become aware of additional deductions they may be assessed.
If class time permits, present Slides 18–20 on the effect of taxes on income. Vocabulary also can be found in the Student Workbook on Page 11.
Social Security Online Option
Have students learn more about Social Security and Medicare. Extension Activity instructions start on Page 69.
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Making It Real
State and local tax rates vary. Share with students that in the calculation on Slide 17, state income tax is not included as a deduction. However, many states collect income tax and the amount varies by state. For example, Ohio collects state income tax based on a worker’s income. The higher the worker’s income, the higher the tax. California has among the highest taxes in the nation. Its income tax rate of 12.3 percent is the highest state income tax rate in the country. Ask students to calculate the tax payment in their state.
Activity: Using the Paycheck Calculations Worksheet on Page 15 of the Student Workbook, students practice deducting taxes and calculating net monthly income to see how much is left for them to spend. Consider doing Jamal’s calculation as a class and then divide the class into two groups to complete the activity. Have groups share their results. The Answer Key to Paycheck Calculations is on Page 39.
Making It Real
Either have students research state and local income tax rates that apply in your community or provide the percentages that they can use to calculate the net monthly income examples in the Paycheck Calculations Worksheet on Page 15 of the Student Workbook. ( is an example of a free Web-based paycheck calculator)
Remind students that federal income tax is a progressive tax. That means citizens pay a higher rate as their income increases.
https://www.paycheckcity.com/calculator/salary/
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Remind students that it is important to choose an occupation that suits their interests, skills, and values. Students also learned about taxes. It’s been said that taxes are what we pay to live in a civilized society. Taxes deducted from paychecks are needed to pay for the services people have come to expect from government. Many of these services are for things people could not afford individually, such as maintaining an army and a national highway system.
Check for lesson understanding. Pass out the index cards. Ask students to write the word “taxes” on the front of an index card. On the back side, have them identify something they do not fully understand and write it as a statement or question. Collect the cards and read the statements or questions aloud to see if the class can help clarify any issues raised.
Optional: Distribute copies of the Income Assessment sheets on Pages 40–41 and have students complete them. The Answer Key is found on Pages 42–43.
Digging Deeper: Extension Activities
If additional class time is available, consider adding the Being an Entrepreneur (Page 55), Starting a Lawn Care Business (Page 59), or STEM Careers (Page 63) extension
activity to your lesson planning.
Also consider adding the extension activity How to Complete a 1040 Income Tax Form (Page 79). Ask the students to name some deductions that can be taken from a paycheck. (Disability insurance, money designated for savings, 401K plans, union dues, health insurance premiums, etc.) Pass out sample pay stubs that show details of deductions and taxes. Have the students figure out the percent of individual taxes and/or deductions taken from the gross, and also determine which deductions are
required by law. What is the total percent deducted? Finally, have the students list in order of importance (to the student) any other deductions.
Digging Deeper: Writing Prompt Activity
Ask the students:
In your opinion, what is the single most important thing teens need to know about working their first summer job?
Have students write a paragraph to convince a classmate to follow their advice so that he or she may succeed in earning that first paycheck.
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What Are Taxes? OverviewIncomeLesson ThreeStudent Worksheet, Page 12
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What Are Taxes? Overview
If you earn $10 per hour and work 40 hours a week, you’ll have $400 to spend, right? No. Gross income (the $400) is different from net income. Net income is the amount you have left after you pay your taxes; it’s what you actually have to spend.
Taxes are funds, or money, that local, state, and federal governments collect to pay their bills. Taxes, which are required, pay for the services government provides.
Income tax, sales tax, and property tax are the three main sources of tax revenue.
Many of these services are for things people could not afford individually, such as maintaining an army or building a highway system. The federal government (sometimes in partnership with states) uses tax money to pay for programs to help the country and its citizens.
Is it preferable to pay for these items with tax dollars or be charged as each is used? What do you think?
What is federally supported?
• Social Security, Medicare, and other retirement programs.
• National defense, veterans, and foreign affairs.
• Interest payments on the national debt.
• Physical, community, and human development programs (natural resources, environment, transportation, job training, and education programs).
• Social programs (Medicaid, food stamps, health programs, unemployment compensation, and assisted housing).
• Law enforcement and government administration (federal prisons, FBI, CIA, and the general costs of the federal government, including the collection of taxes).
What is state or city supported?
• Public schools
• Local libraries
• Police, jails, and courts
• Local parks and recreation
• Social services
• Firefighters
• Elections
• Mass transportation
What do
you think?
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IncomeLesson ThreeStudent Worksheet, Page 13
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Property TaxProperty taxes are based on a property’s value. This includes homes, cars, commercial buildings, and factories. Property value is determined by local governments. Property taxes are often the primary source of local government income.
Local and state governments use their sales and property tax revenues to pay for services and facilities, such as:
• Public schools and libraries
• Streets and streetlights
• Police, jails, courts
• ______________
• ______________
• ______________
Income TaxAn income tax is a tax on earnings from wages, salaries, tips, interest, rents, and capital gains and dividends from stocks. It is the largest source of revenue for the federal government. Each year on or before April 15, American citizens calculate what they owe in taxes and pay an amount due (beyond what was withheld from their pay) or request a refund.
Federal income tax is based on the income of individuals or businesses. This is called progressive taxation: The higher the income, the greater the percentage paid.
The IRS relies on citizens to be honest and responsible about paying their income taxes. This is called voluntary compliance.
Income taxes are figured on a pay-as-you-earn basis; the tax is an estimated amount. It is an employer’s responsibility to withhold tax from wages and deposit it with the IRS.
Sales TaxSales taxes are a source of revenue for most state governments. Each state decides its own sales tax. Counties and cities also may charge a sales tax. Some items are taxed, and some are not. Items not taxed are called tax-exempt.
Some taxable items:• Household items
• Restaurant food
• _____________
• _____________
• _____________
• _____________
• _____________
• _____________
Nontaxable items:• Groceries*
• Medicine
• Medical services
• Insurance
*Not all states exempt groceries from sales taxes. Additionally, the other items listed may or may not be exempt in some states. What is taxable in one state may not be taxable in another.
What do
you think? Fill in the blanks
What Are Taxes? Overview
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Jason’s PaycheckIncomeLesson ThreeStudent Worksheet, Page 14
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Jason’s Paycheck
Jason has landed a summer job working as a paid intern for a medical research company. His paycheck shows the deductions from his pay. More than likely, his paycheck will be automatically deposited into his checking account through direct deposit. See Jason’s sample earnings statement below.
Social Security Number 111-11-1111Taxable Marital Status: Single
ABC Medical Corporation1 Corporate Rd.Anytown, USA 10001
Period Ending: 06/14/19Pay Date: 06/28/19
Jason Winters555 Pine CourtAnytown, USA 10001
RegularOvertimeVacationHolidayGross Pay
Deductions:Federal Income TaxState Income TaxMedicare TaxSocial Security Tax
Other:Health Insurance401K*Transfer to Savings
Net Pay (Checking ACH)*Excluded from federal taxable wages
Earnings Rate Hours This Period Year to Date
Exemption/Allowances:Federal: 0State: 0Local: 0
$12.0000.0000.0012.00
80.0000.0000.0000.00
$960.0000.0000.0000.00
$960.00
$960.0000.0000.0000.00
$960.00
$114.14$42.24$13.92$59.52
$114.14$42.24$13.92$59.52
00.0000.0000.00
00.0000.0000.00
$730.18
Pay Period
06/01/19 - 06/14/19
Earnings
$960.00
Taxes
$229.82
Other
$0.00
Deposit Number
1211111111111
Check Amount
$730.18
Tear Here
SAMPLE CHECKABC Medical Corporation
SEVEN HUNDRED THIRTY DOLLARS AND 18/100 $730.18
CHECK NUMBER12345678
DATE06/28/19
PAY TO THE ORDER OFJason Winters555 Pine CourtAnytown, USA 10001
If Jason lived in your state, what would the state income tax deduction be? _________________________
Is there a county tax deduction where you live?_____________If yes, what amount would be deducted from Jason’s paycheck? _________________________
Calculate Jason’s net pay, given the deductions for your state. What is the new amount?_________________________
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IncomeLesson ThreeStudent Worksheet, Page 15 Answer Key
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Using the information below, calculate each worker’s net monthly income (NMI). GAI is gross annual income, and GMI is gross monthly income.
Jamal works at the recreation center 15 hours a week during the school year. He earns $8.75 an hour. In a typical month, he works 63 hours. Calculate his monthly taxes below.
Gross Monthly Income $
Monthly Federal Income Tax (10%) $ Monthly Social Security (FICA) (6.2%) $ Monthly Medicare (1.45%) $
Monthly State Tax (4%) $ Monthly Local Tax (0.1%) $ Total Monthly Deductions $
Jamal’s NMI = $
A college student, Trey works part time for an annual salary of $13,500 a year.
Gross Monthly Income $
Monthly Federal Income Tax (11.6%) $ 168.75 Monthly Social Security (FICA) (6.2%) $ 69.75 Monthly Medicare (1.45%) $ 16.31
Monthly State Tax (4%) $ 45.00 Monthly Local Tax (0.1%) $ 1.12 Total Monthly Deductions $ 300.93
Trey’s NMI = $ 824.07
Marie is a college professor. Her annual salary is $66,000.
Gross Monthly Income $
Monthly Federal Income Tax (18.7%) $ Monthly Social Security (FICA) (6.2%) $ Monthly Medicare (1.45%) $
Monthly State Tax (4%) $ Monthly Local Tax (0.1%) $ Total Monthly Deductions $
Marie’s NMI = $
Paycheck Calculations
551.25
119.90
431.35
1,125.00
262.69
862.31
5,500.00
1,674.75
3,825.25
55.1334.187.99
22.050.55
130.5069.7516.3145.001.13
1,028.50341.0079.75
220.005.50
Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided.
1. Your abilities includea) The things you do wellb) Your mental competencec) The skill you need to do somethingd) All of the above
2. Career planning is donea) After high schoolb) In collegec) Throughout a lifetimed) Once in a lifetime
3. Who pays taxes?a) Most people who have a jobb) Most people who purchase itemsc) Most people who own propertyd) All of the above
4. What are the three main types of taxes?a) Income, sales, and propertyb) Unemployment, sales, and propertyc) Federal income, unemployment, and stated) Sales, property, and unemployment
5. What is Social Security?a) A private insurance system just for the elderlyb) A free insurance systemc) The amount of money someone hasd) None of the above
6. The purpose of taxes is toa) Improve roadsb) Support governmentc) Pay retirement benefitsd) All of the above
Income Assessment
JA Finance Park®
7. Who pays into Social Security? a) Employeesb) Self-employedc) Employersd) All of the above
8. Federal, Social Security, and Medicare are all types of taxes.a) Trueb) False
9. The total amount of earnings made over a one-year period after all deductions have been taken is known as
a) Gross annual incomeb) Gross monthly incomec) Net annual incomed) Net monthly income
10. The total amount of earnings made over a month, before any deductions, is known asa) Gross annual incomeb) Gross monthly incomec) Net annual incomed) Net monthly income
11. Tina will be working at the municipal swimming pool as a lifeguard this summer. She will earn $1,000 per month (a total of $3,000 for the whole summer). Tina does not plan to work any other jobs this year. Answer the questions:
a) What is Tina’s gross annual income (GAI)? $ ____________b) Tina’s total paycheck deductions are listed below. Add these amounts together to determine
her total paycheck deductions for the three months. $ ____________ » $255.90 federal income tax (summer total) » $114.00 state income tax (summer total) » $186.00 Social Security, or FICA (summer total) » $43.50 Medicare tax (summer total)
c) What is Tina’s gross monthly income for each of the summer months (GMI)? $ ___________d) What is Tina’s net monthly income for each of the summer months (NMI)? $ ___________
Income Assessment
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Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided.
1. Your abilities include
a) The things you do well
b) Your mental competence
c) The skill you need to do something
d) All of the above
2. Career planning is done
a) After high school
b) In college
c) Throughout a lifetime
d) Once in a lifetime
3. Who pays taxes?
a) Most people who have a job
b) Most people who purchase items
c) Most people who own property
d) All of the above
4. What are the three main types of taxes?
a) Income, sales, and property
b) Unemployment, sales, and property
c) Federal income, unemployment, and state
d) Sales, property, and unemployment
5. What is Social Security?
a) A private insurance system just for the elderly
b) A free insurance system
c) The amount of money someone has
d) None of the above
6. The purpose of taxes is to
a) Improve roads
b) Support government
c) Pay retirement benefits
d) All of the above
IncomeAssessment Answer Key
a
c
d
a
d
d
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7. Who pays into Social Security?
a) Employees
b) Self-employed
c) Employers
d) All of the above
8. Federal, Social Security, and Medicare are all types of taxes.
a) True
b) False
9. The total amount of earnings made over a one-year period after all deductions have been taken is known as
a) Gross annual income
b) Gross monthly income
c) Net annual income
d) Net monthly income
10. The total amount of earnings made over a month, before any deductions, is known as
a) Gross annual income
b) Gross monthly income
c) Net annual income
d) Net monthly income
11. Tina will be working at the municipal swimming pool as a lifeguard this summer. She will earn $1,000 per month (a total of $3,000 for the whole summer). Tina does not plan to work any other jobs this year. Answer the questions:
a) What is Tina’s gross annual income (GAI)? $ ____________
b) Tina’s total paycheck deductions are listed below. Add these amounts together to determine her total paycheck deductions for the three months. $ ____________
» $255.90 federal income tax (summer total)
» $114.00 state income tax (summer total)
» $186.00 Social Security, or FICA (summer total)
» $43.50 Medicare tax (summer total)
c) What is Tina’s gross monthly income for each of the summer months (GMI)? $ ___________
d) What is Tina’s net monthly income for each of the summer months (NMI)? $ ___________
IncomeAssessment Answer Key
d
a
c
b
$3,000
$599.40
$1,000
$800.20
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IncomeExtension Activities
Career Exploration Tools .....................47Students take an online career assessment to learn about their interests and work values.
Career Choice Research ...............51Students access career information online and use the Occupational Outlook Handbook to record their findings on a Career Critique Chart.
Being an Entrepreneur 55Students examine entrepreneurial skills and present new business ideas to the class.
Starting a Lawn Care Business ...............59Students identify a business and figure fixed and variable costs.
STEM Careers .......... ..............................63Students explore STEM occupations and use creativity and problem solving to make a pencil holder from a single sheet of paper.
Social Securityand Medicare ............ ..............................69Students read a brief history of Social Security and Medicare and review tax tables for income examples.
Sales Receipt Analysis 75Students examine the cost of sales tax for items in their shopping cart.
How to Complete a 1040 Income Tax Form .....................79Students complete an IRS Form 1040 and examine the equity of a progressive tax.
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Overview
Junior Achievement offers an online career exploration tool to help students in middle school and high school learn about their interests and work values. The O*Net Interest Profiler assessment is available to all users, and takes about 5 minutes to complete. Another option is the JA Career Profiler Assessment by Truity, designed for students over age 14. This assessment takes approximately 20 minutes to complete.
Teacher Introduction
As participants in JA Finance Park, your students can complete a free online career exploration using a tool that will reveal what career fields they might enjoy. Go to https://www.jamyway.org, select the menu icon and select Resources. There you will find instructions on how to access the online tool and register your students.
Materials and Preparation
o Computers and Internet access
o Student Workbooks, Page 16
JA Finance Park®16
o Assignment: Research jobs that interest you using these online career exploration tools.
What’s your personality type? What are your interests and values? How about your strengths and weaknesses? Knowing the answers to such questions can help you decide on what’s best for you to do in the world of work. Junior Achievement invites you to take advantage of the following free career exploration tools to guide you on your journey to what lies ahead.
If you’re over 14 years old, check out the JA Career Profiler Assessment by Truity, a fun, informative way to separate what you like from what you dislike. The personal analysis takes about 20 minutes to help you find a career that best suits your interests, skills, and values. Enjoy discovering your passions and your purpose! Go to http://japrofile.org.
O*NET Interest Explorer, an online tool developed by the U.S. Department of Labor, Employment, and Training, is available to all users and takes about five minutes to complete. O*NET career exploration provides useful information you can use to identify your strengths, the kind of work you like to do, and what you deem important. Use the assessment to identify the education and training needed for careers that interest you and their salaries, and find jobs that are in high demand. Go to https://www.mynextmove.org/explore/ip.
Career Exploration Tools 1 Extension Activity
Activity Time: 5 to 20 minutes
Career Exploration ToolsExtension Activity1
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Career Exploration Tools Activity StepsWhat’s your personality type? What are your interests and values? How about your strengths and weaknesses? Knowing the answers to such questions can help you decide on what’s best for you to do in the world of work. Junior Achievement invites you to take advantage of the following free career exploration tools to guide you on your journey to what lies ahead.
If you’re over 14 years old, check out the JA Career Profiler Assessment by Truity, a fun, informative way to separate what you like from what you dislike. The personal analysis takes about 20 minutes to help you find a career that best suits your interests, skills, and values. Enjoy discovering your passions and your purpose! Go to http://japrofile.org.
O*NET Interest Explorer, an online tool developed by the U.S. Department of Labor, Employment, and Training, is available to all users and takes about five minutes to complete. O*NET career exploration provides useful information you can use to identify your strengths, the kind of work you like to do, and what you deem important. Use the assessment to identify the education and training needed for careers that interest you and their salaries, and find jobs that are in high demand. Go to https://www.mynextmove.org/explore/ip.
Summary and Review
After students have taken the assessment, suggest that they share what they have learned about their interests and career planning with their parents.
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Career Exploration ToolsIncomeExtension ActivityStudent Worksheet, Page 16
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o Assignment: Research jobs that interest you using these online career exploration tools.
What’s your personality type? What are your interests and values? How about your strengths and weaknesses? Knowing the answers to such questions can help you decide on what’s best for you to do in the world of work. Junior Achievement invites you to take advantage of the following free career exploration tools to guide you on your journey to what lies ahead.
If you’re over 14 years old, check out the JA Career Profiler Assessment by Truity, a fun, informative way to separate what you like from what you dislike. The personal analysis takes about 20 minutes to help you find a career that best suits your interests, skills, and values. Enjoy discovering your passions and your purpose! Go to http://japrofile.org.
O*NET Interest Explorer, an online tool developed by the U.S. Department of Labor, Employment, and Training, is available to all users and takes about five minutes to complete. O*NET career exploration provides useful information you can use to identify your strengths, the kind of work you like to do, and what you deem important. Use the assessment to identify the education and training needed for careers that interest you and their salaries, and find jobs that are in high demand. Go to https://www.mynextmove.org/explore/ip.
Career Exploration Tools 1 Extension Activity
51
Overview
Students access career information online using the Bureau of Labor Statistics Occupational Outlook Handbook and summarize their findings in a Career Critique Chart.
Teacher Introduction
Choosing a career is an important decision. Students have many resources available for research. Learning to use these resources will allow them to repeat the career-planning process today and throughout their lifetime. Interests typically dictate what work people enjoy. As interests change, people often are attracted to new occupations. Today’s workers are expected to work as many as seven different occupations during their lifetimes.
Based on students’ personal interests, abilities, and values, they will identify three careers that appeal to them and perform the online research to learn more about them.
Materials and Preparation
o Computers and Internet access
o Student Workbooks, Career Choice Research Worksheet, Page 17, and Career Critique Chart Worksheet, Page 18
Activity Time: 45 minutes
17JA Finance Park®
Choosing a career is an important decision. You have many resources available for research. Learning to use these resources will allow you to repeat the career-planning process throughout your life. Interests typically dictate what work people enjoy. As interests change, people often are attracted to new occupations. Today’s workers may work as many as seven different occupations during their lifetimes.
Based on your personal interests, abilities, and values, identify three careers that appeal to you and then perform the research to learn more about them.
What you need to do: 1. Determine three career choices.
2. Log on to www.bls.gov/ooh and begin your research by selecting from the list on the BLS home page an Occupation Group or Groups that match your career choices.
3. As you read information about each career on the BLS website, insert your findings in the spaces on the Career Critique Chart on Page 18.
4. Score each criteria box with a 5 for excellent, 3 for good, and 1 for not a good fit. Record the points in the columns labeled “Pts.” Total the points.
5. Use the My Notes page at the front of your workbook to make additional notes.
o Assignment: Research three careers that seem compatible with your interests, abilities, and values. Access career information using the Bureau of Labor Statistics Occupational Outlook Handbook at www.bls.gov/ooh. Fill in the Career Critique Chart to summarize your findings.
2Career Choice ResearchExtension Activity
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Criteria Career 1
_____________
Pts Career 2
_____________
Pts Career 3
_____________
Pts
Matches my interests
Matches my abilities
Matches my values
Salary or median pay
Entry-level education
Work experience
On-the-job training
Job outlook
What workers do
Work environment
Advancement
Other qualities needed
Total Points: Total Points: Total Points:
Career Critique Chart
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Career Choice: Research Activity Steps
1. Review the Student Worksheets for this activity.
2. Students research three careers that seem compatible with their interests, abilities, and values. They access career information using the Bureau of Labor Statistics Occupational Outlook Handbook at www.bls.gov/ooh.
3. Students fill in the Career Critique Chart with their research and then summarize and score criteria, with a 5 for excellent, 3 for good, and 1 for not a good fit.
4. Optional: Have students visit www.collegeboard.org and www.nces.ed.gov/collegenavigator to find colleges offering programs in their field.
5. Have students share and discuss their career findings with a partner.
Summary and Review
Students discover that knowing their interests and abilities before researching a career is important. A self-assessment plus knowledge and aptitude helps in making career decisions; this can result in a successful work experience.
Have students review the results of their career research. Present them with the possibility that they will be offered all three of their career choices in the form of summer jobs. They will need to make a decision on which one to choose. Have them decide the long- and short-term benefits of their top choice and make the best decision based on the information they’ve gathered.
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Career Choice ResearchIncomeExtension ActivityStudent Worksheet, Page 17
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Choosing a career is an important decision. You have many resources available for research. Learning to use these resources will allow you to repeat the career-planning process throughout your life. Interests typically dictate what work people enjoy. As interests change, people often are attracted to new occupations. Today’s workers may work as many as seven different occupations during their lifetimes.
Based on your personal interests, abilities, and values, identify three careers that appeal to you and then perform the research to learn more about them.
What you need to do: 1. Determine three career choices.
2. Log on to www.bls.gov/ooh and begin your research by selecting from the list on the BLS home page an Occupation Group or Groups that match your career choices.
3. As you read information about each career on the BLS website, insert your findings in the spaces on the Career Critique Chart on Page 18.
4. Score each criteria box with a 5 for excellent, 3 for good, and 1 for not a good fit. Record the points in the columns labeled “Pts.” Total the points.
5. Use the My Notes page at the front of your workbook to make additional notes.
o Assignment: Research three careers that seem compatible with your interests, abilities, and values. Access career information using the Bureau of Labor Statistics Occupational Outlook Handbook at www.bls.gov/ooh. Fill in the Career Critique Chart to summarize your findings.
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Career Choice ResearchIncomeExtension ActivityStudent Worksheet, Page 18
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Criteria Career 1
_____________
Pts Career 2
_____________
Pts Career 3
_____________
Pts
Matches my interests
Matches my abilities
Matches my values
Salary or median pay
Entry-level education
Work experience
On-the-job training
Job outlook
What workers do
Work environment
Advancement
Other qualities needed
Total Points: Total Points: Total Points:
Career Critique Chart
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Overview
Students learn the characteristics of entrepreneurs and prepare a PowerPoint or paper-based presentation to introduce new entrepreneurial companies.
Teacher Introduction
The workplace is changing. Entrepreneurship, start-ups, and self-employment will be a choice for many workers in the future. Business and social entrepreneurs are people who start businesses in hopes of making a profit or spurring social change.
Entrepreneurs often possess a specific expertise in an industry. They also may have financial planning experience and possess the insight, creativity, and skills to face the challenges of a new and growing company. Entrepreneurs may entice team players with diverse talents and backgrounds to join the company as it moves from a start-up to a more seasoned venture.
Entrepreneurial skill components are: ; Knows all about his or her business.
; Listens to others.
; Relies on others who have different expertise.
; Thinks, reasons, then acts.
; Is good with people and an eager self-starter.
; Keeps others informed of progress and possibilities.
; Is a good planner and organizer.
; Desires to find a faster, easier way to do things.
Activity Time: 1 hour
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Materials and Preparation
o Computers with PowerPoint, or poster board and markers
o Student Workbooks, Being an Entrepreneur, Page 19, and New Business Peer Review Sheet, Page 20
o Make 21 copies of the New Business Peer Review Sheet, Page 58
o Invite three student judges to class
Being an Entrepreneur: Activity Steps
1. Review the Student Worksheets for this activity.
2. Separate students into seven groups. Give each group a number (1, 2, 3, etc.).
3. Have the groups start new companies that aim to fill a particular need or want for teens. For example, the business can offer a new product, such as an app, a backpack, or a high-protein energy bar. Groups create a five-slide PowerPoint or paper-based presentation highlighting the features of the new company to share with the class.
4. Distribute the New Business Peer Review Sheets to the three guest student judges. The judges will use the sheets to rate the group presentations.
5. Have students share their presentations. Ask judges to offer positive and helpful feedback and pointers to each group. Declare the winning entrepreneurial presentation.
Summary and Review
Entrepreneurs are passionate about filling a need or want. They are adept at assessing their desires and interests and deciding on a plan of action. Their ideas are their resume. One or more ideas may eventually become a product or service that will excite and hold consumers’ interest and showcase the entrepreneur’s qualifications and expertise. Based on today’s discussion and presentations, have students list the skills that would make a great entrepreneur.
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Being an Entrepreneur3 Extension Activity
Entrepreneurship, start-ups, and self-employment will be a choice for many workers in the future. Business and social entrepreneurs are individuals who start businesses in hopes of making a profit or spurring social change.
Entrepreneurs: 9 Possess a specific industry expertise.
9 Gather team players with diverse skills and backgrounds.
9 Have financial planning skills.
9 Possess the insight, creativity, and skills to face the challenges of a new and growing company.
9 Deliver quality products and services in a timely manner to customers.
o Group Assignment: Create a new company that fills a particular need or want for today’s teens (a new smartphone app store, a new backpack design, or a protein snack bar, for example). Create a PowerPoint presentation showing the features of your new company and share it with the class.
What you need to do:
1. Decide on a need or service you wish to fill, then create a company with brand recognition. Brand recognition makes a company easy for consumers to identify (think of Nike, McDonald’s, and Apple). Branding can be a unique name, identity, slogan, logo, font, or color scheme associated with a product or service. Create a brand for your company that will persuade customers to buy your product or service.
2. Create a five-slide PowerPoint (or paper-based) presentation introducing your new company to the class. Include the company’s name, the product or service for sale, and the company’s unique features and benefits. Use graphics for colorful appeal.
3. Present your work to the class. A three-judge student panel will review your work using the New Business Peer Review Sheet on Page 20. Be sure to review this sheet beforehand to see how your presentation and product will be judged.
Being an EntrepreneurWorksheet
New Business Peer Review
Sheet
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Being an EntrepreneurIncomeExtension ActivityStudent Worksheet, Page 19
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Being an Entrepreneur3 Extension Activity
Entrepreneurship, start-ups, and self-employment will be a choice for many workers in the future. Business and social entrepreneurs are individuals who start businesses in hopes of making a profit or spurring social change.
Entrepreneurs: 9 Possess a specific industry expertise.
9 Gather team players with diverse skills and backgrounds.
9 Have financial planning skills.
9 Possess the insight, creativity, and skills to face the challenges of a new and growing company.
9 Deliver quality products and services in a timely manner to customers.
o Group Assignment: Create a new company that fills a particular need or want for today’s teens (a new smartphone app store, a new backpack design, or a protein snack bar, for example). Create a PowerPoint presentation showing the features of your new company and share it with the class.
What you need to do:
1. Decide on a need or service you wish to fill, then create a company with brand recognition. Brand recognition makes a company easy for consumers to identify (think of Nike, McDonald’s, and Apple). Branding can be a unique name, identity, slogan, logo, font, or color scheme associated with a product or service. Create a brand for your company that will persuade customers to buy your product or service.
2. Create a five-slide PowerPoint (or paper-based) presentation introducing your new company to the class. Include the company’s name, the product or service for sale, and the company’s unique features and benefits. Use graphics for colorful appeal.
3. Present your work to the class. A three-judge student panel will review your work using the New Business Peer Review Sheet on Page 20. Be sure to review this sheet beforehand to see how your presentation and product will be judged.
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Being an EntrepreneurIncomeExtension ActivityStudent Worksheet, Page 20(continued)
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Overview
Students plan a neighborhood lawn care business. They learn about the importance of identifying a market and how to project their fixed and variable costs.
Teacher Introduction
Energetic teens like to start businesses. Charging others for the jobs they often perform at home for free is appealing. A lawn care service is a good example of such a business. New businesses must consider both fixed and variable costs when setting prices for their products and services. Students will need to consider equipment rental costs, maintenance, and wages to see if, in the end, their venture will be profitable and worth their time and effort.
Materials and Preparation
o Student Workbooks, Pages 21–22, Starting a Lawn Care Business
Starting a Lawn Care Business: Activity Steps
1. Review the Student Worksheet and Answer Key for this activity.
2. Separate the class into groups of three to four students. Tell the groups they will start a lawn care business to meet a need in their community. Perhaps they have seen senior citizens and two-worker families who either are unable to care for their lawns or who don’t have the time to do so. (You may prefer to substitute car-washing or babysitting services in place of lawn care.)
Activity Time: 45 minutes
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1. Calculate your total revenue for the summer at each price.
a. $25.00 per lawn × 35 lawns per week × 12 weeks =
b. $30.00 per lawn × 20 lawns per week × 12 weeks =
c. $35.00 per lawn × 5 lawns per week × 12 weeks =
2. Calculate your total variable costs for the summer at each price.
a. 35 lawns per week × 12 weeks × $24.25 variable cost =
b. 20 lawns per week × 12 weeks × $24.25 variable cost =
c. 5 lawns per week × 12 weeks × $24.25 variable cost =
3. Calculate your total costs for the summer at each price (fixed costs + variable costs). Remember, fixed costs are the same regardless of price or number of lawns mowed.
a. Fixed cost $ + Variable cost $ = Total cost
b. Fixed cost $ + Variable cost $ = Total cost
c. Fixed cost $ + Variable cost $ = Total cost
4. Calculate your potential profit at each price (Total revenue – Total cost = Profit). Remember, wages of $7.25 per hour for each of the partners is included in your costs. Your business profit is over and above the money earned in wages.
a. Total income $ – Total cost $ = Profit
b. Total income $ – Total cost $ = Profit
c. Total income $ – Total cost $ = Profit
5. How much should you and your friends charge to mow each lawn? Explain why.
6. Because the partners will share the profit (or loss) earned by their business, will the success of their summer work be determined by their total wages or by the total income (or loss) of the business? Why?
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3. Ask groups to name their new business.
Explain that their lawn care business will need equipment: a lawn mower, electric trimmer, extension cord, hand clippers, a rake, and a broom. The cost of the equipment is a fixed cost. In other words, the cost of this equipment remains the same no matter how many lawns are mowed. The cost of maintenance, labor, and supplies are variable costs. Variable costs increase or decrease depending on the number of lawns mowed. The more lawns mowed, the more the business will spend on gasoline, taxes, advertising, and insurance, which are other variable costs.
The worksheet indicates the results of market research in which neighbors were asked how much they would pay for lawn care services. Market research helps businesses provide the services people want at a price they are willing to pay.
4. Assignment: Students perform the calculations on the Starting a Lawn Care Business Worksheet to determine whether starting this business makes financial sense.
Sample Table
Summary and Review
After the groups have finished the worksheet, ask them individually if they would open a lawn care business. If not a lawn care business, what about another type? Discuss how asking potential customers how much they would be willing to pay for a service is valuable in helping make wise business decisions.
Vocabulary
Fixed cost A business cost
that remains the same, such as
rent.
Market researchGathering consumer
preferences for products and
services.
Variable costA business cost
that increases or decreases, such
as labor.
Digging Deeper
Optional: Have students create a table for their calculations. Using the table, have them complete their calculations.
Categories A B C
Amount per lawn
Number of lawns
Number of weeks
Total revenue
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Starting a Lawn Care BusinessIncomeExtension ActivityStudent Worksheet, Page 21
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Starting a Lawn Care BusinessIncomeExtension ActivityStudent Worksheet, Page 22 Answer Key
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1. Calculate your total revenue for the summer at each price.
a. $25.00 per lawn × 35 lawns per week × 12 weeks =
b. $30.00 per lawn × 20 lawns per week × 12 weeks =
c. $35.00 per lawn × 5 lawns per week × 12 weeks =
2. Calculate your total variable costs for the summer at each price.
a. 35 lawns per week × 12 weeks × $24.25 variable cost =
b. 20 lawns per week × 12 weeks × $24.25 variable cost =
c. 5 lawns per week × 12 weeks × $24.25 variable cost =
3. Calculate your total costs for the summer at each price (fixed costs + variable costs). Remember, fixed costs are the same regardless of price or number of lawns mowed.
a. Fixed cost $ + Variable cost $ = Total cost
b. Fixed cost $ + Variable cost $ = Total cost
c. Fixed cost $ + Variable cost $ = Total cost
4. Calculate your potential profit at each price (Total revenue – Total cost = Profit). Remember, wages of $7.25 per hour for each of the partners is included in your costs. Your business profit is over and above the money earned in wages.
a. Total income $ – Total cost $ = Profit
b. Total income $ – Total cost $ = Profit
c. Total income $ – Total cost $ = Profit
5. How much should you and your friends charge to mow each lawn? Explain why.
6. Because the partners will share the profit (or loss) earned by their business, will the success of their summer work be determined by their total wages or by the total income (or loss) of the business? Why?
4 Starting a Lawn Care BusinessExtension Activity
$10,500
$7,200
$2,100
$10,185
$5,820
$1,455
$10,585
$6,220
$1,855
-$85
$980
$245
$30 per lawn, because that price results in the greatest profit, $980.
The success of their summer work will be determined by the total income of their business. If the total income is negative (a loss), there won’t be enough money to pay all wages and debts.
400
400
400
10,185
5,820
1,455
10,500
7,200
2,100
10,585
6,220
1,855
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Overview
Students are introduced to the educational requirements for a variety of STEM (Science, Technology, Engineering, and Mathematics) occupations. Using the STEM attributes of creativity and problem solving, students create a pencil holder from a single sheet of paper.
Teacher Introduction
Trained to be an architect, inventor, and engineer, James Dyson created his first consumer product, a wheelbarrow with a ball in place of a wheel, in 1974. It was followed two decades later by his now famous cyclonic vacuum cleaner outfitted with superfast digital motors. His products made him a billionaire.
The need for technical expertise such as Dyson’s continues to grow. Technical occupations are defined as those related to science, technology, engineering, and mathematics. STEM occupations in science, manufacturing, utilities, construction, technology, and financial services need workers with the ability to think logically and creatively when solving problems.
Not every STEM job requires a four-year degree. Educational requirements range from a high school diploma to a doctorate. Many STEM workers, however, have the appropriate math, science, and technology aptitudes and the specialized skills that demand high wages in the job market.
Emphasize to students that in a STEM career, continued learning, often with graduate degrees and management training, helps with job security, pay raises, and promotions.
Activity Time: 45 minutes
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Materials and Preparation
o Student Workbooks, Page 23, STEM Careers
o Pencils
o 8½ x 11 sheets of paper, two per student
o Scissors
o Rulers
o Optional: Make golf tees in place of pencil holders; you’ll need 8½ x 11 sheets of paper, masking tape, 2 golf balls
STEM Career: Activity Steps
1. Review the Student Worksheet for this activity.
2. Read and discuss STEM occupations. Ask, “What type of person do you think works in a STEM occupation?” Possible answers: someone who is good at math and science; a creative and critical thinker who is persistent and doesn’t give up easily; a problem solver; a person who takes complicated things and makes them usable and easy to understand; a collaborator.
3. Pick a highlighted job from the table on Page 66 of this guide and ask students to guess a) the job’s primary responsibility, b) the educational requirements needed, and c) the annual salary. Compare responses with the actual information following the table.
4. STEM careers involve problem solving. Problem solvers:
• Consider all potential parts and related causes of a problem.
• Collaborate to gather information and seek solutions.
• Identify ideas that haven’t been thought of before.
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65
5. Distribute the sheets of paper. Students, working in pairs or individually, will use the STEM attributes of creativity and problem solving to form a functional pencil holder using only the materials provided (paper, scissors, and ruler).
6. Have students start by sketching the design on a sheet of paper. Using the specifications, have them build their holder.
7. Have students evaluate the advantages and disadvantages of each holder.
8. If time allows, ask students to write step-by-step directions on how to form their pencil holders, and swap them with a partner from another table or group. Partners will create the holder based on the direction steps.
Optional: Have students design and construct a golf tee using a single sheet of paper and masking tape. To prove workability, tees must support a golf ball for 5 seconds.
Summary and ReviewHave students present their pencil holders to the class. Ask the following questions:
; Did your original design work? If not, what were your modifications?
; On a scale of 1 to 5, with 5 being the greatest, how interesting and creative is your design?
; Is your pencil holder portable? Can it easily be moved from one desk to another?
; Which pencil holder would get your vote for being the most profitable if sold in a retail store or online?
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STEM Careers
Information on the highlighted careers appears below the table.
Geological Engineer: Designs mines to safely and efficiently remove minerals such as coal and metals for use in manufacturing and utilities; a bachelor’s degree from an accredited engineering program. The median annual salary for geological engineers is $94,240 according to the Bureau of Labor Statistics.
Chemist: Conducts tests and investigates the properties, composition, and structure of matter; at least a bachelor’s degree in chemistry or a related field. The median annual salary for chemists is $74,740.
Physicist: Develops scientific theories to explain the properties of the natural world and may design computer systems and scientific equipment; a doctorate is needed for most research jobs. Many begin their careers in a temporary postdoctoral research position. The median annual salary for physicists is $118,830.
Science
Geological Engineer
Chemist
Field Biologist
Marine Biologist
Scientist
Physicist
Doctor
Nurse
Dentist
Health Science, Agricultural, Food, or Forest Technician
Technology
Computer Support Specialist
Computer Software Engineer
Network and Systems Administrators
3-D Printing Engineer
Manufacturing Materials Manager
Information Security Analyst
Engineering
Aerospace Engineer
Electrical Engineer
Draftsperson
Architect
Mechanical Engineer
Civil Engineer
Environmental Engineer
Auto and Aerospace Mechanic
Construction Manager
Mathematics
Statistician
Accountant
Auditor
Business Teacher
Operations Researcher
Mathematician
City Planner
67
Forest Technician: Gathers data on water and soil quality, on insect damage to trees and other plants, and on other conditions that may pose a fire hazard; an associate’s degree in forest technology. The median annual salary for forest technicians is $36,130.
Computer Software Engineer: Creates computer games; a bachelor’s degree in computer science. The median annual salary for software developers is $103,560.
Information Security Analyst: Works to protect a company’s computer systems from cyberattacks; a bachelor’s degree in a computer-related field. The median annual salary for information security analysts is $95,510.
Aerospace Engineer: Designs aircraft, spacecraft, satellites, and missiles; a bachelor’s degree in aerospace engineering or a science related to aerospace systems. The median annual salary for aerospace engineers is $113,030
Draftsperson: Uses software to convert the designs of engineers and architects into technical drawings and plans; an associate’s degree. The median annual salary for drafters is $54,170.
Environmental Engineer: Uses the principles of engineering, soil science, biology, and chemistry to develop solutions to environmental problems; bachelor’s degree in environmental engineering or related field. The median annual salary for environmental engineers is $86,800.
Business Teacher: Helps students prepare for life after graduation; teaches academic lessons and various skills that students will need to attend college or enter the job market. A bachelor’s degree is required, and public school teachers must have a state-issued certification or license. The median annual salary for teachers is $59,170.
Mathematician: Uses high-level mathematics and technology to develop new mathematical principles; a postgraduate degree in mathematics. The median annual salary for mathematicians is $103,010.
(Source: 2017 Occupational Outlook Handbook, www.bls.gov/ooh)
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Overview
Students read a brief history of Social Security and Medicare and review tax tables.
Teacher Introduction
The largest tax deducted from gross income is federal income tax. Income tax is used to pay for national defense, national parks, and other programs that benefit all citizens.
In the United States, income is taxed on a graduated scale. This means that people who earn more generally have to pay a larger portion of their income in taxes. It’s a complicated formula. If you want to play with the numbers, you can use the chart below, which shows how federal income tax is calculated for a single person in 2018.
In mid-nineteenth-century America, families living in rural areas took financial responsibility for older members. By the 1920s, with more people moving away from farms to work and live in cities, the elderly found themselves without any means of support.
Activity Time: 30 minutes
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If taxable income is over But not over The tax is of the
amount over
$0 $9,525 10% 0%
$9,526 $38,700 $952.50 + 12% $9,525
$38,701 $82,500 $4,453.50 + 22% $38,700
$82,501 $157,500 $14,089.50 + 24% $82,500
$157,501 $200,000 $32,089.50 + 32% $157,500
$200,001 $500,000 $45,689.50 + 35% $200,000
$500,001 Or above $150,689.50 + 37% $500,001
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The Great Depression in 1929 increased their plight. In August 1935, President Franklin D. Roosevelt signed the Social Security Act into law, which created a pension plan for older Americans. The official age to receive full benefits is 65 to 67, depending on the year the recipient was born. The government added spousal and survivor benefits in 1939.
In 1965, Congress created Medicare, a social insurance program designed to provide older adults with affordable health care coverage. Together, these two programs are intended to furnish modest pension and health protection for senior citizens. The tax that funds both programs is commonly called FICA, an acronym for the Federal Insurance Contributions Act.
The social welfare programs called Social Security and Medicare are not free. Workers, even the self-employed, are required to contribute a portion of their wages to fund pension and medical care for older Americans. The workers’ portion of what is called the FICA tax has increased over the years. In 2018, the employees’ portion of the Social Security tax was 6.2 percent of their gross earnings up to $128,700. They pay an additional 1.45 percent of their gross pay to fund Medicare. That means that 7.65 percent of a worker’s paycheck is withheld to fund these government programs. Employers pay a matching amount. Self-employed workers pay the entire cost of the two taxes, 12.4 percent for Social Security and 2.9 percent for Medicare.
Materials and Preparation
o Student Workbooks, Pages 24–25, Social Security and Medicare
o Optional: Computers and Internet access
Social Security and Medicare: Activity Steps
1. Review the Student Worksheets for this activity.
2. Students read and discuss the history of Social Security and Medicare.
3. Assignment: Students calculate the taxes due for various income amounts.
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The largest tax deducted from gross income is federal income tax. Income tax is used to pay for national defense, national parks, and other programs that benefit all citizens.
In the United States, income is taxed on a graduated scale. This means that people who earn more generally have to pay a larger portion of their income in taxes. It’s a complicated formula. If you want to play with the numbers, you can use the chart below, which shows how federal income tax is calculated for a single person in 2018.
Did You Know?• In mid-nineteenth-century America, families living in rural areas took financial responsibility for
older members. By the 1920s, with more people moving away from farms to work and live in cities, the elderly found themselves without any means of support.
• The Great Depression in 1929 increased their plight.
• In August 1935, President Franklin D. Roosevelt signed the Social Security Act into law, creating a pension plan for older Americans.
• The government added spousal and survivor benefits in 1939.
• The Federal Insurance Contribution’s Act (FICA) gives congress the power to tax workers and employers to fund Social Security and Medicare.
• The official age to receive full benefits is 65 to 67, depending on the year the recipient was born.
• In 1965, Congress created Medicare, a social insurance program designed to provide older adults with affordable health care coverage. Together, Social Security and Medicare are intended to furnish modest pension and health protection for senior citizens.
Social Security and Medicare6 Extension Activity
If taxable income is over But not over The tax is of the
amount over
$0 $9,525 10% 0%
$9,526 $38,700 $952.50 + 12% $9,525
$38,701 $82,500 $4,453.50 + 22% $38,700
$82,501 $157,500 $14,089.50 + 24% $82,500
$157,501 $200,000 $32,089.50 + 32% $157,500
$200,001 $500,000 $45,689.50 + 35% $200,000
$500,001 Or above $150,689.50 + 37% $500,001
Calculating Federal Income Tax
Source: www.irs.gov
Social Security and MedicareWorksheets
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Did You Know?The social welfare programs called Social Security and Medicare are not free. Workers, even the self-employed, are required to contribute a portion of their wages to fund pension and medical care for older Americans. The workers’ portion of what is called the FICA tax has increased over the years. In 2018, the employees’ portion of the Social Security tax was 6.2 percent of their gross earnings up to $128,700. They pay an additional 1.45 percent of their gross pay to fund Medicare. That means that 7.65 percent of a worker’s paycheck is withheld to fund these government programs. Employers pay a matching amount. Self-employed workers pay the entire cost of the two taxes, 12.4 percent for Social Security and 2.9 percent for Medicare.
o Assignment: Fill in the correct federal income tax for the incomes below.
Income tax Social Security tax Medicare tax
$190,000
$70,000
$25,000
Social Security and Medicare6 Extension Activity
How much federal income tax, Social Security tax, and Medicare tax would you pay in 2018 if your income was:
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Social Security and MedicareIncomeExtension ActivityStudent Worksheet, Page 24
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The largest tax deducted from gross income is federal income tax. Income tax is used to pay for national defense, national parks, and other programs that benefit all citizens.
In the United States, income is taxed on a graduated scale. This means that people who earn more generally have to pay a larger portion of their income in taxes. It’s a complicated formula. If you want to play with the numbers, you can use the chart below, which shows how federal income tax is calculated for a single person in 2017, with taxes due in 2018.
Did You Know?• In mid-19th century America, families living in rural areas took financial responsibility for older
members. By the 1920s, with more people moving away from farms to work and live in cities, the elderly found themselves without any means of support.
• The Great Depression in 1929 increased their plight.
• In August 1935, President Franklin D. Roosevelt signed the Social Security Act into law, creating a pension plan for older Americans.
• The government added spousal and survivor benefits in 1939.
• The Federal Insurance Contribution’s Act (FICA) gives congress the power to tax workers and employers to fund Social Security and Medicare.
• The official age to receive full benefits is 65 to 67, depending on the year the recipient was born.
• In 1965, Congress created Medicare, a social insurance program designed to provide older adults with affordable health care coverage. Together, Social Security and Medicare are intended to furnish modest pension and health protection for senior citizens.
Social Security and Medicare6 Extension Activity
If taxable income is over But not over The tax is of the
amount over
$0 $9,525 10% 0%
$9,526 $38,700 $952.50 + 12% $9,525
$38,701 $82,500 $4,453.50 + 22% $38,700
$82,501 $157,500 $14,089.50 + 24% $82,500
$157,501 $200,000 $32,089.50 + 32% $157,500
$200,001 $500,000 $45,689.50 + 35% $200,000
$500,001 Or above $150,689.50 + 37% $500,001
Calculating Federal Income Tax
Source: www.irs.gov
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Social Security and MedicareIncomeExtension ActivityStudent Worksheet, Page 25
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Did You Know?The social welfare programs called Social Security and Medicare are not free. Workers, even the self-employed, are required to contribute a portion of their wages to fund pension and medical care for older Americans. The workers’ portion of what is called the FICA tax has increased over the years. In 2018, the employees’ portion of the Social Security tax was 6.2 percent of their gross earnings up to $128,700. They pay an additional 1.45 percent of their gross pay to fund Medicare. That means that 7.65 percent of a worker’s paycheck is withheld to fund these government programs. Employers pay a matching amount. Self-employed workers pay the entire cost of the two taxes, 12.4 percent for Social Security and 2.9 percent for Medicare.
o Assignment: Fill in the correct federal income tax for the incomes below.
Income tax Social Security tax Medicare tax
$190,000
$70,000
$25,000
Social Security and Medicare6 Extension Activity
How much federal income tax, Social Security tax, and Medicare tax would you pay in 2018 if your income was:
73
Calculations Shown BelowFor an income of $190,000:$32,089.50 + [32% × ($190,000 – $157,500)] = $32,089.50 +[32% × $32,500] = $32,089.50 + $10,400 = $42,489.50For an income of $70,000: $4,453.50 + [22% × ($70,000 – $38,700)] = $4,453.50 + [22% × $31,300] = $4,453.50 + $6,886 = $11,339.50For an income of $25,000: $952.50 + [12% × ($25,000 – $9,525)] = $952.50 + [12% × $15,475] = $952.50 + $1,857 = $2,809.50
Summary and ReviewAs stated on the official website of the U.S. Social Security Administration’s (SSA) historical background page, “All peoples throughout human history have faced the uncertainties brought by unemployment, illness, disability, death, and old age. In the realm of economics, these inevitable facets of life are said to be threats to one’s economic security.”
Have students read about economic security throughout history by logging on to the SSA website at www.ssa.gov/history/briefhistory3.html. A documentary film about the origins of Social Security also can be viewed at the site.
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6Social Security and MedicareIncomeExtension ActivityStudent Worksheet, Page 25 Answer Key
Income tax
Social Security tax0.062 × gross income, up to a maximum of
$128,700
Medicare tax0.0145 × gross income,
no cap
$190,000 $42,489.50 $7,979.40 $2,755.00
$70,000 $11,339.50 $4,340.00 $1,015.00
$25,000 $2,809.50 $1,550.00 $362.50
How much federal income tax, Social Security tax, and Medicare tax would you pay in 2018 if your income was:
75
Overview
Whether buying a prom dress at the mall or a hamburger at the local diner, students in most states pay sales tax. Students will compute the sales tax and final cost for items in their shopping cart.
Teacher Introduction
Sales taxes are imposed by state and local governments. In conjunction with other taxes, sales taxes help states and cities run schools and libraries; 911 call centers; bus, water, and trash services; public pools; and community centers. All but a few states have a sales tax. Each state determines its own tax rate. For some, it is their principal tax source. Tax revenue is how governing entities provide goods and services to their citizens. Common exemptions to sales tax are groceries and prescription medications.
Materials and Preparation
o Sales receipts showing sales tax, to share with students
o Student Workbooks, Pages 26–27, Sales Tax Overview Worksheet and Sales Receipt Analysis Worksheet
o Optional: Computers and Internet access
Activity Time: 30 minutes
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WHAT IS IT?A percentage tax
imposed on the retail price of most items.
A source of income for governments.
USESHuman services, health care, police, jails, courts, transportation, colleges, schools, libraries, parks,
and recreation.
WHO PAYS IT?Consumers and businesses.
TAXABLE ITEMSHousehold goods, restaurant food,
furniture, gasoline, utilities, motels and hotels, liquor,
and tobacco.
Nontaxable (exempt) itemsGroceries (most states), medicine,
medical services, insurance
SALES TAX
Sales Tax Overview7 Extension Activity
27JA Finance Park®
Shampoo
$7.99
Travel-s
ize
toothpas
te pack
$1.99
Deodoran
t
$2.29
Balloons
and
confetti
93.4$
Highligh
ter
$2.75
Greeting
card
$2.19
Spiral n
otebook
$1.99
Subtotal
$23.59
Sales Ta
x
$1.65
Total
$25.24
Taxable
Items
All-You-
Need Sup
ermarket
JA Finan
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USA 337
73
Receipt
#894756
6/30/15
8:21 p.m
.Nontaxable (Exempt) Items
All-You-Need Supermarket
JA Finance Park, USA 33773
Receipt #894756 6/30/15
8:21 p.m.
Pretzels
$3.49
Yogurt
$2.00
Cereal (2 boxes)
$5.00
Oranges (3 lbs.)
$5.29
Ground turkey
$6.29
Frozen pizza
$3.99
100% fruit juice
pops
$3.50
Subtotal
$29.56
Sales Tax
$0
Total
$29.56
TaTaTaxaxaxablblbleee
ItItItemmss
1. Deodorant 7% sales tax = $ Final price = $
2. Greeting card 7% sales tax = $ Final price = $
3. Shampoo 7% sales tax = $ Final price = $
4. Spiral notebook 7% sales tax = $ Final price = $
5. Highlighter 7% sales tax = $ Final price = $
6. Oranges 7% sales tax = $ Final price = $
7. What is 7% sales tax on a used car that costs $8,099? $
8. What is the total cost of the car including sales tax? $
How to Compute Sales Tax• Convert the percent (%) to a decimal. Example: 7% = 0.07
• Multiply the subtotal by 0.07. Example: $23.59 × 0.07 = $1.65
• Add the computed sales tax to the subtotal for the total that the consumer pays. Example: $23.59 + $1.65 = $25.24
Sales Receipt Analysis7 Extension Activity
All but a handful of states have a sales tax. Each state determines its own tax rate. The following receipts are from a state where the sales tax rate is 6 percent and there is an additional county sales tax of 1 percent. In this county, consumers pay a total of 7 percent in sales taxes. As in many states, nonfood items are taxable, but food and drugs are not. Sales tax is charged only on taxable items. Examine the two sample sales receipts. Compute the sales tax and final cost for the items found in your shopping cart at the bottom of the page.
Sales Receipt AnalysisExtension Activity7
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Sales Tax Overview
Worksheet
Sales Receipt Analysis Worksheet
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Sales Receipt Analysis: Activity Steps
1. Have students examine the sales receipts you brought to class.
2. Have students open their Workbooks to the Sales Tax Overview Worksheet on Page 26.
• Explain that sales taxes are imposed by state and local governments. States and cities need sales tax revenue to provide goods and services for their citizens. Services may include 911 call centers; bus, water, and trash services; public pools; and community centers.
• Some items, such as groceries and prescription medications, may be exempt from sales taxes, depending on what state you live in.
3. Review the Sales Receipt Analysis Worksheet on Page 27. Students will compute the sales tax and final cost for the items found in their shopping cart at the bottom of the worksheet page. Write the following example on the board to help them get started:
How to Compute Sales Tax
• Convert the percent (%) to a decimal. Example: 7% = 0.07
• Multiply the subtotal by 0.07. Example: $23.59 x 0.07 = $1.65
• Add the computed sales tax to the subtotal for the total that the consumer pays. Example: $23.59 + $1.65 = $25.24
Summary and Review
Sales tax rates for individual states can be found on each state’s official government website. Have students research the current sales tax rate in five states of their choosing. Sites can be found by typing the state name followed by “.gov” in the browser window. For example, for the state of Colorado, the Web address would look like: www.colorado.gov. Tax information can be found on the state’s Department of Taxation and Revenue page. Have students include any local city and county taxes that are in addition to the state tax.
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Sales Tax Overview SheetIncomeExtension ActivityStudent Worksheet, Page 26
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WHAT IS IT?A percentage tax
imposed on the retail price of most items.
A source of income for governments.
USESHuman services, health care, police, jails, courts, transportation, colleges, schools, libraries, parks,
and recreation.
WHO PAYS IT?Consumers and businesses.
TAXABLE ITEMSHousehold goods, restaurant food,
furniture, gasoline, utilities, motels and hotels, liquor,
and tobacco.
Nontaxable (exempt) itemsGroceries (most states), medicine,
medical services, insurance
SALES TAX
Sales Tax Overview7 Extension Activity
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Sales Receipt AnalysisIncomeExtension ActivityStudent Worksheet, Page 27 Answer Key
27JA Finance Park®
Shampoo
$7.99
Travel-s
ize
toothpas
te pack
$1.99
Deodoran
t
$2.29
Balloons
and
confetti
93.4$
Highligh
ter
$2.75
Greeting
card
$2.19
Spiral n
otebook
$1.99
Subtotal
$23.59
Sales Ta
x
$1.65
Total
$25.24
Taxable
Items
All-You-
Need Sup
ermarket
JA Finan
ce Park,
USA 337
73
Receipt
#894756
6/30/15
8:21 p.m
.Nontaxable (Exempt) Items
All-You-Need Supermarket
JA Finance Park, USA 33773
Receipt #894756 6/30/15
8:21 p.m.
Pretzels
$3.49
Yogurt
$2.00
Cereal (2 boxes)
$5.00
Oranges (3 lbs.)
$5.29
Ground turkey
$6.29
Frozen pizza
$3.99
100% fruit juice
pops
$3.50
Subtotal
$29.56
Sales Tax
$0
Total
$29.56
TaTaTaxaxaxablblbleee
ItItItemmss
1. Deodorant 7% sales tax = $ Final price = $
2. Greeting card 7% sales tax = $ Final price = $
3. Shampoo 7% sales tax = $ Final price = $
4. Spiral notebook 7% sales tax = $ Final price = $
5. Highlighter 7% sales tax = $ Final price = $
6. Oranges 7% sales tax = $ Final price = $
7. What is 7% sales tax on a used car that costs $8,099? $
8. What is the total cost of the car including sales tax? $
How to Compute Sales Tax• Convert the percent (%) to a decimal. Example: 7% = 0.07
• Multiply the subtotal by 0.07. Example: $23.59 × 0.07 = $1.65
• Add the computed sales tax to the subtotal for the total that the consumer pays. Example: $23.59 + $1.65 = $25.24
Sales Receipt Analysis7 Extension Activity
All but a handful of states have a sales tax. Each state determines its own tax rate. The following receipts are from a state where the sales tax rate is 6 percent and there is an additional county sales tax of 1 percent. In this county, consumers pay a total of 7 percent in sales taxes. As in many states, nonfood items are taxable, but food and drugs are not. Sales tax is charged only on taxable items. Examine the two sample sales receipts. Compute the sales tax and final cost for the items found in your shopping cart at the bottom of the page.
0.16
0.150.56
0.140.19
0
2.45
2.348.55
2.132.94
5.29566.93
8,665.93
79
Overview
The earnings of a typical student are used to perform a variety of calculations to complete IRS form 1040 and to examine the equity of a progressive income tax. Note: For the Tax Year 2018, filers no longer used Form 1040-A or Form 1040-EZ, but instead used the redesigned Form 1040.
Teacher Introduction
Taxes have been a part of American history since the colonists fought for independence from Great Britain. American citizens pay a variety of taxes to federal, state, and city governments so that numerous services can be provided. Some taxes are based on the value of things we purchase, while others are based on the value of things we own. In the United States, the best known tax is based on what we earn: the income tax.
Each year, most adults file an income tax form with the Internal Revenue Service (IRS) and pay
taxes based on their income. Even students who have income from jobs or interest from savings accounts must file a return. Filing a tax return can be a complicated task. For that reason, many people use the services of accountants and other professionals to prepare their returns.
Students can learn more about taxes by logging on to the IRS’ Understanding Taxes site, www.irs.gov/app/understandingTaxes/student/index.jsp. The site provides a student section with activities, tax tutorials, word puzzles, tax trivia, simulations, and assessments to help students understand the world of taxes. It also explains the how and why of taxes—how to apply tax principles, while explaining tax history and the theory behind America’s tax system.
Activity Time: 1 hour
Form 1040 Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return 2018 OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
(99)
Filing status: Single Married filing jointly Married filing separately Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
If joint return, spouse's first name and initial Last name Spouse’s social security number
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien
Home address (number and street). If you have a P.O. box, see instructions. Apt. no.
City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6.
Full-year health care coverage or exempt (see inst.)
Presidential Election Campaign (see inst.) You Spouse
If more than four dependents, see inst. and ✓ here ▶
Dependents (see instructions): (2) Social security number (3) Relationship to you (4) ✓ if qualifies for (see inst.):
(1) First name Last name Child tax credit Credit for other dependents
Sign Here Joint return? See instructions. Keep a copy for your records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
▲ Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)
Spouse’s signature. If a joint return, both must sign. Date Spouse’s occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)
Paid Preparer Use Only
Preparer’s name Preparer’s signature PTIN Firm’s EIN
Firm’s name ▶ Phone no.
Check if:
3rd Party Designee
Self-employed
Firm’s address ▶
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2018)
Form 1040 (2018) Page 2
Attach Form(s) W-2. Also attach Form(s) W-2G and 1099-R if tax was withheld.
1 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . 1
2a Tax-exempt interest . . . 2a b Taxable interest . . . 2b
3a Qualified dividends . . . 3a b Ordinary dividends . . 3b
4a IRAs, pensions, and annuities . 4a b Taxable amount . . . 4b
5a Social security benefits . . 5a b Taxable amount . . . 5b
6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 . . . . . 67
Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6 . . . . . . . . . . . . . . . . . 7Standard
Deduction for—
• Single or married filing separately, $12,000
• Married filing jointly or Qualifying widow(er), $24,000
• Head of household, $18,000
• If you checked any box under Standard deduction, see instructions.
8 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . 8
9 Qualified business income deduction (see instructions) . . . . . . . . . . . . . . 9
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- . . . . . . . . 10
11 a Tax (see inst.) (check if any from: 1 Form(s) 8814 2 Form 4972 3
b Add any amount from Schedule 2 and check here . . . . . . . . . . . . ▶
)
11
12 a Child tax credit/credit for other dependents b Add any amount from Schedule 3 and check here ▶ 12
13 Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . 13
14 Other taxes. Attach Schedule 4 . . . . . . . . . . . . . . . . . . . . 14
15 Total tax. Add lines 13 and 14 . . . . . . . . . . . . . . . . . . . . 15
16 Federal income tax withheld from Forms W-2 and 1099 . . . . . . . . . . . . . 16
17 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17
18 Add lines 16 and 17. These are your total payments . . . . . . . . . . . . . . 18
Refund
Direct deposit? See instructions.
19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid . . . . 19
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here . . . . ▶ 20a▶ b Routing number ▶ c Type: Checking Savings
▶ d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax . . ▶ 21
Amount You Owe 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions . . . ▶ 22
23 Estimated tax penalty (see instructions) . . . . . . . . ▶ 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018)
How to Complete a 1040 Income Tax FormExtension Activity8
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Materials and Preparation
o Computers and Internet access. Note: Tax forms are updated annually. Obtain forms and instructions for your class to use at http://apps.irs.gov/app/picklist/list/formsPublications.html.
o Student Workbooks, Pages 28–29, How to Complete a 1040 Income Tax Form
How to Complete a 1040 Income Tax Form: Activity Steps
1. Review the Student Worksheets for this activity.
2. Assignment: Students fill out a 1040 tax form (downloaded from the IRS website) using W-2 Wage and Tax Statement found on Page 30 of the Student Workbooks.
Summary and Review
Have students share their observations about filling out a government tax form. Be sure to share with your students that according to the IRS, more than 122 million taxpayers opted to submit their individual tax returns online in 2016. Since 1990, taxpayers have filed nearly 1 billion Form 1040 series tax returns safely and securely. E-filing with fillable forms is free and makes tax filing easier and quicker for many filers. E-filing can be done with commercial tax software, too. Taxpayers also can e-file with a professional tax preparer. Nearly all tax preparers use e-filing, and many are required by law to do so. Filing electronically may mean receiving a refund more quickly.
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On any given day, the government provides you with services. For example, you brush your teeth with government-provided water and you ride a bus to school provided by the city school board and that travels on government-constructed roads and highways. On the way to school, you may see a police officer directing traffic and pass a fire station. Citizens pay a variety of taxes to governments so that these services can be provided. Some taxes are based on the value of things we purchase, while others are based on the value of things we own. In the United States, the best known tax is based on what we earn: the income tax.
Each year most adults file income tax returns with the Internal Revenue Service (IRS) and pay taxes based on their income. Even students who have income from jobs or interest from savings accounts must file a return. Filing a tax return can be a complicated task. For that reason, many people use the services of accountants and other professionals to prepare their returns.
o Assignment: Calculate the income tax for a computer engineer named Mary Anne Smith. Enter her personal information, identify her expenses and deductible income, and make the necessary calculations to find the taxable income. Use the W-2 Wage and Tax Statement provided and the tax forms to find the tax owed or the refund due.
8 How to Complete a 1040 Income Tax FormExtension Activity
Form 1040 Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return 2018 OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.
(99)
Filing status: Single Married filing jointly Married filing separately Head of household Qualifying widow(er)
Your first name and initial Last name Your social security number
Your standard deduction: Someone can claim you as a dependent You were born before January 2, 1954 You are blind
If joint return, spouse's first name and initial Last name Spouse’s social security number
Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954
Spouse is blind Spouse itemizes on a separate return or you were dual-status alien
Home address (number and street). If you have a P.O. box, see instructions. Apt. no.
City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6.
Full-year health care coverage or exempt (see inst.)
Presidential Election Campaign (see inst.) You Spouse
If more than four dependents, see inst. and ✓ here ▶
Dependents (see instructions): (2) Social security number (3) Relationship to you (4) ✓ if qualifies for (see inst.):
(1) First name Last name Child tax credit Credit for other dependents
Sign Here Joint return? See instructions. Keep a copy for your records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
▲ Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)
Spouse’s signature. If a joint return, both must sign. Date Spouse’s occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)
Paid Preparer Use Only
Preparer’s name Preparer’s signature PTIN Firm’s EIN
Firm’s name ▶ Phone no.
Check if:
3rd Party Designee
Self-employed
Firm’s address ▶
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2018)
Form 1040 (2018) Page 2
Attach Form(s) W-2. Also attach Form(s) W-2G and 1099-R if tax was withheld.
1 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . 1
2a Tax-exempt interest . . . 2a b Taxable interest . . . 2b
3a Qualified dividends . . . 3a b Ordinary dividends . . 3b
4a IRAs, pensions, and annuities . 4a b Taxable amount . . . 4b
5a Social security benefits . . 5a b Taxable amount . . . 5b
6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 . . . . . 67
Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6 . . . . . . . . . . . . . . . . . 7Standard
Deduction for—
• Single or married filing separately, $12,000
• Married filing jointly or Qualifying widow(er), $24,000
• Head of household, $18,000
• If you checked any box under Standard deduction, see instructions.
8 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . 8
9 Qualified business income deduction (see instructions) . . . . . . . . . . . . . . 9
10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- . . . . . . . . 10
11 a Tax (see inst.) (check if any from: 1 Form(s) 8814 2 Form 4972 3
b Add any amount from Schedule 2 and check here . . . . . . . . . . . . ▶
)
11
12 a Child tax credit/credit for other dependents b Add any amount from Schedule 3 and check here ▶ 12
13 Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . 13
14 Other taxes. Attach Schedule 4 . . . . . . . . . . . . . . . . . . . . 14
15 Total tax. Add lines 13 and 14 . . . . . . . . . . . . . . . . . . . . 15
16 Federal income tax withheld from Forms W-2 and 1099 . . . . . . . . . . . . . 16
17 Refundable credits: a EIC (see inst.) b Sch. 8812 c Form 8863
Add any amount from Schedule 5 . . . . . . . . . . . . . . 17
18 Add lines 16 and 17. These are your total payments . . . . . . . . . . . . . . 18
Refund
Direct deposit? See instructions.
19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid . . . . 19
20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here . . . . ▶ 20a▶ b Routing number ▶ c Type: Checking Savings
▶ d Account number
21 Amount of line 19 you want applied to your 2019 estimated tax . . ▶ 21
Amount You Owe 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions . . . ▶ 22
23 Estimated tax penalty (see instructions) . . . . . . . . ▶ 23
Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2018)
29JA Finance Park®
Name and Address (Fill in Page 1 of the 1040)• Note that Mary Anne is single.• Print Mary Anne’s name and address and Social Security number in the spaces indicated.• Check the Presidential Election Campaign box if you want $3 of Mary Anne’s taxes to go toward financing
the next presidential election. Checking this box will not cost any additional money. • Check the box for “Full Year Health Coverage.”
Report Mary Anne’s Income (Fill in Page 2 of the 1040)Line 1: Enter Mary Anne’s total wages here.Lines 2a, b 3a, b, 4a, b and 5a, b: Enter $0.00 here.Line 6: Add lines 1 through 5 and enter the total here. This is Mary Anne’s total income.Line 7: Enter Mary Anne’s adjusted gross income.Line 8: Enter the standard deduction using the information in the side bar. Line 9: Qualified business income deduction: Enter $0.00Line 10: Subtract line 8 and 9 from 7. This is Mary Anne’s taxable income.
Lines 11–15: Enter $0.00 here.
Line 16: Enter the federal income tax withheld here.Line 17: Enter $0.00 here. Line 18: Add lines 16 and 17. Enter the amount here. These are Mary Anne’s total payments.
Refund or Amount Mary Anne OwesLine 19: If line 18 is larger than line 15, subtract line 15 from line 18. Enter the amount here. This is Mary Anne’s refund.Lines 20: (Routing number) If Mary Anne provides a bank account routing number, the IRS will deposit the refund directly into her bank account. If not, leave this blank; the IRS will send a check to her home.Line 22: Subtract line 18 from line 15. Enter that amount here. This is the amount Mary Anne owes the IRS.
Mary Anne signs her 1040 form in the space indicated on Side 1 of the form and attaches her W-2 form. She includes a check, credit card number, or authorizes an electronic funds withdrawal if she owes income tax.
Last year, Mary Anne Smith earned $70,000 as a software engineer. Mary Anne is single, has no children, and works full time.
Her employer deducted $12,587.34 in withholding taxes and sent it to the Internal Revenue Service (IRS), where it was credited to her account.
Now that the year is over, she will have to calculate how much she earned and how much of that sum needs to be paid to the government. If the amount she owes is greater than the amount deducted by her employer, she’ll have to pay the difference to the IRS. If that amount is less than the amount collected, the IRS will refund the difference. The calculations will be made on Form 1040 and the results reported to the government. Use the information found on Mary Anne’s W-2 Wage and Tax Statement on Page 30 and fill in her IRS 1040 tax form for 2018.
8 How to Complete a 1040 Income Tax FormExtension Activity
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Sample W2 Form
How to Complete a 1040 Income Tax Form
Worksheets
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How to Complete a 1040 Income Tax FormIncomeExtension ActivityStudent Worksheet, Page 29
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Name and Address (Fill in Page 1 of the 1040)• Note that Mary Anne is single.• Print Mary Anne’s name and address and Social Security number in the spaces indicated.• Check the Presidential Election Campaign box if you want $3 of Mary Anne’s taxes to go toward financing
the next presidential election. Checking this box will not cost any additional money. • Check the box for “Full Year Health Coverage.”
Report Mary Anne’s Income (Fill in Page 2 of the 1040)Line 1: Enter Mary Anne’s total wages here.Lines 2a, b 3a, b, 4a, b and 5a, b: Enter $0.00 here.Line 6: Add lines 1 through 5 and enter the total here. This is Mary Anne’s total income.Line 7: Enter Mary Anne’s adjusted gross income.Line 8: Enter the standard deduction using the information in the side bar. Line 9: Qualified business income deduction: Enter $0.00Line 10: Subtract line 8 and 9 from 7. This is Mary Anne’s taxable income.
Lines 11–15: Enter $0.00 here.
Line 16: Enter the federal income tax withheld here.Line 17: Enter $0.00 here. Line 18: Add lines 16 and 17. Enter the amount here. These are Mary Anne’s total payments.
Refund or Amount Mary Anne OwesLine 19: If line 18 is larger than line 15, subtract line 15 from line 18. Enter the amount here. This is Mary Anne’s refund.Lines 20: (Routing number) If Mary Anne provides a bank account routing number, the IRS will deposit the refund directly into her bank account. If not, leave this blank; the IRS will send a check to her home.Line 22: Subtract line 18 from line 15. Enter that amount here. This is the amount Mary Anne owes the IRS.
Mary Anne signs her 1040 form in the space indicated on Side 1 of the form and attaches her W-2 form. She includes a check, credit card number, or authorizes an electronic funds withdrawal if she owes income tax.
Last year, Mary Anne Smith earned $70,000 as a software engineer. Mary Anne is single, has no children, and works full time.
Her employer deducted $12,587.34 in withholding taxes and sent it to the Internal Revenue Service (IRS), where it was credited to her account.
Now that the year is over, she will have to calculate how much she earned and how much of that sum needs to be paid to the government. If the amount she owes is greater than the amount deducted by her employer, she’ll have to pay the difference to the IRS. If that amount is less than the amount collected, the IRS will refund the difference. The calculations will be made on Form 1040 and the results reported to the government. Use the information found on Mary Anne’s W-2 Wage and Tax Statement on Page 30 and fill in her IRS 1040 tax form for 2018.
8 How to Complete a 1040 Income Tax FormExtension Activity
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Sample W2 FormIncomeExtension ActivityStudent Worksheet, Page 30(continued)
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Saving, Investing, and Risk Management
Overview .................................................................... 1
Introduction ................................................................ 3
Traditional Lesson PlansLesson One: Saving and Investing ............................ 5
Lesson Two: Managing Risk .................................... 17
Extension Activities
Understanding College Costs and the FAFSA ..................... 31The FAFSA form is used to evaluate a student’s (and parents’) financial ability to pay for college.
Understanding Stock Quotes .................................. 35Students use the information found in a sample stock quote table to analyze a stock portfolio.
Roth IRAs: Teens and Retirement Savings ............. 39With earned income, students can invest and watch their savings grow for retirement.
Compound Interest and the Rule of 72.............................. 43Students use an online compound interest calculator to determine the growth of investments with varying interest rates and time horizons.
Junior Achievement $ave, USA “Risk and Insurance” Online Lesson ...................... 49This interactive lesson helps students define risk, common insurance terms, and the different types of insurances.
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Saving, Investing, and Risk Management OverviewStudents explore and compare savings and investments as a part of their overall financial planning. They also examine risk and how insurance may help protect savings from both planned and unplanned events.
ObjectivesStudents will be able to:
• Identify the benefits of saving a portion of income for future use.
• Explain short- and long-term saving options.
• Explain some of the advantages and disadvantages of savings and investment options.
• Assess personal risk and risk management.
PreparationDetermine whether you will use the traditional classroom presentation or the Project-Based Learning option. Also, review and organize the materials for the extension activities you plan to teach.
Summary and AssessmentUse the lesson summaries at the end of each lesson to review concepts. To assess knowledge learned, administer the Saving, Investing, and Risk Management Assessment on Pages 25–26. (Answer Key is on Pages 27–28.)
Extension Activities1. Understanding College
Costs and the FAFSA
2. Understanding Stock Quotes
3. Roth IRAs: Teens and Retirement Savings
4. Compound Interest and the Rule of 72
5. Junior Achievement $ave, USA “Risk and Insurance” Online Lesson
Required Lessons Lesson One: Saving
and Investing Lesson Two: Managing
Risk
TimeThe lessons typically can be completed in two 45-minute sessions.
ConceptsBenefitsGoalsInterestSavingSavingsInvestmentOpportunity costRisk
SkillsActive listening, brainstorming, comparing, critical thinking and reasoning, collaboration, decision making, following directions, information literacy, math computation, reading for information, self-direction, speaking and listening, teamwork, summary writing
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Saving, Investing, and Risk Management Introduction
Teens and preteens need experience in working, earning, saving, and investing. Whether they are buying gifts for friends and family or planning a summer adventure, students need to know what it means to spend money wisely. Likewise, students will be more apt to save and invest if they know what they want their money to do for them.
According to the 2018 JA Teens and College Savings Survey, 52 percent of high school juniors and 39 percent of high school seniors feel they aren’t as prepared as they should be to pay for or manage the cost of college. Smart money management means carefully planning for today’s needs and wants as well as those in the years to come, either through saving or long-term investing. A wise saving plan involves three critical variables: the amount saved, the interest earned on that amount, and the length of time the money is invested. By starting at a young age, savers can expect to increase their wealth over the long term.
Still, even with a well-thought-out plan, life comes with risks. Changing interest rates and stock market swings can affect the return on investments up or down. Accidents and medical emergencies can and do occur, and they can affect a person’s finances. Students will come to see that diversified investing and insurance for such things as health, life, and cars can help shield them from the unexpected. Insurance policies are like helmets and seat belts: They may never be needed, but they offer protection from unforeseen events.
Teacher Introduction
Saving occurs when consumers choose not to spend all of their income. To avoid the temptation to overspend, students need to learn to “Pay Yourself First” (PYF), which means to automatically save a portion of income for future use.
So, where should hard-earned savings go? A financial institution, such as a bank, credit union, savings and loan, or investment firm, helps people save for the future with simple savings accounts and more complex investments. Putting money into a savings account is a safe way to save money. Saving accounts, however, offer low interest rates. There are many ways to invest to earn higher rates of return. Three common long-term investment types are stocks, mutual funds, and bonds. They allow savers to invest their principal and earn, over time, a higher rate of return than they would get if their money was in conservative savings accounts. But stocks and mutual funds are not guaranteed investments. Investors can lose part or all of their money. The value of bonds can erode if interest rates rise. Students, like investors, must learn to gauge risk when they decide how to make their savings work for them.
For many teens, the opportunity cost of starting a savings program with income from a summer job may seem challenging. And for those who choose to save, the number of options can be overwhelming. This lesson will introduce various methods of saving, such as savings accounts, stocks, and mutual funds.
Materials
o Student Workbooks
o Computers and Internet access
o JA Finance Park Slides 1–12
o Highlighters
VocabularyBondAn IOU issued by a company, municipality, or the federal government in exchange for a loan from an investor that will be repaid with a set rate of return.
Financial institutionA business that provides money-related services.
InterestA fee received or paid for the use of money.
InvestTo commit money to gain a profit or earn interest.
Mutual fundA collection of stocks or bonds of various corporations.
Opportunity costThe next best alternative given up when making a financial choice.
Pay Yourself First (PYF)To automatically save a specified amount from a paycheck for future use.
PrincipalThe amount of money originally invested.
RiskThe possibility of financial loss or physical harm.
Savings accountAn interest-bearing account where people put money for future use.
StockA share of a corporation sold to the public.
Saving, Investing, and Risk ManagementLesson One: Saving and Investing
Lesson Time: 45 minutes
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Lesson Preparation
• Optional: Obtain up-to-date savings rates for savings and money market accounts and certificates of deposit from your local bank or credit union or from a financial rate information site, such as Bankrate.com. You also may wish to get a rate of return for two or three popular stocks and an index mutual fund.
• Review Pages 14–15, Know It All Savings Cards.
• Review the Set the Stage talking points.
• Review Saving and Investing: Lesson Steps.
• Display the Savings Options Posters.
• Review the Student Worksheets on Pages 13 and 16.
• Display Slide 1 as the lesson begins.
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Know It All Savings CardsSavings
Options Posters
Doodling for Dollars Worksheet
Tweet Worksheet
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Know It All Savings Card
StocksStocks represent a fractional ownership in a company. Traditionally, they pay higher average returns than most any other investment. Stocks are sold in shares, and their prices can change daily. They are long-term investments because they are meant to gain value over a longer period of time (although they can be bought and sold anytime) based on the company’s performance. Some companies pay dividends to stockholders based on the company’s profits.
Medium to high riskKeep in mind: Stock markets go up and down. Stocks are not insured for loss, so stockholders could lose their principal (the amount they put in) and any return.
Know It All Savings Card
BondsA bond is essentially an IOU. The issuer promises to pay the bond buyer a certain sum of money at the end of a stated period, plus interest payments at specific intervals or when the bond matures. A bond fund pools money from many investors. Unlike stocks, bonds do not represent ownership in the corporation, government agency, or utility borrowing the money.
Medium riskKeep in mind: Unlike bank savings accounts, bonds aren’t insured. Bond buyers could lose some or all of their money, but this is less likely than with stocks. Cashing in before the maturity date could result in the loss of principal (the amount bondholders put in). Bond funds are subject to the rise and fall of interest rates.
Know It All Savings Card
Mutual FundsA mutual fund is a professionally managed investment with money pooled from shareholders (plus interest earned) to buy a collection of stocks or bonds of various corporations.
Each investor buys shares of the fund that represent partial ownership of the fund’s collective holdings. A mutual fund’s goals are explained in the fund’s published report, called a prospectus. Shareholders can elect to take the money earned (paid as dividends) or reinvest it to buy more shares.
Low to high risk Keep in mind: As with stocks, money invested in mutual funds is not insured. Mutual funds can lose value in stock market swings. Fund objectives and fees vary by fund.
Know It All Savings Cards
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Know It All Savings CardSavings Accounts and Certificates of Deposit
Savings accounts carry low risk because most bank and credit union accounts are insured by the government (Federal Deposit Insurance Corporation, or FDIC, or the National Credit Union Administration, or NCUA) for up to $250,000 per savings account. Savings accounts pay a small interest rate, less than what stocks or mutual funds yield, but you can take your funds out at any time without penalty. Banks also offer certificates of deposit (CDs), which are safe and offer higher interest rates than savings accounts. CDs often require that you commit larger amounts of money for longer periods of time.
Low riskKeep in mind: Minimum deposits and fees may apply. Early CD withdrawal may incur penalties. The interest earned on saving accounts and CDs is lower than the potential interest on other investments that carry more risk.
Know It All Savings Card
Money Market Accounts Money market accounts are interest-earning accounts offered by FDIC-insured (Federal Deposit Insurance Corporation) financial institutions. Money market accounts usually pay a higher interest rate than savings accounts in exchange for a larger deposit. Accounts may come with check-writing privileges.
Low riskKeep in mind: Minimum deposits and fees may apply. Federal regulation limits certain types of withdrawals and transfers from money market accounts to a total of six per monthly statement period.
Know It All Savings Cards
Save for College
A 529 plan is a savings account designed for educational expenses. Earnings are tax deferred, and distributions are free from federal tax and, in most cases, state tax. Risk varies depending on investment choices. Relatives may contribute to a 529 savings account up to the limit established by the plan.
Risk: Money must be used for college or graduate school or a 10 percent penalty must be paid.
7
Saving and Investing: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students. • Money experts tell us to save early and often. What are the
advantages to saving money? Is it a good idea to have a “just in case” fund for emergencies? Why or why not?
• Present Slide 2.
Money experts also tell us that a good rule of thumb is to save 10 to 20 percent of any money we receive. When you Pay Yourself First, you automatically save a portion of your paycheck for future use. What would you like to start saving for?
• Optional: Do your savings goals include college? In 2017–18, the College Board reported yearly tuition, fees, and on-campus room and board for an in-state public college averaged $25,290. The cost at a private college averaged $50,900. The price tags do not include books, supplies, off-campus housing, and transportation.
• Have students take a few minutes to explore the infographic on teens and saving for college on Page 32 in their Workbooks and on Page 8 in this guide.
Understanding College Costs and the FAFSA: Online Option
Introduce high school students to the FAFSA, the form used to evaluate a student’s (and parents’) ability to pay for college.
The Extension Activity starts on Page 31.
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Saving and Investing: Lesson Steps | 35 Minutes
1. Present Slides 3 and 4 with the lesson’s vocabulary. Have students highlight the words in their Student Workbooks on Page 31 as you introduce them.
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Notes:
SOURCE: JUNIOR ACHIEVEMENT/CITIZENS BANK/WAKEFIELD RESEARCH
what
teens
think
Teens Who Say they Do Not Feel Prepared to Pay for or Manage the Cost of College
SOURCE: JUNIOR ACHIEVEMENT/CITIZENS BANK/WAKEFIELD RESEARCH
High School Juniors 52%
High School Seniors 39% College Freshmen 34%
High School Seniors
High School Freshmen
what
teens
think
Percentage of Teens Who Say Parents have Spoken to them Only Once or Not At All
about Paying for CollegeHigh School Juniors
SOURCE: JUNIOR ACHIEVEMENT/CITIZENS BANK/WAKEFIELD RESEARCH
31%
48%32%
Percentage of Teens Who Say They Haven’t Done Enough Research
about Paying for College
what
teens
think
62% High School Seniors
75% High School Juniors
64% College Freshmen
SOURCE: JUNIOR ACHIEVEMENT/CITIZENS BANK/WAKEFIELD RESEARCH
what
teens
think
SOURCE: JUNIOR ACHIEVEMENT/CITIZENS BANK/WAKEFIELD RESEARCH
Teens Who Have Less than $1,000 Saved for College
High School Juniors 39%
30%
29%
High School Seniors
College Freshmen
InflationSavers can safely assume that the price of most everything will be higher in the future. Inflation occurs when the prices of goods and services increase over time. For example, with a 3 percent inflation rate, consumers can expect to pay $103 next year for what costs $100 today. Smart savers look for long-term investments that will grow faster than the rate of inflation.
Vocabulary
Compound interestInterest on the principal and the accumulated interest on a deposit or a loan.
Simple interestInterest that is paid only on the original principal.
Compound Interest and the Rule of 72 Online Option
Simple and compound interest are further explained in the Extension Activity starting on Page 43.
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2. Have students look at the Doodling for Dollars Worksheet on Page 33 in the Student Workbook. Ask them to fill in the middle box with one thing they are saving for. Then, have them fill in the rest of the sheet explaining how they receive and spend money. If students don’t receive money on a monthly basis, have them enter a $50 sum. Define the following terms if necessary:
• Bar graph: Represents grouped data. It’s a way to show a lot of information in a format that is easy to understand.
• Pie chart: A circle that is divided into wedges. It’s a way to look at items that make up a whole of something. The circle of a pie chart represents 100 percent.
3. Give students 5–8 minutes to fill in their Worksheet. Ask a few volunteers to share their information with the class.
4. Ask students if they have some type of piggy bank at home. If so, do they save money in it? Does the amount in the piggy bank ever increase without putting more in? (no) Tell them there is a way to make their money earn more money.
5. Explain that one of the benefits of saving is earning interest, a fee received or paid for the use of money. Share the following example of simple interest. If Peter needs $100 and Sophie has some money to spare, she may loan it to him for a year at 10 percent interest. Peter will then return $110 to Sophie at the end of the year. Ask students the following questions based on the Slide 5 Savings Chart, which shows the effects of compound interest.
• If you save $14 per week at 5 percent annual interest, how much money would you have at the end of 10 years? (Answer: Approximately $9,463.)
• If you save $19.20 per week for 10 years at 7 percent annual interest, how much will you have? (Answer: Approximately $14,484.)
• If you save $19.20 per week for 20 years at 9 percent annual interest, how much will you have saved? (Answer: Approximately $56,029.)
• What conclusion can you draw from the information on the slide? (Answer: The amount of savings, called principal, plus time and rate of interest affect long-term financial growth.)
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6. Present Slide 6 and review the three elements important to saving and earning interest (savings amount, time, interest rate).
7. Present Slide 7 and discuss opportunity cost and the importance of wise decision making.
8. Present Slide 8 demonstrating options for saving. Ask a volunteer to read aloud the five options from the slide. Ask the students if they recognize one or more of the options and what, if anything, they know about each. Present Slide 9 and tell class members that by the end of today’s lesson, they will have a better idea of what options they prefer in their “savings basket.”
• Point to the Savings Options Posters as you discuss savings options. Students can follow along in their Workbooks on Pages 34–35. (The Know It All Savings Cards contain the same definition as the posters.)As you mention each option, share the interest rate information for the options you researched before class. Mention that savers also may choose to own real estate, purchase gold, or collect coins or antiques as part of a personal savings plan.
Understanding Stock Quotes
Students use the information found in a sample stock quote table to analyze a stock portfolio.
The Extension Activity starts on Page 35.
Roth IRAs: Teens and Retirement Savings
With earned income, students can invest and watch their savings grow for retirement.
The Extension Activity starts on Page 39.
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9. Present Slide 10 and remind students that a short-term savings goal means saving for something you will need in six months or less. This includes money you might need in an emergency or for an unexpected expense.
• As you present Slide 11, inform students that a long-term goal means saving anywhere from one to five years or even 20 years or more, such as for retirement savings. When putting aside money for a future goal, savers must consider their tolerance for risk and the rate and stability of future returns.
• Use Slide 12 to help illustrate that savings accounts, money markets, and certificates of deposits (CDs) provide safe, quick access to funds, yet usually offer a small return.
• Ask students, “On a scale of 1 to 10, with 10 being the highest, how would you assess your tolerance for risk when it comes to your savings? Would you risk the possibility of losing a portion of your savings for the opportunity to make even more in a riskier investment? Why or why not?”
10. Activity: Separate the class members into five groups. Assign each group one Know It All Savings Card. (Each card contains information about one of five different savings types as shown on the poster and includes risk information.) The types are: savings accounts and certificates of deposit, money market accounts, bonds, stocks, and mutual funds.
• Have groups read the title and the information on their savings cards. Have them use a highlighter to highlight facts or details on their cards to better understand the content.
• Tweet activity: Direct students to Page 36 in the Student Workbook. Tell them they will compose a tweet (280 characters) or a brief statement that summarizes (as much as possible) the information found on their assigned card.
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For example, a stock tweet might read:
#Stocks are ownership shares in a company. As a long-term investment, stocks may pay high returns but may lose money when markets go down. (138 characters)
Or students can choose to use symbols in place of familiar words:
#Stocks are ownership shares in a company. As a long-term investment, stocks may pay high returns but may lose $ when markets go down. (134 characters)
Note: Based on student knowledge of tweets, you may choose to increase the statements to 300 or more characters.
• Ask groups to share their tweets or summaries with the class.
Summary and Review | 5 Minutes
Students learned about the ways that savers save money. They also learned that smart money management means saving a portion of their income through savings accounts and long-term investing. If time permits, have students think about the infographic they explored at the beginning of the lesson. Ask them to share with the class the methods they identified that would help them save more. Emphasize that it’s better to save even a little than not to save anything at all.
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Doodling for DollarsSaving, Investing, and Risk ManagementLesson OneStudent Worksheet, Page 33
Know It All Savings CardSavings Accounts and Certificates of Deposit
Savings accounts carry low risk because most bank and credit union accounts are insured by the government (Federal Deposit Insurance Corporation, or FDIC, or the National Credit Union Administration, or NCUA) for up to $250,000 per savings account. Savings accounts pay a small interest rate, less than what stocks or mutual funds yield, but you can take your funds out at any time without penalty. Banks also offer certificates of deposit (CDs), which are safe and offer higher interest rates than savings accounts. CDs often require that you commit larger amounts of money for longer periods of time in exchange for the interest paid to you by the bank.
Low riskKeep in mind: Minimum deposits and fees may apply. Early CD withdrawal may incur penalties. The interest earned on saving accounts and CDs is lower than the potential interest on other investments that carry more risk.
Know It All Savings Card
Money Market Accounts Money market accounts are interest-earning accounts offered by FDIC-insured (Federal Deposit Insurance Corporation) financial institutions. Money market accounts usually pay a higher interest rate than savings accounts in exchange for a larger deposit. Accounts may come with check-writing privileges.
Low riskKeep in mind: Minimum deposits and fees may apply. Federal regulation limits certain types of withdrawals and transfers from money market accounts to a total of six per monthly statement period.
Know It All Savings Cards
JA Finance Park®
Know It All Savings Card
StocksStocks represent a fractional ownership in a company. Traditionally, they pay higher average returns than most any other investment. Stocks are sold in shares, and their prices can change daily. They are long-term investments because they are meant to gain value over a longer period of time (although they can be bought and sold anytime) based on the company’s performance. Some companies pay dividends to stockholders based on the company’s profits.
Medium to high riskKeep in mind: Stock markets go up and down. Stocks are not insured for loss, so stockholders could lose their principal (the amount they put in) and any return.
Know It All Savings Card
BondsA bond is essentially an IOU. The issuer promises to pay the bond buyer a certain sum of money at the end of a stated period, plus interest payments at specific intervals or when the bond matures. A bond fund pools money from many investors. Unlike stocks, bonds do not represent ownership in the corporation, government agency, or utility borrowing the money.
Medium riskKeep in mind: Unlike bank savings accounts, bonds aren’t insured. Bond buyers could lose some or all of their money, but this is less likely than with stocks. Cashing in before the maturity date could result in the loss of principal (the amount bondholders invest). Bond funds are subject to the rise and fall of interest rates.
Know It All Savings Card
Mutual FundsA mutual fund is a professionally managed investment with money pooled from shareholders (plus interest earned) to buy a collection of stocks or bonds of various corporations.
Each investor buys shares of the fund that represent partial ownership of the fund’s collective holdings. A mutual fund’s goals are explained in the fund’s published report, called a prospectus. Shareholders can elect to take the money earned (paid as dividends) or reinvest it to buy more shares.
Low to high risk Keep in mind: As with stocks, money invested in mutual funds is not insured. Mutual funds can lose value in stock market swings. Fund objectives and fees vary by fund.
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Know It All Savings Cards
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TweetSaving, Investing, and Risk ManagementLesson OneStudent Worksheet, Page 36
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Tweet
Print your Know It All Savings Card title here
(Note: The card title is not part of your tweet.)
_____________________________________.
Look over the savings option on your Know It All Savings Card. Briefly summarize its benefits and risks in a 280-character message, and print it below.
Count your characters—280 is tops!
Post
you
r tw
eet
here
.
Vocabulary
Insurance policy A contract that outlines coverage plans and protects a person against financial loss or damage.
PremiumThe amount paid for an insurance policy.
RiskThe possibility of financial loss or physical harm.
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Teacher Introduction
Accidents, sickness, weather disasters, and emergencies happen even to the best prepared. Minimizing personal risk is the main reason people buy insurance policies. Insurance policies are legal contracts between companies and policyholders that safeguard assets by providing financial compensation in the event of significant accidents, needed medical care, or unforeseen circumstances.
• Health insurance: Protects individuals and families from unforeseeable health expenses or loss of income.
• Home insurance: Provides money and housing if a home is damaged or destroyed by fire, theft, and other hazards.
• Car insurance: Protects families from expensive surprises such as the theft of the family car, an accident, or an injury. Students old enough to drive know that to be covered by auto insurance, they must pay an annual fee, or premium. Before determining premiums, insurance companies will want to know the make, model, and age of the car; who will be driving (the person’s age and driving record); and how the car will be used. Teen drivers also may need to provide their most recent school report card to the insurance company.
Generally, for many types of insurance, premiums are determined by a person’s age, health, life habits, and where he or she lives.
Materials
o Sticky notes
o Computers and Internet access
o Download or make copies of the Perfectly Matched activity using two-different colored sheets. Half the class will received the Insurance Sheet on Page 23. The other half will receive the Life Sheet on Page 24.
o JA Finance Park Slides 13–15
Saving, Investing, and Risk ManagementLesson Two: Managing Risk
Lesson Time: 45 minutes
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Lesson Preparation
• Optional: Make copies of the Saving, Investing, and Risk Management Assessment, Pages 25–26, one for each student. Students will take the assessment at the conclusion of this lesson. The assessment takes 12–15 minutes to complete.
• Review the Set the Stage talking points.
• Review Managing Risk: Lesson Steps.
• Optional: Research auto insurance policies in your location to see how high school grades affect or do not affect the cost of premiums.
• Sketch the “Tree of Life” on the board to save time later.
• For the Perfectly Matched activity, download or make copies of the Insurance Sheet on Page 23 for half of the class using colored paper. Choose another color and make copies of the Life Sheet on Page 24 for the other half of the class. Each student will receive one sheet.
Managing Risk: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
Tell students that life involves risk. Protection against personal risk is why people choose to buy insurance. Ask if anyone has cell phone insurance. If so, what does it cover? Loss? Repair or replacement?
Provide the following “Did You Know?” examples for students to think about.
Did You Know? Jason borrows his mother’s car to drive to a state championship football game. Distracted, he veers off the road and hits a
InsuranceSheet
Life Sheet
VocabularyDeductible/co-pay Money paid out of pocket before insurance covers the remaining costs.
Insurance Online Option
The Junior Achievement $ave, USA “Risk and Insurance” online interactive Extension Activity helps students understand risk, insurance terms, and types of insurance. Instructions start on Page 49.
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guardrail. Jason is shaken up but OK. The damage to his mother’s car, however, is estimated at $1,200. Fortunately, Jason shouldn’t have to use all of his savings to pay the repair bill because his mother has car insurance.
Did You Know? The Stover family plans a $6,000 vacation, including nonrefundable airline and cruise fare tickets. Just before it’s time to leave, Stacie, the youngest, gets sick and the family trip must be put off. If the Stovers had bought travel insurance, they may not have been responsible for paying the total cost of the trip. Did You Know? Roma’s 10-year old cat, Cuddles, fractures her leg and needs immediate surgery. The veterinary clinic cost is estimated at $2,300. Roma has pet insurance, so she agrees to the necessary treatment, knowing that most of the cost will be covered.
Managing Risk: Lesson Steps | 35 Minutes1. Present Slide 13 with the lesson’s
vocabulary. Have students highlight the words in their Student Workbooks on Page 37 as you introduce them.
2. Present Slide 14, describing types of
insurance, and discuss.
Share the following with students: Insurance policies safeguard against risk by providing money in the event of sickness, injury, accidents, or unforeseen events.
• Insurance provides protection in exchange for a fee, called a premium.
• If you have an accident or injury, you file a claim with your insurance company with the expectation that you will be compensated or reimbursed for your loss.
• Various types of insurance can be purchased independently through a company or agent and, in the case of health insurance, through an employer or government program.
» Consumers have a choice of health plans and usually receive an enrollment card that proves they have coverage. The card lists the deductible or co-pay amounts a person must pay before the insurance company covers a portion or all of the remaining costs.
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• Policyholders with all types of insurances may have to pay a deductible and/or co-pay before insurance covers the remaining costs.
» In the auto insurance example discussed at the beginning of the lesson, Jason may have to pay a deductible of $500 toward the repair of his mother’s car. The insurance company would then pay the remaining $700. Even though Jason’s mother pays a yearly premium plus deductible costs for each accident she or covered drivers have, the benefits of car insurance outweigh the cost.
3. Describe how insurance works. Tell students that insurance companies pool the money they receive. Using statistical analysis, they determine what percentage of insured people will actually suffer a loss and file a claim (usually a small number), and with that information, they set the amount consumers pay in premiums. For many types of insurance, premiums are determined by a person’s age, health, life habits, and sometimes where they live.
• A location’s risks can make a difference in premium costs. Think about two houses, one built on a mesa (a high desert plateau) in Arizona and the other built on the Louisiana coast (below sea level). Which location is more likely to experience flooding? Which house would have lower premiums for flood insurance?
• Share with students that auto insurance premiums are usually higher for teen drivers than for middle-age drivers. Ask what they think that tells us about teen drivers. (Answer: Teens pay higher auto rates because statistically they have more accidents than older drivers. That means the probability of a teen driver having an accident is higher than people in other age groups.)
Life InsuranceDo you need life insurance? It can help provide money for those who depend on you financially if you can’t be there for them. For example, if you have small children, you will need a life insurance policy with a high-dollar amount to cover their care until they can care for themselves. As children grow and leave, you will need less protection. How much you pay for life insurance will depend on your age, health, and the size of the benefit you want.
Term life insurance policies are the least costly. They pay death benefits. As the word term suggests, these policies are in effect for a specific time period or until you reach a certain age.
Whole life, universal life, and other cash value policies combine a long-term savings and investment product with life insurance. These are usually more expensive.
Disability InsuranceHow long could you afford to be without a paycheck? If you are disabled, you lose your ability to work and earn a paycheck. Financially speaking, disability can be more costly than death. Unable to work, you must still find a way to pay your living expenses and medical bills. Disability insurance helps you replace lost income.
Many employers offer some type of disability insurance. There are two types of disability policies: short-term and long-term. Short-term disability policies have a maximum benefit of two years, while long-term disability policies have benefits that can last the rest of your life.
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• Additionally, health insurance premiums are usually higher for smokers than nonsmokers. Ask the students why they think this is. (Answer: Smokers with health issues generally submit more health insurance claims than nonsmokers.)
4. Present Slide 15 or draw a tree with seven long branches on the board or interactive whiteboard. Label the tree the “Tree of Life.” On each branch, print one type of insurance—home, health, auto, dental, life, travel, and phone.
5. Distribute the sticky notes. Ask students to think of events that happen over the course of a lifetime in which having insurance would help cover the costs. Ask students to think of things they or their families have experienced, such as an illness or injury that required doctor or specialist visits and/or hospitalizations, a car accident or a house fire, dental checkups, the loss of a phone, or personal property theft or damage done to another person’s property. Have them write each event they can think of on individual sticky notes.
6. Discuss which branches on the Tree of Life each event would fall under and then ask students to take turns attaching the sticky notes to the appropriate branches.
7. Finally, tell the students that people often buy insurance but never need it or use it. Ask students if they think having insurance is worth the money. (Possible answers: Yes, for the peace of mind of having it when you need it; or no because it’s expensive.)
8. Activity: Play the Perfectly Matched activity. Randomly distribute the Insurance Sheets to half of the students in the room and the Life Sheets to the other half. Have the students review their sheets.
• Tell students that the Insurance Sheet shows many different types of insurance. If they have this sheet, they will need to find customers (classmates) who need the insurances and then have them initial the sheet. Ask students to stand if they have this sheet.
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• The second sheet, the Life Sheet, has life scenarios that would benefit from having insurance. If students have this sheet, they will need to “shop for insurance” and find a classmate with different types of insurance to sell. Ask students to stand if they have this sheet.
9. Tell students they have 10 minutes to walk around the room and find the best match for each box on their sheets. For example, a garage fire (on one student’s Life Sheet) would be perfectly matched, or covered, by homeowners insurance, which helps protect the structure of your home and garage (found on another student’s Insurance Sheet).
10. Once a match is found, students initial each other’s sheets and move on to find another. The sheet with the most matches and unique initials (those belonging to more than one student) wins the challenge.
Important! Students will discover that they have life events with no matching insurance coverage. Ask students to consider how they would cover these expenses without insurance.
Summary and Review | 5 Minutes
Students learned that life involves risk. Protection against personal risk is the reason why people choose to buy insurance. Even though people often pay a yearly premium and deductible, the benefits of insurance, including peace of mind, almost always outweigh the out-of-pocket cost of an accident or illness.
With today’s activity in mind, have students discuss the pros and cons of having insurance and how their opinions about paying for insurance may have changed from the start of the lesson.
Optional: Distribute the Saving, Investing, and Risk Management Assessment Sheets and have students complete them. The Answer Key is found on Pages 27–28.
Digging Deeper: Flash Card ActivityHave students create their own flash cards to demonstrate the ways people can help protect
themselves against costly accidents or injury. For example, wearing a helmet when riding a bike or using a seat belt when riding in a car may help reduce the need for doctor visits or hospital
stays. Students can draw a picture of the scenario on one side of an index card and their explanation of it on the other side. Ask students to separate into pairs to compare their cards.
Insurance Sheet
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Homeowners Insurance helps protect your home and
garage.
Find: a homeowner whose garage was damaged by fire.
Medical Health Insurance
Find: a person who went to the emergency room.
Auto Insurance with collision coverage helps pay
for vehicle repairs.
Find: a car owner with $4,500 in damages.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Auto Insurance with comprehensive coverage
helps pay for weather-related or vandalism repairs.
Find: a car owner with hail damage.
Homeowners Insurance with additional coverage
Find: a homeowner with a sewer backup.
Medical Health Insurance
Find: a person who was recently hospitalized.
Auto Insurance with personal injury coverage will help pay lost income if the
insured person is hurt.
Find: an injured car owner who can’t work.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Phone Insurance with extended warranty offers replacement coverage if a phone is lost, stolen, or
damaged.
Find: someone who just lost his/her phone.
Homeowners Insurance with personal liability
coverage helps pay if others are hurt in your home.
Find: a homeowner whose friend was injured on his/her
property.
Auto Insurance with underinsured/uninsured
coverage offers protection in accidents with drivers who have little or no insurance.
Find: a car owner with $6,600 in damages.
Homeowners Flood Insurance
Find: a homeowner with a flooded basement.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Homeowners Earthquake Insurance
Find: a homeowner with no place to live because of an
earthquake.
Dental Insurance with braces coverage.
Find: a person needing braces.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Medical Health Insurance
Find: a person who needs care for a head injury.
Medical Health Insurance
Find: someone who needs outpatient surgery.
Homeowners Insurance with content replacement
coverage helps cover furniture and clothing.
Find: a homeowner whose furniture was destroyed in a
house fire.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
No Insurance
No Insurance
No Insurance No Insurance
Life Sheet
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Creek overflows and your basement floods.
Cost: $10,500
You need: Homeowners Flood Insurance.
Phone stolen.Cost: $500
You need: Phone Insurance.
You need braces.Cost: $4,500
You need: Dental Insurance with braces coverage.
Emergency room visit.Cost: $1,150
You need: Medical Health Insurance.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Garage fire.Cost: $6,500
You need: Homeowners Insurance.
Outpatient surgery.Cost: $5,400
You need: Medical Health Insurance.
Home struck by lightning.Cost: $16,100
You need: Homeowners Insurance.
Car accident.Cost: $4,500
You need: Auto Insurance with collision coverage.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Uninsured motorist damages your van.
Cost: $6,600
You need: Auto Insurance with underinsured/uninsured
coverage.
Friend is hurt in your home.Cost: $2,000
You need: Homeowners Insurance with personal
liability coverage.
Sewer backup.Cost: $1,200
You need: Homeowners Insurance with additional
coverage
Hail damages your car.Cost: $1,500
You need: Auto Insurance with comprehensive
coverage.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Earthquake destroys your home.
You need: Homeowners Earthquake Insurance.
Emergency room visit.Cost: $3,200
You need: Medical Health Insurance.
Hospitalization.Cost: $32,000
You need: Medical Health Insurance.
Auto accident injury.Cost: lost wages
You need: Auto Insurance with personal injury
coverage.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Lost phone.Cost: $500
You need: Phone Insurance.
Furniture destroyed in house fire.
Cost: $1,700
You need: Homeowners Insurance with content replacement coverage.
Head injury.Cost: $4,300
You need: Medical Health Insurance.
Initials ___________ Initials ___________ Initials ___________ Initials ___________
Doing Fine!
Saving, Investing, and Risk Management Assessment
Choose the best answer for each question. Write the letter that corresponds with your answer on the line next to the number. For lists or topics requiring an explanation, write your answers on the lines provided.
1. When it comes to personal savings, what does the acronym PYF stand for?a. Prepare Your Future
b. Pay Your Friends
c. Pay Yourself First
d. Prepay Your Finances
2. List three things you learned about saving and investing.
a.
b.
c.
3. List two short-term and two long-term savings options.
4. A saver who wants her savings insured by the FDIC (Federal Deposit Insurance Corporation) wants to use this savings option.
a. Stocks
b. Bonds
c. Mutual funds
d. Savings account
5. This type of investment is essentially an IOU with a set rate of return. The issuer promises to pay the buyer a certain sum of money at the end of a stated period plus interest payments at specific intervals. This type of investing doesn’t represent ownership in the corporation, government agency, or utility borrowing the money.
a. Money market account
b. Stock
c. Bond
d. Certificate of deposit
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Saving, Investing, and Risk Management Assessment
6. True or false: A long-term investment usually means an investment period of one to three months.
Stocks are insured against loss by most banks and credit unions.
By automatically reinvesting dividends, you are buying additional shares and increasing your investment.
Interest is the fee received for the use of money.
The higher the probability that some event will happen, the more expensive the insurance premium to protect against that event will be.
7. Protection against risk is the primary reason people purchase this type of policy.a. Auto insurance
b. Health insurance
c. Home insurance
d. All of the above
8. List the pros and cons of owning a health insurance policy.
9. Chris is off to college this fall, but he has discovered that under his parents’ health policy, he is only covered for emergency medical care while at school. Should Chris consider purchasing additional medical insurance just in case he needs it? Explain your answer.
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Saving, Investing, and Risk ManagementAssessment Answer Key
Choose the best answer for each question. Write the letter that corresponds with your answer on the line next to the number. For lists or topics requiring an explanation, write your answers on the lines provided.
1. When it comes to personal savings, what does the acronym PYF stand for?a. Prepare Your Future
b. Pay Your Friends
c. Pay Yourself First
d. Prepay Your Finances
2. List three things you learned about saving and investing. (Answers will vary)
a.
b.
c.
3. List two short-term and two long-term savings options.
4. A saver who wants her savings insured by the FDIC (Federal Deposit Insurance Corporation) wants to use this savings option.
a. Stocks
b. Bonds
c. Mutual funds
d. Savings account
5. This type of investment is essentially an IOU with a set rate of return. The issuer promises to pay the buyer a certain sum of money at the end of a stated period plus interest payments at specific intervals. This type of investing doesn’t represent ownership in the corporation, government agency, or utility borrowing the money.
a. Money market account
b. Stock
c. Bond
d. Certificate of deposit
c
The degree of risk
How easy it is to get your money
The rate of return
Short-term options could include savings accounts, certificates of deposit, and money market accounts. Long-term options could include stocks, bonds, and mutual funds.
d
c
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Saving, Investing, and Risk ManagementAssessment Answer Key
6. True or false: A long-term investment usually means an investment period of one to three months.
Stocks are insured against loss by most banks and credit unions.
By automatically reinvesting dividends, you are buying additional shares and increasing your investment.
Interest is the fee received for the use of money.
The higher the probability that some event will happen, the more expensive the insurance premium to protect against that event will be.
7. Protection against risk is the primary reason people purchase this type of policy.a. Auto insurance
b. Health insurance
c. Home insurance
d. All of the above
8. List the pros and cons of owning a health insurance policy.
9. Chris is off to college this fall, but he has discovered that under his parents’ health policy, he is only covered for emergency medical care while at school. Should Chris consider purchasing additional medical insurance just in case he needs it? Explain your answer.
F
F
T
TT
d
Pros: Health insurance allows you to get regular medical health care and
medicine when you need it. If you become seriously ill or injured, some or
most of your care—including hospitalizations and surgery bills—also may be
covered. Cons: Health care insurance is expensive. You pay for something
you may never need. Deductibles and co-payments usually apply. You may
be denied coverage or have limitations on office visits and specialists you
can see.
Chris can check with his parents’ insurer to see if it offers a policy for students who
attend school out of state. He also can look into purchasing a medical plan with ample
coverage sponsored by his college or university, or he can consider purchasing an
individual health policy.
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Saving, Investing, and Risk ManagementExtension Activities
Understanding College Costs and the FAFSA ..........31The FAFSA form is used to evaluate a student’s (and parents’) financial ability to pay for college.
Understanding Stock Quotes ....35Students use the information found in a sample stock quote table to analyze a stock portfolio.
Roth IRAs: Teens and Retirement Savings ..............39With earned income, students can invest and watch their savings grow for retirement.
Compound Interest and the Rule of 72 ............................43Students use an online compound interest calculator to determine the growth of investments with varying interest rates and time horizons.
Junior Achievement $ave, USA “Risk and Insurance” Online Lesson ...............49This interactive lesson helps students define risk, common insurance terms, and the different types of insurances.
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Tips for students filling out the FAFSA:
1. Use your legal name; no nicknames.
2. The application assumes the student (not the parent) is completing the application.
3. Fill in each Social Security blank.
4. Dollar amounts should not include cents.
5. Tax information must be accurate and up-to-date.
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Overview The U.S. Department of Education’s Free Application for Federal Student Aid (FAFSA) is required for all federal grants or loans. It is used to evaluate a student’s (and parents’) financial ability to pay for college.
Teacher Introduction According to the National Center for Education Statistics (NCES), the number of high school students projected to go to college in 2019 is 19.9 million.
College-ready students pay for costs in a number of ways. They may use money saved in personal accounts, use prepaid tuition or college savings plans, borrow money using loans, pay through income, or receive “free” money through federal grants or merit (academics, talent, or athletic) scholarships. College costs include tuition and fees, on-campus housing, and meals. Students also must consider indirect college costs: books, supplies, transportation, and any off-campus housing.
To apply for need-based financial aid from the federal government, students need to complete the FAFSA at www.fafsa.ed.gov in January of their senior year of high school. The form is filled out and filed electronically.
After the form is complete, the government returns a Student Aid Report. This includes the EFC (Expected Family Contribution), the amount students and their families can expect to pay before any federal grants or loans are given. The FAFSA must be completed each year a student is in college.
Activity Time: 30 minutes
Understanding College Costs and the FAFSAExtension Activity
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Materials and Preparation
o Computers and Internet access
o Student Workbooks, Page 38
FAFSA Activity Steps
1. Review the Student Worksheet on Page 33 of this guide.
2. Students visit the FAFSA home page at www.fafsa.ed.gov.
3. Assignment: Students watch the FAFSA: Apply for Aid YouTube videos. They also fill in the Student Worksheet with information they find at the site.
Summary and Review
Review the major concepts of the FAFSA. Have students demonstrate what they have learned by creating one or more collaborative posters. Each student should use a single colored marker so you can easily track his or her work.
Ask students to share what they learned today about FAFSA with their parents or caregivers. A helpful video for parents can be found at https://www.youtube.com/watch?v=QdaGZASwjZU&feature=youtube.
Optional: The Department of Education provides a standard format for evaluating college costs and performance. Have students visit https://collegecost.ed.gov/catc/, and compare costs.
FAFSA 101 Worksheet
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FAFSA 101Saving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 38
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It’s a good idea to keep college debt to a minimum. According to a 2018–19 U.S. News report, the average tuition at an in-state college is $9,717 compared with $35,676 at a private college.
� Assignment: Fill in the FAFSA worksheet with information you find at www.fafsa.ed.gov and find
out how federal grants and loans work.
What is the Student Aid Deadline for your state? Go to YouTube.com and watch the FAFSA videos about applying for aid.
• Video 1: “Overview of the Financial Aid Process” https://www.youtube.com/watch?v=H_iS7gmQd9o
• Video 2: “How to Fill Out the FAFSA” https://www.youtube.com/watch?v=LK0bbu0y5AM
• Video 3: “After the FAFSA: What Happens Next?” https://www.youtube.com/watch?v=ZursF3MUrPA Select “Who Gets Aid” at the top of the page. How can the Federal Student Aid Office help you with college costs?
Select “Types of Aid.” Based on the information you find, what is the difference between federal and private loans? (For example, the interest rates on federal student loans are generally lower than private loans or credit cards. Also, you can expect to start paying back a federal direct loan six months after you graduate college.)
FAFSA 1011 Extension Activity
Stock Value Example
Students also can determine the value of an individual stock holding by using the following formula:
Daily closing price x the number of stock shares held = total stock value
Example:General Electric (GE) $10.22 x 70 shares = $715.40
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Overview
Students read stock quotes and learn how the quotes help investors stay informed on a stock’s movement in the stock market.
Teacher Introduction
Understanding stock quotes is an important skill for all students. Students need to understand that buying stocks is not just for rich people. In fact, if students invest only in low-risk instruments such as savings accounts, CDs, and money market accounts, their savings are not likely to grow to their full potential or to beat inflation.
A stock’s value will change depending on the day’s market forecast and other conditions. A stock quote contains information that helps the investor see at a glance a number of things about the stock. Based on this information, investors and analysts track individual stock performance, assess risk, and get clues on how the stock might perform in the future.
A stock quote includes more information than the current market price. It also may have the previous close and opening price, the daily high and low selling price, the 52-week high and low price, the total number of shares that were traded throughout the day, and the total shares outstanding, among other information.
Stock quotes can be obtained from newspapers or from the Internet. Information found online from sites like MarketWatch or MSN Money is updated throughout the day. Online sites often include historical stock price information provided by financial institutions as well as extensive research, charts, and up-to-date news reports.
Activity Time: 20 minutes
Understanding Stock QuotesExtension Activity
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Materials and Preparation
o Student Workbooks, Pages 39–40
Understanding Stock Quotes Activity Step
Students answer worksheet questions based on the information found in the abbreviated stock quote table.
Summary and Review
Have students use their own words to define a stock quote. Ask them to imagine receiving a gift of $1,000, which they must use to buy three stocks. Which stocks would they buy and why? Give them the opportunity to research stocks in the newspaper or online and keep track of them on Page 40 in their Workbooks for several days or weeks.
How Do I Read a Stock Quote? Answer Key
1. What was the low price of Ford stock (F) for the day?
8.48
2. Was the price higher or lower than the day before?
lower
3. What was the 52-week high for Google (GOOGL) stock?
$1,291.44
4. Which stock had the largest trading volume for the day?
Ford
5. Which stock would you like to own? Why?
Answers will vary.
39JA Finance Park®
A stock quote contains more information than simply the price per share. A stock quote contains information that helps the investor see at a glance a number of things about the stock.
Stock Quote Explained
A Sample Stock Portfolio
International Business Machines (IBM), Ford (F), General Electric (GE), Dow Chemical (DWDP), General Motors (GM), Google (GOOGL)
1. What was the low price of Ford stock (F) for the day?
2. Was the price higher or lower than the day before?
3. What was the 52-week high for Google (GOOGL) stock?
4. Which stock had the largest trading volume for the day?
5. Which stock would you like to own? Why?
2How Do I Read a Stock Quote?Extension Activity
Previous CloseThe price of the stock at the close of the previous trading day.
High/LowThe price range at which the stock has traded throughout a particular day.
VolumeReflects the total number of shares that have been traded throughout the day.
Change %Indicates the difference between the last trade price and what the price was before that.
52-Week HighThis is the highest price at which the stock sold over the past 52 weeks (one year).
52-Week LowThis is the lowest price at which the stock sold over the past 52 weeks (one year).
Previous Close High Low Volume Change % 52- Week
High52- Week
Low
IBM 140.49 140.70 139.02 3,648,742 –0.63% 162.00 105.94
F 8.70 8.67 8.48 54,102,814 –2.18% 12.15 7.41
GE 10.19 10.33 10.12 48,062,093 0.29% 15.59 6.66
DWDP 54.91 55.40 54.31 13,368,269 –0.13% 71.93 48.89
GM 38.27 37.94 36.78 11,568,765 –3.32% 45.00 30.56
GOOGL 1,202.46 1,229.99 1,199.59 2,074,968 1.99% 1,291.44 977.66
o Assignment: Use the information in the table above to fill in the blanks. What questions would you like to ask this portfolio holder? Write two questions you have about the portfolio’s holdings on Page 40 and share them with the class.
How Do I Read a Stock Quote?
Worksheets
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How Do I Read a Stock Quote?Saving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 39
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39JA Finance Park®
A stock quote contains more information than simply the price per share. A stock quote contains information that helps the investor see at a glance a number of things about the stock.
Stock Quote Explained
A Sample Stock Portfolio
International Business Machines (IBM), Ford (F), General Electric (GE), Dow Chemical (DWDP), General Motors (GM), Google (GOOGL)
1. What was the low price of Ford stock (F) for the day?
2. Was the price higher or lower than the day before?
3. What was the 52-week high for Google (GOOGL) stock?
4. Which stock had the largest trading volume for the day?
5. Which stock would you like to own? Why?
2How Do I Read a Stock Quote?Extension Activity
Previous CloseThe price of the stock at the close of the previous trading day.
High/LowThe price range at which the stock has traded throughout a particular day.
VolumeReflects the total number of shares that have been traded throughout the day.
Change %Indicates the difference between the last trade price and what the price was before that.
52-Week HighThis is the highest price at which the stock sold over the past 52 weeks (one year).
52-Week LowThis is the lowest price at which the stock sold over the past 52 weeks (one year).
Previous Close High Low Volume Change % 52- Week
High52- Week
Low
IBM 140.49 140.70 139.02 3,648,742 –0.63% 162.00 105.94
F 8.70 8.67 8.48 54,102,814 –2.18% 12.15 7.41
GE 10.19 10.33 10.12 48,062,093 0.29% 15.59 6.66
DWDP 54.91 55.40 54.31 13,368,269 –0.13% 71.93 48.89
GM 38.27 37.94 36.78 11,568,765 –3.32% 45.00 30.56
GOOGL 1,202.46 1,229.99 1,199.59 2,074,968 1.99% 1,291.44 977.66
o Assignment: Use the information in the table above to fill in the blanks. What questions would you like to ask this portfolio holder? Write two questions you have about the portfolio’s holdings on Page 40 and share them with the class.
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How Do I Read a Stock Quote?Saving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 40
Roth IRAs and Teens
Unlike traditional IRAs, contributions to Roth IRAs are not tax deductible, but potential earnings are tax free if withdrawn after age 59½ and the account is at least five years old.
Note: Students who hold Roth IRAs have access to their money upon the age of majority—that is, the age when they can sign contracts and take full legal responsibility for themselves.
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Overview
With earned income, students can invest and watch their savings grow for retirement.
Teacher Introduction
Teaching students to put even small amounts of money aside for a time far away, such as retirement, is not easy. Indeed, living for the moment and having fun is a lot more appealing. But to harness the power of compound interest, it is crucial for all earners to set aside a portion of each paycheck toward a retirement account. Contributing to a Roth IRA (Individual Retirement Account) can help students think about their future and consider the importance of saving for a lifetime after high school. Dollar–cost averaging with income earned from a summer or part-time job can be a solid first step. Dollar-cost averaging is a method of investing a fixed amount in the same type of investment at regular intervals, regardless of price. With time, the potential for retirement savings growth can be sizable.
In 2019, students were allowed to invest earnings up to $6,000 in a Roth IRA. (The funds must be earnings; allowances and birthday money do not count.) If students don’t earn that much, parents and grandparents can contribute matching dollars to reach the income limit. Only after-tax money can be invested in a Roth.
As a rule, contributions to a Roth IRA can be withdrawn tax free at any time with no penalty. Earnings are typically taxable, along with a 10 percent penalty if they are taken before age 59½. This penalty, however, is waived if the money is used for qualified college expenses. A Roth IRA typically isn’t counted in federal or college financial aid formulas since it is considered a retirement account. Students, however, should check with their schools to see if this holds true for them. Note: If funds are withdrawn during the college years, the money will be counted as student income for the calendar year the withdrawal is made. Again, families should check with their accountant or financial adviser for information and advice specific to their circumstances.
Activity Time: 20 minutes
Roth IRAs: Teens and Retirement SavingsExtension Activity
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VocabularyDollar–cost averaging A method of investing a fixed amount in the same type of investment at regular intervals, regardless of price.
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Materials and Preparation
o Review the Student Worksheet on Page 41
o Student Workbooks, Page 41
Roth IRAs – Back to the Future Activity Step Students read six teen scenarios and decide whether it’s a good idea if any or all of the teens should start saving for retirement with a Roth IRA.
Summary and Review Students learned that putting aside money for retirement means making choices with today’s dollars. Suggest to students that they ask a relative what it’s like to live on retirement money or a fixed monthly income.
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Putting small amounts of money aside for retirement—a time far, far away for teens—is not easy. But to harness the power of compound interest, you may want to consider placing a small portion of each paycheck in a retirement account.
o Assignment: For each of the following situations, circle Yes, No, or Maybe to indicate your opinion on whether the following teens should consider putting some of their earned income in a Roth IRA (Individual Retirement Account). Discuss your answers with a partner.
1. Carl, age 16, works part time after school to pay for his phone and his share of the family’s car insurance.
Yes No Maybe
2. Josiah, age 18, makes $100 a week as a summer lifeguard. His grandmother says she will match dollar-for-dollar each contribution he puts into his Roth IRA.
Yes No Maybe
3. Sara’s father wants her to consider how compounding interest plus future dollars can help her save hundreds of thousands of dollars in 20 years. Sara, 18, agrees to use $1,000 of her waitressing income to kick off her account.
Yes No Maybe
4. John, age 17, believes that $100 saved today can make him a millionaire tomorrow.
Yes No Maybe
5. Every paycheck that Latisha, 16, earns will go to pay for college. She wants to graduate without any student loan debt.
Yes No Maybe
6. Devin, 16, can’t find the money in his budget to save for the future. His dad suggests that he ask family members to deposit money into his retirement fund instead of giving him gifts.
Yes No Maybe
Back to the Future: Teens and Retirement Saving3 Extension Activity
Back to the Future: Teens and Retirement Saving
Worksheet
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3Back to the Future: Teens and Retirement SavingSaving, Investing, and Risk ManagementExtension ActivityAnswer Key
41JA Finance Park®
Putting small amounts of money aside for retirement—a time far, far away for teens—is not easy. But to harness the power of compound interest, you may want to consider placing a small portion of each paycheck in a retirement account.
o Assignment: For each of the following situations, circle Yes, No, or Maybe to indicate your opinion on whether the following teens should consider putting some of their earned income in a Roth IRA (Individual Retirement Account). Discuss your answers with a partner.
1. Carl, age 16, works part time after school to pay for his phone and his share of the family’s car insurance.
Yes No Maybe
2. Josiah, age 18, makes $100 a week as a summer lifeguard. His grandmother says she will match dollar-for-dollar each contribution he puts into his Roth IRA.
Yes No Maybe
3. Sara’s father wants her to consider how compounding interest plus future dollars can help her save hundreds of thousands of dollars in 20 years. Sara, 18, agrees to use $1,000 of her waitressing income to kick off her account.
Yes No Maybe
4. John, age 17, believes that $100 saved today can make him a millionaire tomorrow.
Yes No Maybe
5. Every paycheck that Latisha, 16, earns will go to pay for college. She wants to graduate without any student loan debt.
Yes No Maybe
6. Devin, 16, can’t find the money in his budget to save for the future. His dad suggests that he ask family members to deposit money into his retirement fund instead of giving him gifts.
Yes No Maybe
Back to the Future: Teens and Retirement Saving3 Extension Activity
With his expenses, Carl may not have enough money to open a retirement account.
A match is free money and may pay off in added savings over time.
Sara understands how compounding works and sees the advantages of saving early.
John has a great attitude toward savings, but we don’t have enough information to know if he should open a retirement account.
Latisha has made a decision to use her paycheck to start saving for college. Retirement can wait.
Devin agrees with his dad. He doesn’t want many of the gifts he receives anyway and his family is happy contributing to his retirement knowing it’s what he really wants. A win-win situation for all involved.
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Overview Compound interest is interest paid on an asset’s reinvested earnings. The Rule of 72 is a simple way to estimate how savings can grow over time and with a predetermined interest rate.
Teacher Introduction It’s important to understand the “miracle” of compound interest. Educating students about compound interest and savings accounts will foster strong financial habits. Compound interest is interest paid on a starting amount, called the principal, plus prior interest. This differs from simple interest in which interest is calculated on the original amount only. For example, $100 in a savings account that pays 6 percent interest compounded annually earns $6.00 in interest the first year. $100 × 0.06 = $6 $100 + $6 = $106 That investment ($106) in the second year earns $6.36 in interest with compound interest. $106 × 0.06 = $6.36 $106 + 6.36 = $112.36 For compound interest to work, it requires time and the reinvestment of earnings. By giving investments more time to grow, the accumulation of interest on the interest itself can help increase a savings or investment account. Have students look at the Compound Interest Calculator Worksheet on Page 42 in the Student Workbook and consider the following simplified example. Kristie and Josh want to start a savings plan. At age 25, Kristie invests $10,000 at a 5 percent interest rate that is compounded once a year. Josh also invests $10,000 at 5 percent, but he waits until he is 35 to start saving. As the table on the next page shows, by giving her investment more time to grow, Kristie accumulates more money by age 45.
Ask the students, “How much more?” (Answer: $10,244.03)
Activity Time: 30 minutes
Compound Interest and the Rule of 72Extension Activity
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Materials and Preparation
o Computers and Internet access
o Student Workbooks, Pages 42–43
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4 Compound Interest CalculatorExtension Activity
o Assignment: Go to www.investor.gov and scroll down to “Financial Planning Tools.” Select “Go to Calculator.” You will need to determine the amount you want to save each month. Place the amount on your worksheet in the first shaded column. Use the information on your worksheet to fill in the boxes online. Be sure to determine whether you want interest compounded once, twice, or three times a year before calculating your totals online.
Watch Your Money Grow
Type Principal Monthly Addition
Years to Grow
Interest Rate Total
ABB Stock $1,000 1 year 5%
Money Market $5,000 4 years .50%
EFG Stock $500 5 years 7%
Index Mutual Fund (stocks and bonds)
$2,000 20 years 5%
Global Stock Fund
$10,000 3 years 8%
Compound Interest Calculator Worksheets
Digging Deeper
Ask students, “What do these visual results tell us about compound interest? What kind of function is this? (quadratic) Why? (The principal keeps
increasing.)
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The Rule of 72Students can quickly figure how long it would take to double their money by using the Rule of 72. Divide 72 by the interest rate to determine the number of years savers need for their money to grow. Savers also can divide 72 by the number of years to determine the interest rate they need to double their money.
72 divided by interest rate = the number of years to double money
For example, with a 6 percent interest rate, savers should divide 72 by 6, which equals 12 (72/6 = 12 years). It will take 12 years for savings to double.
Compound Interest Activity Steps1. Review the Student Worksheets for this activity.
2. Assignment Options:
» Option One: Have students use an online compound interest calculator (one can be found at the U.S. Securities and Exchange Commission site*) and see how different investment types grow with varying interest rates and time horizons. Have students fill in Page 43 in their Workbooks.
*Go to www.investor.gov and scroll down to Financial Planning Tools. Select “Go to Calculator.” Use the following link to get to the page directly:
https://investor.gov/additional-rescources/free-financial-planning-tools/compound-interest-calculator.
» Option Two: Using a pencil and paper and the information in the table provided on Page 42 of the Student Workbook, have students graph Kristie’s data, using units of one year for age and $500 for the balance. Students will prepare a graph and share it with the class. (A copy of the table is on Page 46 of this Guide.)
» Option Three: Working in teams, have students use a graphing calculator and enter Kristie’s data using the same units as above. Have one member of the team share his or her results with the class.
Summary and Review
Students examined the way varying savings amounts and interest rates can increase personal wealth over a long time period. Have students create a graphic organizer showing what they learned about compound interest or the Rule of 72 and post it on the class bulletin board.
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Compound Interest CalculatorSaving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 42
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Compound Interest CalculatorSaving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 43
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43JA Finance Park®
4 Compound Interest CalculatorExtension Activity
o Assignment: Go to www.investor.gov and scroll down to “Financial Planning Tools.” Select “Go to Calculator.” You will need to determine the amount you want to save each month. Place the amount on your worksheet in the first shaded column. Use the information on your worksheet to fill in the boxes online. Be sure to determine whether you want interest compounded once, twice, or three times a year before calculating your totals online.
Watch Your Money Grow
Type Principal Monthly Addition
Years to Grow
Interest Rate Total
ABB Stock $1,000 1 year 5%
Money Market $5,000 4 years .50%
EFG Stock $500 5 years 7%
Index Mutual Fund (stocks and bonds)
$2,000 20 years 5%
Global Stock Fund
$10,000 3 years 8%
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Overview
This interactive online lesson will help students understand risk, insurance terms, and types of insurance.
Teacher Introduction
Why do you need insurance? What kinds should you have? Everyone has different insurance needs. Students learn key insurance definitions and the benefits of certain kinds of insurances. They also see they can reduce risk by making smart choices.
Materials and Preparation
o Computers and Internet access
o Student Workbooks, Page 44
Activity Time: 30 minutes
Junior Achievement $ave, USA “Risk and Insurance” Online LessonExtension Activity
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Junior Achievement $ave, USA Worksheet
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Junior Achievement $ave, USA Online Activity StepsHave students log on to www.juniorachievement.org/web/ja-usa/junior-achievement-save-usa.
1. Scroll down to the Upper Elementary/Lower Middle Grades “Risk & Insurance” lesson. Select Play Online Now.
2. Students view five modules on insurance. A check mark will appear on each icon once the module has been read and/or completed.
• Module 1: Select Introduction: Risk! to view the short video, “Life Comes with Risk.”
• Module 2: Select Risk & Insurance and rate the activity risks from highest to lowest. Read about consequences and what you can do to lessen risk.
• Module 3: Insurance is something you buy just in case you need it. Select Learning About Insurance. View the need for insurance and an insurance example. Learn common insurance terms: beneficiary, claim, deductible, insurance, insurance agent, policy, premium, risk. Take the Test Your Knowledge quiz.
• Module 4: Select Types of Insurance. Read about an extended warranty and three types of insurance: vehicle, renters, and health.
• Module 5: Congratulations! You’ve completed the “Risk & Insurance” lesson.
Summary and ReviewStudents observed that risk is a part of life that can be reduced with responsible behavior and insurance. If time permits, ask students to sequence a life event such as a mild illness that may have required insurance to help pay costs and then diagram the sequence. For example:
I wake up with a headache and chills.
Mom calls the doctor.
We go and sit in the waiting room.
Mom gives the receptionist our insurance card.
I see my doctor.
She tells me I need to rest and drink plenty of
fluids.
I miss a day of school.
I feel better in the
morning.
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Junior Achievement $ave, USASaving, Investing, and Risk ManagementExtension ActivityStudent Worksheet, Page 44
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Junior Achievement $ave, USA Online Activity Steps
o Assignment: Go to www.juniorachievement.org/web/ja-usa/junior-achievement-save-usa. Scroll down to the Upper Elementary/Lower Middle Grades “Risk & Insurance” lesson. Select Play Online Now.
• You will view five modules on insurance. A check mark will appear on each icon once the module has been read and/or completed.
• Module 1: Select Introduction: Risk! to view the short video, “Life Comes with Risk.”
• Module 2: Select Risk & Insurance and rate the activity risks from highest to lowest. Read about consequences and what you can do to lessen risk.
• Module 3: Insurance is something you buy just in case you need it. Select Learning About Insurance. View the need for insurance and an insurance example. Learn common insurance terms: beneficiary, claim, deductible, insurance, insurance agent, policy, premium, risk. Take the Test Your Knowledge quiz.
• Module 4: Select Types of Insurance. Read about an extended warranty and three types of insurance: vehicle, renters, and health.
• Module 5: Congratulations! You’ve completed the “Risk & Insurance” lesson.
Junior Achievement $ave, USA Online Lesson5 Extension Activity
Extension Activities
Checks and Checking Accounts .............................. 41Students practice check writing and keep a check register to track their checks, deposits, withdrawals, and automatic electronic payments.
Installment Debt .................. 49Students become aware that an installment debt can be considerably greater than the original purchase price of an item.
Rent or Home Ownership ... 55Students compare the benefits and responsibilities that come with renting or owning a home.
Leasing vs. Buying a Car .... 61Students assess the pluses and minuses of leasing or buying a car.
Identity Theft ........................ 67Students learn about steps they can take to help protect their payment cards and personal identity from theft.
Debit and Credit Overview .................................................................... 1
Introduction ................................................................ 3
Traditional Lesson Plans
Lesson One: Banking Partners .................................. 5
Lesson Two: Personal Spending ............................. 13
Lesson Three: Savvy Shopping ............................... 21
Lesson Four: Managing Credit ................................ 27
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Extension Activities1. Checks and Checking
Accounts
2. Installment Debt
3. Rent or Home Ownership
4. Leasing vs. Buying a Car
5. Identity Theft
Required Lessons Lesson One: Banking PartnersLesson Two: Personal SpendingLesson Three: Savvy ShoppingLesson Four: Managing Credit
TimeThe lessons can typically be completed in four 45-minute sessions.
ConceptsBankingCreditCredit reportsCredit scoreDebitDebtDeposit insuranceFinancial
responsibilityIdentity theftInterestLoansPayment methods
SkillsComprehension and collaborative learning, critical thinking and reasoning, information literacy, inquiry, speaking and listening, research strategies, self-direction, small-group discussion, vocabulary acquisition
Debit and Credit OverviewStudents compare financial institutions and their services. Through discussion and a game activity, they also weigh the advantages and disadvantages of debit and credit. Lastly, students examine the role that credit scores and credit reporting have on personal finances.
Objectives Students will be able to:
• Define financial institution and identify the services it provides.• Examine debit and credit cards and their use.• Explain the benefits and common pitfalls of credit cards.• Explain the benefits of debit cards.• Define credit score and describe how it influences the ability to get
credit and borrow money.
PreparationDetermine whether you will use the traditional classroom presentation or the Project-Based Learning option. Review and organize the materials for the extension activities you plan to teach.
Summary and AssessmentUse the lesson summaries at the end of each lesson to review concepts. To assess knowledge learned, administer the Debit and Credit Assessment on Pages 35–36 (Answer Key is on Pages 37–38).
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Debit and Credit IntroductionJames is in eighth grade. He earns money in the summer by caring for the homes of neighbors when they go on vacation. James
expects to earn about $150 a month doing those jobs. He wants a new bike, which he plans to buy with the cash he earns and keeps in a savings account.
Yvonne is a high school senior with a part-time job. She is making payments on a used car. She also is responsible for paying for her gas and car insurance. With end-of-the-year exams and schoolwork, Yvonne decides to cut back on her hours at work. Looking over her budget, she knows she won’t have enough money to meet her expenses. Yvonne sees little choice but to pay her bills with the credit card her parents have co-signed for emergencies.
Consumers of all ages are confronted with such financial choices. Banks and credit unions help consumers with their choices by providing saving accounts and more complex investments. Financial institutions also provide loans, debit and credit cards, and online services to help people buy the goods and services they need and want. Knowing how banks and debit and credit work will help students make wise choices when managing and spending their hard-earned money. How much consumers borrow and how they manage debt will have a long-term impact on their finances and financial options.
VocabularyBankA for-profit institution that offers personal loans, mortgages, and other services.
Credit unionA not-for-profit cooperative that offers bank services and is owned by its members.
Financial institutionA business that provides money-related services.
InterestA fee received or paid for the use of money.
Internet bankA Web-only bank.
Mobile bankingA wireless service that allows financial transactions by using an app or Web browser from a mobile device.
Online bankingAn electronic way to view account activity and pay bills via the Internet and an institution’s website.
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Teacher Introduction
Nearly everyone who earns income uses the services of a financial institution. Financial institutions help people complete their money transactions safely, quickly, and conveniently. Today’s students need to be prepared to use these services as they move into the world independently.
A financial institution is a business that offers money-related services. Credit unions and banks are examples of financial institutions. They help consumers save for the future; hold and transfer money; handle credit, debit, and loan transactions; and provide mortgage and consumer loans for houses, cars, and home improvements. They earn money by charging their customers interest on loans and fees for services. Interest is a fee received or paid for the use of money.
Many consumers today use tablets and smartphones to conduct banking transactions. An Internet bank is an online bank without brick-and-mortar branches. Transactions are performed exclusively online.
In addition to face-to-face transactions, traditional banks and credit unions also offer online banking. Online banking is a way to view account activity and pay bills once logged on to an institution’s website. With a user name or email address and password, consumers have quick access to their financial accounts, including checking and savings accounts. It is common for financial institutions to issue email alerts and be compatible with money-managing programs such as Quicken and Microsoft Money.
Mobile banking is a wireless service that allows bank customers to access their accounts using an app or Web browser on a mobile device.
Debit and CreditLesson One: Banking Partners
Lesson Time: 45 minutes
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Materials
o Student Workbooks
oo JAoFinanceoPark Debit and Credit Slides 1–6
o Scissors
o Colored markers
Lesson Preparation
• Review the Set the Stage talking points.
• Review the Banking Partners: Lesson Steps.
• Review the Student Worksheets on Pages 11–12.
Banking Partners: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
• What other services besides savings and investments do banks provide? (Possible answers: checking accounts, car and home loans, check cashing, debit and credit cards, change machine.)
• Have students fill in the My Bank Organizer Worksheet on Page 46 in the Student Workbook to help them gauge what they know and do not know about financial institutions. If they don’t know an answer to a question, have them leave the space blank. They will have the opportunity to complete the worksheet at the end of the lesson.
• Display Slide 1 as you introduce today’s lesson topic.
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My Online & Mobile Security Foldable
My Online & Mobile Security Foldable Worksheet Directions:
1. Highlight the information using markers. 2. Cut the large hexagon from the sheet. 3. Cut the lines between each smaller
hexagon. Be careful not to cut the dashed folding lines.
4. Flip the piece so the text faces down. 5. Close the foldable by folding in the
congruent hexagons, one on top of the other.
6. Glue to your workbook on Page 49.Optional: On the workbook page, design an app icon or launch image for a new banking security app. Color it in.
Your bank wants to keep you as a customer. It works hard to make sure your online experience is a safe and easy one. Here are things you can do to keep your information private and your account secure.
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Verify your bank is insured. Verify website security. Make sure the website has https://
and a padlock symbol. Log off when finished.
Close the browser window.
Create strong account
passwords. Use uppercase
and lowercase sym
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numbers. No pet nam
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transaction receipts.
Check your account regularly.Report errors.
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Add glue here and attach to your
Workbook on Page 49.
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My Bank Organizer
Fill in the speech bubbles.
What is a bank?
What is a credit union?
Who uses banks and credit unions?
Where is my financial institution?How do financial institutions help cities, towns, and communities?
What is my favorite service or product?
FinancialInstitutions
My Bank Organizer Worksheet
My Online & Mobile Security Foldableo
Worksheet
Checks and Checking Accounts Activity
Have students practice writing a check and keeping a check register. For instructions, turn to the Extension Activity on Page 41.
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Banking Partners: Lesson Steps | 35 Minutes
1. Present Slides 2 and 3 with the lesson’s vocabulary. Students should highlight the words in their Student Workbooks on Page 45 as you introduce them.
2. Ask the class, “If you were in the market for a new smartphone, what would you want to know before buying one?” (Possible answers: What is the size of the battery and storage? What are the camera features? Will the phone support faster-speed networks? What are the costs of the various data and text plans?)
Explain to students that consumers must do the same comparison shopping before selecting a bank. Choosing a financial institution is a major decision, and there is no one right choice for all consumers. Suggest the following things to look for in a financial institution:
• Safety and convenience.
• Accounts with little or no fees.
• Minimum deposit requirements.
• A high interest rate on savings.
• A low interest rate on loans.
• Checking accounts and debit and credit cards with no or low fees.
• A user-friendly website and knowledgeable customer service representatives.
3. Present Slide 4. Describe banks and credit unions.
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Bank
• Is a for-profit financial institution. A bank is a business; its goal is to earn a profit.
• Offers personal loans, mortgages, and other services, including debit and credit cards.
• Is insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects each depositor’s money in checking, savings, money market accounts, and in certificates of deposit up to $250,000.
Credit Union
• Is a not-for-profit cooperative financial institution. A credit union is owned and controlled by its members. If you have an account with a credit union, you are a member.
• Offers personal loans, mortgages, and other bank services, including debit and credit cards.
• Provides network privileges that allow members to bank at other credit unions.
• Is insured by the National Credit Union Share Insurance Fund (NCUSIF). Each depositor’s personal savings is insured for up to $250,000.
4. Present Slide 5. Point out that consumers may prefer visiting a financial institution in their neighborhood or using a branch in a grocery store or mall. Others might choose the convenience of
online banking. Introduce online banking.
Online and Mobile Banking
• Bank 24/7 using the Internet. Manage accounts and pay bills online. No need to write a check, pay cash, or swipe a debit or credit card.
• Log on securely to an account or app using a user name and password.
• Tap, swipe, and scroll to access account balances and transfer money from one account to another.
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• Deposit checks into eligible accounts with the camera on your mobile device.
• Safety Alert Tip! Consumers should keep their banking information private. For example, avoid banking online when using public wireless networks (Wi-Fi). Others may be able to see and access your account information.
5. Present Slide 6. Introduce Internet banks.
Internet Bank• Sometimes called a direct bank.
Internet banks are online banks; they have no physical branches with tellers or drive-up windows.
• Name and password are needed to log on to an account or mobile device app.
• Customers can access money in a number of ways, including postal mail, mobile apps, telephone, the bank’s Web page, and automated teller machines (ATMs). A name and password are needed to log on securely to an account.
• No cash deposits can be made.
Before opening an account, consumers should check a bank’s website for information about its security practices and features. For example, a bank’s website address should be secure (using “https” with a visible padlock symbol) and require a username, strong password, and, perhaps, a personal security image before access is granted.
6. Optional: Include if time permits or consider assigning as homework.
Safety Alert Tip!
Did you know that websites of other financial institutions linked to your bank’s website may not be FDIC-insured?
For more information on safe Internet banking, have students log on to the FDIC’s website: https://www.fdic.gov/consumers/assistance/protection/idtheft.html
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Ask students to open their Workbooks to Page 47, My Online & Mobile Security Foldable Worksheet. Working in pairs, students should read and discuss the information and then the instructions to cut and fold their worksheets.
Summary and Review | 5 Minutes
After completing the lesson, ask students the following review questions. Have them use their answers to complete their My Bank Organizer Worksheet on Page 46.
• Who uses financial institutions? (Answer: Almost everyone who has or earns money uses financial institutions to help them hold or transfer their money and make other financial transactions.)
• Why is it important to know about financial institutions? (Answer: I may want to open a savings or checking account, automatically deposit a paycheck, use a credit or debit card, or take out a loan.)
• How do financial institutions earn a profit? (Answer: Banks charge more interest to borrowers than the interest they pay to savers. They may also collect account maintenance fees.)
• Where do financial institutions offer services? (Answer: Financial institutions offer services at main offices, branches, ATM machines, and on online websites.)
My Online and Mobile Security Foldable Worksheet Directions:
1. Highlight the information using markers. 2. Cut the large hexagon from the sheet. 3. Cut the lines between each smaller hexagon.
Be careful not to cut across the dashed folding lines.
4. Flip the piece so the text faces down. 5. Close the foldable by folding in the congruent
hexagons, one on top of the other. 6. Glue to your Student Workbook on Page 49.
Optional: On the workbook page, have students design an app icon or image for a new banking security app. Color it in.
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My Bank Organizer Debit and CreditLesson OneStudent Worksheet, Page 46
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My Bank Organizer
Fill in the speech bubbles.
What is a bank?
What is a credit union?
Who uses banks and credit unions?
Where is my financial institution?How do financial institutions help cities, towns, and communities?
What is my favorite service or product?
FinancialInstitutions
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My Online & Mobile Security FoldableDebit and CreditLesson OneStudent Worksheet, Page 47
47JA Finance Park®
My Online & Mobile Security Foldable
My Online & Mobile Security Foldable Worksheet Directions:
1. Highlight the information using markers. 2. Cut the large hexagon from the sheet. 3. Cut the lines between each smaller
hexagon. Be careful not to cut the dashed folding lines.
4. Flip the piece so the text faces down. 5. Close the foldable by folding in the
congruent hexagons, one on top of the other.
6. Glue to your workbook on Page 49.Optional: On the workbook page, design an app icon or launch image for a new banking security app. Color it in.
Your bank wants to keep you as a customer. It works hard to make sure your online experience is a safe and easy one. Here are things you can do to keep your information private and your account secure.
Neve
r sha
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our u
ser
nam
e an
d pa
ssw
ord
with
any
one.
Verify your bank is insured. Verify website security. Make sure the website has https://
and a padlock symbol. Log off when finished.
Close the browser window.
Create strong account
passwords. Use uppercase
and lowercase sym
bols and
numbers. No pet nam
es!Keep online
transaction receipts.
Check your account regularly.Report errors.
Neve
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acco
unt n
umbe
r,
PIN,
or p
assw
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on y
our w
irele
ss
devi
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Lock
you
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ice.
Add glue here and attach to your
Workbook on Page 49.
VocabularyBankruptcyA legal process that gives a debtor protection from creditors.
CashMoney in the form of bills or coins.
CheckA written order for a bank to pay money.
CreditThe amount of financial trust extended to a person or a business by a lender; a loan.
Credit cardA card authorizing the holder to buy goods and services that can be paid for later.
DebitAn amount deducted from a bank account.
Debit cardA card that looks like a credit card but operates like cash; money is immediately subtracted from the cardholder’s bank account when a purchase is made.
DebtMoney owed.
ForeclosureA legal process in which a lender takes possession of mortgaged property from a mortgage holder who failed to make payments.
PayPalAn online payment service that allows consumers to transfer money electronically.
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Teacher Introduction
Debit and credit cards have surpassed cash and checks as forms of payment as Americans look for more convenient ways to make purchases.
A debit card is like cash or a personal check. With a debit card, a consumer buys now and pays now. The money is a debit, or a deduction, from a checking or savings account. Consumers may also use PayPal or other online payment services that are tied to checking, savings, or credit card accounts to buy and sell goods and transfer money electronically.
A credit card, on the other hand, provides an instant loan to a consumer from a bank or other financial institution. A credit card is used with the understanding that the money will be repaid with interest if the debt is not paid in full each month.
Credit—the ability to borrow money—can be a helpful tool when used responsibly. Credit offers some advantages: the freedom to carry small amounts of cash, the opportunity to establish a good credit history, and the ability to track expenditures. Credit also increases financial flexibility, allowing users to enjoy goods and services now and pay for them at a later date.
Students need to know, however, that credit is not free. It is not additional income that allows them to buy more. Credit is a loan that must be repaid. Large credit card bills and the interest on them can become burdensome and reduce the amount of money a cardholder can spend on other wants or needs. And if the loan is not repaid, it becomes a debt. Delinquencies on both credit and loan payments often have significant impact on credit history and may in severe cases lead to bankruptcy or foreclosure.
Lastly, credit card terms such as APR, creditolimit, financeocharges, minimumopaymentodue, and previousobalance will be further explained in this lesson.
Debit and CreditLesson Two: Personal Spending
Lesson Time: 45 minutes
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Materials
o Optional: Bring to class a debit card and a credit card and copies of credit card disclosure summaries from actual credit card offers to share with students.
o Student Workbooks
oo JAoFinanceoParkoDebit and Credit Slides 7–13
o Scissors
o Calculators
o Optional: Computers and Internet access
Lesson Preparation
• Review the Set the Stage talking points.
• Review the Personal Spending: Lesson Steps.
• Review the Student Worksheet on Page 20.
Personal Spending: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students. • How do you pay for the things you buy? How do your parents?
(Possible answers: cash, check, debit or credit cards.)
• (Hold up a debit card and a credit card if you have them.) Debit and credit cards may look the same, but they work differently. Do you
53JA Finance Park®
Sample Credit Card Statement
My Bank USAApril 2019 Statement 03/08/2019 – 04/05/2019Stacie Casey
New Balance $936.36Minimum Payment Due $ 15.00Payment Due Date 05/03/2019
Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay up to a $35.00 Late Fee.
TransactionsPayment and Other CreditsPost Date Trans Date Ref # Transaction Description Amount03/26 03/26 0027 Payment. Thank you. $ 15.00Total This Period $ 15.00 cr
Purchases and Other DebitsPost Date Trans Date Ref # Transaction Description Amount03/12 03/11 2243 ABC Stores Unlimited $ 19.9503/18 03/16 4567 Café Express $ 28.3103/25 03/22 5468 Just 4 You Nails $ 55.0003/26 03/25 4319 Sleep Easy Hotel $ 113.7504/01 03/29 6639 PayPay Fitness USA $ 35.0004/01 03/28 3400 Pharmacy $ 20.0004/04 04/03 5489 Great Online Movies $ 6.45Total This Period $278.46
FeesPost Date Trans Date Ref # Transaction Description Amount04/05 Annual Fee $ 0.00Annual Percentage Rate (APR) Purchases 15% Variable
Activity SummaryPrevious Balance $665.15Payments $ 15.00 crPurchases $278.46Balance Transfers $ 0.00Advances $ 0.00Finance Charges $ 7.75New Balance $936.36
Credit Limit $3,000.00Line of Credit Available: $2,063.64Days in Billing Period 29
Payment Cards and Teens
Debit card: Many banks offer debit cards to teens ages 13–17 who open a checking account with an adult co-signer.
Credit card: Generally, teens may be issued a credit card if they have reached the age of majority in their state, meet certain credit qualifications, have an adult co-signer, and can demonstrate the ability to repay their debts.Sample Credit
Card StatementoWorksheet
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know the difference? Raise your hand to answer true or false to the following statements:
o A debit card is just another name for a credit card. (False. Use a debit card when you have the money in a checking or savings account. Use a credit card when you prefer to pay later.)
o Debit means withdrawal or deduction. (True.)o Debit cardholders are charged interest each time they swipe their
cards. (False. Money is immediately subtracted from a checking or savings account. It is not a loan.)
o Credit cards are a buy-now-pay-now payment option. (False. Credit cards are a “buy now, pay when the bill comes” type of payment.)
o Credit cards are often a safe way to pay for online purchases. (True.)
o Credit cards are free money. (False. Credit is a loan that must be paid back.)
• What are the consequences if you can’t pay for the things you buy? (Answer: late fees and penalties, accounts turned over to debt collectors, repossession, possible bankruptcy or loss of a home.)
Personal Spending: Lesson Steps | 35 Minutes
1. Present Slide 7 with the lesson’s key vocabulary. Have students highlight the words in their Student Workbooks on Page 51 as you introduce them.
2. Ask, “If you had the money to buy the number one thing on your must-have list, what would you buy?” Write the suggested items on the board.
• Have students determine whether the items listed are needs or wants. Explain that a need is something they must have to live, such as food, clothing, and a place to live. A want is something they could live without. Although a car, computer tablet, and smartphone are items many teens (and adults) need, these items are actually wants. Emphasize that impulse buying and spending on too many wants often leads to overspending, debt, and an inability to pay for things that are really needed.
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3. Initiate a discussion about how today’s consumers pay for the things they need and want.
4. Explain that cash, checks, instant online
money transfer accounts (PayPal, for example), and debit cards require money in hand or in a checking or savings account.
5. Activity: Have the students pair off and, using the information discussed so far in this lesson, brainstorm the advantages and disadvantages of debit cards. After 3 minutes, have the pairs share their ideas with the class.
6. Present Slide 8, which provides a list of the
advantages and disadvantages of debit cards. Point out any items that the students missed. Discuss the pros and cons of this payment type.
Key things to remember about debit cards:
• A debit card allows for an immediate electronic transfer of money from a cardholder’s savings or checking account.
• A debit card is essentially a paper check but doesn’t require the processing time that a check does.
• A debit card is a buy-now, pay-now payment type. When a debit card is used, the money is immediately subtracted from the account.
7. Present Slide 9, which lists the advantages
and disadvantages of a credit card. Invite students to read from the slide. Discuss the pros and cons of this payment type.
PayPal
PayPal personal accounts can be used to send money to a friend or make a purchase online. To start, you’ll need:
• Money transferred to a PayPal account.
• A savings, checking, or credit card account from which money can be withdrawn instantly.
Office of the Comptroller of the Currency
Find information online about debit and credit cards, including what to do if your card is stolen, at the U.S. Department of the Treasury’s Answers & Solutions page: www.helpwithmybank.gov/get-answers/credit-cards/index-credit-cards.html.
Credit Is a
Privilege Remind students that credit is granted to those who have demonstrated the ability to manage money. Paying back a credit card loan on time is the responsibility of the cardholder.
Financial Institutions and Credit Cards
Financial institutions make money by charging interest to the people who carry balances on their credit cards and by charging fees to businesses that accept the cards. Merchants often raise the prices of goods and services to cover the fees they have to pay.
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Key things to remember about credit cards:
• A credit card provides preapproved credit. It does not require immediate funds. It is a buy-now, pay-later payment type.
• It provides free short-term borrowing when the balance is paid on time and in full.
• Credit allows consumers to buy in an emergency.
• Credit cards are the best way to order something online or over the phone. If a service or item is not as expected, you can dispute the charge.
• Borrowing has consequences. Credit card companies charge interest (at an annual percentage rate, or APR) on unpaid balances. Cash advances and transfers usually have higher interest rates.
• Credit cards issue monthly statements with a minimum amount due.
• Credit card users need money or an income to pay their bill when it comes due.
8. Optional: Distribute the copies of credit card disclosure summaries from actual credit card offers that you brought to class. Have students compare them.
9. Present Slide 10, Sample Credit Card
Statement. Ask students to take a close look at the Sample Credit Card Statement Worksheet in their Workbooks on Page 53 and find the following vocabulary terms: annual fee, APR, credit limit, finance charges (fees and interest charged), minimum payment due, and previous balance.
Ask students the following: • What does Stacie owe on her credit card? (Answer:
$971.74.)
• Is Stacie charging more than she is paying off? (Answer: Yes, Stacie only made a $15 minimum payment.)
• Why might Stacie have $35 in “Fees Charged” on her bill? (Possible answers: a late fee, a fee for going over the credit limit, or a cash advance fee.)
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• What is Stacie’s annual fee for the use of her card? (Answer: $0.)
• What will happen to Stacie’s finances over time if she keeps the same spending habits and pays the minimum due? (Answer: Her debt will increase.)
10. Present Slide 11, Cost of Using Credit. Point out that consumers who carry debt for a long time may pay more in interest than the cost of their original purchase.
Ask students to discuss why it is difficult to pay off debt and how debt payments can work against consumers.
Optional: The following slides are optional and can be presented based on class time and teacher interest.
Present Slide 12. Explain the uses of a prepaid card as another banking payment method. Prepaid cards work like debit cards and can be used to make purchases, buy items online, or withdraw cash from an ATM. Employers may also use prepaid payroll cards in place of issuing paper paychecks to their employees. Employees, by federal law, are not required to accept prepaid payroll cards as prepaid cards may require fees to activate and withdraw from an account.
Present Slide 13. Talk briefly about the consequences of credit and loan default.
VocabularyAnnual feeA yearly fee.
APRAnnual percentage rate is the amount of interest charged for any unpaid balance.
Credit limitThe maximum a cardholder can borrow. It is recommended that cardholders keep a balance of no more than 25 percent of the credit limit.
Finance chargesThe cost of credit—the fees and interest charged to finance the unpaid balance.
Minimum payment dueThe smallest amount that can be paid to meet loan requirements.
Previous balanceAmount still owed from purchases prior to the current 30-day charge cycle.
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Summary and Review | 5 Minutes Inform students that during the next class, they will play a game called Savvy Shopper. It will give them an opportunity to make decisions about purchases using debit and credit cards.
Digging Deeper: Installment Debt Activity
Students become aware that an installment debt can be considerably greater than the original purchase price of an item. Explore credit further in this Extension Activity.
Instructions begin on Page 49.
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Sample Credit Card StatementDebit and CreditLesson TwoStudent Worksheet, Page 53
53JA Finance Park®
Sample Credit Card Statement
My Bank USAApril 2019 Statement 03/08/2019 – 04/05/2019Stacie Casey
New Balance $936.36Minimum Payment Due $ 15.00Payment Due Date 05/03/2019
Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay up to a $35.00 Late Fee.
TransactionsPayment and Other CreditsPost Date Trans Date Ref # Transaction Description Amount03/26 03/26 0027 Payment. Thank you. $ 15.00Total This Period $ 15.00 cr
Purchases and Other DebitsPost Date Trans Date Ref # Transaction Description Amount03/12 03/11 2243 ABC Stores Unlimited $ 19.9503/18 03/16 4567 Café Express $ 28.3103/25 03/22 5468 Just 4 You Nails $ 55.0003/26 03/25 4319 Sleep Easy Hotel $ 113.7504/01 03/29 6639 PayPay Fitness USA $ 35.0004/01 03/28 3400 Pharmacy $ 20.0004/04 04/03 5489 Great Online Movies $ 6.45Total This Period $278.46
FeesPost Date Trans Date Ref # Transaction Description Amount04/05 Annual Fee $ 0.00Annual Percentage Rate (APR) Purchases 15% Variable
Activity SummaryPrevious Balance $665.15Payments $ 15.00 crPurchases $278.46Balance Transfers $ 0.00Advances $ 0.00Finance Charges $ 7.75New Balance $936.36
Credit Limit $3,000.00Line of Credit Available: $2,063.64Days in Billing Period 29
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Teacher Introduction
The Savvy Shopper Game, the activity for today’s lesson, will help students see the costs and benefits of debit and credit.
Materials
o Student Workbooks
o 6 Savvy Shopper Game Boards
o 6 Savvy Shopper Wild Card Sheets
o Game tokens, candy pieces, or pennies, one for each student
o Scissors
o 6 dice
o Calculators
o Optional: Computers and Internet access
Lesson Preparation
• Review the Set the Stage talking points.
• Review the Savvy Shopping: Lesson Steps.
• Review the Student Worksheets on Pages 25–26.
Debit and CreditLesson Three: Savvy Shopping
Lesson Time: 45 Minutes
Savvy Shopper Wild Card
Sheet
2019
Savvy Shopper Game GoalBe the first player to buy food, jeans, headphones, shoes, and concert tickets, and to have $0 debt.
Directions 1. Place game pieces on the START square. Collect $50. Mark your tally sheet.
2. Roll the die. The player rolling the highest number goes first. Play proceeds counterclockwise.
3. Follow the directions on the squares as you land on them. Fill in your tally sheet after each turn.
4. If you land on food, jeans, headphones, shoes, or concert tickets, you may buy the item with a debit or credit card. If you have the cash, pay the debit price. If you don’t have the money, pay the credit price. You may choose not to purchase the item.
5. With each item purchased, circle the item at the bottom of your tally sheet.
6. Each time you pass the START square, collect $50.
7. Each time you land on a PAY DAY! square, collect $50.
8. If you land on a FEE square, write the amount due in the (–) column of your tally sheet.
9. Keep a running tally of your purchases and what you owe.
10. Continue playing until one player has bought all the items and is debt free.
Buy
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Buy Food
Buy Concert Tickets
Savvy Shopper
Game Board
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Savvy Shopper Tally Sheet
Transaction Description Date Transaction (–) Transaction (+) Balance (=) Debt– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
Food Jeans Headphones Shoes Concert Tickets
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Credit Scenarios
Read the following scenarios carefully. In each scenario, find either one advantage or one disadvantage of using credit. Circle the advantages and underline the disadvantages.
Scenario OneBefore the Gonzalez family went to Walt Disney World for vacation, Mom decided to put most of the money the family had allotted for the trip into a savings account and not carry it with her to the amusement park. She then wouldn’t have to worry about losing it or having it stolen. She would use her credit card to pay most of the expenses and then pay for the trip in one lump sum when the credit card bill came.
Scenario TwoMario left for college and was excited to be on his own. He received several credit card applications and decided that having one card would be helpful while he was away from home. After receiving the card, Mario found it easy to use and started impulsively buying things he thought he really needed. Soon his bill was up to the limit, and someone had to pay it. His parents were not happy with him.
Scenario ThreeRicardo bought a used motorcycle with a small loan from his credit union. He made regular monthly payments of $180 for three years until he had it paid off. When he received the motorcycle title and final paperwork and looked them over, he realized that with interest added, he had paid the credit union $140 more for his motorcycle than he would have if he had paid cash.
Scenario FourRolanda and her best friend were each given a trip to Europe when they graduated from college. They calculated their expenses and planned on taking a small amount of cash and paying for everything else by check. Seeking advice from their bank, they were told that a credit card would be a better option because it would be accepted for payment in many places that would not take personal checks.
Scenario FiveRandy used his credit card to buy a watch that later stopped working. He returned to the store and was given a replacement that also didn’t work. He decided he wanted his money back instead of another watch of the same kind. He was told the problem could be easily taken care of because he had charged the watch. He was given full credit on his credit card account for the price of the watch.
Savvy Shopper Tally Sheet
Credit Scenarios Worksheet
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Savvy Shopping: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes reviewing the advantages and disadvantages of debit cards and credit cards, based on the previous lesson information.
If Slide 12, Prepaid Cards, and Slide 13, Bankruptcy and Foreclosure, were not discussed at the end of the previous lesson, discuss them now.
Savvy Shopping: Lesson Steps | 35 Minutes
Activity: Present Slide 14 and then play the Savvy Shopper Game. The game will help students see the costs and benefits of debit and credit cards. The goal of the game is to be the first player to buy food, jeans, headphones, shoes, and concert tickets and have $0 debt. Optional: You may change the items to be purchased depending on student preference.
1. Separate the class into groups of four to six. Give each group a Savvy Shopper Game Board and a Wild Cards Sheet. Have students turn to Page 54 in the Student Workbook to find their Savvy Shopper Tally Sheet. They will need this sheet to keep track of their transactions.
2. Ask a student in each group to cut apart and shuffle the Wild Cards and place them facedown on the game board.
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Summary and Review | 5 Minutes
Ask students what they would do differently if they could play the game again. Explain that their future success requires making wise decisions about when to use debit and when to use credit. If there is extra time in the session, have students research credit card offers online and create a comparison chart showing the different card types (college, gold or platinum, and reward options) along with their benefits, annual fees, and APR rates. Or have students read the Credit Scenarios Worksheet in their Student Workbooks on Page 55, and circle the advantages and underline the disadvantages of using credit.
Savvy Shopper Game Goal: Be the first player to buy food, jeans, headphones, shoes, and concert tickets, and to have $0 debt.
Directions 1. Place game pieces on the START square.
Collect $50. Mark your tally sheet.
2. Roll the die. The player rolling the highest number goes first. Play proceeds counterclockwise.
3. Follow the directions on the squares as you land on them. Fill in your tally sheet after each turn.
4. If you land on a food, jeans, headphones, shoes, or concert tickets square, you may buy the item with a debit or credit card. If you have the cash, pay the debit price. If you don’t have the money, pay the credit price. You may choose not to purchase the item.
5. With each item purchased, circle the item on the bottom of your tally sheet.
6. Each time you pass the START square, collect $50.
7. Each time you land on a PAY DAY! square, collect $50.8. If you land on a FEE square, write the amount due in the (–) column of your tally sheet.9. Keep a running tally of your purchases and what you owe.
10. Continue playing until one player has bought all the items and is debt free.
2019
Savvy Shopper Game GoalBe the first player to buy food, jeans, headphones, shoes, and concert tickets, and to have $0 debt.
Directions 1. Place game pieces on the START square. Collect $50. Mark your tally sheet.
2. Roll the die. The player rolling the highest number goes first. Play proceeds counterclockwise.
3. Follow the directions on the squares as you land on them. Fill in your tally sheet after each turn.
4. If you land on food, jeans, headphones, shoes, or concert tickets, you may buy the item with a debit or credit card. If you have the cash, pay the debit price. If you don’t have the money, pay the credit price. You may choose not to purchase the item.
5. With each item purchased, circle the item at the bottom of your tally sheet.
6. Each time you pass the START square, collect $50.
7. Each time you land on a PAY DAY! square, collect $50.
8. If you land on a FEE square, write the amount due in the (–) column of your tally sheet.
9. Keep a running tally of your purchases and what you owe.
10. Continue playing until one player has bought all the items and is debt free.
Buy
Hea
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Buy Food
Buy Concert Tickets
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Savvy Shopper Tally SheetDebit and CreditLesson ThreeStudent Worksheet, Page 54
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Savvy Shopper Tally Sheet
Transaction Description Date Transaction (–) Transaction (+) Balance (=) Debt– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
– +
Food Jeans Headphones Shoes Concert Tickets
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Credit ScenariosDebit and CreditLesson ThreeStudent Worksheet, Page 55
55JA Finance Park®
Credit Scenarios
Read the following scenarios carefully. In each scenario, find either one advantage or one disadvantage of using credit. Circle the advantages and underline the disadvantages.
Scenario OneBefore the Gonzalez family went to Walt Disney World for vacation, Mom decided to put most of the money the family had allotted for the trip into a savings account and not carry it with her to the amusement park. She then wouldn’t have to worry about losing it or having it stolen. She would use her credit card to pay most of the expenses and then pay for the trip in one lump sum when the credit card bill came.
Scenario TwoMario left for college and was excited to be on his own. He received several credit card applications and decided that having one card would be helpful while he was away from home. After receiving the card, Mario found it easy to use and started impulsively buying things he thought he really needed. Soon his bill was up to the limit, and someone had to pay it. His parents were not happy with him.
Scenario ThreeRicardo bought a used motorcycle with a small loan from his credit union. He made regular monthly payments of $180 for three years until he had it paid off. When he received the motorcycle title and final paperwork and looked them over, he realized that with interest added, he had paid the credit union $140 more for his motorcycle than he would have if he had paid cash.
Scenario FourRolanda and her best friend were each given a trip to Europe when they graduated from college. They calculated their expenses and planned on taking a small amount of cash and paying for everything else by check. Seeking advice from their bank, they were told that a credit card would be a better option because it would be accepted for payment in many places that would not take personal checks.
Scenario FiveRandy used his credit card to buy a watch that later stopped working. He returned to the store and was given a replacement that also didn’t work. He decided he wanted his money back instead of another watch of the same kind. He was told the problem could be easily taken care of because he had charged the watch. He was given full credit on his credit card account for the price of the watch.
VocabularyCredit reportA record of a person’s financial information, including previous addresses, Social Security number, current and previous employers, estimated income, credit card accounts with amount owed and payment history, and loan information.
Credit scoreA standardized measurement of the potential to repay a debt.
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Teacher Introduction
Students may know about the consequences of bad debt but may not know about the benefits of good debt as it pertains to a consumer’s financial record. When a debt is paid on time and with no missed payments, the action reflects positively on a consumer’s credit. When credit is used responsibly, it demonstrates to lenders that a consumer is creditworthy—that he or she has used credit successfully with a history of paying bills on time. Maintaining a good credit record is important. With it, consumers can get loans for houses, cars, boats, and home improvements.
Lenders need a way to understand the financial risk of issuing a line of credit to someone. Credit reports and credit scores are two ways prospective lenders assess the likelihood of a consumer loan being paid on time and in full. A credit report determines a consumer’s creditworthiness. It details personal and financial information about a person, including existing loans and credit accounts, any late payments, and recent inquiries from other creditors. A credit score is a numerical expression of a person’s creditworthiness and is based on information in a credit report.
Credit reporting companies keep records on a consumer’s credit experience. A credit report includes information on where a consumer lives, how they pay their bills, and whether they have been sued or arrested or have filed for bankruptcy. According to the Federal Trade Commission, the three nationwide credit report companies—Equifax, Experian, and TransUnion—sell the information in your report to creditors, insurers, employers (with written consent), and other businesses that use it to evaluate your applications for credit, insurance, employment, or housing.
Simply put, if you are a responsible borrower, you will have a good credit rating. If not, you will have a poor credit rating.
Whether to use credit is an important decision. It is essential that students understand the fundamentals of building a good credit reputation so that when the time comes, they can apply for and receive loans.
Lesson Time: 45 minutes
Debit and CreditLesson Four: Managing Credit
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Materials
o Student Workbooks
oo JAoFinanceoParkoDebit and Credit Slides 15–21
o One coin
Lesson Preparation
• Optional: Make copies of the Debit and Credit Assessment, Pages 35–36, one for each student. Students will take the assessment at the conclusion of this lesson. The assessment takes 12–15 minutes to complete.
• Review the Set the Stage talking points.
• Review the Managing Credit: Lesson Steps. For the Credit Score! game in this lesson, you will need to:
1. Draw a simple football field on the board. Add your school’s name to the end zones.
2. Draw a simple scoreboard.
Managing Credit: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students. • Ask students if they have ever been asked to loan money to a friend.
If not, have students imagine the following:
You have $1,000 in a savings account. A good friend comes to you and asks for $300 to buy a bike. Your friend will use the bike to
Rent or Home Ownership Activity
Before committing to a lease or a mortgage, students should understand the benefits and responsibilities that come with renting or owning a home.
For more about renting or owning, see the Extension Activity on Page 55.
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ride to and from a new job where she will earn $100 a week, $25 of which will go toward paying you back. Do you loan your friend the money? Why or why not?
• Have the students reimagine the scenario:
You have $1,000 in a savings account. Someone you don’t know knocks on your door and asks for $300. She tells you she needs the money to buy a bike to get to and from work. She assures you that she will earn $150 a week and can pay you $50 each week toward paying off the loan. Do you loan this person the money? Why or why not? What would you want to see or know about a person before giving him or her money?
Managing Credit: Lesson Steps | 35 Minutes
1. Point out that lenders need some way of understanding the financial risk of giving consumers lines of credit. Before they agree to make loans, they’ll want to know a number of things about borrowers, such as where they work and live, how much money they make and spend, and their ability to repay debts.
2. Explain that although a number of people might be able to buy a $300 bike with cash, many could not afford to pay for a house or a car in the same way. Typically, houses and cars are bought by taking out a loan.
3. Emphasize that how consumers spend their money and pay their bills has an impact on whether they can borrow money and at what cost. Responsible consumers have an easier time getting loans.
4. Present Slide 15 with the lesson’s vocabulary. Define creditoreport and creditoscore and have students highlight the words on Page 56 in their Student Workbooks.
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5. Present Slides 16 and 17. Tell students you are a bank. They want to borrow money to buy a shiny new car. Should you loan them the money? Share with students what goes into determining whether a consumer is creditworthy.
• Payment history.
• Outstanding debt.
• Credit-use history.
• Ownership of valuable assets such as real estate, personal property, and investments and savings.
6. Explain that goododebt is the term used when debts are paid on time. This reflects well on a consumer’s credit record.
7. Emphasize that a credit score influences the credit available to a consumer. If a potential borrower has a high score, the bank will loan money with the expectation that it will be paid back in a timely fashion. With an acceptable credit score, a consumer is one step closer to buying a new home or car or being allowed to rent an apartment
8. Present Slide 18, Credit Report Agencies. Explain to students that the three major credit-reporting agencies—Equifax, Experian, and TransUnion—keep records of a consumer’s credit experience. A credit report includes personal information: Social Security number, date of birth, where a consumer lives, how he pays his bills, and whether he has been sued or arrested or has filed for bankruptcy.
Leasing vs. Buying a Car ActivityStudents should understand the pluses and minuses of leasing or buying a car to make the best decision.
For more about leasing versus owning, see the Extension Activity on Page 61.
What Is a Social Security Number?A Social Security number is a unique number often used as a personal identifier by government agencies, financial institutions and colleges and universities. A Social Security number is needed for credit checks, to get a jobs and to collect Social Security benefits. A credit report also contains a consumer’s Social Security number. The Social Security Administration provides Social Security numbers and cards at no cost to eligible U.S. citizens.
Free Credit Reports
Consumers may order a copy of their credit report from one of the companies or all of the companies at the same time. Visit annualcreditreport.com or call1-877-322-8228.
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These agencies sell that information to creditors, insurers, employers (with written consent), and other businesses that use it to evaluate applications for credit, insurance, employment, or renting.
9. Present Slide 19, FICO
Score Breakdown. Slide 20, FICO Credit Score, is optional depending on class time and teacher interest. FICO is an acronym for the Fair Isaac Corporation, founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. Together, they developed the formula for the FICO score. It is the standard credit score in the United States, used in more than 90 percent of lending decisions (www.myfico.com).
• Credit scores range from 300 to 850. The higher the credit score, the better the reference for the consumer and the lower the risk to the lender.
• A score of 720 or above is considered very good to excellent.
• Below 600 is a potentially poor credit risk.
• Late payments, exceeding the credit limit, applying for credit frequently, and having an account turned over to a collection agency will affect a consumer’s credit score.
• While many lenders use FICO credit scores to help them make lending decisions, each lender has its own process for making decisions.
10. The Fair Credit Reporting Act (FCRA) requires each of the nationwide reporting companies to provide consumers with a free copy of their credit report, upon request, once every 12 months. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the act and requires that consumer reporting companies keep accurate credit reports.
11. Present Slide 21. Reemphasize that building a good credit history is one way to demonstrate to lenders who do not know you that you are reliable and will pay back a loan.
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12. Point out that identity theft of personal and private information is a threat to everyone. According to the Federal Trade Commission, identity theft tops the list of consumer complaints they receive each year. Ask students to raise their hands if they or anyone in their family have been victims of identity theft. Mention any security breaches that are currently in the news. For people of all ages, a stolen identity is an inconvenient, expensive, and time-consuming problem to fix.
13. Activity: Play the Credit Score! game. This activity will reinforce the lesson’s vocabulary terms and concepts. Separate the class into two teams. Ask teams to choose a captain and a team name. Meanwhile, if you haven’t already done so, draw a simple football field and scoreboard on the board.
14. Game rules:a) Correct answer = 10 yards (a first down). Go again.
b) Incorrect answer = fumble. The ball (and question) goes to the other team.
c) Three correct answers in a row = a field goal. Add three points to the team’s score orothe team can continue play to go for a possible touchdown.
d) With a touchdown, a team is awarded 7 points. Add 7 points to the team’s score. Ball goes to the other team.
e) Unsportsmanlike conduct: 15-yard penalty and the loss of the ball. Teacher’s call! (Use for poor team play, answering out-of-turn, etc.)
f) Supplement the activity with additional questions from today’s lesson, if needed.
• Students rotate turns. Explain that only the student from each team who is asked the question may answer, but he or she may ask for help from the team. Answers must be supported or explained with information from today’s lesson.
• Flip the coin and start play. Give the team that wins the toss the choice of taking control of the ball or letting the other team start first. Draw a football or attach a paper football on the 20-yard line of the team that starts play. Move the ball back and forth across the field as questions are answered.
• Announce the winner.
Identity Theft Activity
For more information about how students can help protect themselves from identity theft, turn to the Extension Activity on Page 67.
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Credit Score! Questions Answer Key1. Why do banks want to know the financial history of their loan
customers? (Answer: Lenders need some way of understanding the financial risk of giving a consumer a line of credit.)
2. I’m your bank. You want a loan. Why should I loan you money? (Answer: I am creditworthy; I pay my bills on time; I have little debt.)
3. A credit report contains many pieces of personal information about a consumer. Name two. (Possible answers: Previous addresses, Social Security number, current and previous employers, estimated income, credit card accounts with amount owed and payment history, loan information.)
4. You are busy with finals and forgot to pay your credit card bill. You are charged $100 in late fees. This will likely lower your (fill in the blank). (Answer: credit score.)
5. In your own words, define credit score. (Answer: A credit score is a standardized measurement of a person’s potential to repay a debt.)
6. Name one of the three nationwide credit reporting agencies.(Answer: Equifax, Experian, TransUnion.)
7. What does a consumer reporting agency do? (Answer: It keeps records of consumers’ credit history.)
8. You pay your bills on time. Is this a smart move? (Answer: Yes. It shows lenders you can pay off your debts.)
9. Your credit score is 699. According to the FICO credit score system, is this a good or bad credit score? (Answer: Good.)
10. Could this happen?oBill and Sandy are buying their first home. Unfortunately, after checking their credit history, their bank turns them down for a loan because of nonpayment of past credit card bills. (Answer: Yes. Missing payments may lower a consumer’s credit rating and affect his or her ability to get a loan.)
11. Your available credit is $1,000, but you keep your debt to $200. How does this help you build a positive credit history? (Answer: When you spend less than your credit limit, it reflects positively on your spending habits.)
12. You decide to charge your new cellphone on a credit card and pay it off immediately. Does this help or hurt your credit? (Answer: It helps. You build credit without accumulating debt.)
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13. Does this help or hurt? You decide the best way to build credit is to apply for credit cards at every store you love at the mall. (Answer: It hurts. Having multiple open accounts could cause lenders to question what would happen if you spend up to or exceed your credit limit. Collecting credit cards is not a good thing.)
14. True or false? You suspect you are a victim of identity theft. Your friends tell you that getting a credit report costs big bucks, so you let it go. (Answer: False. Credit agencies are required by law to issue a free credit report to consumers once a year.)
15. Could this happen?oTyler is looking for a job and to buy his first home. The loan company denies him. (Answer: Yes. With no job, Tyler has no income to pay a mortgage. Plus, he has no home-loan history.)
Summary and Review | 5 Minutes
Extend game play and have students create new questions to ask the opposing team. If time allows, have students write an essay in response to the following persuasive writing prompt.
Digging Deeper: Extension
Some parents co-sign a credit card for their teens to use because they believe a credit card teaches young people how to be financially responsible. Some
parents prefer to give their teens prepaid debit cards. Explain what you think parents should do and why.
Optional: Distribute the Debit and Credit Assessment Sheets and have students complete them. The Answer Key is found on Pages 37–38.
Debit and Credit Assessment
Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions.
1. An example of a financial institution is:a. A department store
b. A bank
c. A school
d. An ATM machine
2. Who uses financial institutions?a. Adults
b. College graduates
c. Almost everyone who maintains a savings or checking account, uses debit or credit cards, or needs a loan
d. Account holders with lots of cash
3. Define online banking.
4. Identify the incorrect statement.a. A debit card allows for an immediate electronic transfer of money from a cardholder’s savings
or checking account.
b. A debit card is essentially a paper check but doesn’t require the processing time a check does.
c. A debit card is handy in an emergency when you don’t have the money to spend.
d. A debit card is a pay-now payment type with no grace period for payments.
5. To keep your account safe, create a strong password when banking online. Name two additional safety tips when banking online.
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Debit and Credit Assessment
6. True or false? A bank is a not-for-profit financial institution.
You order your favorite foot-long sandwich with chips and a drink using your debit card. The total comes to $5.68. Your online statement shows a charge of $40.68. The extra amount is an overdraft fee.
A credit card provides preapproved credit.
Internet banking means using a bank branch to make deposits and withdrawals.
The lower an applicant’s credit score, the lower the risk to the lender.
Identity theft is a threat to anyone with a good credit rating.
7. Lenders use credit agencies to determine:a. An applicant’s credit score
b. An applicant’s credit history
c. Whether an applicant has any outstanding debt or defaults
d. All of the above
8. When lenders lend money to borrowers, they charge an additional fee for the use of their money. This fee is called:
a. Debit
b. Stock
c. Interest
d. Credit
9. List an advantage and disadvantage of a credit card.
10. Banks want college students to have their credit cards. Why do you think this is? Is it a good idea? Explain your answer.
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Debit and CreditAssessment Answer Key
Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions.
1. An example of a financial institution is:a. A department store
b. A bank
c. A school
d. An ATM machine
2. Who uses financial institutions?a. Adults
b. College graduates
c. Almost everyone who maintains a savings or checking account, uses debit or credit cards, or needs a loan
d. Account holders with lots of cash
3. Define online banking.
4. Identify the incorrect statement.a. A debit card allows for an immediate electronic transfer of money from a cardholder’s
savings or checking account.
b. A debit card is essentially a paper check but doesn’t require the processing time a check does.
c. A debit card is handy in an emergency when you don’t have the money to spend.
d. A debit card is a pay-now payment type with no grace period for payments.
5. To keep your account safe, create a strong password when banking online. Name two additional safety tips when banking online.
b
c
Online banking is an electronic way to view account activity and pay bills via the Internet and an institution’s website.
c
Keep my user name and password private; don’t store my account number or PIN on my mobile device; log off my account and close the browser window when finished.
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Debit and CreditAssessment Answer Key
6. True or false? A bank is a not-for-profit financial institution.
You order your favorite foot-long sandwich with chips and a drink using your debit card. The total comes to $5.68. Your online statement shows a charge of $40.68. The extra amount is an overdraft fee.
A credit card provides preapproved credit.
Internet banking means using a bank branch to make deposits and withdrawals.
The lower an applicant’s credit score, the lower the risk to the lender.
Identity theft is a threat to anyone with a good credit rating.
7. Lenders use credit agencies to determine:a. An applicant’s credit score
b. An applicant’s credit history
c. Whether an applicant has any outstanding debt or defaults
d. All of the above
8. When lenders lend money to borrowers, they charge an additional fee for the use of their money. This fee is called:
a. Debit
b. Stock
c. Interest
d. Credit
9. List an advantage and disadvantage of a credit card.
10. Banks want college students to have their credit cards. Why do you think this is? Is it a good idea? Explain your answer.
c
d
T
T
T
F
FF
A credit card provides a preapproved credit. It does not require immediate funds. It is a
buy now, pay later payment type. Credit allows you to pay for things in emergencies that
you otherwise could not afford. Credit cards are the best way to order something online
or over the phone. If a service or item is not as expected, you can dispute the charge.
Credit cards charge interest (at an annual percentage rate or APR) on unpaid balances.
Cash advances and transfers usually have higher interest rates. Credit cards are not free
money. Money charged to a credit card must be paid back plus interest if the bill is not
paid in full.
College students use credit cards to buy the things they need and want. Banks want
college students to become lifelong customers. College students may one day need
additional bank services for car and home loans. Banks make money when students
buy things on a credit card and don’t pay the balance in full each month.
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Checks and Checking Accounts ......................... 41Students practice check writing and keeping a check register to track their checks, deposits, withdrawals, and automatic electronic payments.
Installment Debt ......................... 49Students become aware that an installment debt can be considerably greater than the original purchase price of an item.
Rent or Home Ownership ...... 55Students compare the benefits and responsibilities that come with renting or owning a home.
Leasing vs. Buying a Car................ 61Students understand the pluses and minuses of leasing or buying a car.
Identity Theft ...67Students learn about steps they can take to help protect their payment cards and personal identity from theft.
Debit and CreditExtension Activities
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Overview
Students will practice writing a check and keeping a check register. Reviewing a checking account balance regularly helps consumers keep track of their checks, deposits and withdrawals, and any scheduled automatic electronic payments.
Teacher Introduction
A checking account is a secure place for consumers to keep their cash. A checking account allows for deposits and withdrawals, check writing, ATM withdrawals, and debit card transactions. Although declining in use with the rise of Web-based payment tools, check writing remains a way for consumers to pay rent, buy groceries, and/or pay bills by mail. Knowing how to write a check and keep a record of it is a practical money-management skill. Current technology also permits bank deposits by scanning paper checks using a smartphone camera.
Student checking accounts can be opened with a small deposit, identification, and a Social Security number. Generally, a parent has to be a co-owner of the account if the student is under 18.
A debit card is like a check. When the card is used to buy an item, the amount is instantly deducted from a checking account. Keeping track of debit charges helps keep a checking account from being overdrawn. Debit cards are accepted at many grocery and retail stores, gas stations, and restaurants. Using a debit card gives consumers an alternative to carrying a checkbook. In addition, many stores are more likely to accept a debit card than a personal check because a debit payment is approved and credited to the merchant immediately.
Checks and Checking AccountsExtension Activity1
Activity Time: 45 minutes
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Materials and Preparation
o Student Workbooks, Pages 45–47
Write a Check and Check Register Activity Steps
Students practice writing a $25.00 birthday check to a family member.
Have students turn to Page 57 in their Student Workbook, Write a Check Worksheet. (Answer Key on Page 43.)
Check-writing instructions: 1) Use a pen when writing a check.
2) Write your name, address, and zip code in the upper left-hand corner.
3) Enter the date in the upper right-hand corner. Include the month, day, and year.
4) Pay to the order of: Print the name of the person or business you are paying.
5) In the box near the dollar sign ($): Using numbers, fill in the dollar amount (25.00). The number should be written close to the dollar sign.
6) Print the amount on the line underneath using words and fractions.
7) Memo line: Print the reason or purpose of the check here.
8) Sign your check. Use your full name. No nicknames. A check is a formal bank document.
9) Keep track of your checks and the account balance in a register or ledger.
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Check-Writing Instructions:1. Use a pen when writing a check.
2. Write your name, address, and zip code in the upper left-hand corner.
3. Enter the date in the upper right-hand corner. Include the month, day, and year.
4. Pay to the order of: Print the name of the person or business you are paying.
5. In the box near the dollar sign ($): Using numbers, fill in the dollar amount (25.00). The number should be written close to the dollar sign.
6. Print the amount on the line underneath using words and fractions.
7. Memo line: Print the reason or purpose of the check here.
8. Sign your check. Use your full name. No nicknames. A check is a formal bank document.
9. Keep track of your checks and the account balance in a register or ledger.
Checking Account Tips
Know your account balance. Don’t spend more than you have.
Your check will “bounce” (the bank will notify you that it is not valid) if you write a check for more money than what is in your account. Overdraft and bounced-check fees may apply.
Keep track of your account with a written or online register.
Pay to theOrder of $NON-NEGOTIABLEay to the ABLE
Date
3456
Dollars
Memo
101111111 123456789999 3456
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Checks and Checking AccountsWrite a Check1 Extension Activity
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Rent or Home Ownership3 Extension Activity
Own a Condo, Townhome, or House
• A home is likely the biggest purchase you’ll ever make. Don’t buy until you’re ready. Consider staying in your home for at least five years.
• Do you have a steady job? Can you afford a large cash down payment—generally 20 percent of the purchase price—and monthly mortgage payments? Consider your current debt (car, credit card, student loan) and other expenses before buying.
• Stick with a budget. If not paying cash, you’ll need a loan. Mortgage payments should be no more than 25 to 30 percent of your net income or take-home pay.
• Comparison shop among several lenders for a home loan. In the early years of your mortgage, the majority of monthly payments will go toward paying interest. Over time, an increasing amount goes toward reducing the mortgage balance or principal. The process of paying off a loan over a set period of time is called amortization.
• Once you qualify for a loan, mortgage costs will depend on your credit history. Costs will include rate points and fees. Fees include a title search, title insurance, attorney, appraisal fees, recording fees, taxes, lender’s origination fee (prepaid interest), and a credit report.
• Compare rates and fees, and read lender reviews. Get information about the same loan amount, loan term, and type of loan from each potential lender. Check the newspaper and Internet. Rates can change daily. Figure out how much of a down payment you can afford.
• You’ll need homeowner’s insurance.• Mortgage types:
• A conventional mortgage has equal payments, typically over 15, 20, or 30 years based on a fixed interest rate. (Consider that a smaller monthly payment equals more time in debt.)
• Government-guaranteed financing programs include loans from the Federal Housing Authority (FHA) and the Veterans Administration (VA).
• An adjustable rate mortgage (ARM), also referred to as a variable rate mortgage, has an interest rate that increases or decreases during the life of the loan based on changes in market interest rates. (This may be a good option if you plan to move soon.)
• Use the Federal Trade Commission’s mortgage shopping information and worksheet to help you estimate monthly mortgage payments for various loan amounts, interest rates, fees, taxes, and insurance: www.consumer.ftc.gov/articles/0189-shopping-mortgage. Use one of the online mortgage calculators, such as www.mortgagecalculator.org/, to make your calculations.
Rent • Where would you like to live?
Downtown, uptown, close to schools or parks? Do you want to rent an apartment, a room in a home, or an entire house?
• With renting, you’ll have little or no upkeep costs.
• Stick with a budget. Rent payments should be no more than 25 to 30 percent of your net income or take-home pay. To share costs, you may want to consider a roommate.
• The amount of rent you’ll pay is determined by where you live. A one-bedroom apartment may be $400 in a small city and as much as $3,600 in a big city.
• References needed: You’ll need to prove to your future landlord that you are a trustworthy tenant. References are past landlords or people or companies to whom you have demonstrated financial responsibility.
• Costs: Application fees; security deposit or first month’s rent; renter’s insurance.
• Renter’s insurance covers your personal property if it’s stolen or damaged by fire or severe weather. It also covers injury to others and/or to their property. An average renter’s insurance policy costs between $15 and $30 a month.*
• Understand the responsibility that comes with renting. You’ll need to sign a lease, which is a binding contract that protects the landlord and the tenant. A lease should include the rent amount, whether utilities are included, default (failure to pay) terms, extended terms, and waivers. Read your lease carefully and be sure to keep a copy.
*Source: National Association of Insurance Commissioners
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Number Date Description Debit (-)
Credit (+) Balance
4/11/19 Previous balance $634.51
Checks and Checking AccountsCheck Register1 Extension Activity
Keep track of your checking account transactions with a hard copy or online register.
Write a Check Worksheet
Tracking Expenses Worksheet
Check Register
Worksheet
43
1. Students will now record expenses in a check register. Have students turn to Pages 58 and 59 in their Student Workbook, Tracking Expenses and Check Register Worksheets.
2. Demonstrate how to record the first Check Register Worksheet
transaction on a board or interactive whiteboard. (“On April 14, you wrote check number 3456 to [family member] in the amount of $25.00.”)
3. Have students record the remaining check and debit card transactions. (Answer Key on Page 44.)
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Pay to theOrder of $NON-NEGOTIABLEay to the ABLE
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101111111 123456789999 3456
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Travis McCray111 Miller Place
Anytown, CO 55555April 14, 2019
Craig Lents 25.00
Twenty-five dollars xx/100
Birthday Gift Travis McCray
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Summary and Review
Even if students rarely need to write a check, keeping a register for cash and debit transactions will help them learn how to track their spending.
Number Date Description Debit (–) Credit (+) Balance
4/11/19 Previous balance $634.51
3456 4/14/19 Craig’s birthday $25.00 $609.51
4/15/19 Direct deposit check $153.45 $762.96
4/16/19 ATM withdrawal $20.00 $742.96
4/16/19 Gas $43.01 $699.95
3457 4/18/19 Water + Electricity Bill $65.39 $634.56
3458 4/20/19 Cable $56.50 $578.06
3459 4/22/19 Central Bank (car payment) $237.52 $340.54
4/23/19 School store $55.57 $284.97
4/23/19 Lunch $22.52 $262.45
4/24/19 ATM withdrawal $20.00 $242.45
3460 4/25/19 Mom $19.00 $223.45
4/27/19 Graduation gift from grandma $50.00 $273.45
Check Register Answer Key
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Write a Check Debit and CreditExtension ActivityStudent Worksheet, Page 57
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Check-Writing Instructions:1. Use a pen when writing a check.
2. Write your name, address, and zip code in the upper left-hand corner.
3. Enter the date in the upper right-hand corner. Include the month, day, and year.
4. Pay to the order of: Print the name of the person or business you are paying.
5. In the box near the dollar sign ($): Using numbers, fill in the dollar amount (25.00). The number should be written close to the dollar sign.
6. Print the amount on the line underneath using words and fractions.
7. Memo line: Print the reason or purpose of the check here.
8. Sign your check. Use your full name. No nicknames. A check is a formal bank document.
9. Keep track of your checks and the account balance in a register or ledger.
Checking Account Tips
Know your account balance. Don’t spend more than you have.
Your check will “bounce” (the bank will notify you that it is not valid) if you write a check for more money than what is in your account. Overdraft and bounced-check fees may apply.
Keep track of your account with a written or online register.
Pay to theOrder of $NON-NEGOTIABLEay to the ABLE
Date
3456
Dollars
Memo
101111111 123456789999 3456
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Checks and Checking AccountsWrite a Check1 Extension Activity
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Tracking ExpensesDebit and CreditExtension ActivityStudent Worksheet, Page 58
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Keep your checking account balanced by adding deposits and subtracting checks, debit card purchases, and withdrawals. Correctly record the following transactions in your Check Register on Page 59 in the Student Workbook.
1. You have a beginning balance of $634.51.
2. On April 14, you write check number 3456 to a family member in the amount of $25.00. The check is a birthday gift.
3. A direct deposit in the amount of $253.45 is credited to your account on April 15. This is your pay from your part-time job. One hundred dollars is automatically placed in your savings account. The rest is deposited in your checking account. Your deposit is $153.45.
4. On April 16, you swipe your debit card at the ATM and withdraw $20.
5. On April 16, you swipe your debit card at the gas pump. The amount debited is $43.01.
6. On April 18, you write check number 3457 to the utility company to pay your water and electric bill. The amount is $65.39.
7. On April 20, you write check number 3458 to the cable company to pay the bill. The amount is $56.50.
8. On April 22, you write check number 3459 to Central Bank to make a car payment. The amount is $237.52.
9. On April 23, you buy a school jersey using your debit card. The amount is $55.57.
10. On April 23, you use your debit card to buy lunch for you and your friends at Taco Express for $22.52.
11. On April 24, you use your debit card to withdraw money from Central Bank’s ATM. The withdrawal amount is $20.00.
12. On April 25, you write check number 3460 to your mother to pay back a personal loan. The amount is $19.00.
13. On April 27, you receive a graduation check in the amount of $50.00 from your grandmother. You deposit the check into your account.
Checks and Checking AccountsTracking Expenses1 Extension Activity
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Debit and CreditExtension ActivityStudent Worksheet, Page 59
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Number Date Description Debit (-)
Credit (+) Balance
4/11/19 Previous balance $634.51
Checks and Checking AccountsCheck Register1 Extension Activity
Keep track of your checking account transactions with a hard copy or online register.
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Overview Students become aware that an installment debt can be considerably greater than the original purchase price of an item.
Teacher Introduction Ask students if they have seen auto advertisements that offer a car for “no money down” and low monthly payments. This type of loan is called an installment loan. An installment loan is a form of credit that must be repaid over time with a set number of monthly payments. Payments are usually structured so that the borrower pays more in interest in the early months of the loan before paying off the principal (the price tag) of the item. Consumers who use installment loans are paying for the benefit of using an item (house or car) before it is paid for in full.
Buying on Credit Advantages: Offers immediate use of the goods or services; adds an element of flexibility in money management (for example, the ability to take advantage of a one-time offer or sale price); provides a convenient way to pay; helps a personal credit rating when payments are made on time.
Buying on Credit Disadvantages: Usually requires a credit check and income verification (the borrower needs steady income); adds the burden of personal debt; results in higher costs when interest and other charges are added; could result in the loan being rolled over into a new loan with extended monthly payments if the borrower buys another car before paying off the loan on the previous car.
2 Installment DebtExtension Activity
Activity Time: 20 minutes
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Materials and Preparation
o Student Workbooks, Pages 52–53
Installment Debt Activity Steps
1. Have students turn to Page 60 in their Student Workbook and review the One-Day-Only Sale! Skit Worksheet.
2. Ask student volunteers to read aloud the parts of Trey, Marie, and the Sales Associate.
3. Once the skit has been read, have the students calculate the monthly cost of the new home theater system. (Note: Payment calculations are rounded to the next higher dollar.)
Take a poll and see which decision students think Trey and Marie should make.
a) Purchase the sound system with cash.b) Purchase the sound system on an installment plan.c) Delay the purchase of the system until all options are
considered.
Ask students to write reasons for their choice on Page 61 of their Workbooks.
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One-Day-Only Sale!Scene: a large electronics store
Trey: Here it is. The Ultimate 235 home theater speaker system we’ve been saving for.
Marie (reading the print on the box): Rich, spacious sound. The latest in digital technology. Wireless. Universal remote. Power and optical cables and headset included. And it’s on sale. Original cost, $1,499. Now it’s only $1,100. This is great!
Trey (excitedly): It will be like being in a movie theater, only at home!
Marie: But … where do we get $1,100?
Trey: We’ve been saving all summer. The money is in the bank.
Marie (doubtful): I know. But once we spend it, it’s gone. It took a long time to earn that money.
Trey: We won’t see a lower price for it—not even online.
Sales Associate: Need some help?
Trey Hi. This is the sound system we want. But it’s pricey.
Sales Associate: The 235 is the top of the line. It produces a great bass resonance that just can’t be matched in any other home theater sound system.
Marie: Yeah, it’s a great system.
Sales Associate: If the price is a problem, we offer a low monthly payment installment plan. You can take up to three years to pay it off.
Trey: How does the installment plan work?
Sales Associate: For as little as $100 down and $37.68 a month, you can walk out of the store today with the top-of-the-line sound system you want and deserve.
Trey: Is that all? We can afford that and still keep our money.
Marie: How long did you say we have to pay?
Sales Associate: Three years.
Marie (doing some figuring): Three years, that’s ___________months.
Trey (adding things up): In all, we’ll be paying $_______________over the next three years.
Marie: Hmm. That’s a lot more than the sale price of $_______________.
Sales Associate: But remember, you can take the system home today and enjoy theater sound tonight! You won’t find a better model or price anywhere.
2Installment DebtOne-Day-Only Sale! SkitExtension Activity
One-Day-Only Sale! Skit
Worksheets
One-Day-Only Sale! Skit Answer Key
Marie: How long did you say we have to pay?Sales Associate: Three years.Marie (doing some figuring): Three years, that’s 36 months.Trey (adding things up): In all, we’ll be paying $1,456 over the next three years.Marie: Hmm. That’s a lot more than the sale price of $1,100 .
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2Installment DebtOne-Day-Only Sale! SkitExtension Activity
Trey and Marie have a decision to make. What should they do?
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Good Idea
Why it will work
Reason #1
Why it will work
Reason #2
Why it will work
Reason #3
• Fact or example
• Fact or example
• Fact or example
Summary and Review
Review the advantages and disadvantages of using installment loans. Be sure to emphasize that using credit is a privilege that can be costly. Also, borrowing money for purchases imposes a legal obligation to repay the debt.
Provide students with a sample persuasion map like the one here. Tell them you are looking for ideas for an educational video on installment loan debt to post on YouTube for teens to see. Students should fill in the map with their ideas and explain why they would work.
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One-Day-Only Sale! SkitDebit and CreditExtension ActivityStudent Worksheet, Page 60
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One-Day-Only Sale!Scene: a large electronics store
Trey: Here it is. The Ultimate 235 home theater speaker system we’ve been saving for.
Marie (reading the print on the box): Rich, spacious sound. The latest in digital technology. Wireless. Universal remote. Power and optical cables and headset included. And it’s on sale. Original cost, $1,499. Now it’s only $1,100. This is great!
Trey (excitedly): It will be like being in a movie theater, only at home!
Marie: But … where do we get $1,100?
Trey: We’ve been saving all summer. The money is in the bank.
Marie (doubtful): I know. But once we spend it, it’s gone. It took a long time to earn that money.
Trey: We won’t see a lower price for it—not even online.
Sales Associate: Need some help?
Trey Hi. This is the sound system we want. But it’s pricey.
Sales Associate: The 235 is the top of the line. It produces a great bass resonance that just can’t be matched in any other home theater sound system.
Marie: Yeah, it’s a great system.
Sales Associate: If the price is a problem, we offer a low monthly payment installment plan. You can take up to three years to pay it off.
Trey: How does the installment plan work?
Sales Associate: For as little as $100 down and $37.68 a month, you can walk out of the store today with the top-of-the-line sound system you want and deserve.
Trey: Is that all? We can afford that and still keep our money.
Marie: How long did you say we have to pay?
Sales Associate: Three years.
Marie (doing some figuring): Three years, that’s ___________months.
Trey (adding things up): In all, we’ll be paying $_______________over the next three years.
Marie: Hmm. That’s a lot more than the sale price of $_______________.
Sales Associate: But remember, you can take the system home today and enjoy theater sound tonight! You won’t find a better model or price anywhere.
2Installment DebtOne-Day-Only Sale! SkitExtension Activity
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Debit and CreditExtension ActivityStudent Worksheet, Page 61
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2Installment DebtOne-Day-Only Sale! SkitExtension Activity
Trey and Marie have a decision to make. What should they do?
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Overview Before committing to a lease or a mortgage, students should understand the benefits and responsibilities that come with renting or owning a home.
Teacher Introduction
Someday, students will want a place to call their own. Renting will offer them a place to live with little upkeep costs and the option to move without having to sell a property. Rent is generally less expensive than a mortgage payment. Owning a home, however, remains a goal for many families.
People want to own a home for a variety of reasons. They might want a place that will provide privacy and security; a personal dwelling to decorate or remodel as they see fit; or an investment property that builds equity and provides tax benefits. Home equity is the difference between what a homeowner owes on his home and what it is worth. A home’s market value may increase or decline over time.
If a home is in their future, students will need to carefully consider how much house they can afford and how long they are willing and able to commit to paying for it. For many consumers, mortgages make up the largest share of household debt.
Buying a home requires money. Currently, a 20 percent down payment (a large cash deposit to be paid at the time of sale) on the purchase price of the home is often required by a bank or lender. This deposit is deducted from the home’s price to determine the amount that must be borrowed from a bank. The loan is then divided into monthly mortgage payments. The monthly payment includes the principal, interest, property taxes, and usually homeowner’s insurance. If borrowers cannot make a down payment of 20 percent, they will need to take out private mortgage insurance to protect the lender in case the borrowers stop paying the loan.
Students can use a price-to-rent ratio formula that shows the price of renting versus the cost of buying in a certain area. Handy online calculators show the price-to-rent ratio for most cities.
3 Rent or Home OwnershipExtension Activity
Activity Time: 45 minutes
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Materials and Preparation
o Student Workbook, Pages 58–59
o Optional: Computer and Internet access o Extra sheets of paper
Rent or Home Ownership Activity Steps
1. Write the following loan amount example on the board. Go through one or two sample mortgage calculations with the class.
30-Year Loan Amount Formula:Loan Amount (home price minus down payment) ÷ 360 (months) = Monthly Mortgage Payment
Example: You want to buy a $100,000 townhome.$100,000 (price) – $20,000 (20% down payment) = $80,000 (loan amount)
$80,000 ÷ 360 = $222.22
HousingLine 1: Home cost
Line 2: Down payment amount
Line 3: Loan amount (Line 1 minus Line 2)
Line 4: Monthly mortgage payment
(divide Line 3 by 360)
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Rent or Home OwnershipMy First Lease3 Extension Activity
o Assignment: Describe your “perfect” apartment. Pick a move-in date with a monthly rent amount and write it down. Now, fill in your lease. List your teacher as your landlord and circle your rental responsibilities as a tenant.
Sample Lease
1. The parties to this Agreement are: , hereinafter called Landlord, and
, hereinafter called Tenant.
2. Properties: Landlord hereby leases the following property to Tenant for the terms of this Agreement.
3. Term: The term of this Agreement shall be for one year beginning on and ending on .
4. Rent: The total rent for said property shall be $ , to be paid monthly in amounts of $ due and payable on the day of each month.
5. Utilities: Landlord agrees to furnish the following services and/or utilities: ( ) electricity ( ) gas ( ) water.
6. Security Deposit: Tenant shall deposit with the Landlord the first and last month’s rent to be held as security deposit. This deposit will be returned in full, when this lease expires if, the premises are in good condition and tenant owes no back rent.
7. Tenant shall not lease or sublease nor assign the premises without the written consent of the Landlord.
8. Landlord may enter premises at reasonable times for the purposes of inspection, maintenance, or repair. Except in the instance of an emergency, the Landlord shall give 24-hour notice prior to such an entry.
9. Tenant agrees to keep the premises in good condition, and shall not make any alterations, including changing or adding locks, without the written consent of the Landlord. Tenant further agrees to notify Landlord immediately if any repairs are necessary.
10. Landlord agrees to regularly maintain the building and grounds in a clean, orderly, and safe manner.
11. Tenant agrees not to disturb the peace and quiet of other tenants in the building and the immediate neighbors. Tenant further agrees not to conduct business or commercial activities on the premises.
12. Tenant shall, upon termination of this Agreement, vacate and return the premises in the same condition that it was received, less reasonable wear and tear, and other damages beyond the control of the Tenant.
The Landlord will return the security deposit to the Tenant when the lease expires. Any waiver or modification of this Agreement shall be in writing and signed by both Landlord and Tenant. We, the undersigned, agree to this Lease:
Tenant (Print): Signature(s) Date:
Landlord (Print): Signature(s) Date:
My perfect apartment:
$
$
$
$
Rent or Home Ownership Worksheet
My First Lease
Worksheet
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these calculations do not include interest. Assuming a 6 percent interest rate (considered the historical rate over the last 50 years), the payment would more than double. For example, a $300,000 house payment that excludes interest would be $300,000/360 = $833.33 per month. At 6 percent interest, the monthly payment would be $1,798.65.
3. Have students turn to Page 62, Rent or Home Ownership Sheet in their Workbooks. Have student pairs do the following:
• Read each section and highlight any new words or concepts.
• Discuss renting and owning and which one they prefer.
4. If time permits, have students describe what would make a “perfect” apartment and then fill in the My First Lease Worksheet on Page 63 in their Workbooks.
Summary and Review
Read the following rent-or-buy scenarios to your students. Have students share their opinions about whether the person mentioned should consider a house or a rental.
Rentoorobuy? With interest rates low, John, 22, thinks it’s a great time to buy a home. He works part time and has little savings.
Rentoorobuy? Carlos travels a lot with his new company. He expects to relocate in two to three years.
Rentoorobuy? Chris and Kim want more room for their growing family. Their combined income is $86,000. They have little credit card debt but have car payments and $30,000 in student loans.
Mortgage amount:
Mortgage term:
years or months
Interest rate:
Monthly payments:
Mortgage start date:
% per year
$ 300,000
30 360
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$ 1,798.65
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Rent or Home Ownership3 Extension Activity
Own a Condo, Townhome, or House
• A home is likely the biggest purchase you’ll ever make. Don’t buy until you’re ready. Consider staying in your home for at least five years.
• Do you have a steady job? Can you afford a large cash down payment—generally 20 percent of the purchase price—and monthly mortgage payments? Consider your current debt (car, credit card, student loan) and other expenses before buying.
• Stick with a budget. If not paying cash, you’ll need a loan. Mortgage payments should be no more than 25 to 30 percent of your net income or take-home pay.
• Comparison shop among several lenders for a home loan. In the early years of your mortgage, the majority of monthly payments will go toward paying interest. Over time, an increasing amount goes toward reducing the mortgage balance or principal. The process of paying off a loan over a set period of time is called amortization.
• Once you qualify for a loan, mortgage costs will depend on your credit history. Costs will include rate points and fees. Fees include a title search, title insurance, attorney, appraisal fees, recording fees, taxes, lender’s origination fee (prepaid interest), and a credit report.
• Compare rates and fees, and read lender reviews. Get information about the same loan amount, loan term, and type of loan from each potential lender. Check the newspaper and Internet. Rates can change daily. Figure out how much of a down payment you can afford.
• You’ll need homeowner’s insurance.• Mortgage types:
• A conventional mortgage has equal payments, typically over 15, 20, or 30 years based on a fixed interest rate. (Consider that a smaller monthly payment equals more time in debt.)
• Government-guaranteed financing programs include loans from the Federal Housing Authority (FHA) and the Veterans Administration (VA).
• An adjustable rate mortgage (ARM), also referred to as a variable rate mortgage, has an interest rate that increases or decreases during the life of the loan based on changes in market interest rates. (This may be a good option if you plan to move soon.)
• Use the Federal Trade Commission’s mortgage shopping information and worksheet to help you estimate monthly mortgage payments for various loan amounts, interest rates, fees, taxes, and insurance: www.consumer.ftc.gov/articles/0189-shopping-mortgage. Use one of the online mortgage calculators, such as www.mortgagecalculator.org/, to make your calculations.
Rent • Where would you like to live?
Downtown, uptown, close to schools or parks? Do you want to rent an apartment, a room in a home, or an entire house?
• With renting, you’ll have little or no upkeep costs.
• Stick with a budget. Rent payments should be no more than 25 to 30 percent of your net income or take-home pay. To share costs, you may want to consider a roommate.
• The amount of rent you’ll pay is determined by where you live. A one-bedroom apartment may be $400 in a small city and as much as $3,600 in a big city.
• References needed: You’ll need to prove to your future landlord that you are a trustworthy tenant. References are past landlords or people or companies to whom you have demonstrated financial responsibility.
• Costs: Application fees; security deposit or first month’s rent; renter’s insurance.
• Renter’s insurance covers your personal property if it’s stolen or damaged by fire or severe weather. It also covers injury to others and/or to their property. An average renter’s insurance policy costs between $15 and $30 a month.*
• Understand the responsibility that comes with renting. You’ll need to sign a lease, which is a binding contract that protects the landlord and the tenant. A lease should include the rent amount, whether utilities are included, default (failure to pay) terms, extended terms, and waivers. Read your lease carefully and be sure to keep a copy.
*Source: National Association of Insurance Commissioners
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My First LeaseDebit and CreditExtension ActivityStudent Worksheet, Page 63
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Rent or Home OwnershipMy First Lease3 Extension Activity
o Assignment: Describe your “perfect” apartment. Pick a move-in date with a monthly rent amount and write it down. Now, fill in your lease. List your teacher as your landlord and circle your rental responsibilities as a tenant.
Sample Lease
1. The parties to this Agreement are: , hereinafter called Landlord, and
, hereinafter called Tenant.
2. Properties: Landlord hereby leases the following property to Tenant for the terms of this Agreement.
3. Term: The term of this Agreement shall be for one year beginning on and ending on .
4. Rent: The total rent for said property shall be $ , to be paid monthly in amounts of $ due and payable on the day of each month.
5. Utilities: Landlord agrees to furnish the following services and/or utilities: ( ) electricity ( ) gas ( ) water.
6. Security Deposit: Tenant shall deposit with the Landlord the first and last month’s rent to be held as security deposit. This deposit will be returned in full, when this lease expires if, the premises are in good condition and tenant owes no back rent.
7. Tenant shall not lease or sublease nor assign the premises without the written consent of the Landlord.
8. Landlord may enter premises at reasonable times for the purposes of inspection, maintenance, or repair. Except in the instance of an emergency, the Landlord shall give 24-hour notice prior to such an entry.
9. Tenant agrees to keep the premises in good condition, and shall not make any alterations, including changing or adding locks, without the written consent of the Landlord. Tenant further agrees to notify Landlord immediately if any repairs are necessary.
10. Landlord agrees to regularly maintain the building and grounds in a clean, orderly, and safe manner.
11. Tenant agrees not to disturb the peace and quiet of other tenants in the building and the immediate neighbors. Tenant further agrees not to conduct business or commercial activities on the premises.
12. Tenant shall, upon termination of this Agreement, vacate and return the premises in the same condition that it was received, less reasonable wear and tear, and other damages beyond the control of the Tenant.
The Landlord will return the security deposit to the Tenant when the lease expires. Any waiver or modification of this Agreement shall be in writing and signed by both Landlord and Tenant. We, the undersigned, agree to this Lease:
Tenant (Print): Signature(s) Date:
Landlord (Print): Signature(s) Date:
My perfect apartment:
Overview
For many students, having a car is a rite of passage and the culmination of a dream. Before finding the perfect ride, students should understand the pluses and minuses of leasing or owning a car.
Teacher Introduction
Ask the students how many of them want to buy a car when they get a job. Ask how many of them will need a car to get to that job. For many students, especially those living in rural or suburban areas, cars are necessary forms of transportation.
Explain to students that transportation is the second-largest expense for most households after housing. If they use a car to travel, they will have ownership costs. This is their monthly loan or lease payment. They’ll also need to pay monthly operating costs. Operating costs include car maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking, and tolls. When they are ready for their first car, they may choose to buy or lease it.
Buying a car may seem ideal because it will belong to the buyer once payments are made, if it cannot be bought outright. Longer-term loans often have smaller monthly payments. These loans, however, cost more over the life of the loan because the consumer is paying interest for a longer period of time. Also, as the car loses value (depreciates) over time, the owner may end up owing more on the loan than the car is worth.
That’s why some people prefer to lease, knowing that a lease means they can have a new car every few years and they don’t have to worry about selling a car before getting a new one.
Auto LoanMost car buyers need financing to buy a new car. One option includes direct lending. This type of loan comes from a finance company, bank, or credit union. In direct lending, a buyer agrees to pay the amount financed plus an agreed-upon finance charge over a period of time. On the other hand, dealership financing comes directly from the dealer. This type of financing offers convenience, and sometimes manufacturer-sponsored, low-rate deals. An online auto calculator can help you see what your monthly auto loan payment will be.
To use an online calculator, insert the auto loan amount, the auto loan term (years or months), the interest rate (% per year), and the auto loan start date in the appropriate boxes and click “calculate.”
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Leasing vs. Buying a CarExtension Activity
Activity Time: 30 minutes
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To compare leasing versus owning in depth, have students visit www.leaseguide.com and www.leasecompare.com. Both sites have online calculators and frequently asked questions on leasing versus buying a car. Whether buying or leasing, encourage students to get the terms of any agreement they or their parents negotiate in writing.
Students will examine the advantages and disadvantages to buying and leasing a car to determine what is best for them.
Materials and Preparation o Student Workbook, Pages 64–65
o Optional: Colored pencils or markers
o Optional: Computer and Internet access
Leasing vs. Buying a Car Activity Steps
1. Draw two columns on the board, labeled “Lease” and “Buy”.
2. Define lease as a contract by which one party conveys land or property (in this case, a car) to another person for a set amount of time in exchange for specified payments. This is the same as renting an apartment. Define buy as obtaining ownership of an item in exchange for payment. Ask students to tell you the difference between the two.
3. Tell students they are going to make a decision about which they would prefer: to lease or buy a car.
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4 Leasing vs. Buying a Car Graphic OrganizerExtension Activity
Lease
Buy
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4 Leasing vs. Buying a CarTip SheetExtension Activity
Visit www.leaseguide.com and www.leasecompare.com for more information on leasing versus buying a car.
Lease a Car Buy a Car
1Lower payment per month
Most of the time, lease payments are lower than buying a car with similar terms.
1Equity—it’s yours
Once you finish paying for the car, it’s yours. You can keep driving it, sell it, use it as a
trade-in for your next car, or donate it.
2
Down payment and feesWith smart negotiation, a down payment on a leased car may be less than with a purchase. Check to see if there are extra fees for giving up the car before the end of the lease or for missing equipment once the car is returned.
2Rough rider
You are a new driver. You are likely to get some scratches and minor dings on your car. If the car is yours, you can live with them. If
you lease, you will pay for them.
3Taxes
Typically, you pay less in taxes with a lease because you won’t pay a high down payment.
3
The open roadOnce you buy a car, it is yours and you can drive it as much as you want. With a lease,
you can drive only so many miles before you pay extra. Most leases allow 12,000 to 15,000
miles a year. Expect a charge of 10 to 25 cents for each additional mile.
4Do you always want new?
When you lease, you trade in your car every two to three years and get a new one.
4Insurance costs
Generally, insurance will be cheaper when buying a car because the costs decrease over
time and you don’t have to repeatedly pay new car fees.
5Maintenance
Because you don’t keep a leased car for long, you are unlikely to have major maintenance costs. Check the manufacturer’s warranty to
be sure it covers the entire lease term.
5Long-term costs
Over time, owning a car will cost less than leasing, assuming you keep the car you buy
for several years.
Leasing vs. Buying a
Car Graphic Organizer Worksheet
Leasing vs. Buying a Car
Tip Sheet
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Lease a Car Buy a Car
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
“What Matters Most to Us” Sample Table
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about buying or leasing a car without the benefit of information about their overall income and spending budgets. In the future, when they are earning real income, they may make different decisions.
5. Have students open their Workbooks to the Leasing vs. Buying a Car Graphic Organizer Worksheet and Tip Sheet, Pages 64 and 65.
6. Tell students to read the Tip Sheet. If a student believes that a tip fits his thinking, he should color in the corresponding space on the Graphic Organizer. The tips in the lease and buy columns are not necessarily in opposition to each other, so a student could agree with the first tip, for example, in both columns. Students can color with colored pencils or markers, or just shade with pencils or pens.
7. After reading the entire Tip Sheet and coloring in the appropriate spaces on the Graphic Organizer, students should examine the cars and see which one has the most colors. This will make it clear if leasing or buying is the best option.
8. Tell students to put tally marks on the board under “Lease” or “Buy” once they have a preference.
Optional: To see what is most important to the class, draw a table on the board titled “What Matters Most to Us.” List in the “Lease a Car” and “Buy a Car” columns the five “tips” tally numbers. Then ask students to write one or two sentences describing the results. Finally, ask student volunteers to share how the class results compare with their own.
Summary and Review
Calculate the total number of preferences for “Lease” and “Buy” on the board. Ask a few students why they chose what they did and then tell students what the most popular class choice was. Ask if a lower- or higher-than-expected income would change their choice, and why. If it isn’t said, tell students that a change in income level might change the kind of car a person can afford to lease or buy.
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Leasing vs. Buying a Car Graphic OrganizerDebit and CreditExtension ActivityStudent Worksheet, Page 64
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4 Leasing vs. Buying a Car Graphic OrganizerExtension Activity
Lease
Buy
1 2 3
4
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1 2 3
4
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4 Leasing vs. Buying a CarTip SheetExtension Activity
Visit www.leaseguide.com and www.leasecompare.com for more information on leasing versus buying a car.
Lease a Car Buy a Car
1Lower payment per month
Most of the time, lease payments are lower than buying a car with similar terms.
1Equity—it’s yours
Once you finish paying for the car, it’s yours. You can keep driving it, sell it, use it as a
trade-in for your next car, or donate it.
2
Down payment and feesWith smart negotiation, a down payment on a leased car may be less than with a purchase. Check to see if there are extra fees for giving up the car before the end of the lease or for missing equipment once the car is returned.
2Rough rider
You are a new driver. You are likely to get some scratches and minor dings on your car. If the car is yours, you can live with them. If
you lease, you will pay for them.
3Taxes
Typically, you pay less in taxes with a lease because you won’t pay a high down payment.
3
The open roadOnce you buy a car, it is yours and you can drive it as much as you want. With a lease,
you can drive only so many miles before you pay extra. Most leases allow 12,000 to 15,000
miles a year. Expect a charge of 10 to 25 cents for each additional mile.
4Do you always want new?
When you lease, you trade in your car every two to three years and get a new one.
4Insurance costs
Generally, insurance will be cheaper when buying a car because the costs decrease over
time and you don’t have to repeatedly pay new car fees.
5Maintenance
Because you don’t keep a leased car for long, you are unlikely to have major maintenance costs. Check the manufacturer’s warranty to
be sure it covers the entire lease term.
5Long-term costs
Over time, owning a car will cost less than leasing, assuming you keep the car you buy
for several years.
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Overview
Students learn there are things they can do to help protect their payment cards and identity from theft.
Teacher Introduction
Current technology makes it relatively easy for thieves to access personal information and use it in fraudulent ways. Protecting one’s identity and privacy is something students need to consider in today’s digital world. The Federal Trade Commission (FTC), the nation’s consumer protection agency, works to prevent fraudulent and deceptive practices in the marketplace. According to the FTC, acting fast limits a consumer’s liability for credit card or debit charges that he or she didn’t authorize.
• Report the loss or theft of your card to the card issuer as quickly as possible. Many companies have toll-free numbers and 24-hour service for such emergencies. Once you report the loss of your debit card, federal law says you cannot be held liable for unauthorized transfers that occur after that time.
• Follow up with a letter or email. Include your account number, the date and time when you noticed your card was missing, and when you first reported the loss.
• Check your card statement carefully for transactions you didn’t make. Report these transactions to the card issuer as quickly as possible.
• If you or someone you know owns a home, check to see if the homeowner’s insurance policy covers liability for card thefts.
Identity TheftExtension Activity
Activity Time: 30 minutes
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Materials and Preparation
o Student Workbook, Page 71
o Make six copies of the Card Sort Sheet, Page 70, one for each small group
o Scissors
o Optional: Computers with Internet access
Prevent Fraud Activity Steps
1. Separate students into groups of three or four and arrange desks to create a table.
2. Distribute one Card Sort Sheet to each group. Have a student volunteer cut the sheet into 10 slips and spread them out.
3. Write the following three topics on the board: “Prevent Identity Theft,” “Prevent Credit or Debit Card Fraud,” and “Prevent Debit Card Fraud.”
4. Have students read the Identity Theft Overview Worksheet found in their Workbooks. Based on the worksheet, students are to determine under which topic—Prevent Identity Theft, Prevent Credit or Debit Card Fraud or Prevent Debit Card Fraud—each word or phrase appears.
5. Have groups use the information from the worksheet to confirm their topic picks. Ask those students who picked other topics to support their choices using personal experience or other criteria or evidence.
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Card Sort Sheet
Card 1Social Security and bank account numbers should not be shared publicly.
Card 6Cut up old cards.
Card 2ATM
Check your transactions.
Card 7Use strong passwords.
Card 3Safeguard your wallet.
Card 8Don’t write your PIN on
account slips.
Card 4Report suspicious billing
entries.
Card 9Draw a line through
blank spaces.
Card 5Be wise about Wi-Fi
Card 10Check your credit report
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Prevent Credit or Debit Card Fraud • Don’t disclose your account number over the
phone unless you initiate the call.
• Guard your account information. Never leave it out in the open.
• Keep a record of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.
• Draw a line through blank spaces on charge or debit slips above the total so the amount can’t be changed.
• Don’t sign a blank charge or debit slip.
• Shred old financial documents and statements and save receipts to check against your monthly statements.
• Cut up old cards—cutting through the account number—before you throw them away.
• Open your monthly statements promptly and compare them to your receipts. Report suspicious entries as soon as possible.
• Carry only the cards you’ll need.
Prevent Debit Card Fraud
• Don’t carry your PIN in your wallet, purse, or pocket or write it on your ATM or debit card. Memorize it.
• Never write your PIN on a deposit slip, an envelope, or other papers.
• Check your ATM or debit card transactions; the funds for an item will be quickly transferred out of your checking or other deposit account.
• Check your account activity, especially if you bank online. Compare the current balance and transactions on your statement to those you’ve recorded. Report any discrepancies to your card issuer immediately.
Prevent Identity Theft1. It’s important to keep some things private. Don’t share Social Security numbers, street
addresses, phone numbers, and family financial information on social network sites or anywhere else. Bank account or credit card numbers are private and should not be shared.
2. Safeguard your pocketbook or wallet.
3. Limit what you carry. Take only the cards and identification you need.
4. Check credit card and bank statements carefully and often.
5. Use strong passwords with your laptop, credit, bank, and other accounts.
6. Be wise about Wi-Fi. Before you send personal information over your laptop or smartphone on a public wireless network in a coffee shop, library, airport, hotel, or other public place, see if your information will be protected by a secure wireless network.
7. Shred any documents with personal and financial information.
8. For more ways to protect your identity log on to https://www.consumer.ftc.gov/topics/privacy-identity-online-security.
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Card Sort Sheet
Identity Theft Overview
Worksheet
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Summary and Review
Identity theft leaves consumers with the lengthy and time-consuming task of repairing their credit and getting their finances back in order. Keeping personal financial information private limits students’ exposure to having their information used without their knowledge or permission. For more tips and tools on preventing identity theft, have students visit https://www.consumer.ftc.gov/topics/privacy-identity-online-security.
Ask students to create a visual presentation (a timeline, web, or concept map) to show the action steps when reporting an identity theft, and share it with the class.
Prevent Identity Theft
Prevent Credit or Debit Card Fraud
Prevent Debit Card Fraud
Card 1 Card 4 Card 2
Card 3 Card 6 Card 8
Card 5 Card 9
Card 7
Card 10
Card Sort Sheet Answer Key
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Identity Theft Action Steps
Place a fraud alert
Order a credit report
Create a theft report
Make phone calls
Send certified letters
Keep track of your actions
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Card Sort Sheet
Card 1Social Security and bank account numbers should not be shared publicly.
Card 6Cut up old cards.
Card 2ATM
Check your transactions.
Card 7Use strong passwords.
Card 3Safeguard your wallet.
Card 8Don’t write your PIN on
account slips.
Card 4Report suspicious billing
entries.
Card 9Draw a line through
blank spaces.
Card 5Be wise about Wi-Fi.
Card 10Check your credit report.
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Identity Theft OverviewDebit and CreditExtension ActivityStudent Worksheet, Page 66
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Prevent Credit or Debit Card Fraud • Don’t disclose your account number over the
phone unless you initiate the call.
• Guard your account information. Never leave it out in the open.
• Keep a record of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.
• Draw a line through blank spaces on charge or debit slips above the total so the amount can’t be changed.
• Don’t sign a blank charge or debit slip.
• Shred old financial documents and statements and save receipts to check against your monthly statements.
• Cut up old cards—cutting through the account number—before you throw them away.
• Open your monthly statements promptly and compare them to your receipts. Report suspicious entries as soon as possible.
• Carry only the cards you’ll need.
Prevent Debit Card Fraud
• Don’t carry your PIN in your wallet, purse, or pocket or write it on your ATM or debit card. Memorize it.
• Never write your PIN on a deposit slip, an envelope, or other papers.
• Check your ATM or debit card transactions; the funds for an item will be quickly transferred out of your checking or other deposit account.
• Check your account activity, especially if you bank online. Compare the current balance and transactions on your statement to those you’ve recorded. Report any discrepancies to your card issuer immediately.
Prevent Identity Theft1. It’s important to keep some things private. Don’t share Social Security numbers, street
addresses, phone numbers, and family financial information on social network sites or anywhere else. Bank account or credit card numbers are private and should not be shared.
2. Safeguard your pocketbook or wallet.
3. Limit what you carry. Take only the cards and identification you need.
4. Check credit card and bank statements carefully and often.
5. Use strong passwords with your laptop, credit, bank, and other accounts.
6. Be wise about Wi-Fi. Before you send personal information over your laptop or smartphone on a public wireless network in a coffee shop, library, airport, hotel, or other public place, see if your information will be protected by a secure wireless network.
7. Shred any documents with personal and financial information.
8. For more ways to protect your identity log on to https://www.consumer.ftc.gov/topics/privacy-identity-online-security.
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Budget + Overview .................................................................... 1
Introduction ................................................................ 3
Traditional Lesson PlansLesson One: Think Before You Spend ....................... 5
Lesson Two: What Is a Budget? .............................. 15
Lesson Three: Using a Budget ................................ 25
Extension ActivitiesSample Budgets .................. 43Students practice preparing budgets and making budgeting decisions. They work in teams, pairs, or individually.
Personal Budget .................. 47Through discussion and research, students recognize the need for responsible spending and the benefit of budgeting.
Paying for Postsecondary Education ............................. 53Students see that education after high school is an investment in their future. They explore options to pay for higher education.
Completing a Budget (separate download)Students continue to prepare for the JA Finance Park simulation by researching the price of goods and services and practicing their budgeting skills. They evaluate hypothetical life situations and prioritize budget items.
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Budget + Overview
Required Lessons Lesson One: Think
Before You Spend Lesson Two: What Is
a Budget?Lesson Three:
Using a BudgetTime
The required lessons can typically be completed in three 45-minute sessions.
ConceptsWants and needsGoal settingImpulse buyingBudgetsCategorizing
SkillsActive listening, critical thinking, self-knowledge, self-reflection, math computation, reading, working in pairs and teams, and interpreting and working with data
Extension Activities1. Sample Budgets
2. Personal Budget
3. Paying for Postsecondary Education
4. Completing a Budget
Students recognize the importance of spending wisely to achieve financial success and the value of creating and maintaining a budget.
ObjectivesStudents will be able to:
• Categorize spending by needs and wants.
• Compare teen and adult spending patterns.
• Determine which categories belong in a budget.
• Relate the need to save money to meet goals.
• Prepare a budget using goals and income.
PreparationDetermine whether you will use the traditional classroom presentation or the Project-Based Learning option. Also, review and organize the materials for the required lessons and extension activities you plan to teach.
Summary and AssessmentUse the lesson summaries at the end of each lesson to review concepts. To assess knowledge learned, administer the Budget + Assessment on Pages 37–38 (Answer Key is on Pages 39–40).
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neBudget + Introduction
A budget plays a dual role: It is a record of income and expenses. But it is also a plan for spending and saving. Helping students grasp the benefit of keeping a budget that leads to financial security is difficult, because they have seldom seen the practice in action.
“Following a budget and living within your means are essential to keeping your finances healthy,” said William Norton III, author of Norton Bankruptcy Law and Practice. Norton considers the credit card to be the largest contributor to people’s inability to stick to a budget—and often is the cause of bankruptcy. Teaching students to live within their means now and to save for the things they desire will help them accomplish their goals and create a sound financial future.
Without a road map to follow, though, young people can easily get lost. Learning how to read a budget, prepare one, and follow it arms teens with crucial skills. Learning to set goals and to budget the funds to achieve those goals gives students an appreciation for the need to spend and save wisely. It also lays the groundwork for financial success.
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Vocabulary
Expenditures Money that is spent on goods, services, and bills.
Impulse buying Making a purchase based on an immediate want or due to the pressure of advertising.
Long-term goals Plans that take a year or more to accomplish.
NeedsGoods or services that people cannot survive without, such as water, food, shelter, and clothing.
Short-term goals Plans that can be accomplished within three months to a year.
WantsGoods or services that make people more comfortable or content but which are not necessary for survival.
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Teacher Introduction
All of us, teens especially, have a hard time determining the difference between needs and wants. Needs are the goods and services that people cannot survive without, such as food, water, clothing, and shelter. Wants are goods and services that make people comfortable or content but that are not necessary to live. Most teens have their basic needs taken care of by their parents or caretakers, so they are more concerned with the things they want. In this lesson, students will grapple with the difference between needs and wants as they examine spending habits and categorize their expenditures —money spent on goods and services. The students also will learn about impulse buying and the tactics that sellers use to encourage them to spend money they did not plan on spending.
Setting goals can help students determine which things are most important to them. Short-term goals are objectives that can be accomplished in less than a year. Long-term goals are not usually realized for a year or more. Whether it is going to college, buying a car, or planning a trip to Europe, long-term goals keep students focused on the future. Goals might be monetary or personal—both should drive saving and spending. For example, buying a daily cup of coffee at a local shop might be a wasteful expenditure for one student. But for another who is trying to develop a friendship with the barista, it is an investment in a relationship. The goal of this lesson is to help students realize that the good financial habits they establish now can stay with them throughout their adult lives.
Materials o Student Workbooks
o Computers and Internet access
o JA Finance Park Budget + Slides 1–10
o Calculators
o Set of 3 × 5-inch cards
o Optional: Purchase List
Budget + Lesson One: Think Before You Spend
Lesson Time: 45 minutes
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Lesson Preparation• Read the Set the Stage talking points. • Review the Think Before You Spend: Lesson Steps.
• Decide whether you will copy the Purchase List on Page 10 and distribute one per group, or have the students list goods and services of their own on the 3 × 5 cards.
• Review the Student Worksheets Pages 11–13.
• Choose any optional activities that you think will benefit your students’ understanding.
• Know your current local and state sales tax rates.
Think Before You Spend: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
• How many of you have spent money this week?
• Have you ever saved money to spend on an item you wanted?
• Have you ever bought something that you didn’t know you wanted until you saw it?
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T Chart
Needs Wants
Use this T chart to categorize the suggestions made by your class or group.
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My Future Goals
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Impulse Buying
Advertising
Store layout
Pricing promotions
Product demonstrations
Under each appropriate heading, make a list of different tactics used by retailers that encourage impulse purchases.
T Chart Worksheet
My Future Goals
Worksheet
Impulse Buying
Worksheet
Purchase List
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Think Before You Spend: Lesson Steps | 35 Minutes1. Distribute up to five 3 x 5 cards to each student. Ask the students to
write down their past week’s expenditures (the purchases they have made), one item per card.
• They should record both the item purchased and the price paid (or an estimated amount).
• An optional Purchase List is available on Page 10 if you have students who do not want to reveal this information or who have not spent money recently.
• Students do not need to put their names on the expenditure cards.
2. Separate students into groups of four or five. Ask the groups to sort their collection of expenditure cards into two categories: needs and wants. Have the students remain in these groups for further instruction.
3. Present the introduction slide and Slides 1 and 2. Briefly define the terms on Slide 2. Have students highlight the terms on Page 67 in their Workbooks.
4. Present Slide 3. Discuss the definition of needs with your class. Ask for suggestions of some items that would satisfy needs.
Present Slide 4 and discuss wants. Use Slide 5 to lead a discussion about wants and needs. Encourage students to discuss the difference between needs and wants and explore the often fine line between them.
Making It RealHave students calculate the total amount they spent on the items they listed. Then, using local tax information, ask them to calculate how much sales tax was paid on
each of their purchases (or the total).
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5. Present Slide 6 and stop for student comments after each question.
• Remind students of earlier lessons about planning for the future. Explain that goals can be monetary—something you want to buy or need to pay for, like a car or college.
• Goals also can be personal, such as forming a band, meeting new people, or getting into a club or on a team. Often, personal goals have some cost attached, such as club fees, uniforms, or lessons.
6. As you present Slide 7, have students name some goals that could be accomplished in less than a year. These are short-term goals. Long-term goals are those that take at least a year to accomplish. Ask for examples of long-term goals. Record the suggestions on the board.
• Give students 3–5 minutes to complete the My Future Goals Worksheet on Page 69 in their Workbooks before sharing goals with their group. The suggestions on the board may help them with this task.
• Tell students that if they limit the things they spend their money on today, they will have more money to save to meet their future goals.
7. Read through Slides 8 and 9 and encourage class comments and discussion.
Optional ActivityTo check for understanding, have students turn to the T Chart Worksheet on Page 68 of their Workbooks. Randomly choose students to call out an item from their expenditure cards, which the group will then list on the T Chart in either the Wants or Needs column. Continue until you are satisfied that the students understand the difference between wants and needs.
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8. Present Slide 10 and read about the tactics used by stores to increase their sales. Ask students to turn to the Impulse Buying Worksheet on Page 70 in their Workbooks and list some different methods under each tactic heading that store managers and product retailers use to get people to buy things they don’t need.
9. Give students time to reorganize their 3 × 5 cards, sorting their expenditures once again into needs and wants.
• You may want to have them add a third category, impulse purchases.
• Have them discuss which of the purchases might have been made on impulse and how they might avoid those in the future.
• Note: Collect the note cards. You will need them in the next lesson.
Summary and Review | 5 Minutes
Examining spending patterns helped students see if they are spending their money wisely. They categorized their spending by needs and wants, reasoning abstractly and quantitatively. They then related how they could use their money to help them achieve their goals.
To wrap up this lesson, lead a short discussion using any or all of the following questions:
• Did anyone discover they are spending more than they thought on certain items?
• Did anyone already have a savings or spending plan?
• Before this lesson, had you ever thought about limiting your spending to have money for some goal?
• Now that you know you can make your money work to meet your goals, what might you do differently?
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Use this list to identify three or four items you have purchased recently or would like to purchase. Record one item and its price on each 3 × 5 card provided by your teacher.
Purchase List
Strawberry smoothie $4.69 Car wash $7.50
Shampoo $7.89 Library fines $5.00
Hair shine $12.00 Book for English class $9.99
Monthly dues at the gym $24.00 Cheerleader outfit $169.00
Cell phone bill $30.00 Football jersey $40.00
Movie and popcorn $17.00 New novel $12.99
Field trip fees $12.50 Nail polish $7.50
Take-out pizza $8.49 Lunch at the snack bar $4.85
Gym socks $6.99 Large chai latte $5.40
Music download $1.29 Monthly bus pass $15.00
Chocolate shake and fries $6.00 Twinkle Toe shoes $24.99
Ticket to home game $10.00 Nachos at the game $5.00
Mall parking $4.00 Haircut $18.00
5K registration $20.00 New bike lock $12.00
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T ChartBudget + Lesson OneStudent Worksheet, Page 68
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T Chart
Needs Wants
Use this T chart to categorize the suggestions made by your class or group.
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My Future GoalsBudget + Lesson OneStudent Worksheet, Page 69
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My Future Goals
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Impulse BuyingBudget + Lesson OneStudent Worksheet, Page 70
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Impulse Buying
Advertising
Store layout
Pricing promotions
Product demonstrations
Under each appropriate heading, make a list of different tactics used by retailers that encourage impulse purchases.
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Vocabulary
BudgetA record of income and spending and a plan for managing money.
Discretionary incomeMoney available to spend on goods and services that are not essential.
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Teacher Introduction
Now that students are aware of the need to spend wisely, they are ready to learn about using a budget—a record of income and expenses and a plan for managing money. They will establish categories for a budget that will allow them to track their spending, and they will practice adapting a budget to their own needs.
The first step in creating a budget is to determine how much money is available. In a monthly budget, this is accomplished by figuring net monthly income (NMI) and adding it to any other sources of income. The next critical step is to define spending categories and priorities. Money is first allocated to a savings account and to essential goods and services, such as housing, food, and clothing. The remaining amount can then be apportioned to categories of goods and services that are desired but not essential, such as furniture, personal grooming, and entertainment.
Discretionary income is the money available after monthly bills are paid and basic living needs are met. Things that are desirable, such as television, trendy clothes, and snack foods, can be purchased with these funds. If there is money remaining once a budget has been planned, that can be added to current categories, added to savings, or used to make a special purchase.
The primary rational for a budget is to track spending, prevent overspending and relying on credit, and encourage saving for future goals. Students can be introduced to the process of budgeting with an optional exercise that shows them how to budget their time. Time is a scarce resource for everyone. As teens enter the demanding academic arenas of high school and college, they will have to learn to manage their time efficiently. Managing their time, students will learn, is much like managing their money.
Materials
o Student Workbooks
o 3 × 5-inch cards from previous lesson
o Computer
o JA Finance Park Budget + Slides 11–16
o Optional: Sticky notes or scratch paper
Budget + Lesson Two: What Is a Budget?
Lesson Time: 45 minutes
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Lesson Preparation
• Review the Set the Stage talking points.
• Review the What Is a Budget?: Lesson Steps.
• Review the Student Worksheets on Pages 21–23.
• Review the 3 × 5 cards from the previous lesson. Divide them so you can distribute to groups of four to five students each. Be sure that each group will have items representing various categories of expenses (not all food or clothing, for example). You may want to create more expenditure cards to fill out some of the categories. As an alternative, copy and distribute the Purchase List (from Lesson One) on Page 10.
What Is a Budget?: Lesson Begins
Set the Stage | 5 MinutesSpend a few minutes discussing the following questions with the students.
• What does it mean when someone says they are living paycheck to paycheck?
• Some 69 percent of Americans don’t have enough money saved to pay their bills for six months should they lose their job, according to a 2017 survey by financial services company Bankrate. In addition, 24 percent have no cash savings in case of an emergency. If these people lost their jobs, what are some of the possible consequences?
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Budget Categories
Complete the inner circles as you brainstorm and discuss typical budget categories. Fill in the outer circles with items that belong in the categories. Two categories have been completed for you.
Family Household Expenses
Transportation
Clothing
Gas, bus fare, parking, car
paymentShirts, pants,
shoes
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Caleb’s Budget
Caleb is a junior at JA Enterprise High School and plays rugby on the school team. He has a part-time job at a local fast-food restaurant and works 20 hours a week for $7.60 an hour. His gross monthly income is $608.00, and his take-home pay is $501.64. In his spare time, Caleb walks a dog belonging to an elderly neighbor. He earns an additional $40 per month for that chore.
Caleb’s parents gave him a used car, and he pays his own insurance, which is $110 a month. His gas and maintenance expenses usually run $65 a month. He also has a cell phone and pays his parents $30 each month for his share of the family plan.
In three weeks, Caleb plans to take a day trip to Six Flags amusement park. His admission will cost $50, and he plans to have $35 for meals and another $50 for incidentals.
Caleb needs to start saving for Christmas, which is in four months, and he usually spends around $200 on gifts for his family and friends. He also would like to buy a new $80 e-reader this month.
Though Caleb’s parents will help pay for his college tuition, he knows that in two years, he will have to pay for his books and earn his own spending money. He is estimating that each semester, he will spend $300 on books and $600 on personal needs.
Answer the following questions below about Caleb’s situation and complete his monthly budget.
1. What is Caleb’s net monthly income? ____________________________________________
2. How much are Caleb’s regular monthly expenses? __________________________________
3. How much does Caleb have left over after he pays his regular monthly expenses? ___________________________ This is his discretionary fund.
4. What are Caleb’s short-term goals? _____________________________________________
5. What is his long-term (longer than one year) goal? __________________________________
6. If the Six Flags trip will cost $135, how much money will he have left over this month? _______________________________
7. How much money does Caleb need to save every month for the next four months if he wants to have enough money to do his Christmas shopping? _______________________________
8. Complete Caleb’s monthly budgetNet Monthly Income $ ____________________Transportation: Insurance $ ____________________Gas and Repairs $ ____________________Cell Phone $ ____________________Saving: Christmas Expense $ ____________________e-Reader $ ____________________Total Expenses $ ____________________Balance Remaining (Discretionary Income) $ ____________________
9. How much will Caleb have left over this month if he goes to Six Flags? $_________________10. How much do you think Caleb will need to put into savings every month to reach his long-term goal? $_________________
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Budget Your Time
My short-term goals:
My long-term goals:
Think about how you spend the hours remaining after school. Create categories for the way you spend your after-school hours and write them in the table. In the “Hours” column, record how much time you spend on the activities, rounding to the nearest hour. Color-code the categories (following the example of school hours) and transfer the data to the pie chart, where each slice of the pie represents one hour. Use a different color for each category of time. Be sure your time does not exceed your net daily hours. Time left over after budgeting for daily activities can be used at your discretion.
Key Activity Hours
School 7
Net Daily Hours 24
Budget Categories Worksheet
Caleb’s Budget
Worksheet
Budget Your Time
Worksheet
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oWhat Is a Budget?: Lesson Steps | 35 Minutes
1. Ask for a few volunteers to share their goals from Lesson One. Explain that to achieve goals, people need to invest in them.
2. Discuss steps that can be taken to fulfill goals. For instance, if your goal is to form a band, you need to practice your instrument, write some music, and recruit other band members. Ask for other ideas.
3. Emphasize that a budget is an important tool to track saving and spending so a person can reach a goal. A budget is a record of income and spending and a plan for managing money. Budgets have categories into which spending can be recorded or estimated to help manage money.
4. Present Slides 11 and 12 and lead students in a discussion of what they think a budget is and what it might be used for. Have students highlight the terms on Page 71 of their Workbooks.
5. Separate the class into groups of four to five students each. Distribute the 3 × 5 cards, giving each group an equal number of cards, or give each group the Purchase List (from Lesson One) on Page 10.
6. Instruct the students to sort the cards (or items from the list) into categories based on similarities. They should create a title or heading for each group of items (sticky notes or scratch paper may be helpful for this). For example, food might be one category and hygiene items another. Answers will be somewhat subjective.
7. Present Slide 13 and have the students turn to the Budget Categories Worksheet on Page 72 in their Workbooks. Tell students they should now consider expense categories for which a typical family may need to budget.
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8. Lead the students through the first example, filling in a category heading in the inner circle and having them suggest detailed items for that category in the adjacent outer circle.
• Additional categories may include: savings, housing, utilities, food (at home and away from home), health care, entertainment, philanthropy, home and car insurance, education, appliances and furnishings, child care, maintenance and repair (home and auto), and miscellaneous.
9. Instruct students to finish the page, working in their groups or individually.
10. Share with students that although the family budget presented on Slide 14 is “average,” it may not be typical. The numbers presented there represent national averages and are based on information from very different situations, such as high income families, single–income families, and families with many children or only one child.
• Online Option: Have students go online to research the national average household income. The Bureau of Labor Statistics (www.bls.gov) is an excellent resource.
11. Tell the students that because everyone’s life situation is different, budgets are going to be different. One person may be single with no children, while someone else may be a single parent with three children, and another may be married with one child.
• Most families have expenses in the categories shown on the pie chart but not necessarily at the same percentage of spending and perhaps not every month.
• Companies, organizations, and governments also keep their finances in order by doing detailed budgets.
12. Present slide 15 and go over the steps for creating a budget. Discuss the following points:
• Ask for student volunteers to remind the class how NMI is calculated.
• Ask for examples of expense categories (see step 8 for a detailed list).
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o• Explain that a dollar amount will be given to each of the categories in the budget.
• Define discretionary income as the amount available after monthly bills are paid and basic living needs are met.
13. Tell students that when preparing a budget, it is important to consider needs before wants. The first categories that should be budgeted are those that provide for needs such as housing and groceries. Also plan to “Pay Yourself First” (PYF), which is a concept that calls for automatically saving a portion of income for future use.
14. Have students turn to Page 73 in their Workbooks. Individually or in pairs, have students read the case study and answer the questions about Caleb’s budget. (Answer Key on Page 22.) Or, turn to Page 20 for an optional activity that teaches students to budget their time.
Making It RealAmerica’s national median household income* was estimated at $57,652 in the latest
five-year survey. But the median household income varies by state. For example, in Alabama the median household income is $46,472. In California, it is $67,169,
and in Wyoming it is $60,938. Have students research average household income for their state, region, or metropolitan area.
How does the average in your location compare to the national average? Remind students that incomes for the same occupation can vary widely.
*Source: U.S. Census Bureau, 2013–17 American Community Survey 5-Year Estimates
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Summary and Review | 5 Minutes
Budgets come in many types and are used by a variety of people. Ask students the following questions:
• What are the main purposes of a budget? (Answer: track spending, prevent overspending, allow for saving to achieve goals)
• What amount of money should be used to calculate a budget? (Answer: net monthly income, not gross income)
• When you have allotted money for all your bills and needs and paid yourself first by putting money aside, you might have a little money left over. What is this money called? (Answer: discretionary income)
• What can you do with discretionary income? (Possible answers: go on a date, buy something you want, contribute to a charity)
Optional ActivityIf your students seem overwhelmed by the financial budget discussion, consider this activity as an alternative:
Share with students that you want to show them how budgeting works with something other than money. Time is another thing that can be budgeted. Everyone has 24 hours in the day, and depending on how you use that time, you can accomplish a lot or a little. Time, like money, also can be used to achieve goals.
Present Slide 16 and ask what kind of an expense school represents. At their age, school is like taxes for an adult—mandatory. Those seven hours must be deducted from the total before time can be budgeted for other things. The remaining hours are the net hours, which is akin to the NMI. How many hours remain? (Answer: 17) What kinds of activities fill up the remaining hours? (Answer: Sleep, chores, etc.) Remember to budget the hours needed for necessary tasks first (homework, sports practice, cooking, and eating).
After these time requirements are met, how would we define the remaining hours that are available for activities of your choice? (Answer: discretionary) Have students turn to the Budget Your Time Worksheet, Page 74. They will list additional time categories and note the time allotted for each on the pie chart and the budget chart. Categories might include work, eating, personal care, sports, or club activities. Any free time would also be discretionary hours in their budget. These are hours they can use at their discretion.
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oBudget CategoriesBudget +Lesson TwoStudent Worksheet, Page 72
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Budget Categories
Complete the inner circles as you brainstorm and discuss typical budget categories. Fill in the outer circles with items that belong in the categories. Two categories have been completed for you.
Family Household Expenses
Transportation
Clothing
Gas, bus fare, parking, car
paymentShirts, pants,
shoes
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Caleb’s BudgetBudget +Lesson TwoStudent Worksheet, Page 73 Answer Key
73JA Finance Park®
Caleb’s Budget
Caleb is a junior at JA Enterprise High School and plays rugby on the school team. He has a part-time job at a local fast-food restaurant and works 20 hours a week for $7.60 an hour. His gross monthly income is $608.00, and his take-home pay is $501.64. In his spare time, Caleb walks a dog belonging to an elderly neighbor. He earns an additional $40 per month for that chore.
Caleb’s parents gave him a used car, and he pays his own insurance, which is $110 a month. His gas and maintenance expenses usually run $65 a month. He also has a cell phone and pays his parents $30 each month for his share of the family plan.
In three weeks, Caleb plans to take a day trip to Six Flags amusement park. His admission will cost $50, and he plans to have $35 for meals and another $50 for incidentals.
Caleb needs to start saving for Christmas, which is in four months, and he usually spends around $200 on gifts for his family and friends. He also would like to buy a new $80 e-reader this month.
Though Caleb’s parents will help pay for his college tuition, he knows that in two years, he will have to pay for his books and earn his own spending money. He is estimating that each semester, he will spend $300 on books and $600 on personal needs.
Answer the following questions below about Caleb’s situation and complete his monthly budget.
1. What is Caleb’s net monthly income? ____________________________________________
2. How much are Caleb’s regular monthly expenses? __________________________________
3. How much does Caleb have left over after he pays his regular monthly expenses? ___________________________ This is his discretionary fund.
4. What are Caleb’s short-term goals? _____________________________________________
5. What is his long-term (longer than one year) goal? __________________________________
6. If the Six Flags trip will cost $135, how much money will he have left over this month? _______________________________
7. How much money does Caleb need to save every month for the next four months if he wants to have enough money to do his Christmas shopping? _______________________________
8. Complete Caleb’s monthly budgetNet Monthly Income $ ____________________Transportation: Insurance $ ____________________Gas and Repairs $ ____________________Cell Phone $ ____________________Saving: Christmas Expense $ ____________________e-Reader $ ____________________Total Expenses $ ____________________Balance Remaining (Discretionary Income) $ ____________________
9. How much will Caleb have left over this month if he goes to Six Flags? $_________________10. How much do you think Caleb will need to put into savings every month to reach his long-term goal? $_________________
$541.64$205.00
$336.64Buying an e-reader, a trip to Six Flags, and saving for
ChristmasSaving for college
$201.64
$50.00
$541.64$110.00
$65.00$30.00$50.00
$335.00$206.64
$71.64
$80.00
Answers will vary.
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oBudget Your TimeWhat Is a Budget?Lesson TwoStudent Worksheet, Page 74
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Budget Your Time
My short-term goals:
My long-term goals:
Think about how you spend the hours remaining after school. Create categories for the way you spend your after-school hours and write them in the table. In the “Hours” column, record how much time you spend on the activities, rounding to the nearest hour. Color-code the categories (following the example of school hours) and transfer the data to the pie chart, where each slice of the pie represents one hour. Use a different color for each category of time. Be sure your time does not exceed your net daily hours. Time left over after budgeting for daily activities can be used at your discretion.
Key Activity Hours
School 7
Net Daily Hours 24
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Vocabulary
Opportunity costThe next best alternative given up when making a financial choice.
ScarcityThe economic condition of limited resources that prevents people from having everything they want.
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Teacher Introduction
We all make choices every day. In previous lessons, students learned that choices have costs and benefits. Those costs and benefits must be analyzed as students decide whether the advantages of a particular action are likely to outweigh its disadvantages. People are essentially seeking to understand the opportunity cost of their decision, the next best alternative given up when a choice is made. Learning to make those choices wisely will go a long way to securing a sound financial future.
In this lesson, students create a budget to demonstrate how the concept of scarcity forces them to make choices. Scarcity, the economic condition in which people can’t have everything they want because of limited resources, is the reason we must make those decisions. Although scarcity can involve limited time or other resources, this lesson focuses on how students have seemingly unlimited needs and wants but only a limited amount of money.
Materials
o Student Workbooks
o Computers and Internet access
o JA Finance Park Budget + Slides 17–19
o Summer Job Classifieds, Page 30
o Goals Cards, Pages 31–32
o High School Life Scenarios, Pages 33–35
o Scissors
Lesson Preparation
• Optional: Make copies of the Budget + Assessment, Pages 37–38, one for each student. They will take the assessment at the conclusion of this lesson.
• Review the Set the Stage talking points.
• Review the Using a Budget: Lesson Steps.
Budget + Lesson Three: Using a Budget
Lesson Time: 45 minutes
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• Choose which scenarios might be best suited for your class: The Summer Job Classifieds, Page 30, and Goals Cards, Pages 31–32, relate more to middle school students; the High School Life Scenarios, Pages 33–35, are more suited to high school students.
• Make a copy of either the Goals Cards or the High School Life Scenarios for each student, and cut apart as indicated. You can post or display the classified ads or copy one for each row or table.
• Review the Student Worksheet on Page 36.
Using a Budget: Lesson Begins
Set the Stage | 5 Minutes
Spend a few minutes discussing the following questions with the students.
• Do you have everything you want?
• Do you think anyone has everything he or she wants?
• Have you had to make any hard choices because you can’t have everything you want?
• How would life be different if you had all the time and money you needed? Likely, you would not have to keep close track of what you spend or save to reach your goals. Until that unlikely day, budgeting is a good tool to use.
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Summer Job ClassifiedsLifeguard Supervise swimmers, clean pool area, and teach lessons. $9 an hour, four-hour shifts, four days a week.
Dog Walker Dog E Daycare seeks energetic animal lovers to walk, groom, and feed dogs for our clients. $25 weekly, plus commission for signing on new clients.
Babysitter wanted Take care of two children in our home, 7 a.m.–2 p.m., 3 days a week. $25 day.
Sandwich Shop Employee Prepare and serve sandwiches, cashier, and clean. $8.50 an hour, shifts negotiable, usually six hours, three to four days a week.
Grocery Store Bagger Bag groceries at Quickie Mart. $8 an hour, three-hour shifts, five days a week.
Computer Store Stocker Stock shelves and assists customers. $300 per month.
Barista Prepare and serve coffee and other beverages. $7.25 an hour, 20 hours a week.
Camp Counselor Mentor younger children and help them gain outdoor skills. Must reside at camp for the summer. $335 per week. Meals deducted from pay—$40 week.
Math Tutor Work with elementary school students to improve their math skills. $15 an hour, four hours a week.
Pool Maintenance Establish your own business cleaning, filling, and maintaining neighborhood pools. Charge $40 a month per client. You have four clients.
Dishwasher Learn valuable life and team-building skills working in a restaurant. $7.50 an hour, four hours a day, four days a week.
Golf Caddy Carry golf bags for players; requires physical endurance and an understanding of the game. $10 an hour, six hours a week.
Lawn Care Work on your own time using your own equipment. You will receive up to four clients weekly and receive $12 per lawn mowed.
Sell Vegetables Load and unload truck and sell produce at the local farmers’ market. $20 each market, Wednesdays and Saturdays.
Farmworker Help with growing, harvesting, and weeding crops; also feed and care for animals. $10 per hour, 20 hours a week.
Housekeeping Light housekeeping and simple meal preparation for elderly lady. $80 per week, two hours a day, weekdays.
Bicycle Courier Transport documents and small packages within city limits; must have bike. $100 per week.
Office Intern Filing and other office work for research chemist. $50 per week.
Office Intern Cleaning, filing, and some reception work for architect. $65 per week.
Computer Tutor Senior center looking to hire someone with sharp computer skills and lots of patience to teach a weekly computer class. $250 month.
Summer Job Classifieds
High School Life Scenarios
Scenario OneJamal is a junior at a suburban high school and is active in several sports. His dad bought a new truck recently and gave his old one to Jamal. His parents cover the insurance cost, but Jamal has to pay for his own gasoline.
He typically fills his 17-gallon gas tank once a month for his drive to school, work, and sports practices. He works 20 hours a week year-round at a local grocery store and makes $8.50 per hour. In addition to his gas, he is responsible for his portion of the family cell phone bill ($35 a month), as well as his own clothing and entertainment expenses.
Jamal plans to attend community college after graduation, so he will live at home while going to school. His parents will pay tuition, but he will be responsible for his books and other expenses.
Scenario TwoAva is a sophomore at a metro-area high school and rides the bus to school or gets a ride from her older brother. Her parents shared the cost of a car with her brother, and they plan to do the same for Ava, so she is saving to buy a used car before she graduates.
During the summer, Ava works 32 hours each week as a hostess in a local restaurant; she is paid $7.50 per hour. Ava also babysits on the weekends and typically earns $50. She is responsible for paying for her cell phone plan, which is $80 a month.
Ava’s goal is to earn a degree in landscape architecture, and she wants to attend an out-of-state college. Her parents will cover the tuition cost, but she must pay for room and board. She estimates her financial responsibility will be about $9,000 a year.
JA Finance Park®High School Life Scenarios
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Life Scenario Monthly Budget
Don’t forget to deduct payroll taxes! Assume the
deductions for federal, state, and FICA (Social Security and Medicare) total 18 percent of
gross income.
Are you paying yourself first? Consider saving at
least 10 percent of income toward your goals.
What other expense categories may be needed to reflect a
realistic budget? Are there items in the budget that are wants and could be cut or reduced to help
you meet your goals?
Income Monthly IncomeJob
Allowance
Other
Total Income
NMI
Expenses Monthly BudgetSavings (Pay Yourself First)
Short-term goal
Long-term goal
Other
Transportation
Car payment
Gasoline
Maintenance
Insurance
Cell phone
Food
Clothing
Entertainment
Gifts and giving
NMI
Total Expenses
Balance
Fill in the Monthly Budget.
Life Scenario Monthly Budget
Worksheet
High School Life Scenarios
Scenario OneJamal is a junior at a suburban high school and is active in several sports. His dad bought a new truck recently and gave his old one to Jamal. His parents cover the insurance cost, but Jamal has to pay for his own gasoline.
He typically fills his 17-gallon gas tank once a month for his drive to school, work, and sports practices. He works 20 hours a week year-round at a local grocery store and makes $8.50 per hour. In addition to his gas, he is responsible for his portion of the family cell phone bill ($35 a month), as well as his own clothing and entertainment expenses.
Jamal plans to attend community college after graduation, so he will live at home while going to school. His parents will pay tuition, but he will be responsible for his books and other expenses.
Scenario TwoAva is a sophomore at a metro-area high school and rides the bus to school or gets a ride from her older brother. Her parents shared the cost of a car with her brother, and they plan to do the same for Ava, so she is saving to buy a used car before she graduates.
During the summer, Ava works 32 hours each week as a hostess in a local restaurant; she is paid $7.50 per hour. Ava also babysits on the weekends and typically earns $50. She is responsible for paying for her cell phone plan, which is $80 a month.
Ava’s goal is to earn a degree in landscape architecture, and she wants to attend an out-of-state college. Her parents will cover the tuition cost, but she must pay for room and board. She estimates her financial responsibility will be about $9,000 a year.
JA Finance Park®
High School Life Scenarios
Scenario OneJamal is a junior at a suburban high school and is active in several sports. His dad bought a new truck recently and gave his old one to Jamal. His parents cover the insurance cost, but Jamal has to pay for his own gasoline.
He typically fills his 17-gallon gas tank once a month for his drive to school, work, and sports practices. He works 20 hours a week year-round at a local grocery store and makes $8.50 per hour. In addition to his gas, he is responsible for his portion of the family cell phone bill ($35 a month), as well as his own clothing and entertainment expenses.
Jamal plans to attend community college after graduation, so he will live at home while going to school. His parents will pay tuition, but he will be responsible for his books and other expenses.
Scenario TwoAva is a sophomore at a metro-area high school and rides the bus to school or gets a ride from her older brother. Her parents shared the cost of a car with her brother, and they plan to do the same for Ava, so she is saving to buy a used car before she graduates.
During the summer, Ava works 32 hours each week as a hostess in a local restaurant; she is paid $7.50 per hour. Ava also babysits on the weekends and typically earns $50. She is responsible for paying for her cell phone plan, which is $80 a month.
Ava’s goal is to earn a degree in landscape architecture, and she wants to attend an out-of-state college. Her parents will cover the tuition cost, but she must pay for room and board. She estimates her financial responsibility will be about $9,000 a year.
JA Finance Park®
Goals CardsCopy, separate, and distribute goals, one per student, for the summer job budget activity.
JA Finance Park®
Short-term goal: New clothes for the dance, $100
Long-term goal: Dance lessons, $500
Short-term goal:Replace mom’s blender, $65
Long-term goal: Summer camp, $550
Short-term goal:Buy a yearbook, $32
Long-term goal: Saving to go to Stanford University,
$200 monthly
Short-term goal:Buy a yearbook, $32
Long-term goal:Saving for college, $125 monthly
Short-term goal:Take a babysitting and first aid class, $200
Long-term goal:Open a child care business; initial start-up
costs, $1,500
Short-term goal:New shoes, $75
Long-term goal:New cell phone, $700
Short-term goal:Buy seeds, $35
Long-term goal:Help build a community garden; start-up
costs, $1,200
Short-term goal:Driving lessons, $500
Long-term goal:Saving for a car, $200 monthly
Short-term goal:New pair of basketball shoes, $129
Long-term goal:Basketball camp, $550
Short-term goal:Trip to theme park, $60
Long-term goal:Saving for college, $100 monthly
Short-term goal:Buy a camera, $69
Long-term goal:Travel to New York City, $100 monthly
Short-term goal:New cell phone, $700
Long-term goal:Payment plan for phone, $65 monthly
Goals Cards
Goals CardsCopy, separate, and distribute goals, one per student, for the summer job budget activity.
JA Finance Park®
Short-term goal: New clothes for the dance, $100
Long-term goal: Dance lessons, $500
Short-term goal:Replace mom’s blender, $65
Long-term goal: Summer camp, $550
Short-term goal:Buy a yearbook, $32
Long-term goal: Saving to go to Stanford University,
$200 monthly
Short-term goal:Buy a yearbook, $32
Long-term goal:Saving for college, $125 monthly
Short-term goal:Take a babysitting and first aid class, $200
Long-term goal:Open a child care business; initial start-up
costs, $1,500
Short-term goal:New shoes, $75
Long-term goal:New cell phone, $700
Short-term goal:Buy seeds, $35
Long-term goal:Help build a community garden; start-up
costs, $1,200
Short-term goal:Driving lessons, $500
Long-term goal:Saving for a car, $200 monthly
Short-term goal:New pair of basketball shoes, $129
Long-term goal:Basketball camp, $550
Short-term goal:Trip to theme park, $60
Long-term goal:Saving for college, $100 monthly
Short-term goal:Buy a camera, $69
Long-term goal:Travel to New York City, $100 monthly
Short-term goal:New cell phone, $700
Long-term goal:Payment plan for phone, $65 monthly
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1. Present vocabulary Slide 17. Have students highlight the terms on Page 75. Scarcity is the condition of not having everything you want because resources are limited. Opportunity cost is the next best alternative given up when making a financial choice. If scarcity did not exist, there would be no need to make choices or create budgets. But because we cannot have everything we want, using a budget helps people pay their bills, save to meet future goals, and buy the things they want. Present Slide 18. Point out the different expense categories. Ask students which expenses show this person is working toward a goal? (Possible answers: PYF, rock climbing gear, gym fees, trip to Joshua Tree)
2. Without a budget to follow, it is easy to spend more money than you should on things you don’t need. Present Slide 19.
a) Discuss how the two pie charts are similar. (Answer: Both show 100 percent of income being used; both show expense categories.) How are they different? (Answer: The adult chart has fewer, bigger sections. The teen chart has more categories; the teen chart has a large slice of money spent on clothing while that slice is small for adults.)
b) Which categories are included in the adult budget that are not in the student spending chart? (Answer: housing, transportation, medical/dental, philanthropy, insurance)
c) Which categories are in the student spending pie chart that are not in the family budget? (Answer: video, music and movies, electronics, concerts)
d) Looking at these charts, what would you say is the biggest difference between teen spending and adult spending? (Answers: Teens spend more on goods that are “wants”; adults spend more on goods and services that fill needs.)
3. Announce that to help them prepare for the JA Finance Park experience and for their future, students will learn how to create a budget.
• Distribute the Goals Cards, one per student. (Or, to make the exercise more relevant, have them use their own goals from previous lessons.)
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• Have students turn to the Life Scenario Monthly Budget Worksheet on Page 76 in their Workbooks and write down their pay and their short- and long-term goals. In most cases, they will have to decide how much to save toward their goals.
4. Project or display Summer Job Classifieds, Page 30 (or distribute copies you have made ahead of time), and Goals Cards, Pages 31–32. If you will be using the High School Life Scenarios, turn to Pages 33–35 and follow the lesson steps for the Optional Activity for High School Students.
• Have students choose a summer job. Some may choose the same job.
5. Direct students to fill in their own spending categories on the Life Scenario Monthly Budget Worksheet. (If a student lacks ideas here, suggest things such as personal care, food, entertainment, and clothing. Or, show Slide 19 again to provide some ideas.)
• The first categories that should be budgeted are those that have the highest priority.
• Distribute funds to needs and obligations first (including paying yourself first). Any money remaining is discretionary income.
• This is a monthly budget, so if income is stated by hour or week, monthly income must be calculated using that information.
• The money budgeted must not exceed the NMI.
• Every category will not necessarily be filled in with an amount. In many cases, a choice must be made.
Optional Activity Think-Pair-Share
Raven, a high school freshman, is looking forward to a three-day field trip to the financial district in New York City. The cost for the round-trip bus ride and hotel in Times Square is $825. Raven’s parents will pay the cost of transportation and hotel, but she will have to earn the money for meals, shopping, and a Broadway show. Raven has to make a decision about her needs and wants. She does not have any savings and has only three months before the trip. Raven needs your advice to help her decide.
• How can she earn the money?
• How can she save on food expenses?
• How much should she consider for shopping?
• Are there other expenses Raven should consider?
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Summary and Review | 5 Minutes
Debrief the budget activity with your students by asking the following questions about the life scenarios:
• Was it difficult to meet the stated life goals and still have enough income for the entertainment, clothing, and food you wanted to buy?
• Do you have ideas for ways to create a better spending plan for your scenario?
• Are you willing to create and follow a budget? (Encourage students to try it for at least a month or two.)
• Have you ever had a conversation with your parents or guardians about their budgets?
• What if you have no real goals? Do you still need to save? (Answer: Yes! You might have goals someday.)
Optional: Distribute the Budget + Assessment sheets and have students complete them. The Answer Key is on Pages 39–40.
Optional Activity for High School Students
1. Randomly assign one High School Life Scenario card to each student or group. Inform students that during this lesson, they are the student described in the scenario. Each scenario describes the current income of the student and provides some information about future goals the student has. It will be up to each individual student (or small group) to develop a budget for the scenario.
2. Direct students to turn to the Life Scenario Monthly Budget Worksheet on Page 76 in their Workbooks. They will prepare a monthly budget based on the financial information provided on the life scenario cards. If specific cost estimates for some line items are not specified, students can use their best guess. Not all budget line items listed on the worksheet will be used for all life scenarios. There is space for adding extra budget categories if students wish.
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Summer Job ClassifiedsLifeguard Supervise swimmers, clean pool area, and teach lessons. $9 an hour, four-hour shifts, four days a week.
Dog Walker Dog E Daycare seeks energetic animal lovers to walk, groom, and feed dogs for our clients. $25 weekly, plus commission for signing on new clients.
Babysitter wanted Take care of two children in our home, 7 a.m.–2 p.m., 3 days a week. $25 day.
Sandwich Shop Employee Prepare and serve sandwiches, cashier, and clean. $8.50 an hour, shifts negotiable, usually six hours, three to four days a week.
Grocery Store Bagger Bag groceries at Quickie Mart. $8 an hour, three-hour shifts, five days a week.
Computer Store Stocker Stock shelves and assists customers. $300 per month.
Barista Prepare and serve coffee and other beverages. $7.25 an hour, 20 hours a week.
Camp Counselor Mentor younger children and help them gain outdoor skills. Must reside at camp for the summer. $335 per week. Meals deducted from pay—$40 week.
Math Tutor Work with elementary school students to improve their math skills. $15 an hour, four hours a week.
Pool Maintenance Establish your own business cleaning, filling, and maintaining neighborhood pools. Charge $40 a month per client. You have four clients.
Dishwasher Learn valuable life and team-building skills working in a restaurant. $7.50 an hour, four hours a day, four days a week.
Golf Caddy Carry golf bags for players; requires physical endurance and an understanding of the game. $10 an hour, six hours a week.
Lawn Care Work on your own time using your own equipment. You will receive up to four clients weekly and receive $12 per lawn mowed.
Sell Vegetables Load and unload truck and sell produce at the local farmers’ market. $20 each market, Wednesdays and Saturdays.
Farmworker Help with growing, harvesting, and weeding crops; also feed and care for animals. $10 per hour, 20 hours a week.
Housekeeping Light housekeeping and simple meal preparation for elderly lady. $80 per week, two hours a day, weekdays.
Bicycle Courier Transport documents and small packages within city limits; must have bike. $100 per week.
Office Intern Filing and other office work for research chemist. $50 per week.
Office Intern Cleaning, filing, and some reception work for architect. $65 per week.
Computer Tutor Senior center looking to hire someone with sharp computer skills and lots of patience to teach a weekly computer class. $250 month.
Goals CardsCopy, separate, and distribute goals, one per student, for the summer job budget activity.
JA Finance Park®
Short-term goal: New clothes for the dance, $100
Long-term goal: Dance lessons, $500
Short-term goal:Replace mom’s blender, $65
Long-term goal: Summer camp, $550
Short-term goal:Buy a yearbook, $32
Long-term goal: Saving to go to Stanford University,
$200 monthly
Short-term goal:Buy a yearbook, $32
Long-term goal:Saving for college, $125 monthly
Short-term goal:Take a babysitting and first aid class, $200
Long-term goal:Open a child care business; initial start-up
costs, $1,500
Short-term goal:New shoes, $75
Long-term goal:New cell phone, $700
Short-term goal:Buy seeds, $35
Long-term goal:Help build a community garden; start-up
costs, $1,200
Short-term goal:Driving lessons, $500
Long-term goal:Saving for a car, $200 monthly
Short-term goal:New pair of basketball shoes, $129
Long-term goal:Basketball camp, $550
Short-term goal:Trip to theme park, $60
Long-term goal:Saving for college, $100 monthly
Short-term goal:Buy a camera, $69
Long-term goal:Travel to New York City, $100 monthly
Short-term goal:New cell phone, $700
Long-term goal:Payment plan for phone, $65 monthly
JA Finance Park®
Goals CardsCopy, separate, and distribute goals, one per student, for the summer job budget activity.
Short-term goal:Take a watercolor class, $125
Long-term goal:Saving to paint in Italy, $60 monthly
Short-term goal:Buy concert tickets, $60
Long-term goal:Buy new guitar, $1,800
Short-term goal:Join a gym, $40 monthly
Long-term goal:Make the football team; team fees, $300
Short-term goal:Repay loan from dad, $55 remaining
Long-term goal:Save for college, $60 monthly
Short-term goal:Attend woodworking class, $135
Long-term goal:Build shelves for community center, $500
Short-term goal:Visit Washington, D.C., $600
Long-term goal:Support a child through a charitable
organization, $30 monthly
Short-term goal:Go on a date, buy concert tickets, $70
Long-term goal:Save to hire a limo for the prom, $50 monthly
Short-term goal:Buy an e-reader, $269
Long-term goal:Participate in student-exchange program to
Sweden, $15,200
Short-term goal:Adopt a puppy from the shelter, $125
Long-term goal:Save for pet food and vet expenses,
$950 year
Short-term goal:Paint bedroom, $35
Long-term goal:Remodel bedroom with new furniture, $1,200
Short-term goal:Learn to sew; class costs $35
Long-term goal:Provide 10 baby blankets to local children’s hospital; cost for materials, $20 per blanket
Short-term goal:Run a 10K; entry fee, $30
Long-term goal:Buy new laptop, $1,199
High School Life Scenarios
Scenario OneJamal is a junior at a suburban high school and is active in several sports. His dad bought a new truck recently and gave his old one to Jamal. His parents cover the insurance cost, but Jamal has to pay for his own gasoline.
He typically fills his 17-gallon gas tank once a month for his drive to school, work, and sports practices. He works 20 hours a week year-round at a local grocery store and makes $8.50 per hour. In addition to his gas, he is responsible for his portion of the family cell phone bill ($35 a month), as well as his own clothing and entertainment expenses.
Jamal plans to attend community college after graduation, so he will live at home while going to school. His parents will pay tuition, but he will be responsible for his books and other expenses.
Scenario TwoAva is a sophomore at a metro-area high school and rides the bus to school or gets a ride from her older brother. Her parents shared the cost of a car with her brother, and they plan to do the same for Ava, so she is saving to buy a used car before she graduates.
During the summer, Ava works 32 hours each week as a hostess in a local restaurant; she is paid $7.50 per hour. Ava also babysits on the weekends and typically earns $50. She is responsible for paying for her cell phone plan, which is $80 a month.
Ava’s goal is to earn a degree in landscape architecture, and she wants to attend an out-of-state college. Her parents will cover the tuition cost, but she must pay for room and board. She estimates her financial responsibility will be about $9,000 a year.
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Scenario FourAiko is a senior at a rural high school and is active in drama and dance. Her mom bought a new car recently and gave her old one to Aiko. The car is paid for, but Aiko has to pay for the gasoline. Her parents pay for the insurance.
Because her schedule after school is so busy, she is only able to work weekends. She helps teach dance to young children at a local studio. Aiko typically works eight hours a week and earns $8.50 an hour. Every other weekend, she also babysits for an aunt and earns $30. Her parents give her an allowance of $100 a month and expect her to buy her own clothes and pay for her school lunches and entertainment.
She typically drives 14 miles each day to and from school and another 20 miles on the weekend for her dance studio job. She plans to attend a dance school after graduation and needs to contribute $200 each month to her savings account to afford it.
High School Life Scenarios
Scenario ThreeJoaquin is a senior in high school. He recently bought a car from family friends and is paying them $150 a month. He also must buy his gas and pay his parents $35 a month toward his insurance. Joaquin works 20 hours a week at a nearby pizza parlor. He earns $5 per hour and averages $100 a week in tips.
Joaquin’s parents pay for his cell phone, but he is responsible for all his entertainment expenses. His best friend has a serious illness and Joaquin has made a commitment of $10 a week to support cancer research.
After graduation, Joaquin plans to attend trade school to learn automotive body repair. He will be able to live at home but will be responsible for tuition, books, and fees. He estimates school expenses will be $4,200 a year.
Scenario FiveMatt is a junior in high school. He works 25 hours a week at a retail store and earns $7.75 an hour. A good friend of his picks him up for school each morning, and he either uses one of his parents’ cars to get to work each day or his parents drop him off. He agreed to put $50 of gasoline in the family car each month to help pay his share.
He is looking forward to prom in three months; tickets will cost $50. He also is saving money to rent a tuxedo and buy flowers and a dinner out for his girlfriend, Stephanie.
Matt plans to buy a car after graduation, so he is saving for that goal. He intends to go to college and thinks his parents will pay for the tuition, but he will be responsible for other college expenses.
Scenario SixAlejandro is a high school junior. He owns a used car and is responsible for his own gasoline and maintenance costs. Alejandro works as a stocker at a local department store. He earns $7.75 an hour and works 20 hours per week.
Alejandro usually drives 200 miles a week. His car is in need of new tires soon; he plans to replace them in three months and needs $350 for that expense. Alejandro also has a cell phone as part of his parents’ family plan, and his parents pay the bill. He is responsible for his entertainment expenses.
Alejandro hasn’t yet decided what he wants to do after graduation, but he knows he should be saving for the future. He needs a nest egg to help him get started, whether it will be for college or moving out on his own.
High School Life Scenarios
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Life Scenario Monthly BudgetBudget +Lesson ThreeStudent Worksheet, Page 76
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Life Scenario Monthly Budget
Don’t forget to deduct payroll taxes! Assume the
deductions for federal, state, and FICA (Social Security and Medicare) total 18 percent of
gross income.
Are you paying yourself first? Consider saving at
least 10 percent of income toward your goals.
What other expense categories may be needed to reflect a
realistic budget? Are there items in the budget that are wants and could be cut or reduced to help
you meet your goals?
Income Monthly IncomeJob
Allowance
Other
Total Income
NMI
Expenses Monthly BudgetSavings (Pay Yourself First)
Short-term goal
Long-term goal
Other
Transportation
Car payment
Gasoline
Maintenance
Insurance
Cell phone
Food
Clothing
Entertainment
Gifts and giving
NMI
Total Expenses
Balance
Fill in the Monthly Budget.
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Budget + Assessment
Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions.
1. Short-term goals are:a) hard to reachb) accomplished in less than a yearc) personald) categorized by wants and needs
2. The amount of earnings made over one month, after deductions, is known as:a) Total annual incomeb) Net monthly incomec) Gross monthly incomed) Gross annual income
3. A record of income and expenditures for a given period of time is called a/an:a) Creditb) Investmentc) Budgetd) Interest
4. When budgeting, the first categories to consider are those that meet your:a) Wantsb) Needsc) Discretionary fundsd) Important expenses
5. In what area category of a typical family budget do people spend most of their money?
a) Foodb) Housingc) Transportationd) Entertainment
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Budget + Assessment
6. Jason went to the grocery store to buy a gallon of milk for his mother. While waiting in the checkout line, he saw a display for a new chocolate-caramel candy bar, so he bought it, too. The candy bar purchase is an example of a/an:
a) Special treatb) Impulse buyc) Needd) Payment for running an errand for his mom
7. What is the difference between a short-term goal and a long-term goal?
8. What is the difference between NMI and discretionary income?
9. What does it mean to follow a budget?
10. What is PYF?
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Assessment Answer Key
Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions.
1. Short-term goals are:
a) hard to reach
b) accomplished in less than a year
c) personal
d) categorized by wants and needs
2. The amount of earnings made over one month, after deductions, is known as:
a) Total annual income
b) Net monthly income
c) Gross monthly income
d) Gross annual income
3. A record of income and expenditures for a given period of time is called a/an:
a) Credit
b) Investment
c) Budget
d) Interest
4. When budgeting, the first categories to consider are those that meet your:
a) Wants
b) Needs
c) Discretionary funds
d) Important expenses
5. In what category of a typical family budget do people spend most of their money?
a) Food
b) Housing
c) Transportation
d) Entertainment
b
c
b
b
b
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Budget +Assessment Answer Key
6. Jason went to the grocery store to buy a gallon of milk for his mother. While waiting in the checkout line, he saw a display for a new chocolate-caramel candy bar, so he bought it, too. The candy bar purchase is an example of a/an:
a) Special treat
b) Impulse buy
c) Need
d) Payment for running an errand for his mom
7. What is the difference between a short-term goal and a long-term goal?
8. What is the difference between NMI and discretionary funds?
9. What does it mean to follow a budget?
10. What is PYF?
b
A short-term goal can be accomplished in as little as three months to a year. A long-term
goal takes one year or more to realize.
Net monthly income is the amount of money available for spending after taxes are
deducted. Discretionary income is the money available after monthly bills are paid and
basic living needs are met.
Answers will vary but should reflect that a budget means following a spending plan. The
plan helps a person manage expenses and work towards both short-term and long-term
goals through regular saving.
Pay Yourself First is the concept of automatically putting away money every month for
future use.
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Sample Budgets .............43Students practice preparing budgets and making budgeting decisions. They work in teams, pairs, or individually.
Personal Budget ............47Through discussion and research, students recognize the need for responsible spending and the benefit of budgeting.
Paying for Postsecondary Education ............................53Students see that education after high school is an investment in their future. They explore options to pay for higher education.
Completing a Budget (separate download)Students continue to prepare for the JA Finance Park simulation by researching the price of goods and services and practicing their budgeting skills. They evaluate hypothetical life situations and prioritize budget items.
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Overview Students practice preparing budgets. They make budgeting decisions while working in teams, pairs, or individually.
Teacher Introduction
With practice, students will gain confidence in their newfound budgeting skills. In this activity, they will compare the budgets of three young adults. You may choose to have the students work in teams, pairs, or individually. The budget examples will demonstrate to students that individual preferences affect budget planning.
Materials and Preparation o Student Workbooks, Page 45, which will be projected or displayed
using an interactive board
Activity Time: 15 minutes
Sample BudgetsExtension Activity1
77JA Finance Park®
Compare the following three spending plans and discuss the questions.
1. Why are Sam’s utilities higher than Reggie’s or Anna’s?
2. When Sam decides to rent a larger apartment, which expense is most affected?
3. What trade-offs (opportunity costs) does Anna have to make after choosing to own an expensive sports car?
4. Why do you think Reggie chooses to spend only $50 for transportation by riding the bus?
5. Other than rent, what budget category seems to be a top priority for Anna?
6. Other than rent, what budget category seems to be a top priority for Reggie?
Net Monthly Income Reggie: $1,500 Anna: $1,500 Sam: $1,500
Expenses
Rent $600 $500 $800
Transportation $50 (bus fare) $400 (sports car) $100 (motorcycle)
Savings $50 $100 $50
Utilities $150 $100 $300
Clothes $150 $150 $150
Entertainment $500 $250 $100
Total Expenses $1,500 $1,500 $1,500
Evaluating Sample Budgets1 Extension Activity
Evaluating Sample Budgets
Worksheet
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Sample Budgets Activity Steps1. Introduce students to the idea of evaluating a sample budget by
projecting Evaluating Sample Budgets, Page 45 (Page 77 in the Student Workbook). Point out that the three young adults have the same net monthly income but have chosen to spend their money in different ways.
2. Review the questions that follow the budget comparison, engaging the students in determining the answers.
Summary and ReviewAsk students if they understand there is no one right answer when it comes to planning a budget. Each person’s (or family’s) budget will reflect his or her own short- and long-term goals and reveal what he or she values in life. Some people choose to spend less on housing so they can spend more on a car. Some prefer to spend more on clothes and entertainment and less on a new or fancy car.
The important point to recognize is the benefit of having—and following—a budget.
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Evaluating Sample BudgetsBudget + Extension ActivityStudent Worksheet, Page 77
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Compare the following three spending plans and discuss the questions.
1. Why are Sam’s utilities higher than Reggie’s or Anna’s?
2. When Sam decides to rent a larger apartment, which expense is most affected?
3. What trade-offs (opportunity costs) does Anna have to make after choosing to own an expensive sports car?
4. Why do you think Reggie chooses to spend only $50 for transportation by riding the bus?
5. Other than rent, what budget category seems to be a top priority for Anna?
6. Other than rent, what budget category seems to be a top priority for Reggie?
Net Monthly Income Reggie: $1,500 Anna: $1,500 Sam: $1,500
Expenses
Rent $600 $500 $800
Transportation $50 (bus fare) $400 (sports car) $100 (motorcycle)
Savings $50 $100 $50
Utilities $150 $100 $300
Clothes $150 $150 $150
Entertainment $500 $250 $100
Total Expenses $1,500 $1,500 $1,500
Evaluating Sample Budgets1 Extension Activity
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Overview
Through research and discussion, students will recognize the need for responsible spending and the benefit of budgeting as they prepare for the future.
Teacher Introduction
Students will create budget projections for a four-month period that illustrate the costs associated with being an adult and living on their own. Students will need to research and identify job opportunities that they qualify for as high school graduates. Based on the income they can reasonably earn, they will build a budget, basing their expected expenditures on averages that a typical family might spend in each category. They will then research the appropriate housing, food, transportation, and other living expenses, making choices that keep their expenses less than their income.
Materials and Preparation
o Computers and Internet access
o Student Workbooks, Pages 51–52
o Optional: Student access to a spreadsheet program or online budget calculator
Activity Time: 40 minutes +homework
Personal BudgetExtension Activity2
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Job Title Number of Hours Hourly Rate Total Salary
Federal tax withheld
FICA (Social Security and Medicare) tax withheld
State tax withheld
County/local tax withheld
NMI
Expense Type Average Range Your Percent Target Budgeted Amount
Savings 2–10%
Housing 22–27%
Renter’s Insurance 4–6%
Utilities 6–8%
Food (at home) 7–10%
Food (dining out) 6–8%
Transportation 9–12%
Gasoline 5–9%
Maintenance/insurance 4–6%
Clothing 4–6%
Entertainment 4–7%
Medical 2–5%
Totals 100%
2Personal BudgetExtension Activity
Personal Budget
Worksheets
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CategoryBudget Target
Revised Budget
Month 1 Month 2 Month 3 Month 4
Income
Fixed Expenses
Savings
Housing
Transportation
Insurance
Variable Expenses
Utilities
Gasoline
Maintenance
Food (at home)
Food (dining out)
Clothing
Entertainment
Medical
Describe the choices you made and the rationale for your decisions. Are there items you would have liked to include in your budget but did not? What kind of change(s) in lifestyle would you experience if you had to live on the budget above? How easy (or difficult) do you think it would be to live with this budget?
2Personal BudgetExtension Activity
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Personal Budget Activity Steps1. Ask students how easy or difficult they think it will be to maintain
their current lifestyle once they are living on their own.
2. Tell students they will complete a project that will help them determine whether they are ready to support themselves after high school and what kind of lifestyle they might expect to have.
3. The students’ first assignment is to find a job they could realistically be hired for with a high school diploma. • They can read through classified ads, conduct online job
searches, or use the chart below.
• They may only “take” a job if their education and previous job experience meet the job posting requirements. Alternatively, you can assign jobs and salaries to students.
• The job can be located anywhere in the state in which they currently live.
• The following jobs are common for high school graduates; wages represent national averages.
Occupation Hourly Wage Occupation Hourly
Wage
Fast-food worker $9.81 Waiter/Waitress $10.01
Coffee shop attendant $10.72 Dishwasher $9.81
Host/hostess $10.72 Housekeeping $11.84
Office cleaning $12.02 Animal care $11.13
Usher, ticket taker $10.85 Recreation attendant $11.80
Bar porter, bellhop $12.55 Retail sales worker $11.24
Cashier $10.11 Production assembly $15.31
Food-processing worker $12.69 Driver/sales worker $14.06
Light truck/delivery services $14.06 Parking lot attendant $11.70
Child care worker $10.72 Home health aide $11.67
Health care orderly $13.23 Teller $13.52
File clerk $15.14 Receptionist $13.65
Warehouse worker $12.44
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4. After students have identified a job and wage, they will forecast expenses. Their initial budget plan should include: savings, housing, renter’s insurance, utilities, food, transportation, phone, medical, clothing, entertainment, household goods, and grooming supplies.
5. Students may add other categories. They will need to research expenses not expressly noted on the Personal Budget Worksheet, including cell phone, parking fees for work, furnishings for their apartment, or personal hygiene expenses, for example. Students should not include debt as part of their budget.
• The Personal Budget Worksheet 1, on Page 78, gives students an outline of the average percentage spent in each category. (Averages are based on average expenditures reported by the Bureau of Labor Statistics, Consumer Expenditure Survey, for persons under 25 years of age.)
• In the budgeting process, they should allocate 100 percent of their income to budget categories. A discretionary income category may be used to help balance the budget to 100 percent if income exceeds expenses.
6. After completing the Personal Budget Worksheet 1, students should form pairs or small groups to discuss their plans and give and receive feedback on the reasonableness of their budget plan and job choice, given each person’s background and interests.
• The classroom teacher will have final approval over each student’s job choice and budget plan.
• Following approval, students begin quantifying the expense phase of their budget. Using the Internet or newspaper ads, students will research realistic housing and transportation options in the community where they will work.
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2Making It RealThe unemployment rate for 2017 high school graduates was 13.2 percent.*
Have students research the unemployment rate in their state and county. Also, have them look up the average earnings of a high school graduate and
the minimum wage paid in their state.*
According to the Bureau of Labor Statistics, workers ages 16 to 24 had median weekly earnings of $545 (women) to $563 (men) in the first quarter of 2018.
*Source: Bureau of Labor Statistics, https://www.bls.gov/news.release/hsgec.t01.htm
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• Students may choose to have a roommate to help with housing expenses, but they should be given parameters. Sharing an apartment with another person, for example, means renting a more expensive two-bedroom space, and roommates must share equally in rent, utility, and insurance payments. Each roommate will budget for his or her own food and other expenses.
7. If students find that actual expenses are more (or less) than originally budgeted, they will record that amount in the Revised column of the budget on the Personal Budget Worksheet 2 (Page 79). Students may use the template to record their monthly expenses, or they may find it easier to build their budget on a spreadsheet or some other tool you recommend.
8. To add a level of complexity, students should make assumptions about what may happen over the course of four months—for example, buying furniture or being involved in a car accident. You may want to suggest some life events that would affect their budget, such as getting a raise, receiving an inheritance, or incurring medical bills because of an accident.
9. The level of detail to be included in the budget, the timeline for completion, and grading are determined based on teacher preference.
Summary and ReviewAsk students what the biggest surprise was as they researched actual costs associated with living on their own. Do they see a benefit to having a budget to help them reach their goals? Has this exercise changed the way they plan to manage their money in the future?
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Job Title Number of Hours Hourly Rate Total Salary
Federal tax withheld
FICA (Social Security and Medicare) tax withheld
State tax withheld
County/local tax withheld
NMI
Expense Type Average Range Your Percent Target Budgeted Amount
Savings 2–10%
Housing 22–27%
Renter’s Insurance 4–6%
Utilities 6–8%
Food (at home) 7–10%
Food (dining out) 6–8%
Transportation 9–12%
Gasoline 5–9%
Maintenance/insurance 4–6%
Clothing 4–6%
Entertainment 4–7%
Medical 2–5%
Totals 100%
2Personal BudgetExtension Activity
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Personal BudgetBudget +Extension ActivityStudent Worksheet 2, Page 79
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CategoryBudget Target
Revised Budget
Month 1 Month 2 Month 3 Month 4
Income
Fixed Expenses
Savings
Housing
Transportation
Insurance
Variable Expenses
Utilities
Gasoline
Maintenance
Food (at home)
Food (dining out)
Clothing
Entertainment
Medical
Describe the choices you made and the rationale for your decisions. Are there items you would have liked to include in your budget but did not? What kind of change(s) in lifestyle would you experience if you had to live on the budget above? How easy (or difficult) do you think it would be to live with this budget?
2Personal BudgetExtension Activity
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Overview
Students see that education after high school is an investment in their future. They explore options for paying for higher education.
Teacher Introduction
According to the 2018 JA Teens and College Savings Survey, more than half of high school juniors (52 percent) admit to not knowing the cost of college tuition, and a significant number of high school seniors (42 percent) are also unaware of the cost. This activity will help provide some insight into the true costs associated with higher education and give students information about their options.
Materials and Preparation
o Computers and Internet access
o Make one copy of Life Scenarios 1–6, Pages 57–62
o Student Workbooks, Page 56 Bud
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Activity Time: 30 minutes
Paying forPostsecondary EducationExtension Activity
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Work Many students work full time or part time while attending school.
Students generally need to apply for scholarships. They may be funded by a school, community organization, business, fraternal organization, or foundation and are often based on merit. Each scholarship has different qualifications and requirements, such as minimum GPA, intended major, test scores, extracurricular activities, or community engagement. Scholarships also may be geared toward a specific segment of the population.
Scholarships
Student loans do need to be paid back, with interest. Typically, loan payments begin six to 12 months after graduation or after a student drops out of school.
Loans
GrantsGrants are awarded by the government and private organizations to help eligible students pay for school and are usually based on financial need. The most common federal grant is the Pell Grant. Grants are gifts that do not have to be paid back.
Work-StudyThis is a federal program that provides funds to students who work part-time at a college or university. More than 3,000 institutions in the United States participate in the program. Students apply for positions with the school they attend and must meet minimum need requirements.
Free Application for Federal Student Aid (FAFSA)
This form must be completed to be eligible for federal, state, and other college-based financial aid. See www.fafsa.ed.gov for application and additional information.
Financial Aid Options3 Extension Activity
Financial Aid Options Worksheet
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Paying for Postsecondary Education Activity Steps1. Ask students if they have plans to go to college or enroll in a
technical or trade school. Ask if they have any idea how much school will cost. Record their estimates on the board for everyone to see.
2. Ask students how they plan to pay for school. (Answers will likely include student loans, scholarships, parents, savings, and jobs.) If students have not begun to plan for paying for college, recommend they do so because postsecondary education is often a multiyear endeavor, sometimes taking five or more years to complete.
3. Ask students to list the various expenses associated with college. The list should include tuition, room and board, books, supplies, health services, transportation to and from campus, cell phone, and entertainment.
4. Tuition alone can vary greatly. Out-of-state tuition at a public institution is often more than double the cost of in-state tuition. For example, at a four-year public college in 2018–19, the average tuition and fees were $9,716 for in-state students and $21,629 for out-of-state students according to the U.S. News and World Report.* The cost of a private college can easily exceed $35,676. Tuition costs also often vary by the program a student is enrolled in. Students enrolled in engineering, technology, medicine, and fine arts programs frequently pay more.
Optional: Have students research the costs associated with the school they want to attend or the cost at up to three other schools that offer the degree program they are considering. How does the cost of their school preference(s) compare to the national average?
5. Though the costs may seem daunting, there are ways to reduce expenses. Financial aid can be key. As students do research about the costs they might incur, it will be helpful for them to know how the bills might be paid. There is a consistent starting point for all students: the Free Application for Federal Student Aid (FAFSA). This application is required to receive any free aid that might be available. (An Extension Activity on how to complete the FAFSA is available in the Saving, Investing, and Risk Management section on Page 31.)
*Source: https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic
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36. Have the students turn to the Financial Aid Options Worksheet, Page 80, in the Student Workbook. Review the options presented.
7. Organize the class into groups of four or five students each (up to six groups total). Explain that they will work together to make suggestions for students who hope to continue their education after high school. They will consider family circumstances; how much time they have to save for their education; how much that education will cost; and the income they might expect to make after earning their degree or certificate.
8. Distribute the six Life Scenarios (Pages 57–62), one to each group. Each group should select a reporter who will share the group’s recommendations after the activity. The reporter will record the group suggestions on the scenario sheet. The group will have 10 minutes to read the scenario and discuss options.
9. After 10 minutes, each reporter should take turns describing the scenario and sharing the suggestions provided by the group. Ideally, the students will share multiple options for paying for school. You may want to make suggestions or open a class discussion for additional recommendations.
Summary and Review
Ask students if any of the scenarios could apply to them or to someone they know. Have the students discuss any plans they already have made to continue their education. Ask if they learned something new about paying for higher education through this activity.
Making It RealConsider updating the six Life Scenarios to reference postsecondary institutions and
costs in your state.
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Financial Aid OptionsBudget + Extension ActivityStudent Worksheet, Page 80
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Work Many students work full time or part time while attending school.
Students generally need to apply for scholarships. They may be funded by a school, community organization, business, fraternal organization, or foundation and are often based on merit. Each scholarship has different qualifications and requirements, such as minimum GPA, intended major, test scores, extracurricular activities, or community engagement. Scholarships also may be geared toward a specific segment of the population.
Scholarships
Student loans do need to be paid back, with interest. Typically, loan payments begin six to 12 months after graduation or after a student drops out of school.
Loans
GrantsGrants are awarded by the government and private organizations to help eligible students pay for school and are usually based on financial need. The most common federal grant is the Pell Grant. Grants are gifts that do not have to be paid back.
Work-StudyThis is a federal program that provides funds to students who work part-time at a college or university. More than 3,000 institutions in the United States participate in the program. Students apply for positions with the school they attend and must meet minimum need requirements.
Free Application for Federal Student Aid (FAFSA)
This form must be completed to be eligible for federal, state, and other college-based financial aid. See www.fafsa.ed.gov for application and additional information.
Financial Aid Options3 Extension Activity
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 1
Jamie is a high school junior who wants to be a mechanic. He has good attendance, and his GPA is 3.0. He will be the first person in his family to graduate from high school. Jamie knows that he needs additional training if he wants to do more than work at the corner gas station. His parents want him to be able to pursue his goal but do not have many resources to put toward his education. They have saved $4,000 to give to him. Technical Institute offers a course in Automotive Technology. The cost to be certified will be between $15,000 and $25,000. The national average wage for an auto mechanic is $39,550* annually.
As a group, discuss Jamie’s options. What can he do to pay for his education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
*U.S. Bureau of Labor Statistics, 2017
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JA Finance Park®
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 2
Lakisha is a high school senior who wants to be a lawyer. She has good attendance, and her GPA is 4.0. She is considering two private colleges, one in-state, the other out-of-state. She plans a pre-law degree in political science and then will apply to law school. The cost of tuition for four years at the private in-state school is about $102,000 and about $128,000 for the out-of-state college. This does not include housing, books, or fees. She has heard there are more scholarships for undergraduate degrees than for a law degree. Lakisha’s parents have saved $20,000 for her education. The national average salary for a lawyer is $119,250* annually.
As a group, discuss Lakisha’s options. What can she do to pay for her education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
*U.S. Bureau of Labor Statistics, 2017
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 3
Laila is a high school senior who wants to be a dental hygienist. She has good attendance, and her GPA is 2.5. She may need to take some additional classes because her GPA is low. She volunteers a lot in the community and has earned many volunteer hours. The local community college has a dental hygienist program that will cost about $27,000 for a two-year degree. Her mother is a single parent with three other children, all younger than Laila, and she doesn’t have anything saved for Laila to go to school. The national average wage for a dental hygienist is $74,070* annually.
As a group, discuss Laila’s options. What can she do to pay for her education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
*U.S. Bureau of Labor Statistics, 2017
JA Finance Park®
JA Finance Park®
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 4
Manuel is a high school senior who wants to be a mechanical engineer. He has good attendance, and his GPA is 4.0. He will be the first person in his family to graduate from high school. He is the valedictorian of his school, president of the student council, and captain of the football team. He has been recognized at several state competitions for his science engineering projects. His state university has accepted his application. A four-year degree will cost him about $94,000. The national average wage for a petroleum engineer nationally is $132,280* annually.
As a group, discuss Manuel’s options. What can he do to pay for continuing his education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
*U.S. Bureau of Labor Statistics, 2017
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 5
Sunee is a high school junior who wants to be a teacher. She has good attendance, and her GPA is 3.0. She is a cadet teacher in high school and has shown an aptitude for teaching. Her goal is to attend her state’s university. Her grandparents left her a college fund of $20,000. Her parents will be able to contribute $1,000 a year to her housing. Her expenses for four years will be about $88,000. The national average wage for an elementary school teacher is $56,900* annually.
As a group, discuss Sunee’s options. What can she do to pay for her education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
JA Finance Park®
*U.S. Bureau of Labor Statistics, 2017
JA Finance Park®
Paying for Postsecondary EducationBudget +Extension ActivityLife Scenario 6
Connor is a high school senior who isn’t sure about what he wants to do after graduation. He has good attendance, and his GPA is 2.8. He is physically fit and enjoys being outdoors. He does not have money to pay for college, but he thinks he would like to learn something about aircraft. He is good with tools and does well with math. The national average for avionics technicians is $61,260* annually. As a group, discuss Connor’s options. What can he do to pay for continuing his education? Consider grants, loans, scholarships, work-study, and saving, for example.
Option 1:
Option 2:
Option 3:
*U.S. Bureau of Labor Statistics, 2017
Simulation and DebriefingOverview .................................................................... 3
Simulation .................................................................. 5
Debriefing .................................................................. 7
Sim
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RequiredSimulationDebriefing
TimeThe simulation will take approximately 4 to 4½ hours.
ConceptsBudgetExpensesIncomeNeedsSavingsTaxesWagesWants
SkillsActive listening, critical thinking, interpersonal communication, math computation, self-reflection, teamwork
Simulation and Debriefing OverviewStudents participate in the JA Finance Park simulation. They put into action all they have learned in the classroom by making important spending decisions and maintaining a balanced budget. Following their simulation experience, students participate in a reflective assessment.
ObjectivesStudents will:
• Create a family budget using hypothetical life situations.
• Make saving and investment decisions.
• Reflect on their simulation experience.
PreparationReview and organize the materials for the simulation and debriefing lesson.
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Teacher Introduction
After many hours of instruction and preparation, students are ready for the JA Finance Park simulation. Keep in mind the lesson objective is having students grasp the importance and complexity of keeping a budget while making some key decisions of their own.
The JA Finance Park simulation is the authentic assessment for this curriculum. To be successful, students must understand the difference between gross and net monthly income and consider the impact of federal, state, and local taxes on income. Students will research various spending categories and set a budget that meets the needs and requirements of their assigned life scenario, while staying within their income guidelines. To finalize the experience, students will make shopping decisions and pay bills.
At the simulation’s conclusion, individual reports are available for each student to review and discuss as he or she prepares for the self-assessment.
Where and how the simulation experience is implemented will be determined in accordance with your local JA Area Office.
Materials
o Student Account Number list (use is determined by the local JA Area Office for site-based and mobile implementation)
o Quick-Start Guide (used for virtual implementation)
Lesson Preparation
Site-based and mobile classes: JA staff and volunteers will direct the students through the day’s activities.
Virtual classes: Teachers and/or JA volunteers will lead students through the four sessions of the simulation using the instructions found in the Guide for Teachers and Volunteers.
Simulation
Time: The simulation
will take approximately 4 to 4½ hours.
Deb
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Teacher Introduction
Following the JA Finance Park simulation experience, it is important to review with the students what they experienced and what they learned.
In this lesson, students will reflect on the activities they participated in during the simulation and will discuss what actions they can take now to affect real-life situations in the future. They also will engage in a reflective writing assignment in which they address how their perceptions of money may have changed.
Materials
o Student Workbooks
Lesson Preparation
• Review Student Worksheet on Page 9.
Set the Stage | 5 Minutes
Ask students to reflect on their simulation experience. Consider including some of these questions to prompt their reflections:
• What did you learn from your experience at JA Finance Park?
• Do you think your assigned persona reflected how your life may turn out?
• What surprised you most about the simulation experience?
• What was most difficult or challenging about the simulation experience?
• What have you learned that you will use to prepare or plan for the future you want?
Debriefing
Lesson Time: 45 minutes
81JA Finance Park®
Simulation and Debriefing
Student Journal Entry Activity
Write a one- to three-paragraph journal entry explaining how your perception of money has changed. If knowledge is power, how will you use this power in the future? Is knowing how to budget your money a powerful skill? Why or why not? Simulation
and Debriefing Worksheet
JA Finance P
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Debriefing: Lesson Steps | 30 Minutes
1. Using the Budget Review reports provided by the local JA office, you may wish to have students discuss highlights of their final financial situation. Allow them to explain how they might improve the financial stability of their persona over time, using a what-if scenario.
• Examples of change(s) that might be helpful include adding or increasing savings each month, paying off credit card debt, and seeking professional investment advice.
2. Ask students to turn to Page 81 in the Student Workbook and write a one- to three-paragraph journal entry explaining how their perceptions of money have changed following the JA Finance Park simulation. Students will answer the following questions on the worksheet:
• If knowledge is power, how will you use this power in the future? Is knowing how to budget your money a powerful skill? Why or why not?
Summary and Review | 10 Minutes
Have students complete the Post-Program Survey. Your local JA Area Office may wish to collect the results.
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DebriefingStudent Worksheet, Page 81
81JA Finance Park®
Simulation and Debriefing
Student Journal Entry Activity
Write a one- to three-paragraph journal entry explaining how your perception of money has changed. If knowledge is power, how will you use this power in the future? Is knowing how to budget your money a powerful skill? Why or why not?
1
Glo
ssar
yGlossaryAbilitiesThe things you do well.
Annual feeA yearly fee.
AptitudesYour natural talents.
APR Annual percentage rate is the amount of interest charged for any unpaid balance.
Bank A for-profit institution that offers personal loans, mortgages, and other services.
BankruptcyA legal process that gives a debtor protection from creditors.
BondAn IOU issued by a company, municipality, or the federal government in exchange for a loan from an investor that will be repaid with a set rate of return.
BudgetA record of income and spending and a plan for managing money.
Career clusterA grouping of jobs and industries related by skills or products.
CashMoney in the form of bills or coins.
CheckA written order for a bank to pay money.
Compound interestInterest on the principal and the accumulated interest on a deposit or a loan.
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CreditThe amount of financial trust extended to a person or a business by a lender; a loan. Credit cardA card authorizing the holder to buy goods and services that can be paid for later.
Credit limit The maximum a cardholder can borrow. It is recommended that cardholders keep a balance of no more than 25 percent of the credit limit.
Credit reportA record of a person’s financial information, including previous addresses, Social Security number, current and previous employers, estimated income, credit card accounts with amount owed and payment history, and loan information.
Credit scoreA standardized measurement of the potential to repay a debt.
Credit union A not-for-profit cooperative that offers bank services and is owned by its members.
DebitAn amount deducted from a bank account.
Debit cardA card that looks like a credit card but operates like cash; money is immediately subtracted from the cardholder’s bank account when a purchase is made.
DebtMoney owed.
Deductible/co-pay Money paid out of pocket before insurance covers the remaining costs.
Discretionary incomeMoney available to spend on goods and services that are not essential.
3
Glo
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yDollar-cost averagingA method of investing a fixed amount in the same type of investment at regular intervals, regardless of price.
ExpendituresMoney that is spent on goods, services, and bills.
Finance chargesThe cost of credit—the fees and interest charged to finance the unpaid balance.
Financial institutionA business that provides money-related services.
Fixed cost A business cost that remains the same, such as rent.
Fixed expensesExpenses that do not change from month to month, such as auto insurance or rent.
ForeclosureA legal process in which a lender takes possession of mortgaged property from a mortgage holder who failed to make payments.
Gross Annual Income (GAI)Total pay or earnings made over a one-year period before any deductions have been taken.
Gross Monthly Income (GMI)Total amount of earnings made over a month before any deductions (1/12 of GAI).
Impulse buyingMaking a purchase based on an immediate want or due to the pressure of advertising.
IncomeMoney received on a regular basis for work or through investments.
Income taxA portion of one’s personal income paid to a government.
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Insurance policy A contract that outlines coverage plans and protects a person against financial loss or damage.
InterestA fee received or paid for the use of money.
InterestsThe things you like and enjoy doing.
Internet bankA Web-only bank.
InvestTo commit money to gain a profit or earn interest.
Long-term goalsPlans that take a year or more to accomplish.
Market researchGathering consumer preferences for products and services.
MedicareA social insurance program that extends health coverage to almost all Americans age 65 and over.
Minimum payment dueThe smallest amount that can be paid to meet loan requirements.
Mobile bankingA wireless service that allows financial transactions by using an app or Web browser from a mobile device.
Mutual fundA collection of stocks or bonds of various corporations.
Needs Goods or services that people cannot survive without, such as water, food, shelter, and clothing.
Net Annual Income (NAI) Income amount remaining after a year’s worth of deductions have been taken.
5
Glo
ssar
yNet Monthly Income (NMI) Amount of monthly income remaining after all deductions have been taken (sometimes referred to as take-home pay).
Online bankingAn electronic way to view account activity and pay bills via the Internet and an institution’s website.
Opportunity costThe next best alternative given up when making a financial choice. PayPalAn online payment service that allows consumers to transfer money electronically.Pay Yourself First (PYF)To automatically save a specified amount from a paycheck for future use.
PremiumThe amount paid for an insurance policy.
Previous balanceAmount still owed from purchases prior to the current 30-day charge cycle.
PrincipalThe amount of money originally invested.
RiskThe possibility of financial loss or physical harm.
Savings accountAn interest-bearing account where people put money for future use.
ScarcityThe economic condition of limited resources that prevents people from having everything they want.
Short-term goalsPlans that can be accomplished within three months to a year.
Simple interestInterest that is paid only on the original principal.
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Social SecurityA social insurance system that provides benefits to most Americans who are retired, sick, or too disabled to work, and to families of workers who have died.
StockA share of a corporation sold to the public.
TaxesRequired payments to a government.
3Cs of creditThe factors that determine a credit score: character; capacity to repay; and capital, or what a person owns.
ValuesThe ideals that are important to you and your career choice.
Variable costA business cost that increases or decreases, such as labor.
Variable expenses Expenses that vary from month to month, such as entertainment, car repairs, or doctor bills.
WantsGoods or services that make people more comfortable or content but which are not necessary for survival.