1 Your Money Matters! Financial Literacy Teacher Guide
2 2 Table of Contents: Introduction...3 Toronto Star epaper...4 Financial Awareness Inventory...5 SPENDING To Spend or Not to Spend Activity...6 I Need It. I Want It. I Gotta Have It!...7 Is it Better to Buy or Lease?...8 Best Method of Payment...8 SAVING Invest in YOURSELF First!...9 Time is Money!...9 It s a FACT!...9 Save for the Unexpected (Emergency Fund)...10 INVESTING Saving With GICs...11 Rule of Invest in What You Know...12 BORROWING Take an Interest in Interest Rates...13 Credit To Use or Not to Use...13 Credit Can Help the Economy Be a Wise Consumer...15 Payday Loans...16 It s Debatable!...16 YOUR OPINION MATTERS!...16 GIVING BACK Charities at Work...17 MY MONEY MATTERS!...17 THAT S PUZZLING! ANSWERS...18 GLOSSARY OF TERMS
3 3 Introduction Dear Educator, This teacher guide is intended to be used with the student section and the Toronto Star. You may duplicate the activity pages in this resource for your students. This unit lets students look at ways to manage the money in their lives. It looks at some of the financial choices that are available to them and examines the rewards and consequences of their financial decisions. Student loans. Credit cards. Saving for studies after high school. These are just some of the money choices that they will need to deal with by the time they finish high school. Now is the time for them to begin thinking about some of the choices that they will soon need to make. There are things that they can do right now. Things like starting a savings program, training themselves to be wise consumers, and exploring ways for them to give back to their community. If your students get into the budgeting habit now, it will help them to be ready for the financial challenges and opportunities that lie ahead. There are things in this unit that will have more significance to students in the years to come. It is not expected that they will immediately open an investment account and start purchasing the types of investments outlined in these pages. The purpose of this information is to make them aware that these investments exist with hopes that they will investigate their investment options in preparation for their financial futures. The activities deal with the concept of Needs and Wants as a focus for setting priorities. Students examine how to satisfy their own financial Needs and Wants, and set priorities. Activities explore how to budget for Needs and Wants. Completing the activities will give students good basic knowledge and skills related to financial literacy. Using them as a starting point or a follow-up to your lessons can enhance learning. Activities address a range of abilities and can be used in any order and adjusted to suit your students. Students may work individually or in small groups. Many activities can be completed in one class period while others may require more time to complete. Be sure to look for connections to expectations within your province and at your specific grade level(s). This resource was developed by Toronto Star Classroom Connection. You may contact us at
4 4 Help students get familiar with using the Toronto Star epaper As part of this program, you will receive access to the Toronto Star epaper for one month, starting November 1, Searching the Star epaper for financial literacy related stories is easy: 1. Go to torontostarnie.newspaperdirect.com to access the epaper. 2. Type a word or sentence you want to find in the Search box and select Anytime.
5 5 Financial Awareness Inventory: How financially aware are you? Circle each answer either Yes or No. At the end, calculate the percentage of questions answered Yes and No. Do you know how to make a budget? Yes No Do you have a budget? Yes No Do you avoid making impulse purchases? Yes No Do you understand the difference between Needs and Wants? Yes No Do you keep track of your expenses? Yes No Do you keep money aside for unexpected expenses? Yes No Have you avoided the need to often borrow money? Yes No Do you understand how interest is charged when you borrow money? Yes No Have you started saving for your future education? Yes No Do you have a bank account? Yes No TOTAL YES AND NO SCORES Questions answered Yes :... Percentage:... Questions Answered No :... Percentage:... The higher the percentage of questions you answered Yes the more financially aware you are. Look over the questions you answered No and decide if these areas require some action on your part.
6 6 Spending To Spend or Not to Spend Activity Each month your family has to decide the order in which the family expenses must be paid. FAMILY EXPENSES:... Car payment... Rent or Mortgage... House and Car Insurance... Utilities... Gas... Transit... Auto repairs... Furniture payments... Special occasions... Dining out... Gifts... Charitable giving... Medical insurance... Taxes... Savings... Cell phone... Internet... Cable TV service... Toiletries Clothing Groceries Entertainment In a small group discuss each of these expenses and place them in order of importance. Give reasons for your choices. What changes would you make if your family income was reduced? Why?
7 7 Spending I Need It. I Want It. I Gotta Have It! We all have things in life that we need or want. Let s start our exploration of financial literacy by looking at those Needs and Wants. List five items you really NEED to have and five items you really WANT to have. These are your personal Needs and Wants. Do some research online to find out the prices and explain why you need or want each item. ITEM price need or want? reason How would you define the terms Needs and Wants? Needs wants From your personal list of Needs and Wants, select one item that you cannot afford to buy from your current allowance and/or earnings. How much does the item cost? If you decide to buy that item in 6 months, how much will you have to save each week? How will the money you set aside for this purchase affect the budget you created in the Your Money Matters! student section?
8 8 Spending Is it Better to Buy or Lease? Use the Toronto Star epaper edition to find an advertisement for a vehicle that you like. What is the monthly cost to lease the vehicle? What is the total cost to lease the vehicle for four years? What is the total cost to lease the vehicle for five years? What is the total cost to purchase the same vehicle outright? What are the advantages to leasing the vehicle? What are the advantages to purchasing the vehicle? Best Method of Payment Four teens - Carley Cash, Dawn Debit, Mohammed Check, and Carl Credit all have their own ways of paying for their purchases that amount to $20 or more. Carley pays cash, Dawn pays by debit card, Mohammed pays by cheque, and Carl pays by credit card. Form a group of four classmates. Each group member should take on the persona of one of the friends. Your job is to convince the others in your group that your method of payment is the best. In the opinion of your group, who is the savviest consumer? Give reasons for your choice. Savviest consumer is because
9 9 Saving Invest in YOURSELF First! Review the Savings section in the Your Money Matters! student section. In your own words, describe what it means to invest in yourself first from a financial standpoint. Why is this important to your financial future? Time is Money! Fill in the blanks to come up with the total savings. You are an (a)... year-old who saves $... a week for an annual savings of $... a year, with an annual 2 per cent return. Your investment will be worth about $... at age 60. If you started saving at age 35, the same investment will be worth just $... at age 60. It s a FACT! It s really easy for small expenses to add up to big spending over time. The student section shows an example of how spending just $2.00 a day on pop will cost you $730 a year! Give some thought to other small daily or weekly expenses you have and calculate the annual cost below. IT S A FACT: Spending $ 2 a day on pop costs you $ 730 a year! IT S A FACT:
10 10 Saving Save for the Unexpected (Emergency Fund) Planning is an essential part of financial intelligence. Financial advice suggests that people should set aside money for unexpected events. It is suggested that people have two or three months income set aside. However, there are some eventualities for which savings are simply not enough. Look through the Star epaper or thestar.com for stories about people who have been involved in accidents, who have had fires in their homes, or encountered other serious problems. In most cases, these incidents result in a heavy financial burden. Insurance is one way financially to survive such incidents. How would insurance help the people involved in such incidents? Search the internet to find what different types of insurance are available. Use that information to complete the table below. Be sure to include various kinds of automobile, health, and home insurance. Type of insurance Category What it covers
11 11 Investing Saving With GICs Research online to find the highest interest rate offered on locked-in and cashable GICs. Using the rule of 72, how much longer will it take to double your investment if you purchased the cashable GIC instead of the locked-in GIC? In a chart list the advantages and disadvantages of both kinds of GICs. LOCKED-IN GIC - ADVANTAGES LOCKED-IN GIC - disadvantages cashable GIC - ADVANTAGES cashable GIC - disadvantages Rule of 72 The rule of 72 is a way to estimate the time or interest rate you would need to double your money on an investment. For example, if you have an investment that s earning 5% per year, 72 divided by 5 equals 14. This means it would take about 14 years for your original investment to double.
12 12 Investing Invest in What You Know There is an investment saying suggesting that people should invest in businesses that they know and understand. Look in the business section of the Toronto Star epaper or thestar.com and select five companies that provide products and services that you know and understand. If you could invest $3,000 in one of these companies, which one would it be and why?
13 13 Borrowing Take an Interest in Interest Rates Look in the Toronto Star epaper for borrowing rates for things such as: vehicles, mortgages, homes and personal loans. How much variety is there among the rates offered? What type of loans seem to have the lowest rates? What type of loans seem to have the highest rates? Credit To Use or Not to Use Making a purchase with a credit card is really easy, but there are advantages and disadvantages. In the space below list three advantages and three disadvantages of using credit cards. Advantages of using credit DisAdvantages of using credit Credit Can Help the Economy Credit is a process whereby consumers, businesses and governments can purchase goods and services now under arrangements to pay for them at a later date. Credit serves society in four major ways: 1. Stabilizes the economy Credit enables businesses to purchase goods and services with regularity even when income is temporarily limited. 2. Promotes new business People start new businesses through the use of credit. 3. Expands production Business firms may expand the production of goods and services. Individuals may also increase their earning power through credit card purchases or loans. 4. Raises standard of living Credit provides such things as homes, automobiles, furniture, appliances, or vacations, giving a higher quality of life or standard of living.
14 14 Borrowing Use the Toronto Star to find stories that indicate one or more of the four major ways that credit helps individuals and the economy. In a chart like the one below write the headline of the newspaper item you found next to the function to which it relates. Credit Function Story Headline 1. Stabilizes the economy 2. Promotes new business 3. Expands production 4. Raises standard of living In your opinion, what effect would there be on the standard of living that we enjoy, if credit was not available to consumers?
15 15 Borrowing Be a Wise Consumer An important aspect of financial intelligence is being a wise consumer. Businesses spend their money on advertising in an effort to get you to spend your money on a particular product or service. Study several advertisements in the newspaper, magazines or online. As a group, make a list of techniques that advertisers use to help generate product sales. Watch some television commercials and compare the advertising techniques to those used in a print publication or online. Read the Small Print Find three advertisements that have information in small print at the bottom of the advertisement. What type of information is found in the small print? Why is this information there? Make note of any terms that you do not understand and discuss them with others in your class.
16 16 Borrowing Payday Loans A payday loan is an unsecured small-sum cash advance, usually a few hundred dollars, advanced for a short period of time, typically less than two weeks and payable on or near the borrower s payday. The interest rates are substantially higher than traditional credit products and fees are also charged. Research payday loans online, then answer the questions below: How do these companies make it easy for people to borrow money? Why do you think that people utilize companies like these? What is the concern that some people have with payday loan companies? What actions, if any, do you think that the government should take to regulate these companies? Discuss this with others in your class. It s Debatable! In small groups, write an opinion piece expressing your thoughts (pro or con) on payday loans. Before you begin writing, study several opinion pieces from the Star to see how they are written. Payday Loan Editorials: Opinion Piece Examples: html Your Opinion Matters! Send your opinion piece to Toronto Star Classroom Connection. We may publish your piece on our website or in the newspaper. Submissions must be made by a Certified Teacher. Visit for more details.
17 17 Giving back Charities at Work In some communities, many basic needs are provided for by not for profit organizations. In a small group, research charities in your community. As a group, compare your findings and select four charities that the group agrees are the most important to your neighbourhood. Complete the table below. Name of charity What does this charity do? How can it afford to do its work? My Money Matters! List two areas in which you think you can improve the ways that you manage your money. What do you think will be the financial impact of these changes on your life?
18 18 That s Puzzling! Answers Answers to the puzzle on page 8 of the student section. Search the letters below to find the words listed on the right hand column of this puzzle. Words can run in all directions up, down, right, left, backwards even diagonally and can even share common letters. One of these words has already been found. Y L E C N I N B U D G E T P H D A B R O R L A G B Q D I K S E P G Z I D F N H R R W O D N P I I J T K C K J P E T Q U L R C N V A P P R E C I A T I O E N T L L Y X U S Q Z T Q V A C I E H F O N P I N D M E T N I R R C N D S T R E M U D N W A P E Q I S T C J Y O Y I E L T K S D O B P Y A X H D K T E E Y T R I R E U W P I Z U B V C E G N I T S E V N I J I S B I N E C H L G P W A N T S L E F G M F D O I R E P E C A R G X E B L N F I R D Q O X H K Appreciation ATM Bankruptcy Budget Capital Collateral Credit Debit DepreciatE Gross Inflation Interest Investing Loan Net PIN Principal ROR Wants Yield D I H K C O L L A T E R A L J C Unlisted Clue: _ the time a borrower is allowed after a payment is due to make that payment without adding to the interest owed. (2 words).
19 19 Glossary of Terms Account fee The amount charged by a financial institution for the services they provide in managing the account. This may also be called the monthly service charge or monthly plan fee. Annual fee The fee a credit card company charges a credit card holder to use the card for a year, or the fee a lender charges a borrower for the use of a line of credit for a year. Appreciation The amount of value an item such as a home or stocks gain over time from the original purchase price. Automated teller machine (ATM) A specialized computer used by bank customers to manage their money, for example, to get cash, make deposits, or transfer money between accounts, or pay bills. Bankruptcy To legally declare yourself unable to repay your debts. A bankruptcy remains on a person s credit history for up to seven years. Depending on the type of bankruptcy, it could stay on a person s credit history for up to ten years. Bond A type of loan in which an investor extends money to the government or a corporation with a set interest rate and maturity date. Budget A method of tracking your monthly income and expenses. A written budget helps people to be better money managers and to prepare for major or unexpected expenses. Capital Wealth in the form of money or property. Capital gains Profits from the sale of an investment. Charitable giving The act of giving money or other items to a nonprofit, charitable organization. Compound interest Compound Interest calculates the amount of interest after a certain amount of time, known as the compounding period. If you compound annually (every year), the interest for the second year is calculated on the original amount plus the interest made in the first year. Collateral Any assets of a borrower (for example, a home) that a lender has a right to take ownership of if the borrower doesn t repay the loan as agreed. Credit When a bank or business allows its customers to purchase goods or services on the promise of future payment. Credit bureau A reporting agency that collects information on consumer credit usage. Credit card Any card that may be used repeatedly to borrow money or buy products and services on credit. Credit cards are issued by financial institutions, retail stores, and other businesses. A credit card offers the cardholder credit that can be paid monthly with as little as the required minimum payment. Credit check A lender or landlord s inquiry at a credit bureau for the purpose of evaluating the credit history of an applicant.
20 20 Glossary of Terms Credit limit The maximum dollar amount the lender is willing to make available to the borrower according to the agreement between them. For example, if you have a credit card, the credit agreement will usually specify the maximum amount of money you re allowed to charge to the card. Credit rating An evaluation of an individual s or business s financial history and the ability to pay debts. Lenders use this information to decide whether to approve a loan. Credit history A record of an individual s past borrowing and payments. Credit union A non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations may organize credit unions for their members, and some companies establish credit unions for their employees. Debit card A special card issued by a bank that looks like and is treated like a credit card; however, when used, the amount of the purchase or cash advance is subtracted from the user s deposit account immediately rather than drawing on available credit. Depreciation A loss of value in real property brought about by age, physical deterioration, and functional or economic obsolescence. Discretionary expenses The purchase of goods or services, which are not essential. Fixed expenses For an individual, a fixed cost is an expense that stays the same each month for a specified term such as rent or a car payment. Grace period The time a borrower is allowed after a payment is due to make that payment without adding to the interest owed. Gross income The total amount of money (before taxes and other deductions) received during a period of time in exchange for work. Identity theft A criminal activity involving stealing personal information from others and forging their signatures in order to apply for credit in their names. Inflation The overall increase in the cost of products and services over time. Interest The amount of money paid by a borrower to a lender in exchange for the use of the lender s money for certain period of time. For example, you earn interest from a bank if you have a savings account and you pay interest to a lender if you have a loan. Investing Purchasing something of value (for example, stocks or real estate) with the goal of earning money over time if the value increases. Loan An agreement between a borrower and a lender, where the borrower agrees to repay money with interest over a set period of time. Minimum payment The smallest amount that a consumer is required to pay toward a credit card balance monthly in order to keep the account in good standing.
21 21 Glossary of Terms Net income For a business, the amount of money earned after all expenses and taxes. For an individual, total takehome pay after all deductions (taxes, social security, etc.). Also called after tax income or net salary. Personal identification number (PIN) A secret combination of letters or numbers you use to gain access to your account through an electronic device such as an ATM. Principal The total amount of money borrowed, loaned, invested, etc., not including interest or service charges. Return on investment Also known as the Rate of Return (ROR), this is the profit that one makes on an investment. Rule of 72 The rule of 72 is a way to estimate the time or interest rate you would need to double your money on an investment. For example, if you have an investment that s earning 5% per year, 72 divided by 5 equals 14. This means it would take about 14 years for your original investment to double. Simple Interest Simple interest is always calculated on the principal amount (original) amount. Wants Items that are desired, but that are not needed to live. Yield The interest or dividends received by a shareholder.