YOUR FINANCIAL FUTURE. LEVEL Three

Transcription

1 YOUR FINANCIAL FUTURE LEVEL Three

2 YOUR FINANCIAL FUTURE LEVEL THREE Steve Mariotti NEELAM PATEL Network for Teaching Entrepreneurship

3 Your Financial Future Written by Steve Mariotti and Neelam Patel of the Network for Teaching Entrepreneurship Bank of America understands that good financial management is more important than ever, especially as individuals and communities face uncertain economic times. Our commitment to financially empowering individuals and families stems from our longstanding belief that the health of our business is intrinsically linked to the economic success of the communities we serve. We believe that a strong foundation in financial literacy basics is a critical skill for future economic success. We invest in financial education for youth starting as early as elementary school to help create a generation of young people who develop into adulthood with an understanding of how to earn, save, spend, budget, invest and manage credit. Bank of America is pleased to work with The Network for Teaching Entrepreneurship to produce Your Financial Future. This updated curriculum is available for downloading at no cost to anyone. We welcome your comments. You can reach us at: [email protected]. Cover photograph: Yellow Dog Productions/Getty Images Your Financial Future, The Network for Teaching Entrepreneurship was previously named the National Foundation for Teaching Entrepreneurship. Copyright 2011 NFTE (Network for Teaching Entrepreneurship), 120 Wall St., 29th Floor, New York, NY All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from NFTE prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to NFTE (Network for Teaching Entrepreneurship), Permissions Department, 120 Wall St., 29th Floor, New York, NY

4 CONTENTS Teaching Your Financial Future vi Unit 1 The Economic Way of Thinking 1 Activity 1 The Importance Financial Planning 3 Activity 2 Making Sound Financial Decisions: Strategies for Life 6 Activity 3 How the Economy Affects You 10 Unit 2 Money Management and the Basics of Banking 13 Activity 4 Preparing a Monthly Personal Budget 15 Activity 5 Banking: Types of Accounts and Services 18 Activity 6 Understanding the Time Value of Money 21 Unit 3 Saving and Investing 24 Activity 7 The Value of Saving 26 Activity 8 Assessing Your Savings and Investment Goals 29 Activity 9 Balancing Risk and Reward 32 Unit 4 Spending 35 Activity 10 Getting the Most Value for Your Dollar 37 Activity 11 Understanding Your Consumer Rights 40 Activity 12 Preventing Identity Theft 43 Unit 5 Credit 46 Activity 13 Building Good Credit 48 Activity 14 Determining the Cost of Credit 51 Activity 15 Using Credit Cards Responsibly 54

5 v Contents Unit 6 Philanthropy and Giving 57 Activity 16 Give and Take: The Benefits of Philanthropy 59 Activity 17 Responsibility to Your Community and Volunteering 62 Activity 18 Developing a Personal Giving Plan 65 Unit 7 Personal Insurance Needs 68 Activity 19 Understanding Health Insurance 70 Activity 20 Understanding Life Insurance 73 Activity 21 Understanding Home and Car Insurance 76 Unit 8 Career Planning: Taking Charge of Your Life 79 Activity 22 Assessing Your Aptitudes, Skills, and Competitive Advantage 81 Activity 23 Finding the Right Job for You 845 Activity 24 Your Education: The Best Investment You ll Ever Make 88 VOLUNTEER S GUIDE 91

6 Welcome to The Network for Teaching Entrepreneurship s Your Financial Future curriculum. As a volunteer, this resource will provide you with the necessary tools you will need to prepare, deliver, and engage students who are being exposed to the world of financial literacy. By supporting students throughout this learning process, you will give them an invaluable opportunity to understand how their choices about education, career, and managing money affects their overall well being and their family throughout their lives. I. YOUR Financial FUTURE Curriculum The lessons are designed for use with elementary, middle school, and high school students and are divided into the following units by grade level. They include numerous hands-on and critical thinking activities. The structure of this program is consistent for each level. It is divided into learning Units. The number of units covered is dependent on the grade level. LEVEL ONE Unit 1: The Economic Way of Thinking Unit 2: Money Management and the Basics of Banking Unit 3: Saving and Investing Unit 4: Spending LEVEL TWO Unit 1: The Economic Way of Thinking Unit 2: Money Management and the Basics of Banking Unit 3: Saving and Investing Unit 4: Spending Unit 5: Credit Unit 6: Philanthropy and Giving

7 vii LEVEL THREE Unit 1: The Economic Way of Thinking Unit 2: Money Management and the Basics of Banking Unit 3: Saving and Investing Unit 4: Spending Unit 5: Credit Unit 6: Personal Insurance Needs Unit 7: Philanthropy and Giving Unit 8: Career Planning: Taking Charge of Your Life Each Unit contains three learning activities. Each Activity is divided into three parts: Part 1: Introducing the Lesson Part 2: Student Activity/Guided Instruction Part 3: Critical Thinking Activity/Assessment Each Student Activity is accompanied by a Worksheet for the student to complete based on what they learned in the lesson. The Student Activities can be completed in one class period or may be assigned as homework. These activities help students to link new and existing information. They also can help students see that they already possess some knowledge about the new topic and are, in fact, dealing with information that has meaning or relevance to them. Studies have shown that hands-on activities are critical for students as they help boost self-esteem and confidence in learning situations. Every topic includes a Critical Thinking Activity/Assessment. These are open-ended questions designed to provoke thought and discussion. Remember, the lessons are designed to provide students with: The real-world importance of the topics Concrete actions they can take to apply their knowledge Opportunities for self-reflection about their lives and their futures Personal and professional goal-setting opportunities The reality, importance, and viability of their financial and entrepreneurial activities and achievements Encouragement for future achievement

8 viii In your role, you will be able to bring a new and valuable perspective to the learning. The students will appreciate that you have chosen to spend your time with them sharing your knowledge. Studies have shown that positive attention from adult role models can have a tremendous impact on the life outcomes of young people. II. Preparing for the Lesson As you prepare to work with the students, remember that the most important thing you bring to this program is you; that is, your real life experience both personally and professionally. By sharing your experiences and your business knowledge, you will not only teach business topics, but important life skills as well. Students will gain a greater understanding of how the world works as they become better acquainted with your background your education, job, successes and failures, hobbies, motivation to volunteer, and personal stories. Think of your time with the students not as a series of lectures to deliver, but rather as an interactive session. The more you link real-world experiences with the curriculum, the more successful you will be in reaching the students and holding their interest. Try to make your session lively and engaging by thinking through ways to include experiential learning elements. This can be accomplished when you: Research the community. Like any new situation, you may want to do research on the school (location, the name of the principal, number of students, student-teacher ratios, test scores, and so on), the community (economic status, major and local businesses in the area, and other circumstances that may negatively impact that community such as crime, homelessness, substance abuse, and so forth), the population (racial/ ethnic makeup), and so on. This helps you to understand some of the issues the students may be facing and creates an opportunity for making a connection. Read the lesson prior to the session and prepare personal stories to align with the concepts, questions, and activities. Think about how you can make the activities real for the students. Think about your own experiences or experiences of which you re aware and build them into the explanation of the activity. Also, use handouts or other items that are relevant to the lesson that will bring the lesson to life.

9 ix Remain attentive to the grade level and various learning levels and needs of students. For example, when working with elementary and middle school students, be cautious about the level of the terminology you use. Spend more time on definitions, have the students work in groups as opposed to individually, and provide more guidance. Think about the timeframe for your session. Map out how long you have to speak, the appropriate length of time to complete activities, and to engage in discussion. List the primary concepts then go into detail about each. Break these concepts into components, integrate your personal experience, and answer questions. The lesson plans we have provided are designed to help you do this. At the end of each lesson, recap the major concepts. III. Delivering the Lesson As a volunteer, you will be responsible for delivering the planned lesson. Specific tips for delivering a lesson are as follows: 1. Unit Overview. The unit overviews are made up of two pages. The first page is for you it summarizes the topic of the lesson and lists the activities contained in the lesson. The second page is for the students. You may read or summarize the content of this page for your students. 2. Vocabulary Terms. Each activity starts with a list of vocabulary terms. You may write the vocabulary terms on a board or flip chart before you start the activity. You should review the terms in context as they are used throughout the activity. 3. Introducing the Lesson. Each activity begins with a brief introduction. Review its content with the students. (If you think they would benefit by having the entire activity in hand, you may choose to provide this to them.) 4. Say to Students. There is a brief section at the end of the vocabulary section that starts with Say to Students. You should read this section directly to the students before they begin work on the hands-on activity. It contains an example or other ideas that support the content of the lesson. 5. Student Activity/Guided Instruction. This section provides instructions for the hands-on activity, including the worksheet to be completed, timing suggestions, and instructions for review. You should go over

10 x the concept of the activity with the students beforehand and review it afterwards. Suggestions for this review are provided with each Student Activity. Students should work individually on the worksheets. Be sure to monitor that they are working productively and answer any questions they might have about the activity. When students have completed the activity, you may ask for volunteers or have them work in groups to compare their answers and then share their results with the class. 6. Critical Thinking Activity/Assessment. Each activity ends with an open-ended, critical thinking question. Pose this question to the students and have them write down their responses. Afterwards, facilitate an open discussion among students on the critical thinking topic. IV. How to Use ThE Volunteer s Guide A Volunteer s Guide follows the student curriculum. The Volunteer s Guide contains a lesson summary, including teaching tips and pointers specific to each lesson, suggested responses to the Student Activity review and Critical Thinking questions, and an answer key for all worksheets. Note that the responses that appear in bold color are merely sample responses or information that will help you stimulate discussion. They are not meant to be the exact responses of students to any given question. To prepare for delivering a lesson, be sure to: 1. Look over the student activity that you will cover in class beforehand. 2. Review the same activity in the Volunteer s Guide before teaching each lesson to pick up teaching points and suggestions prior to delivering the lesson and to have the suggested responses to the Student Activity, Critical Thinking exercise, and worksheet answer key at hand. V. Final Preparations On the day you are scheduled to teach, please bear in mind to: Arrive minutes before the class starts so that you can meet the staff and/or teacher prior to the start of class, ask any questions you may have, and settle yourself in.

11 xi Reserve 5 10 minutes of your time to share who you are, what you do, and vice versa. This provides a great opportunity to open up the lesson and begin connecting with the students. Be open and honest. It is OK to say, Wow, I didn t know that, I really learned something today, or I didn t see it that way. This fosters awareness, respect, and acceptance between all parties. Be patient and flexible as the school environment may be different from the one you remember. Keep students focused and engaged by bringing them back to the lesson. Tweens and teens are easily distracted and can begin to have sidebar conversations. Use phrases like, Let s get back to the activity, Please share your discussion with the group, or simply try to relate it back to the part of the lesson. Use reflective listening phases like... What I m hearing you say is... or Are you saying... and paraphrase what you ve heard. This will allow you to check what you heard and provide the student with an opportunity to agree, clarify, or think more about what he or she is trying to communicate. Ask open-ended questions about the material or ask for questions or opinions. For many of you, this may be your first experience working with young people, volunteering in a school setting, and/or working in a low-income community. It s OK to ask questions or have them explain their answers or comments further. This helps to keep them focused on the content and adds to your understanding and learning as well. Provide constructive feedback. Be specific, not general. Identify exactly what went well by saying, That was a great example that illustrates... as opposed to just saying, That was a good example. Also keep the feedback in the moment as this can be rewarding and a valuable learning moment for the student. It s important that you work towards completing the entire lesson so that all concepts are covered. Keep in mind that some topics are longer than others and therefore may require additional time. Remember to be creative make the experience your own and have fun! Good luck and thanks for giving your time and life experience to these students.

12 Unit 1 The Economic Way of Thinking In this unit, you will review the concept of financial planning and decision making with your students and how the global economy affects them. This unit includes the following activities: 1. The Importance Financial Planning 2. Making Sound Financial Decisions: Strategies for Life 3. How the Economy Affects You

13 2 Unit 1 The Economic Way of Thinking Read the following TO your STUDENTS for an overview of the unit: Good financial planning is the key to your achieving financial security. In this unit, you will learn about financial goals and how to set them. You will also discover how the global economy affects you individually. Financial security means knowing that you can make, save, and invest enough money to achieve your goals. In order to achieve financial security, you must map out your plan to do so. A financial plan is, in essence, a road map that shows your current financial situation, identifies your financial goals, and suggests ways for you to achieve those goals. The economy is the financial structure of a country. It affects all of us. For example, the U.S. has a free-market economy, which is one in which prices are freely determined by the available supply and consumer demand for various goods and services. It also means that anyone who wants to start a business to produce and sell those goods and services can do so without permission from the government.

14 3 LEVEL THREE Unit 1 The Economic Way of Thinking Activity 1 The Importance of Financial Planning PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Financial security is knowing that you can make, save, and invest enough money to achieve your goals. A goal is something you want to make happen in the future. A short-term goal is one that you can accomplish in the next year. A mid-range goal is one you hope to achieve within the next one to five years. A long-term goal is one that will take five years or more to reach. A financial plan is a road map that shows a person s current financial situation, identifies his or her financial goals, and suggests ways of achieving those goals. Say to Students: You may have seen or heard commercials from companies that claim to help people achieve financial security. What exactly does this mean, and what would make you feel financially secure, both now and in the future? Financial security means knowing that you can make, save, and invest enough money to achieve your goals. For example, you may want to buy a bike, go to college, or own a home. These are all types of goals with different financial implications that take different times to achieve. A goal is more than wishful thinking; it is something that you must to plan to accomplish and work to achieve. In order to achieve financial security, you must map out your plan to do so. A financial plan is, in essence, a road map that shows your current financial situation, identifies your financial goals, and suggests ways for you to achieve those goals.

15 4 LEVEL THREE Unit 1 The Economic Way of Thinking The time you spend developing your financial plan will be well worth it. By creating a realistic plan and sticking to it, you ll be able to achieve your short-term, mid-range, and long-term goals. Think about the things you d like to have, and consider just how much you would have to save each week and how long it would take to buy them. It s really not that difficult, and you ll really appreciate the things you buy when you have to save up for them. Also, it s a great habit to get into. As you get older, this routine will help you achieve the financial security you re seeking. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Goal Setting worksheet. (Use extra sheets of paper if necessary.) This should take no more than 20 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask: a. What were some of their immediate (short-term) goals? b. Where do they see themselves in the next 5 years? c. Can they imagine what they ll achieve (not just acquire) by the time they re adults? d. Ask for volunteers to come to the front of the class to diagram how they will achieve various financial goals. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t 1. Ask students to list one possible and one impossible goal. Ask them what makes one goal possible and one not. 2. Ask for volunteers to describe their goals for this school year and what they plan to do to reach it.

16 5 LEVEL THREE Unit 1 The Economic Way of Thinking Goal Setting Worksheet 1. What are some of your short-term goals? 2. What goals you would like to achieve by the time you are 18 years old (or in the next five years)? 3. What goals would you like to achieve by the time you are 21? By the time you are 25? By the time you are 30? 4. What are some other goals you d like to accomplish throughout your life? How do you plan to achieve them? 5. Fill out this wish list for what you would like to buy at different ages. At each age, tell how you will earn the money to save for the item on your wish list. FINANCIAL SAVINGS AGE HOW EARNED? GOAL REQUIRED example: a. b. c. d. e. 16 Used car $2,500 Summer job

17 6 LEVEL THREE Unit 1 The Economic Way of Thinking Activity 2 Making Sound Financial Decisions: Strategies for Life PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A forecast is a projection of what might happen in the future. A budget is a plan for how to spend, save, and invest the money you make. Gross income represents your total earnings before any deductions, such as income taxes. Net income is your take-home pay; that is, the amount of your paycheck after all deductions have been made. Say to Students: You ve learned that a financial plan is a roadmap that shows a person s current financial situation, identifies his or her financial goals, and suggests ways of achieving those goals. It is also a roadmap for sound financial decision making throughout your life. Short-term Goals (1 year) Mid-term Goals (1 5 years) Long-term Goals (5+ years) What are some of your short-, medium-, and long-term goals? Are they realistic and achievable, or are they just wishful thinking? To be sure your goals are solid; here are some steps you can take to make sensible financial decisions: 1. Review your current financial situation. a. What is your total income? b. What expenses repeat, or recur, every month?

18 7 LEVEL THREE Unit 1 The Economic Way of Thinking 2. Refine, or improve, your financial plan by forecasting what you think will happen in the coming months. a. What unusual, or one-time, expenses do you predict will occur in the next year? b. Do you see situations that could cause your income to increase or decrease? 3. What are some different options you could follow to achieve your goals? Here are some examples: a. If you re thinking about buying a new car, could you buy a used one and take out a smaller loan? b. Might you work extra hours to buy that mountain bike? c. Might you consider going to a state college rather than an out-of-state one to save money? 4. Choose a course of action that s right for you and helps you to achieve all your life goals, not just your shortterm desires. For example, taking this summer off and hanging out with your friends instead of working may be the most fun in the short-term, but how will it affect your midrange goal of buying a car next summer? 5. Re-visit and Revise. Few things in life stay exactly the same. Check your financial plan often to see if the assumptions you made are still true. Revise your plan as needed based on your current situation. Taking the most realistic view of your financial situation will help you now and in the future. When you make a financial forecast, for example, you must take into account all the recurring expenses that you have each month. You ll also need to account for any unplanned expenses or even ones that only occur once in a while. When you work, you may also be able to project an increase in your salary that you can build into your budget. The thing to remember is that there are many roads to achieving your goals and you ll need to find the right balance for you.

19 8 LEVEL THREE Unit 1 The Economic Way of Thinking PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Monthly Income & Expense Forecast worksheet. This should take no more than 30 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask: a. Think about what you earn each month. Is there anything else you can do to increase your income? b. Next think about what you spend. Forecast, or project, your regular monthly income and expenses. Do you have any unusual expenses coming up this month? c. Make a list of the short-term items you d like to buy during the month. d. Enter these items into suitable categories on the worksheet. For example, tickets to a concert would go under Entertainment. (If your item isn t listed exactly, put it in the closest category or where it says Other. ) e. Will you have enough income and savings to buy the items you want? If not, try to revise your forecast to see how you can achieve your goal. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask the students to picture themselves five years from now. Ask them to contemplate how much they will be earning each month? Then ask them to consider the types of expenses they might have. You should also ask students how much they will have in savings and how they achieved that amount. Finally, you may wish to ask what major things they own and how they bought them.

20 9 LEVEL THREE Unit 1 The Economic Way of Thinking MONTHLY INCOME AND EXPENSE FORECAST

21 10 LEVEL THREE Unit 1 The Economic Way of Thinking Activity 3 How the Economy Affects You PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. The economy is the financial structure of a country. When an economy is strong and is growing fast, prices usually start going up. This is called inflation. When prices fall, it can cause a recession, or a contraction of the economy. The unemployment rate is expressed as a percentage based on the number of people who are out of work and looking for a job vs. the total number of people who could be employed. An economic indicator is a number, or statistic, that tells you something about how the economy is performing. Say to Students: The global economy affects all of us. The U.S. has a freemarket economy, which means that prices are freely-determined by the available supply and consumer demand for various goods and services. It also means that anyone who wants to start a business can do so without permission from the government. Because the government does not dictate economic activity, the economy is constantly changing. When an economy is strong and is growing fast, prices usually start going up, resulting in inflation. When prices fall, it can cause a recession, which is a contraction of the economy that can lead to higher unemployment. Inflation Recession and Deflation

22 11 LEVEL THREE Unit 1 The Economic Way of Thinking During a recession, there are not enough jobs for everyone who wants to work. The rate of inflation and the unemployment rate are two economic indicators that affect how investments behave. Economic indicators include such things as business earnings, unemployment rates, new housing starts, changes in consumer goods prices (inflation/deflation), industrial production, stock market prices, changes in the money supply, and many more. Let s say you always have a granola bar as an afternoon snack. The granola bars usually cost 50 cents each, so you can buy two for a dollar. But what happens if the price of the granola bar rises to 60 cents each? Now you can only buy one candy bar for your dollar, or start paying $1.20 for the same two granola bars. This is what inflation does it makes your money worth less. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Economy worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may: a. Have students describe factors that make up the economy. b. Compare the terms inflation and recession. c. Discuss different types of economies throughout the world. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to think about the most recent global recession and how it affected their family personally. Share your experiences with your classmates and friends. 1. Did this period of economic decline cause your family to cut back or delay purchases? 2. Did they save more for a rainy day? 3. How else did it affect you?

23 12 LEVEL THREE Unit 1 The Economic Way of Thinking Economy Worksheet Circle the correct answers for each of the questions below. 1. An economy is: a. The supply of money in a country b. The financial structure of a country c. A country s unemployment rate 2. If the rate of inflation high... a. Prices are going down b. Prices are going up c. It s a good time to buy bonds 3. What kind of economy does the U.S. have? a. A free-market economy b. A government-controlled economy c. An industrial economy

24 Unit 2 MONEY MANAGEMENT AND THE BASICS OF BANKING In this unit, students will learn how to prepare a monthly budget, which will include comparing their actual expenses against what they forecast for a month. They will also learn about the types of accounts and services offered by banks. Finally, they will learn about how interest makes their money grow over time. 4. Preparing a Monthly Personal Budget 5. Banking Types of Accounts and Services 5. Understanding the Time Value of Money

25 14 Unit 2 MONEY MANAGEMENT AND THE BASICS OF BANKING Read the following TO YOUR STUDENTS for an overview of the unit: As you learned earlier, a budget helps you keep track of how much you earn and how much you spend. In essence, it s a plan for how to spend, save, and invest the money you make. Preparing a personal monthly budget helps you keep track of your income and expenses so that you can manage your money. One of the easiest and most convenient places to keep your money is in a bank. Not only do banks offer people a variety of financial services, they also provide safety and security for their hard-earned money. Finally, you will study a very important concept in this unit the Time Value of Money. A dollar you have today may be worth more or less in the future, depending on how it s invested. The relationship between time, money, and return on investment, or ROI, is called the time value of money.

26 15 LEVEL THREE Unit 2 Money Management and the Basics of Banking Activity 4 Preparing a Personal Monthly Budget PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A budget is a plan for how to spend, save, and invest the money you make. It helps you keep track of how much you earn and how much you spend. Money you receive, such as wages from a job, an allowance, or even gifts, is called income. Money you spend on school supplies, clothes, food, birthday gifts, and entertainment is called expenses. If you spend more than you earn, you will have a budget deficit. If you spend less than you earn, you will have a budget surplus. Say to Students: Preparing a personal monthly budget helps you keep track of your income and expenses so that you can manage your money. If you have a budget deficit, you won t have enough money to pay for the things you want. You also won t have any money to save or invest. Spending more than you earn is sometimes referred to as living beyond your means. Monthly Income $ Monthly Expenses $ Difference (income minus expenses ) $ If you have a budget surplus, you ll have extra money that you can save toward buying the things that you want, whether it s paying for a cell phone or saving for college. When your earnings exceed what you spend, it is known as living within your means.

27 16 LEVEL THREE Unit 2 Money Management and the Basics of Banking Your personal budget will help you figure out how much money you need to save each month to accomplish your goals. It will also help you to avoid budget deficits so that you can buy the things you want and save and invest your money to achieve financial security. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete their Personal Monthly Budget worksheet. (Have students fill in the projected column only for now.) This should take approximately 20 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students about: a. Their projected income for the month. b. Their projected expenses for the month. c. If the students budgets show a surplus or deficit. If you wish, you may ask students to repeat this exercise after one month to compare their actual income and expenses with their forecasts. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to answer these questions: 1. If you have a deficit, what can you do to reduce your expenses or earn extra income to balance your monthly budget? 2. If you have a surplus, how might you save or invest this money?

28 17 LEVEL THREE Unit 2 Money Management and the Basics of Banking PERSONAL MONTHLY BUDGET WORKSHEET

29 18 LEVEL THREE Unit 2 Money Management and the Basics of Banking Activity 5 Banking Types of Accounts and Services PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A checking account lets you write checks on your deposits or use a check card to pay for purchases. A savings account is money kept in a bank or other financial institution on which you earn interest. High-yield Certificates of Deposit, or CDs, pay higher interest rates than savings accounts. Online banking allows you to view your accounts online and make electronic transfers of money between your checking and savings accounts. Say to Students: One of the easiest and most convenient places to keep your money is in a bank. Not only do banks offer you a variety of financial services, they also provide safety and security for your hard-earned money. Banks offer several types of checking and savings accounts. Some types of checking accounts have monthly fees for this service, while others offer free checking when you maintain a minimum balance or have your paychecks deposited directly to the bank. Some banks even offer checking accounts that are geared towards the needs of students.

30 19 LEVEL THREE Unit 2 Money Management and the Basics of Banking Banks also offer many choices for savings, from regular savings accounts that pay a modest interest rate to high-yield Certificates of Deposit. CDs call for minimum deposits and require that you to keep the money in the bank for a fixed period, such as 3 months, 6 months, or a year. Online banking allows you to do your banking from the convenience of a computer rather than traveling to the bank itself. With online banking, you can also do online bill pay, which allows you to pay some of your bills online, rather than mailing them in with your check when they are due. Have you ever heard the expression You re money should work for you. Explain that this means that by saving or investing your money appropriately, it will grow by itself over time. For example, money deposited in a bank savings account earns interest. The earlier you start saving and investing, the more time your money will have to grow. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Bank Services worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students about: a. Do they have a checking account with a bank and what has been their experience? b. Do they have a savings account, and how has it helped them make their money grow? c. Do they or their family members use online banking? Has the experience been positive? Why or why not? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to answer these questions: 1. What are some of the advantages of online banking? 2. Think of at least three ways online banking saves you time and money.

31 20 LEVEL THREE Unit 2 Money Management and the Basics of Banking Bank Services Worksheet 1. List three types of checking accounts offered by your local bank. What are the advantages and disadvantages of each? 2. List two types of savings accounts offered by your local bank. What are the advantages and disadvantages of each? 3. What is the minimum deposit for a 6-month CD at your bank? What interest rate does it pay? If you put in the minimum amount, how much will you have after 6 months? 4. What types of companies allow you to pay their bills online? What types of companies do not? Why do you think this is so?

32 21 LEVEL THREE Unit 2 Money Management and the Basics of Banking Activity 6 Understanding the Time Value of Money PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. The relationship between time, money, and return on investment (ROI) is called the time value of money. If you have $20 in your pocket, its present value is just that $20. The future value of money is the amount it will grow to in the future when you invest it wisely. Say to Students: A dollar you have today may be worth more or less in the future, depending on how you invest it. Three things determine how your money will grow: 1. Time. The more time you have to save, the more years you can earn interest, and the more money you will have at the end of the time period. You also have more opportunities to add or deposit money into your savings account. 2. Money. The more money you have to start with, the faster it will grow. 3. Return on Investment (ROI). A higher ROI will help your money grow faster. Young people have a great advantage when investing because they have more time to reach their goals. This is the power of the time value of money.

33 22 LEVEL THREE Unit 2 Money Management and the Basics of Banking PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Time and Money worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students for: a. Examples of financial goals. b. Timeframes for achieving financial goals. c. Invite students to suggest how they plan to achieve their financial goals. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to answer this question: Why do you, as a young person, have an advantage over an adult when it comes to investing?

34 23 LEVEL THREE Unit 2 Money Management and the Basics of Banking Time and Money Worksheet 1. Your Financial Goals List two of your financial goals. a. Goal #1: b. Goal #2: 2. Time What is the amount of time you have to save money for each goal? a. Goal #1: b. Goal #2: 3. Money How much money do you think you ll need for each goal? a. Goal #1: b. Goal #2: 4. Planning for the Future What is your plan for reaching each goal? a. Goal #1: b. Goal #2:

35 Unit 3 SAVING AND INVESTING In this unit, you will be reviewing the concepts of saving and investing with your students. The unit includes the following activities: 7. The Value of Saving 8. Assessing Your Savings and Investment Goals 9. Balancing Risk and Reward

36 25 Unit 3 SAVING AND INVESTING Read the following TO YOUR STUDENTS for an overview of the unit: Saving money is one of the most important steps toward financial security. When you save, you put money aside on a regular basis. You put the money someplace safe, such as a bank or a credit union, so that it is available when you need it for an unexpected expense (such as medical bills), a planned expense (such as education), or for retirement. As a bonus, the bank will pay you just for leaving the money in your account. The longer it stays in your account, the more money you will have to spend later. You may also decide to invest some of your money in stocks and bonds. Investing this way is riskier than putting money in a bank s savings account because your money is usually not insured, and your return on investment (ROI) the amount of money you earn compared to the amount of money you invest is not guaranteed. It is even possible that you will lose all of the money you invest. However, investing also provides an opportunity to earn more money or to increase your savings at a faster rate. Both saving and investing provide opportunities to increase your wealth, leading to financial security and freedom. Most financial experts advise people to use a combination of saving and investing. Saving keeps your money safe and available, and investing gives you the chance to grow your wealth. The amount you save and the amount you invest depends on your financial goals, your financial resources, how old you are, and how much risk you are willing to take.

37 26 LEVEL THREE Unit 3 Saving and Investing Activity 7 The Value of Saving PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Income is money that you earn from work or receive as a gift. Savings is money or other assets you set aside, sometimes to reach a goal. A savings account is money kept in a bank or other financial institution. A deposit is money you put into your savings account. You also earn interest on your savings. Interest is the amount the bank pays you each month for the use of your money so that they can make loans. Liquidity is the ease with which savings (or any investment) can be turned into cash. Say to Students: You can open a savings account using a governmentissued ID, such as a social security card, driver s license, passport, and so on. To open or add to your savings account, you make a deposit. A savings account also provides safety for your money. Money saved in a bank is safe even if the bank goes out of business. This is so because the government guarantees the first $250,000 deposited in a bank through the Federal Deposit Insurance Corporation (FDIC). If you do not put your money in a bank, there is no protection if it is lost or stolen. The sooner you get into the habit of saving some of your income in a bank or credit union, the more money you ll have to use to reach your goals. Also, it is a good habit to save a part of cash gifts you receive, your allowance, money you earn from running a small business, or other income. For example, if you earn $100 a week and deposit $10 each week in a savings account earning 2.5 percent interest compounded monthly, you will have $ at the end of one year.

38 27 LEVEL THREE Unit 3 Saving and Investing PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the 10% Savings worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask: a. What item did you chose to buy? b. Why is it important for you to save money to buy this item? c. Did you understand the math? Is there a volunteer that would like to come to the front of the class to demonstrate how to do the math? d. How can you use this activity in the future? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students these questions: 1. How much do you currently save from what you earn? 2. Share ideas on how anyone could meet the goal of saving 10% of earnings.

39 28 LEVEL THREE Unit 3 Saving and Investing 10% Savings Worksheet To calculate 10 percent of a certain amount of money, you move the decimal point one place to the left. For example, 10% of $ is $ Use this simple formula to answer the following questions: 1. What is 10% of $64.00? What is 10% of $125.00? What is 10% of $759.00? 2. If you earn $125 a week in a part-time job, how much will you have left to spend each week after saving 10%? 3. At this rate, how much will you save in a month (4 weeks)? 4. Think of something you d like to buy with your savings, then answer the questions below to create a savings plan to buy that item. a. How much does this item cost? b. How much money do you actually make each week? c. If you deposited 10% of your weekly income into your savings, how much would you save each week? d. How many weeks would it take to save enough money to buy what you want? (Round up to the nearest week.)

40 29 LEVEL THREE Unit 3 Saving and Investing Activity 8 Assessing Your Savings and Investment Goals PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary term with the students. Either write them on a board, chart paper, or provide students with this worksheet A 5-Year Plan is a strategy you develop to help you achieve your goals in a specific time period, namely 5 years. Say to Students: When you work in a business, you are often asked, What is your 5-year plan, and how do you propose to achieve it? To reach the goals of a 5-year plan, which is a mid-range goal, you have to think things through very carefully and be patient. In order to make any plan, you first must be clear about your goals. Let s think about your goals for two specific 5-year plans (well almost 5 years!). The first set of goals is for where you want to be financially upon your high school graduation. The second set of goals is for where you want to be financially after you graduate college. (If you don t plan to attend college, then set these goals for 5 years after you graduate high school.)

41 30 LEVEL THREE Unit 3 Saving and Investing PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the 5-Year Plan Goals worksheet. (Use extra sheets of paper if necessary.) This should take approximately 15 minutes. 2. Review the various possible answers with the students. They may work in pairs or you may ask volunteers to provide answers. 3. Review the concepts of the exercise with the students. You may ask: a. Why is talking about savings so important? b. What are some things you can think about saving for? c. Do you set goals for savings? education? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to tackle the following exercise: Think of a goal for a personal 5-year plan; that is, one not based on a financial goal but one that relates to accomplishing a personal achievement. Be very specific about what it is you want to achieve. Now think of all the steps you will need to take between now and then to achieve your goal. Again, be as specific as possible. Share your plan with your classmates, and discuss the various steps that everyone came up with to accomplish their plans.

42 31 LEVEL THREE Unit 3 Saving and Investing 5-Year Plan Goals Worksheet 5 - Y e a r P l a n # 1 1. Upon my high school graduation, I expect to have $ saved for college, job training, or to start my own business. 2. Here are the steps I followed to achieve this level of savings. (List after-school work, summer jobs, gifts you received, and so forth, and state your savings strategy.) 3. I will have acquired the following items by the time I graduate from high school. 4. Here is how I was able to purchase these items. 5 - Y e a r P l a n # 2 1. Upon college graduation (or 5 years after I graduate high school), I expect to have $ saved and invested. 2. Here are the steps I used to save and invest my money. (List full and part-time jobs, other income, summer jobs, and so on, and state your savings and investment strategy.) 3. I will have acquired the following items by the time I graduate from college (or within 5 years after I graduate high school). 4. Here is how I was able to purchase these items.

43 32 LEVEL THREE Unit 3 Saving and Investing Activity 9 Balancing Risk and Reward PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. An investment is something you put money, time, or energy into in the hope of getting something in return. Return is what you hope to get back from your investment. Risk is the chance that you will not get the return on your investment that you expect. Capital is cash or goods used to generate income. Say to Students: Before investing your time or money (capital), you need to think about the risk of the investment and the potential return. Suppose you want to sell printed T-shirts that you make. You would first have to buy a quantity of blank T-shirts, purchase the printing equipment and supplies, create various designs, and advertise your products. You are investing both your money (to buy the supplies and equipment) and your time (to create designs, advertise the shirts, and so on). What are some of the risks? Your investment could actually lose value or waste your time: What if no one wants to buy the T-shirts? You have then lost time, money, and are stuck with the T-shirts. What if the cost of your materials goes up, hurting your profits on those you do sell?

44 33 LEVEL THREE Unit 3 Saving and Investing What are the possible returns? Your return is the gain or reward for your investment: You sell 10 T-shirts at $15 each. Your cost per T-shirt is $10, so you ve earned $50 total on the T-shirts you ve sold (10 shirts X $5 per shirt). You make some new friends as a result of your business or your efforts result in a new business opportunity. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Risk and Reward worksheet. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask: a. What are some other examples of a risk? b. What are some rewards that are related to that risk? c. Why are risk and rewards important to consider in your life? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to think about an investment they have made either in time or money, and challenge them with these questions: 1. What risks did you take? 2. What was your return or reward? 3. What is the relationship between the two? 4. How comfortable are you with risk?

45 34 LEVEL THREE Unit 3 Saving and Investing Risk and Reward Worksheet Write the potential risks and rewards of each situation described below. 1. You loan your friend $100 to start a lawn-care business. Potential risks: Potential rewards: 2. You invest $200 in materials to make jewelry. You plan to sell finished necklaces, bracelets, and rings for $25 each. Potential risks: Potential rewards: 3. Your brother asks for a $50 loan. You agree that he will pay you back $55 in one week. Potential risks: Potential rewards:

46 Unit 4 SPENDING In this unit, you will be reviewing the concept of informed consumer spending with your students. The unit includes the following activities: 10. Getting the Most Value for Your Dollar 11. Understanding Your Consumer Rights 12. Preventing Identity Theft

47 36 Unit 4 SPENDING Read the following TO YOUR STUDENTS for an overview of the unit: Let the Buyer Beware, is a very old expression that remains true today, especially with the advent on online shopping. You will learn that it is your responsibility, not the seller s, to be informed about what you are purchasing and who you are purchasing it from. You will also begin to understand your consumer rights and responsibilities. You will learn that there are consumer protection laws that seek to prevent you from being taken advantage of by businesses. These laws forbid businesses from lying about prices and from using advertising to fool people. Finally, you will learn about the dangers of and how to prevent identity theft.

48 37 LEVEL THREE Unit 4 Spending Activity 10 Getting the Most Value for Your Dollar PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Caveat emptor is the Latin expression meaning Let the Buyer Beware. Before you make a purchase, consider doing research, meaning to study or investigate, either online or in consumer-oriented magazines to be sure you get the best product from the highest-quality seller. Say to Students: Nowadays, most people search the Internet before they make a major purchase. Whether you are buying a TV, a digital camera, or a car, your time is well spent searching the Web for reviews of these items, doing comparative price shopping, and learning which sellers can be counted on to support their products after a sale. Useful information can also be found in consumer magazines, newspapers, and consumer features on your local news. The key point to remember here is Look before you buy. Not only do you need to evaluate what you re purchasing in advance, you also need to examine who you are buying it from. Is the seller a relative? a friend? a reputable dealer? or an online source? Again, you can count on various consumer websites and magazines to help you determine the credibility of your seller.

49 38 LEVEL THREE Unit 4 Spending There s an old expression Let the Buyer Beware, which is as true today as when it first was uttered hundreds of years ago. It means that it is your responsibility, not the seller s, to be informed about what you are purchasing and whom you are purchasing it from. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Smart Buyer worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Suggest why it is important to look before you buy; that is, to do the research. b. Offer reasons why it is important that they not only research the purchase itself, but the seller as well. c. Discuss the types of websites they can go to find reviews of different products and services and to see ratings of the sellers. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to answer these questions: 1. Why is it important to do the right amount of research before you make a big purchase? 2. Why is it also important that you know your seller s reputation before you buy?

50 39 LEVEL THREE Unit 4 Spending Smart Buyer Worksheet 1. You re about to buy your first new car. What are some types of websites you should look at before heading out to the dealer? 2. Let s say that you decided on which vehicle you want to purchase. How will you determine which dealership has the best selection and the best prices? 3. Once you decide on a dealership, how will you find out what other car buyers think about their experiences working with this dealer both before and after the sale?

51 40 LEVEL THREE Unit 4 Spending Activity 11 Understanding Your Consumer Rights PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, or chart paper, or provide students with this worksheet. A consumer is anyone who buys something. Consumer protection laws are rules that seek to prevent consumers from being taken advantage of by businesses. Every state has these laws and a government agency to enforce them. The Federal Trade Commission (FTC) is the government agency that watches over business and can sue a company it suspects of unlawful practices. The Food and Drug Administration (FDA) is the government agency that regulates the safety and advertising of food, drugs, cosmetics, and medical devices. A class-action suit is a lawsuit brought by many consumers who team up to sue a company. Deceptive pricing is advertising one price and then charging another; the law forbids this practice. Say to Students: Consumer protection laws forbid businesses from lying about prices and from using advertising to fool people. These laws allow consumers who think they have been cheated to sue the business they believe have wronged them. The Federal Trade Commission (FTC) monitors businesses to be sure they do not use unfair or deceptive practices or use misleading or false advertising. Here is a link to the FTC Consumer Protection website:

52 41 LEVEL THREE Unit 4 Spending Businesses cannot: Say they offer lower prices than their competitors, if it is not true. Say they are offering something for free, unless it really is free. It is illegal, for example, to offer a free oil filter with oil change, but raise the price of the oil to cover the cost of the filter. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Consumer Rights worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss the concept of truthful advertising. b. Talk about how the government protects consumer rights. c. Discuss reasons why a consumer or group of consumers might sue a company. d. Give an example of a product claim that sounds too good to be true. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to discuss this problem: Let s say you own a sporting goods store. You decide to sell a set of 10 golf clubs for $400, while your competitor sells the same model clubs, but with 14 clubs included, for $500. Your advertising claims $100 less than the competition. Is it legal for you to claim that you are selling this set of clubs for $100 less than the competition? Why or why not?

53 42 LEVEL THREE Unit 4 Spending Consumer Rights Worksheet 1. You ve heard the expression, If something sounds too good to be true, it probably is. Give an example of how this might apply to consumer rights and the practice of misleading advertising. 2. You ve seen the Nutrition Facts label on cans, bottles, and boxes of food. How are these labels an example of the government protecting your rights as a consumer? 3. What is the difference between a lawsuit brought by an individual and a class-action lawsuit? 3. You receive an claiming to sell a medicine you take for one-third the regular cost. When you receive your order, you find out that it s not the same medication stated in the . The company refuses to refund your money. What should you do?

54 43 LEVEL THREE Unit 4 Spending Activity 12 Preventing Identity Theft PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Identity theft involves someone pretending to be someone else in order to steal their money or to get other benefits. A credit rating indicates how likely someone is to repay money that they ve borrowed. A credit report lists someone s history of borrowing and repaying debt. Say to Students: Identity theft is a serious crime in the U.S. If you are a victim of identity theft, your credit rating could suffer dramatically. With identity theft, someone pretends to be an existing account holder to obtain money from a legal bank account. The thief gets the victim s personal information from their credit cards, checks, or deposit slips. They then use this information to access funds at the victim s bank. Some of the ways a criminal obtains a victim s personal information are: Stealing mail or going through garbage that contains personal information. This is known as dumpster diving. Eavesdropping on public transactions, such as ATM withdrawals, to obtain personal data. This is known as shoulder surfing. Robbing payment receipts or identification cards, either by pick pocketing them or by skimming cards through a card reader. Posing as someone else to get the victim s credit information. This is known as pretexting, or phishing when done online.

55 44 LEVEL THREE Unit 4 Spending The Federal Trade Commission (FTC) has an identity theft website. ( It gives detailed information to help you deter, detect, and defend against identity theft. There s no foolproof method for preventing identity theft. Here are some ways you can reduce the chances that you ll be a victim. Remove anything that shows your social security number from your wallet or purse. Shred all personal financial documents that you no longer need, and store those that you do securely. Don t provide any personal information over the phone unless you re absolutely sure about who is on the other end of the line. Keep a list of all your accounts in a safe and secure place. Check your bank and credit card statements carefully each month to be sure they agree with your records. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Protecting My Identity worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students for: a. Discuss ways identity thieves work. b. Talks about what types of harm identity theft can cause an individual and how it can cause so much damage. c. Discuss ways that students can prevent identity theft. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students the following question: Why should you shred all personal financial documents you no longer need, even items such as free credit card offers?

56 45 LEVEL THREE Unit 4 Spending PROTECTING MY IDENTITY Worksheet 1. List five ways identity thieves obtain personal information illegally. a. b. c. d. e. 2. Why might you wish to check your credit report at least once a year? What should you do if you find any problems, such as, to your surprise, you have a long past due bill from a local department store whose credit card you rarely used? 3. List three ways to minimize the chance that you ll be a victim of identity theft. a. b. c. 4. Research surveys show that, from 2003 to 2006, there was actually a decrease in the total number of victims as well as a decrease in the total value of identity theft in the U.S. from $47.6 billion in 2003 to $15.6 billion in The average identity theft per person also decreased from $4,789 in 2003 to $1,882 in Why do you think this drop-off occurred?

57 Unit 5 CREDIT In this unit, students will explore how to build a good credit record, determine the cost of the credit they use, and learn how to use credit cards responsibly. The unit includes the following activities: 13. Building Good Credit 14. Determining the Cost of Credit 15. Using Credit Cards Responsibly

58 47 Unit 5 CREDIT Read the following TO YOUR STUDENTS for an overview of the unit: Building a good credit history is an essential part of sound financial planning. Someone s credit history is their record of how well they used credit in the past and, specifically, if they paid back the money they borrowed in full and on time. Banks will only issue credit to those who have good credit history. If someone uses a credit card and doesn t pay the money back, they will get a bad credit history. A bad credit history makes borrowing money for big purchases very difficult because the lender does not trust that the money will be paid back. Credit cards are issued by banks or other financial institutions and allow people to purchase goods or services. Credit cards are popular because of their convenience in making purchases and because they are widely accepted by businesses around the world. They allow people to make purchases throughout the month and then pay for them when their credit card statement, or monthly bill, comes in. One has to pay the bank back each month for his or her purchases. If an individual pays the full amount, or principal on time, he or she will not be charged interest. If they pay less than the full amount, finance charges will appear on their next statement. Thus the larger the balance someone has unpaid each month, the larger will be their interest payments, which can become very expensive. The lesson to be learned here is that you should use credit cards only if you have the discipline to pay them off regularly, before finance charges get too high. If you can do this, then you are using credit cards responsibly. Practicing this type of self-discipline will mean that you are living within your means.

59 48 LEVEL THREE Unit 5 Credit Activity 13 Building Good Credit PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. When you borrow money, you are using credit. Your credit history is your record of how well you used credit in the past and if you paid back the money you borrowed in full and on time. Compound interest is the interest you receive on your previously invested interest. Compounding means that you are earning interest on your interest. It can also be a bank earning interest on your unpaid credit card balances. Say to Students: When you loan something to a friend, you know you can trust him or her to give it back, right? So the next time they want to borrow something, you don t hesitate to lend it to them. Your friend has good credit with you. When you borrow from a financial institution, such as when a bank loans you money, you are also using credit. The institution that extends you the credit trusts you to pay the money back. There are three kinds of credit history: 1. No credit. Someone who has never borrowed money before has no credit. No one knows if that person can be trusted to pay the money back because they have never proven their ability to do so. Banks rarely lend money to people with no credit. 2. Good credit. Someone who has borrowed money and paid it back in full and on time has good credit. This person can usually get more credit when needed because creditors know they will get their money back.

60 49 LEVEL THREE Unit 5 Credit 3. Bad credit. Someone who has borrowed money in the past and not paid it back either in full or on time has bad credit. This person is not likely to be trusted if they want to borrow again in the future, or they will be charged more because they are a credit risk. This makes buying a home, car, or other large purchases very difficult. It is very important to establish a good credit history. Although most banks will not lend money to someone with no credit history, if you are at least 18 years old and have a job, you can often start building a credit history by applying for a credit card and paying your bills on time. Doing so will make getting credit easier for you in the future. If you do not pay the full monthly balance on your credit card, however, you will be charged interest the larger the unpaid balance the more interest you will pay. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Credit History worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss ways to build a good credit history and why this is important. b. Talk about why it s a bad practice to make the minimum payment each month on a credit card. c. Why does even making the minimum payment consistently each month not build good credit history? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students this question: How does the power of compounding, in this case compounding of finance charges by the bank that issues your credit card, affect you negatively when you don t pay your credit card bills in full each month?

61 50 LEVEL THREE Unit 5 Credit Credit History Worksheet Define the following types of credit histories and give an example of how a person might have gotten that kind of credit rating. 1. No credit Definition: An example of someone who might have no credit would be: 2. Bad credit Definition: An example of someone who might have bad credit would be: 3. Good credit Definition: An example of someone who might have good credit would be:

62 51 LEVEL THREE Unit 5 Credit Activity 14 Determining the Cost of Credit PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Credit cards are issued by banks or other financial institutions and allow you to purchase goods or services. If you pay the full amount, or principal, shown on your credit card statement on time, you will not be charged interest. A finance charge is the interest you pay to use the credit card. If you fail to make the minimum payment on time, you will also be charged a late fee. Some credit cards also charge an annual fee for their use. Say to Students: When you use a credit card, the bank that issued the card is lending you money to pay for your purchase. At the same time, the bank pays the purchase price, less a service fee to the company from which you bought the goods or services. In turn, by using the card, you have promised to repay the bank at a future date. You have to pay the bank back each month for your purchases. If you pay the full amount, or principal, back on time, you are not charged any interest. If you pay less than the full amount, finance charges will appear on your next statement. The finance charge is applied to the entire unpaid balance. Thus the larger the balance you have unpaid each month, the larger will be your interest payments, which can become very expensive. In addition, if you do not make the minimum payment on time, you will also be charged late fees.

63 52 LEVEL THREE Unit 5 Credit Banks will only issue credit to those who have a good credit history. If you use a credit card and don t pay the money back, you will get a bad credit history. A bad credit history makes borrowing money for big purchases very difficult because the lender does not trust that the money will be paid back. Let s say you charge $200 to your credit card for a media player. Your bill comes the next month, and you can only afford to pay $35. At an 18 percent interest rate, you ll be assessed a $3.00 finance charge, reducing your actual payment to $32. Your bill next month, even if you don t make additional charges, will be $168. If you take 6 months to pay for the media player, you will pay a total of nearly $211, or $11 in finance charges. Now imagine how your bills will grow if you keep making additional charges and only make small payments each month! The lesson here is to use credit cards only if you have the discipline to pay them off regularly, before finance charges get too high. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Cost of Credit worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss the pros of cons of paying in cash vs. using credit. b. Comment on whether they think the cost of credit (9 percent) for the loan is fair or unfair. c. What other ways besides a loan might Jason use to buy the bike? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Pose the following situation to your student and ask for their comments: Your friend just got her first credit card. She tells you about all the things she will buy with it and that she will just make the minimum monthly payments. Why is this a bad idea?

64 53 LEVEL THREE Unit 5 Credit Cost of Credit Worksheet Let s say you want to buy a laptop computer that costs $1,000. You have $500 in your savings account to spend on it, and you decide to finance the rest by taking out a $500 loan at your local bank. The bank charges an annual interest rate of 8 percent. Here is the comparison of what it will cost you to use cash to buy the computer vs. what you will pay using the loan: Cost of Using Cash to Buy Computer Cost of Buying the Computer with Credit* $1, $ Price of Computer Cash Payment Loan Payment Cost of Credit* $ $40.00 $1, $1, Cost of Computer Cost of Computer The cost of credit is the amount of interest you pay, which in this case is 8 percent of $500, or $ X $ = $40.00 It is up to you to weigh the cost vs. the benefits of buying the computer now with credit vs. waiting to save up the additional $ C o s t o f C r e d i t E x e r c i s e Jason wants to buy a new road racing bike. The bike costs $1,400. He has $400 saved, but will have to finance the rest. His local bank is willing to lend him $1,000 at an annual interest rate of 9 percent. The loan must be paid back in one year. Calculate the price of buying the bike using credit. Cost of Using Cash to Buy Bike Cost of Buying the Bike with Credit Price of Bike Cash Loan Cost of Credit Cost of Bike Cost of Bike

65 54 LEVEL THREE Unit 5 Credit Activity 15 Using Credit Cards Responsibly PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A credit card statement, or monthly bill, lists all the charges and payments you ve made on your credit card the previous month. It also lists any unpaid balances, finance charges, and fees. The due date is when your credit card bill must be paid. You must make at least the minimum payment, but it is best to pay your bills in full. Finance charges, or interest, appear if you don t pay your balances in full. If you don t pay on time, you will also be charged late fees. A credit limit is set on every credit card by the financial institution that issues it based on the credit rating of the card holder. Say to Students: Credit cards are popular because of their convenience in making purchases and because they are widely accepted by businesses around the world. They allow you to make purchases throughout the month and then pay for them when your monthly credit card bill comes in. Before you charge any purchase to your credit card, make sure you will have enough money to pay the bill in full on or before the due date. Credit cards charge very high interest rates from 12 to over 20 percent a year! When you don t pay your balance, finance charges appear on your next bill. If you don t pay on time, late fees are added as well. Each month, your balance will continue to grow even if you make few or no more purchases.

66 55 LEVEL THREE Unit 5 Credit For example, let s say you charge $1,000 to buy a new stereo and your credit card interest rate is 18 percent. If you only make minimum payments of 2.5 percent, or $25, each month, it will take you 62 months (over 5 years) to pay off that $1,000 and you will pay $539 in finance changes! Though credit card companies set credit limits on cards they issue based on your credit rating, it is up to you to determine your financial limits. If you can pay your balance in full each month, then you are using your credit card responsibly. If you cannot, consider using other sources that require low or no interest charges to pay it off. If you can rarely pay more than the monthly minimum, think about destroying the card, getting a loan to pay off the balance, and only paying cash for your purchases from now on. Practicing this type of self-discipline will mean that you are living within your means. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Credit Card worksheet. (Use an extra sheet of paper if necessary.) This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss the advantages and disadvantages of using savings to buy things vs. using a credit card. b. Ask for volunteers to suggest a scenario for purchasing an item using a credit card. Have class members suggest the item, cost, interest rate, and payment schedule. Then ask for volunteers to work out the math at the board for how much the item will wind up costing. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students this question: What should you consider before making a large purchase and charging it to your credit card?

67 56 LEVEL THREE Unit 5 Credit Credit Card Worksheet 1. Why do you think banks set a credit limit on new credit cards they issue? 2. Why might it be a better idea to use your savings to pay off a credit card balance rather than paying the minimum amount due and taking on finance charges? 3. You have your eyes set on a new guitar that costs $1,000. You earn $150 a week working in a grocery store. Your monthly expenses amount to $200 total. You try to save $200 a month, and so far you ve been able to bank $800. You re thinking about using your credit card to purchase the guitar. Can you afford to do this? Why or why not? What if the guitar costs $2,000? Could you afford it then? Again, why or why not?

68 Unit 6 Philanthropy, Community Service, and Giving In this unit, students will learn about philanthropy, giving, community service, and volunteering. They will also develop a personal giving plan to help them achieve their philanthropic goals. The unit includes the following activities: 16. Give and Take: The Benefits of Philanthropy 17. Responsibility to Your Community & Volunteering 18. Developing a Personal Giving Plan

69 58 Unit 6 Philanthropy, Community Service, and Giving Read the following TO YOUR STUDENTS for an overview of the unit: It is important for young people to understand the many benefits of giving their time, talent, and money to good causes. Philanthropy involves helping out other people, be it volunteering at a soup kitchen, library, or animal shelter. Philanthropy can also involve giving money or goods, such as donating cans of food to a homeless shelter. Even when someone doesn t have money to give, they almost always have time and skills that they can share. Community service is concern for the welfare of others in your community. When someone volunteers, they work on behalf of others or for a particular cause without payment. Volunteering is intended to improve the quality of life for all concerned. There is also a financial benefit to giving. When a person gives, their gifts are often tax-deductible, which means that the cost of something (such as giving away money) can be deducted from their income, thereby reducing the overall amount of income tax they must pay. The bottom line is that everybody has something to give that could help make the world a better place.

70 59 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Activity 16 Give and Take: The Benefits of Philanthropy PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Philanthropy is giving your time, skills, or money to help other people. You could volunteer at a soup kitchen or an animal shelter. Or you could give money or cans of food to a homeless shelter. A nonprofit is an organization that tries to improve society. Unlike other businesses, its main goal is not making money. It is called a nonprofit because it is not trying to make a profit. Your local library, for example, is a nonprofit. A foundation is an organization that collects money and resources from businesses and people and gives them to nonprofits. The nonprofits use the money and resources to help make the world a better place. A mission statement is a sentence or two that explains what a foundation or nonprofit does. Say to Students: Many of the things we take for granted libraries, museums, a sculpture on the street, hospitals are supported all or in part by gifts of money, time, and effort.

71 60 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving It is important for you as young people to understand the many benefits of giving your time, talent, and money to good causes. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Philanthropy worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss why it is import to give back and help other people who are in need. b. Talk about the role and function of nonprofit organizations. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask the students to write a few sentences answering these questions, or discuss them as a group: If you could create your own foundation, what would it do? Whom would it help? What would your foundation s mission statement be?

72 61 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Philanthropy Worksheet 1. If your business or investments made a profit of $100 this year, to which nonprofit might you donate $10? Circle one answer below and explain your choice. a. A public garden in my neighborhood b. A fund to help children in another country c. A cancer-research lab d. A nonprofit that fights ocean pollution e. Other (create your own suggestion) I would choose to donate $10 to this nonprofit because What are three social or environmental problems that concern you? Why do you think solving these problems is important and how can you make a difference? Problems: a. b. c.

73 62 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Activity 17 Responsibility to Your Community AND Volunteering PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A socially-responsible business is one that gives something back to the community through philanthropy or volunteerism. It also operates in a manner that is consistent with its ethics. Goodwill is what you earn for your school, your business, or by yourself when you give money and time to organizations that help people and communities. Publicity is free promotion gained when you, your school, or your business are written about in newspapers and magazines, or given exposure on the Internet, radio, or television. Volunteering is the practice working on behalf of others or for a particular cause without payment. It is intended to improve the quality of life for all concerned. Say to Students: Even when you don t have money to give, you have time and skills that you can share. You could volunteer at a hospital and read to sick children. You could pitch in to cook at a homeless shelter. Everyone has something to give that could help make the world a better place.

74 63 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Helping Your Community and Volunteering worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss how volunteering in your community benefits everyone, including yourself. b. Talk about how volunteer work helps those in your community. c. Argue why it makes sense or not to do work for which you do not get paid. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask the students to write a few sentences answering these questions, or discuss them as a group: Describe any giving you currently do in your life. What are the benefits you are receiving? How could you give more? If you don t give your time, money, or skills to help anyone currently, create a plan for doing so, and describe the benefits you think you ll get.

75 64 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Helping Your Community and Volunteering Worksheet 1. List below three ways that you could give time, money, or something else to help people in your community. a. b. c. 2. Write a short letter or to one of your classmates. Ask them to join you in giving $10 to the cause you decided to donate to on the Philanthropy worksheet. Explain the purpose of the charity and how it will benefit from the donation. Also explain how contributing the money will benefit your classmate.

76 65 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Activity 18 Developing a Personal Giving Plan PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. An operating charity or public charity is a charitable organization that receives its financial support from a broad cross-section of the community and that delivers charitable programs and services to communities and to people in those communities. Tax-deductible means that the cost of something (such as giving away money) can be deducted from your income, thereby reducing the overall amount of income tax you must pay. Say to Students: Sometimes giving away one s money or time is the wisest investment of all. Giving offers great personal and financial benefits: 1. It allows you to improve life for other people. You can choose how to do so based on what is important to you. 2. It feels good! 3. Giving can introduce you to people who can become new friends or new business connections. 4. Giving away money can be tax-deductible. erest you paid Gifts to charity cellanous deductions

77 66 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Giving allows you to be involved in delivering much needed services to people in your community while assisting in the improvement of the quality of life for yourself, your family, your friends, and those who are members of your community. For anything to work well, you need a plan. In this case a personal giving plan that you review and modify from time to time will help you achieve your philanthropic goals. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Personal Giving Plan worksheet. This should take approximately 30 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss why it is important to develop a personal giving plan. b. Discuss the personal and financial benefits of giving. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask the students to write a few sentences answering these questions, or discuss them as a group: Even if you are currently involved in giving, what other community or volunteer work would you like to do? Where might you see yourself in terms of philanthropy five years from now?

78 67 LEVEL THREE Unit 6 Philanthropy, Community Service, and Giving Personal Giving Plan Worksheet 1. If you don t give your time, money, or skills to help anyone currently, create a plan for doing so below and describe the benefits you think you ll get. Circle the correct answer below. 2. If your yearly income is $50,000 and you must pay 20% of your income in taxes, how much income tax do you pay each year? a. $10,000 b. $5,000 c. $20, Using the example in #2, giving away $5,000 would lower the income on which you pay taxes to: a. $40,000 b. $45,000 c. $9,000

79 Unit 7 Personal Insurance Needs In this unit, students will learn about how to protect themselves from loss by buying insurance. The unit includes the following activities: 19. Understanding Health Insurance 20. Understanding Life Insurance 21. Understanding Home and Car Insurance

80 69 Unit 7 Personal Insurance Needs Read the following TO YOUR STUDENTS for an overview of the unit: As you reach adulthood and start your careers, you will want to reduce your risk from loss by purchasing insurance. There is insurance to protect your personal goods, car, home, health, and life. In return for a specified payment, or premium, the insurance company will pay you a specified amount of money if you suffer a loss that is covered by your insurance policy. This unit will address the various types of insurance: Health insurance, which is designed to pay for medical expenses. Life insurance, which is intended to protect family members in the event of a loss of income when one family member dies or suffers a critical or terminal illness. Home insurance that protects someone s house or apartment and the goods within it if they are stolen or if they are damaged by weather, for example. Car insurance that protects an individual if their vehicle is involved in an accident.

81 70 LEVEL THREE Unit 7 Personal Insurance Needs Activity 19 Understanding Health Insurance PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Health insurance is designed to help pay for medical expenses. A premium is the amount you pay for health insurance, often on a monthly basis. A deductible is the amount you pay that is not covered by the insurance provider. A copay is a small payment you make every time you visit a doctor. Say to Students: Hopefully, you ll enjoy good health throughout your life. When you re young, you tend not to think about these things. As you get older, maintaining good health becomes a more serious issue and obtaining good healthcare is necessary for doing so. Health insurance is without a doubt the most important job benefit, and you ll need to choose wisely among the plans offered by your employer. HEALTH CARE COST The employer and the employee share the cost of health insurance. In recent years, the amount paid by the employee has risen in terms of increased copays, higher deductibles, and higher monthly premiums. However, the cost of not carrying health insurance is even higher. A simple surgery with brief hospital stay can cost tens of thousands of dollars. A serious injury or disease can be financially disastrous to a family without health insurance $2.4 trillion 2017 $4.3 trillion The types of healthcare plans, their costs, and features vary depending on the level of coverage, be it for an individual or for an entire family.

82 71 LEVEL THREE Unit 7 Personal Insurance Needs An indemnity health insurance plan, also known as a fee-for-service plan, is designed to give you maximum flexibility in selecting doctors and hospitals. These plans are the most expensive. An HMO, or health maintenance organization, provides managed care in return for a monthly or quarterly premium. The fee you pay varies based on your coverage, and you can choose from range of health benefits. Your healthcare is managed by your primary care physician (PCP), such as a family doctor or general practitioner. This is the least costly option. With a PPO, or Preferred Provider Plan, health insurance companies contract a network of doctors and hospitals that are preferred providers. A PPO is a more flexible option than an HMO because you, not your primary care physician, get to choose your doctors. The costs of a PPO generally fall in the middle between indemnity and HMO plans. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Health Insurance worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss why having health insurance is a necessity. b. Talk about the different types of healthcare plans and evaluate the benefits and drawbacks of each. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to consider and debate this question: In , there was a national debate over a bill to provide healthcare to the 47 million of Americans who had no health insurance. Total healthcare spending in the U.S was $2.4 trillion in 2007, or about $7,900 per person, and it s going up at about 7 percent a year. Is providing healthcare to everyone and controlling its costs a good government priority? Why or why not?

83 72 LEVEL THREE Unit 7 Personal Insurance Needs Health Insurance Worksheet 1. Why do you think it s important for you to have health insurance? Circle the correct answer below. 2. Which type of medical plan is the most expensive, but provides the most flexibility? a. HMO b. PPO c. Indemnity plan 3. Which type of medical plan allows you to select a doctor from a network of preferred providers? a. PPO b. Indemnity plan c. HMO 4. In which type of medical plan, does your primary care physician manage your healthcare? a. HMO b. Indemnity plan c. PPO 5. A copay is a(n): a. Payment you make every time you visit a doctor. b. Payment you share with your employer for health insurance. c. A whole life insurance premium.

84 73 LEVEL THREE Unit 7 Personal Insurance Needs Activity 20 Understanding Life Insurance PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A premium is the amount you pay for life insurance, often on a monthly basis. Life insurance is intended to protect family members in the event of a loss of income when one family member dies or suffers a critical or terminal illness. A beneficiary is an individual (or individuals) you choose to receive the benefits of your life insurance policy if you die or are critically injured or terminally ill. Say to Students: There are three kinds of life insurance: 1. Term Life Insurance provides coverage for a specific time period and has no cash value (available for loans and/or withdrawals) while the policy is in effect. 2. Whole Life Insurance is a life insurance policy that remains in effect for the insured s entire life and requires a fixed premium to be paid every year. Whole life insurance has a cash value at the end. 3. Universal Life Insurance is also a type of permanent life insurance based on a cash value. It allows you, within limits, to change the death benefit and vary the amount or timing of premium payments. A part of your premium can go towards building cash value that earns interest.

85 74 LEVEL THREE Unit 7 Personal Insurance Needs Life Insurance pays a sum of money to your beneficiaries in the event that you die or suffer a critical injury or terminal illness. It is intended to protect your family members from loss of income when such events occur. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Life Insurance worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss under what circumstances is having life insurance a necessity. b. Talk about the different types of life insurance plans, and evaluate the benefits and drawbacks of each. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to discuss these questions: 1. At what point in life might it be necessary to purchase life insurance? 2. Describe the circumstances under which each different type of life insurance might be most suitable.

86 75 LEVEL THREE Unit 7 Personal Insurance Needs Life Insurance Worksheet 1. Why is having life insurance a necessity when you are working and supporting a family? Circle the correct answer below. 2. Which type of life insurance policy has no cash value while the policy is in effect? a. Whole life b. Term life c. Universal life 3. Which type of life insurance policy remains in effect for the insured s entire life and requires a fixed premium to be paid every year? a. Whole life b. Term life c. Universal life 4. Which type of life insurance policy provides that a part of your premium can go towards building cash value that earns interest? a. Whole life b. Term life c. Universal life

87 76 LEVEL THREE Unit 7 Personal Insurance Needs Activity 21 Understanding Home AND Car Insurance PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. Home insurance covers your property against losses to its structure or contents due to events such as theft, fire, floods, and so forth. Renter s insurance is like home insurance, except that it covers the contents of an apartment instead of a house. Car Insurance covers cars and trucks against losses that result from traffic accidents and against personal liability that can result from such accidents. Liability is when you are deemed to be financially and legally responsible for something. Say to Students: Home insurance policies are usually term contracts in effect for a fixed period of time. To have home insurance, you must pay the premiums each term. The cost of home insurance usually depends on what it would cost to replace the entire house. A basic home insurance policy covers a home against occurrences such as theft or fire. Events such as floods or earthquakes must be covered separately. Car insurance covers cars, trucks, and other vehicles against losses that result from traffic accidents and the personal liability involved in those accidents.

88 77 LEVEL THREE Unit 7 Personal Insurance Needs PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Home and Car Insurance worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Discuss the need for carrying home or renter s insurance. b. Argue why, even as a renter, you should carry insurance. c. Talk about the impact, in terms of liability, if someone doesn t carry car insurance. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to discuss this question: Suppose you don t have car insurance and you were involved in a car accident where you hit a person who was crossing the street. This person has several serious injuries and medical bills amounting to over $50,000. Discuss your liability in this situation.

89 78 LEVEL THREE Unit 7 Personal Insurance Needs Home AND Car Insurance Worksheet 1. Why is having home insurance a necessity? 2. Even if you don t own a house but are renting an apartment, why is it a good idea to have renter s insurance? 3. Aside from it being the law, why is it necessary for you to have car insurance once you start driving?

90 Unit 8 Career Planning: Taking Charge of Your Life In this unit, students will begin to think about their career choices and how they affect their financial security. They will learn how to find the right job and how to finance their education. The unit includes the following activities: 22. Assessing Your Aptitudes, Skills, and Competitive Advantage 23. Finding the Right Job for You 24. Your Education The Best Investment You ll Ever Make

91 80 Unit 8 Career Planning: Taking Charge of Your Life Read the following TO YOUR STUDENTS for an overview of the unit: To choose a career path, a person must first begin by assessing their aptitudes and skills and determining their competitive advantage. When choosing a career or starting a business, taking advantage of one s aptitude and strengths will help them succeed and enjoy doing it. Making money is not the only reason to work. People work to gain experience, learn about how business works, build business contacts, and much more. A job is work that one does for which they are paid. A career is what someone does with his or her working life. With each new job someone pursues, they should think about it in terms of building a career. A college education is the best way to increase the amount of money you can earn during your lifetime, but it takes time and can be expensive. However, a college degree can nearly double the amount of money an individual can earn compared to a high school graduate.

92 81 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Activity 22 Assessing Your Aptitudes, Skills, AND Competitive Advantage PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. An aptitude is a natural ability to do something you can do well. A strength is something you can do well. Examples of aptitudes are being good at math or the ability to pick up a foreign language easily. A skill is a particular ability or area of expertise. A trait is a quality or characteristic that you have. In business, a competitive advantage is a skill, knowledge, or technology that your company has, but your competition does not, that can help you better satisfy a consumer need. A competitive advantage can also refer to an individual in terms of the skills and experience they might have that someone else lacks. Say to Students: When choosing a career or starting a business, taking advantage of your aptitude and strengths will help you succeed and enjoy doing it. If you like to build things, you may want to be an engineer. On the other hand, if you can t stand the sight of blood, pursuing a medical career would be a poor choice.

93 82 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life People have both good and bad traits. Good traits include honesty, punctuality, hard-working, and so on. Bad traits include things like sloppy work, tardiness, and dishonesty. In business, traits such as determination, confidence, and discipline have often been linked with success. You can work on your bad traits and develop good ones. First you must recognize and acknowledge your bad traits, and then set goals for yourself to transform them into good ones. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Strengths and Competitive Advantage worksheet. This should take approximately minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may: a. Ask for volunteers to discuss things they enjoy doing and do well. Ask them to think about whether or not they can make money doing them or not. b. Again ask for volunteers to tout their competitive strengths. Again, can these evolving into a career? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students to ponder this scenario and offer feedback. Let s say you re an employer. Justin always shows up on time, but produces fewer widgets each day than Alissa. Alissa is always 10 minutes late, but she is your most productive employee. Eduardo is punctual, courteous, and tries very hard, but his widgets have a higher percentage of quality flaws. Based on these traits, who would you say is your most valuable employee?

94 83 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Strengths and Competitive Advantage Worksheet 1. List three things that you enjoy doing and that you also do well: a. b. c. 2. Which of these three things do you think you do the best? (This is your number one strength.) 3. What kind of job do you think you could get using your number one strength? Why? 4. What do you think is your competitive advantage?

95 84 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Activity 23 Finding the Right Job for You PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A job is work that you do and for which you are paid. A career is what you do with your working life. Your career will probably be made up of many jobs over your lifetime. An entry-level position is a starting job at the bottom of a company s hierarchy. A hierarchy is a set of rankings that make up the structure of a business organization. Here is a sample organization chart for a large company. An internship is a temporary job that offers careerrelated experience. Some interns are paid, while others are not. A co-op is a fixed-term position for which you are paid and gain career-related experience. Say to Students: Making money is not the only reason to work. You work to gain experience, learn about how business works, build business contacts, and much more.

96 85 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life With each new job you pursue, you should think about it in terms of building a career. For example, if you eventually want to go into sales, then look for a job that will enable you to have contact with the public. If you wish to pursue a career in a service industry, such as food and restaurant management, then you should seek an entry-level position in a restaurant. If you want to pursue a career in the healthcare profession, then perhaps you may wish to work as a volunteer at a hospital. You may even be able to avoid having to start at the bottom by working part-time jobs, internships, and co-ops while still in high school and college if you get the right job experience. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Aptitude Inventory worksheet. This should take approximately 30 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may: a. Ask for volunteers to discuss how they felt about rating themselves this way. Did they feel the items in Part 1 of the Aptitude Inventory worksheet described them well? b. After students completed Part 2 of the Aptitude Inventory worksheet, did they think that the results provided them with some good career ideas? Why or why not? PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students this question: Think about your ultimate career goal. What type of jobs should you seek out to help you gain the right experience to achieve your goal?

97 86 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Aptitude Inventory Worksheet P A R T # 1 To choose a career, you have to know your aptitudes, skills, and competitive advantage. Circle one of the letters in each of the groups below that best describes you. 1. a. I m not afraid to talk in front of a class. b. I like to take things apart to see how they work. c. I keep up with the latest fashions. d. I m always offering advice to my friends. e. Math is my favorite subject. f. I enjoy sports. 2. a. I talk on the phone a lot. b. I like doing research for reports better than writing them. c. Music is very important to me. d. I m not shy about expressing my opinions. e. I like to play backgammon or checkers. f. I know how to use tools. 3. a. I enjoy explaining things. b. My favorite TV shows are about science or nature. c. I d rather make a valentine than buy one. d. I hate to sit still. e. I m very organized. f. I d rather be outside than inside. 4. a. I eat healthy food and exercise as much as possible. b. I m interested in plants and animals. c. I really like art class. d. I d rather work with a group than work alone. e. I like going to natural history museums. f. I enjoy working with my hands.

98 87 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life 5. a. I like to help people. b. I m curious about a lot of things. c. I keep a diary. d. I like being a team leader. e. I m shy about speaking in a group. f. I d rather do something physical than sit and watch TV. P A R T # 2 Enter the number (amount) of each letter you have circled in Part 1 here: A s B s C s D s E s F s If you have a score of three or more next to one of these letters, you could be interested in the careers listed next to the corresponding letter below. You might also consider starting a business that would require similar talents and interests. If you did not score three in any one category, that just means your talents and interests are still developing. A: You are interested in people and their problems. Maybe you could do some childcare or volunteer work. You would probably enjoy helping others. Examples: Doctor Social Worker Teacher Day-Care Center Owner Nurse Therapist/Counselor B: You are curious about how things work. Your curiosity could lead you to a career or business that requires problem-solving ability. Examples: Scientist Market Researcher Detective Engineer Financial Analyst Mechanic C: You are interested in what makes you tick and in expressing your feelings through art or music. You might like creative work. Examples: Cartoonist Musician Photographer Graphic Artist Advertising Executive Architect D: You are outgoing and like to get people to work together. You might like a career that involves persuading, leading, or directing others. Examples: Salesperson Lawyer Politician School Principal Restaurant Owner Coach E: You are attracted to school subjects and hobbies that require logical thinking. Work involving attention to detail and organizational skills might be attractive to you. Examples: Accountant Banker Laboratory Worker Chemist Secretary Weather Forecaster F: You like to be physically active. Your hobbies might include gardening or building things. You may wish to explore a career that would involve working with your hands. Examples: Carpenter Gardener Contractor Archaeologist Surgeon Veterinarian

99 88 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Activity 24 Your Education The Best Investment You ll Ever Make PART 1 I N T R O D U C I N G T H E L E S S O N Review the following vocabulary words with the students. Either write them on a board, chart paper, or provide students with this worksheet. A college education is provided by universities, 4-year colleges, community colleges, vocational schools, trade schools, and career colleges. Tuition is the cost you pay to attend a college, not including the cost of where you live, what you eat, books, and social activities. A Coverdell ESA is a U.S. government plan with tax advantages designed to encourage savings to cover future educational expenses. A 529 College Saving Plan is another U.S. government plan with tax advantages designed to encourage saving for higher education. Say to Students: A college degree can take from 2 4 years to earn. If you want to pursue professions such as medicine, law, or engineering, it will require another 4 5 years. Of course, by going to college, the opportunity cost is the money you would make by working those years. AVERAGE SALARIES BY EDUCATION LEVEL Source: U.S. Census Bureau, 2004.

100 89 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Tuition costs vary between public, or state, colleges and private colleges. Tuition, room, and board at private four-year colleges can run more than $30,000 a year on average. A similar education at a four-year public college costs around $12,000 a year. There are many plans to help you and your family save up for college. One such savings plan is called a Coverdell Education Savings Account. Currently $2,000 can be contributed each year per child. A 529 College Saving Plan is another U.S. government plan with tax advantages designed to encourage saving for college expenses. The best advice however, is to start saving early! A college education is the best way to increase your lifetime earnings, but it takes time and can be expensive. However, a college degree can raise your lifetime earnings on average about 75 percent, or nearly $1 million compared to a high school graduate. PART 2 S t u d e n t A c t i v i t y / G U I D E D I N S T R U C T I O N 1. Have students complete the Saving for College worksheet. This should take approximately 15 minutes. 2. Review the answers with the students. Either ask for volunteers or have them work in groups to compare answers. 3. Review the concept of the exercise with the whole class. You may ask students to: a. Specify what is included in tuition and what is not. b. Discuss the financial impact of going to college vs. getting a high school diploma over the course of a lifetime. PART 3 C r i t i c a l T h i n k i n g A c t i v i t y / A s s e s s m e n t Ask students this question: Why is it important to invest in college education early? (Hint: Think about what you learned about the time value of money and compound interest.)

101 90 LEVEL THREE Unit 8 Career Planning: Taking Charge of Your Life Saving for College Worksheet Circle the correct answer below. 1. Tuition is: a. The cost of going to college, including food and a place to live b. The cost of going to college, minus food and a place to live c. The cost of not going to college 2. What s the difference between Coverdell ESA and a 529 College Saving Plan? a. A Coverdell ESA has tax advantages. b. A 529 College Saving Plan is designed to be used for higher education expenses only. c. A Coverdell ESA is a good savings option for grandparents. 3. What is the maximum contribution you can make to a Coverdell ESA in 2010? a. $3,000 b. $2,000 c. $5, How much higher are your lifetime earnings expected to be if you have a 4-year college education vs. a high school diploma? a. 50% b. 100% c. 75%

102 VOLUNTEER S GUIDE Unit 1 The Economic Way of Thinking Activity 1 The Importance Financial Planning 92 Activity 2 Making Sound Financial Decisions: Strategies for Life 94 Activity 3 How the Economy Affects You 96 Unit 2 Money Management and the Basics of Banking Activity 4 Preparing a Monthly Personal Budget 98 Activity 5 Banking: Types of Accounts and Services 100 Activity 6 Understanding the Time Value of Money 103 Unit 3 Saving and Investing Activity 7 The Value of Saving 105 Activity 8 Assessing Your Savings and Investment Goals 107 Activity 9 Balancing Risk and Reward 109 Unit 4 Spending Activity 10 Getting the Most Value for Your Dollar 111 Activity 11 Understanding Your Consumer Rights 113 Activity 12 Preventing Identity Theft 115 Unit 5 Credit Activity 13 Building Good Credit 118 Activity 14 Determining the Cost of Credit 120 Activity 15 Using Credit Cards Responsibly 122 Unit 6 Philanthropy and Giving Activity 16 Give and Take: The Benefits of Philanthropy 124 Activity 17 Responsibility to Your Community and Volunteering 126 Activity 18 Developing a Personal Giving Plan 128 Unit 7 Personal Insurance Needs Activity 19 Understanding Health Insurance 130 Activity 20 Understanding Life Insurance 132 Activity 21 Understanding Home and Car Insurance 134 Unit 8 Career Planning: Taking Charge of Your Life Activity 22 Assessing Your Aptitudes, Skills, and Competitive Advantage 136 Activity 23 Finding the Right Job for You 138 Activity 24 Your Education: The Best Investment You ll Ever Make 141

103 92 LEVEL THReE Volunteer s guide Activity 1 The Importance of Financial Planning t e a c h i n g t i p s This lesson introduces students to the concept of financial security. It also starts students along the path of setting short-term, mid-range, and long-term goals. Students learn that in order to achieve financial security, they must build a financial plan, or road map, that sets out how they will achieve their goals. Emphasize to students that time spent financial planning is well worth it It will help them achieve their goals. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity has students state their goals for life s various upcoming milestones. It again asks them to be specific about their goals and their plans to achieve them. Answers will vary. Here is a sample response to the questions asked in the activity: a. A short-term goal might be to buy a used car for their senior year. b. Their five-year plans may include graduating college, beginning a career, or starting a family. c. Their long-term plans for adulthood may involve owning a home, having a family, and owning high-ticket items. d. Volunteers should describe to the class their plans for achieving their various financial goals. Answers to the question will vary. Critical Thinking Activity 1. Ask students to list one possible and one impossible goal. Ask them what makes one goal possible and one not. One possible goal might be to start and run their own business. An impossible goal might be to travel to another planet. Anyone who has a good idea and is willing to work hard may be able to start and run a business, while traveling to another planet is not technically possible at this time. 2. Ask for volunteers to describe their goals for this school year and what they plan to do to reach it. Answers will vary. Be sure to draw out from student volunteers a variety of goals and plans to achieve them.

104 93 LEVEL THReE Volunteer s guide Goal Setting Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. What are some of your short-term goals? Getting my driver s license, securing a good summer job, and achieving my savings goals. 2. What goals you would like to achieve by the time you are 18 years old (or in the next five years)? Getting into a good trade school, getting my own apartment, buying a car, and starting my own business. 3. What goals would you like to achieve by the time you are 21? By the time you are 25? By the time you are 30? Age 21: graduating college, and living on my own, and running a small business. Age 25: Getting married, starting a family, succeeding in my own businesses, owning a condo, and having a new car. Age 30: Owning a home, having a family, and expanding my business. 4. What are some other goals you d like to accomplish throughout your life? How do you plan to achieve them? Answers will vary. Be sure students list achievable goals appropriate to different phases of their lives and provide a timeline with milestones for achieving these goals. 5. Fill out this wish list for what you would like to buy at different ages. At each age, tell how you will earn the money to save for the item on your wish list. AGE FINANCIAL GOAL SAVINGS REQUIRED HOW EARNED? example: a. b. c. d. e. 16 Used car $2,500 Summer job 21 4 yr.-college degree $80, Condo $200, House $350, Sports car $50, Retire at beach $500,000 house Student loan, part-time job, savings, help from family Full-time job, mortgage loan, savings and investments Full-time job, mortgage loan, savings and investments Full-time job, car loan, savings and investments Full-time job, 401(k), social security, other savings and investments

105 94 LEVEL THReE Volunteer s guide Activity 2 Making Sound Financial Decisions: Strategies for Life t e a c h i n g t i p s In this lesson, students begin the process of making and managing a budget. They learn how to forecast their income and expenses for the month. The lesson includes a step-by-step walkthrough of a simplified financial planning process. Talk students through this process and challenge them with the questions it contains prior to tackling the Student Activity. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to forecast their income and expenses for the coming month. A template to complete this forecast is provided. Encourage students to use the expense items already listed in the template. If they have an item that isn t listed in the template, however, they may put it in the closest category where it says Other. Be sure, though, that they identify what Other stands for in each case. Answers will vary. Here is a sample response to the questions asked in the activity: a. I can take on additional jobs weekend around the neighborhood to increase my income. b. The one unusual expense I have coming up this month is the annual dues for the Speech Club. c. Some of the short-term items I d like to buy this month include: Blouse and Nail Polish. d. Students will enter the above items onto the Monthly Income and Expense Forecast template. e. Yes, I will have enough money to buy what I need this month barely. Critical Thinking Activity Ask the students to picture themselves five years from now. Ask them to contemplate how much they will be earning each month? Then ask them to consider the types of expenses they might have. You should also ask students how much they will have in savings and how they achieved that amount. Finally, you may wish to ask what major things they own and how they bought them. Answers to the question will vary. Students should suggest a reasonable income for their age in five years, adjusted for whether they attended college or not and what field of study they pursued. Likewise, students should discuss the expenses for someone who has entered the workforce, including rent, utilities, car payments, insurance, food, loan and credit card payments, and so forth. Students should state what they would expect to have saved and how they achieved that level. (Ask them to be specific; that is, what was their plan in terms of the percentage of income set aside for savings?) They should list major things they own, such as a car, appliances, televisions, and so on and how they paid for them did they pay cash? Use a credit card? Take our a loan? Did they use some of their savings to buy these items?

106 95 LEVEL THReE Volunteer s guide MONTHLY INCOME AND EXPENSE FORECAST Worksheet Answers will vary. The following worksheet is completed as an example for one month. $ $ $40.00 $40.00 $ $50.00 $ $ $ $ $ $ $ $30.00 $20.00 $35.00 $85.00 $ $ $75.00 $75.00 $25.00 $25.00

107 96 LEVEL THReE Volunteer s guide Activity 3 How the Economy Affects You t e a c h i n g t i p s This lesson introduces students to the ins and outs of the global economy. Students learn about economic indicators in general and the terms inflation, recession, and unemployment rate in particular. They are taught that the U.S. has a free-market economy, meaning that the government does not control economic activity. Teach students the meaning of inflation using simple examples like the one provided in the lesson. Also, this lesson provides an opportunity for students to speak about how recent economic conditions affected them and their families personally. Be sensitive to their experiences, letting them express themselves while still controlling the discussion. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students some basic questions about the economic terms introduced in the lesson. Answers will vary. Here is a sample response to the questions asked in the activity: a. Some of the factors that make up the economy include supply and demand of goods and services and the inflation and unemployment rates. b. Prices increase when there is inflation; prices decrease when there is recession. c. The U.S. has a free-market economy, while China has an economy that is centrally controlled by the government. Critical Thinking Activity Ask students to think about the most recent global recession and how it affected their family personally. Have them share their experiences with their classmates and friends. Ask students these questions: 1. Did this period of economic decline cause your family to cut back or delay purchases? 2. Did they save more for a rainy day? 3. How else did it affect you? Answers to the question will vary. This may be a sensitive subject for many students if their parents lost their jobs or suffered other financial losses, so tread with care. Did they have to cut back on expenses and purchases? Did their families reduce their debt? Were they still able to save despite the circumstances? Have them speak about some positive outcomes of the downturn. Did they spend more time with family? Take up cheaper alternatives for entertainment? Use this question to build self-esteem as much as possible; that is, despite tough circumstances, they survived and perhaps became better, stronger individuals.

108 97 LEVEL THReE Volunteer s guide Economy Worksheet Answers will vary. Sample responses are shown on this worksheet. Circle the correct answers for each of the questions below. 1. An economy is: a. The supply of money in a country b. The financial structure of a country c. A country s unemployment rate 2. If the rate of inflation high... a. Prices are going down b. Prices are going up c. It s a good time to buy bonds 3. What kind of economy does the U.S. have? a. A free-market economy b. A government-controlled economy c. An industrial economy

109 98 LEVEL THReE Volunteer s guide Activity 4 Preparing a Personal Monthly Budget t e a c h i n g t i p s The goal of this lesson is to teach students the value of living within your means. It takes students further along in the budget planning process. Students learn to avoid deficits and to strive for budget surpluses. By preparing and managing their personal monthly budgets this way, students can reach their goals and achieve financial security. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to complete a Personal Monthly budget worksheet. Have students complete the Projected column only for now. (If they wish, they can go back later and repeat the exercise, filling in their actual expenses and comparing them to their forecasts, or projected expenses.) Answers will vary. Here is a sample response to the questions asked in the activity: a. Be sure students project a realistic income for the month. Also make sure they ve included all their income from part-time jobs, gifts, interest on savings, and so on. b. Again, be sure students understand to list all their expenses not just the bills that arrive by mail, but anything on which they spend their money during the month. c. Ask for a show of hands on who had a budget surplus vs. a budget deficit. Then ask for suggestions from those who had a surplus to those who did not for ideas on how to eliminate their deficits. Answers to the question will vary. Critical Thinking Activity 1. If you have a deficit, what can you do to reduce your expenses or earn extra income to balance your monthly budget? Students should suggest ways to reduce non-essential spending, such as eating out less, buying fewer clothes, not renting as many DVDs or video games, and so on. To earn more income, students could suggest working additional hours at a part-time job or doing chores for their neighbors or their family. 2. If you have a surplus, how might you save or invest this money? To invest their surplus, students can put it towards their college fund or some short-term item they wish to purchase. They could also invest it in some object they believe will be more valuable in the future. They might also consider working with their parent or guardian to begin investing in some form of securities.

110 99 LEVEL THReE Volunteer s guide PERSONAL MONTHLY BUDGET WORKSHEET Answers will vary. The following worksheet is completed as an example for one month. $580 $580 $580 $580 $580 $580 0 $50 $50 $100 $100 $140 $140 $50 $50 $50 $50 $100 $100 $140 $140 $50 $50 $25 $20 $35 $80 $90 $90 $60 $60 $10 $10 $25 $20 $35 $80 $90 $90 $60 $60 $10 $10

111 100 LEVEL THReE Volunteer s guide Activity 5 Banking Types of Accounts and Services t e a c h i n g t i p s This lesson introduces this different types of accounts offered by banks checking, savings, and Certificates of Deposit or CDs. It also presents the concept of online banking, informing students about its convenience for making transfers between accounts and for paying bills online. Emphasize that money saved or invested is money that works for you. It doesn t just sit in a bank; it earns interest without your having to do anything but leave it there. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks student to identify different types of checking, savings, and Certificate of Deposit accounts offered by banks and also to discuss what types of companies may provide online banking or not and why. (If you do not wish to access the Internet from your classroom, perhaps you can share some flyers from a local bank to help students with this exercise.) Answers will vary. Here is a sample response to the questions asked in the activity: a. Students may or may not already have a checking account. Ask them to talk about their experiences managing their accounts. For example, do they write checks as well as use their check card? Do they record all their transactions in a check register or in a software program? Do they reconcile their accounts regularly each month? b. Students may or may have a savings account. Ask them if they contribute regularly, and if they are satisfied with the results of their savings plan. c. Some students may have personal experience with online banking or some may have seen their family members use it. Ask them to talk about their experience, and if they find this to be a convenient way to do their banking. Critical Thinking Activity 1. What are some of the advantages of online banking and online bill paying? 2. Think of at least three ways banking in this manner saves you time and money. Answers will vary. Some of the advantages on online banking and bill paying are: 1. Convenience & security you can pay your bills, transfer funds, and monitor your accounts from your own home computer or even from your mobile device 2. Since you do not have to account for time in the mail, you can keep your money in your bank, earning interest, until a bill is due. 3. You save on postage and travel to the post office, which saves gas and helps the environment.

112 101 LEVEL THReE Volunteer s guide Bank Services Worksheet Answers will vary. Sample responses are shown on this worksheet. Note: Additional examples beyond those required by the question may be provided. 1. List three types of checking accounts offered by your local bank. What are the advantages and disadvantages of each? Banks will have different names for these accounts, but here are some common types of checking accounts. (Minimum balances vary. The figures shown are examples.) (1) Basic Checking Account: No monthly maintenance fee when a small minimum balance ($1,000) is maintained or when you use Direct Deposit for your paychecks. Includes a standard ATM card. (2) College Student Checking Account: For students 18+ years old who want free checking. Sometimes combined with a savings account. Includes a standard ATM card. (3) Premium Checking Account: For those who maintain high balances ($5,000 10,000) and want to earn interest on the money in their checking account. Sometimes combined with savings or other investment accounts. Includes a premium ATM card. 2. List two types of savings accounts offered by your local bank. What are the advantages and disadvantages of each? Banks will have different names for these accounts, but here are some common types of savings accounts. (Minimum balances vary. The figures shown are examples.) (1) Regular Savings Account: No monthly service charge if you maintain a minimum balance, use Direct Deposit for your paychecks, or make automatic transfers from another account with the same bank. (2) Money Market Savings Account: No monthly fees when you maintain a minimum balance ($3,500) or make automatic transfers from another account with the same bank. You also often have the option to write checks on this account. (3) CD Savings Accounts: Guaranteed return at fixed rates. Many options are available for the term (length) of the CDs.

113 102 LEVEL THReE Volunteer s guide 3. What is the minimum deposit for a 6-month CD at your bank? What interest rate does it pay? If you put in the minimum amount, how much will you have after 6 months? Rates and minimum deposits will vary. The following example is based on rates at the time of this writing: 6 Month CD Rate = 0.35% Compounded Daily $5,000 minimum deposit Value after 6 months = $5, What types of companies allow you to pay their bills online? What types of companies do not? Why do you think this is so? Generally, larger companies that issue monthly statements allow you to pay your bills online. Smaller businesses that do not bill regularly do not. Examples of companies that allow you to pay your bills online include banks (for credit card and loan payments), utilities, cable and satellite companies, large department store chains, cell phone companies, home improvement stores, and so forth. Before you can pay a particular company s bills online, you must enter your account information for that company in your bank s online bill paying system. Smaller businesses that do not issue monthly statements and whose customers do not maintain credit accounts with the business (the corner grocery store ) generally do not have the systems needed to interface with the banking system to support the use of online bill paying.

114 103 LEVEL THReE Volunteer s guide Activity 6 Understanding the Time Value of Money t e a c h i n g t i p s In this lesson, the students study a very important concept the time value of money. A dollar they have today may be worth more or less in the future, depending on how they invest it. Students also learn the term Return on Investment (ROI) and that a higher ROI will help their money grow faster. Be sure to point out that young people have a big advantage when investing because they have more time to reach their goals this, in essence, is the time value of money in practice. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks student to complete a time value of money worksheet. They are asked to list two financial goals, state how much time they have to achieve them, estimate how much money it will take to reach each goal, and describe their plan for achieving this. Answers will vary. Here is a sample response to the questions asked in the activity: a. Starting one s own business, owning a home, having enough money to retire at an early age, and so on. b. Be sure students set reasonable timeframes for achieving the goals they set. For example, they may set years of age to own a condominium. c. Ask for volunteers to propose financial goals and discuss their plans for achieving them. Ask other class members to contribute with their own ideas. Critical Thinking Activity Why do you, as a young person, have an advantage over an adult when it comes to investing? Answers to the question will vary. I have an advantage over an adult because of the time value of money. This means I have a longer time to save and invest and earn interest on my money. As I get older and my savings and investments grow, my money will work for me instead of me working for it.

115 104 LEVEL THReE Volunteer s guide Time and Money Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. Your Financial Goals List two of your financial goals. a. Goal #1: Start my own business and save up $1 million by the time I m 40. b. Goal #2: Retire at age Time What is the amount of time you have to save money for each goal? a. Goal #1: I am 16 years old, so I have 24 years to accomplish my first goal. b. Goal #2: I have 39 years to accomplish my second goal. 3. Money How much money do you think you ll need for each goal? a. Goal #1: By the time I am 30, my business will be doing very we ll and I ll need to save and invest about $100,000 a year. b. Goal #2: To retire at 55, I want the sum total of all my assets and investments to be $2 million by that age. 4. Planning for the Future What is your plan for reaching each goal? a. Goal #1: I am very good with computers, and I earn money now helping adults fix their computer problems. I plan to start a computer consulting company and expand nationally. b. Goal #2: I plan to invest my money wisely for retirement as soon as I can. I will invest aggressively (higher risk) while I m young, and more conservatively (lower risk) when I get close to retirement. I will buy stock, bonds, and invest in real estate and other business.

116 105 LEVEL THReE Volunteer s guide Activity 7 The Value of Saving t e a c h i n g t i p s This lesson is designed to teach students the benefits of saving the money they earn. It instructs them on the safety of putting their money in a bank. It also teaches them how their money will grow as a bank pays them interest for the use of their money. Finally, the lesson stresses the point that, the earlier they start to save, the more the student s money will grow. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity underscores the benefits of savings by having students work though a number of examples of putting away 10% of what they earn or receive and how this can help them achieve their goals. Students need to choose an item they wish to buy. Ask students why they selected this item and why it is important to them. Make sure that students understand the math of calculating percentages, using 10% as an example. Ask for volunteers to come to the board and work through examples of saving 10%. Students are asked for an example of how they can use this activity in the future. Answers will vary. Here is a sample response to the questions asked in the activity: I might choose to save 10% or more of my earnings to reach a long-term goal, such as buying a new car after I graduate college. I might also decide to set aside 10% of my earnings for charitable giving. Critical Thinking Activity How much do you currently save from what you earn? Share ideas on how anyone could meet the goal of saving 10% of earnings. Answers to the question will vary, but should be in the 5 10 (or more) percent range. Suggest students prepare a simple personal monthly budget, listing their current income from all sources and all their recurring monthly expenses. If students are failing to meet the 10 percent objective, suggest they look at what expenses can be reduced or eliminated. Also ask if they can see ways to increase their income to help achieve the 10 percent savings objective.

117 106 LEVEL THReE Volunteer s guide 10% Savings Worksheet To calculate 10 percent of a certain amount of money, you move the decimal point one place to the left. For example, 10% of $ is $ Use this simple formula to answer the following questions: 1. What is 10% of $64.00? $6.40 What is 10% of $125.00? $12.50 What is 10% of $759.00? $ If you earn $125 a week in a part-time job, how much will you have left to spend each week after saving 10%? $ At this rate, how much will you save in a month (4 weeks)? $ Think of something you d like to buy with your savings, then answer the questions below to create a savings plan to buy that item. Answers will vary. For the purpose of this exercise, let s use a $200 figure. a. How much does this item cost? Answers will vary, but for this exercise, let s say the student earns $145 a week. b. How much money do you actually make each week? c. If you deposited 10% of your weekly income into your savings, how much Using the above figures, the answer would be $ would you save each week? d. How many weeks would it take to save enough money to buy what you Using the above figures, the answer would be 14 weeks. want? (Round up to the nearest week.)

118 107 LEVEL THReE Volunteer s guide Activity 8 Assessing Your Savings and Investment Goals t e a c h i n g t i p s This lesson is designed to teach students about making mid-range plans, specifically 5-year plans. It teaches students to set clear and realistic goals for their plans and to practice patience in achieving them. Students will create two financially related 5-years plans and another that challenges them to develop a plan to achieve a personal goal. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to complete a 5-Year Plan Goals worksheet. The first goal relates to where they expect to be financially by the time they graduate high school. The second goal asks where they see themselves financially upon graduating college (or 5 years after their high school graduation if they don t plan to attend college.) Students are asked about the importance of savings, what are things for which they might save, and if they have specific savings goals. Discuss with students the value of saving how interest makes their money grow and why the time value of money makes it important to start saving early and commit to a savings plan. Answers will vary. Here is a sample response to the questions asked in the activity: Saving is important because it s a commitment to my future and myself. If I start saving now and keep making deposits into my account, the interest I earn will make my money grow over time. I would like to save up for a used car, a laptop computer, and my college education. These are the savings goals I have set for myself. Critical Thinking Activity Think of a goal for a personal 5-year plan; that is, one not based on a financial goal but one that relates to accomplishing a personal achievement. Be very specific about what it is you want to achieve. Now think of all the steps you will need to take between now and then to achieve your goal. Again, be as specific as possible. Share your plan with your classmates, and discuss the various steps that everyone came up with to accomplish their plans. Answers to the question will vary. Here s a sample response. I would like to continue to participate in music and eventually achieve my goal of releasing a CD. To continue to grow my voice, I will sing in my county choir. This spring I will audition for the choir. If I m accepted, I will have to participate in weekly rehearsals. I will also be part of their semi-annual concerts for the community.

119 108 LEVEL THReE Volunteer s guide 5-Year Plan Goals Worksheet Answers will vary. Sample responses are shown on this worksheet. 5 - Y e a r P l a n # 1 1. Upon my high school graduation, I expect to have $ 2,500 saved for college, job training, or to start my own business. 2. Here are the steps I followed to achieve this level of savings. (List after-school work, summer jobs, gifts you received, and so forth, and state your savings strategy.) After school jobs: $500 / Summer Jobs: $1,000 / Gift from Grandparents: $1,000 My goal is to save at least 10% of what I earn through jobs and gifts. 3. I will have acquired the following items by the time I graduate from high school. Desktop computer, stereo, and used car. 4. Here is how I was able to purchase these items. I used the money I earned from parttime and summer jobs and also some of my savings to buy these things. 5 - Y e a r P l a n # 2 1. Upon college graduation (or 5 years after I graduate high school), I expect to have $ 7,500 saved and invested. 2. Here are the steps I used to save and invest my money. (List full and part-time jobs, other income, summer jobs, and so on, and state your savings and investment strategy.) Part-time jobs: $1,000 / Summer Jobs: $1,500 / Investments: $5,000 My goal is to save at least 10% of what I earn through jobs and gifts, plus to continue contributing to my investment account at least $100 a month. 3. I will have acquired the following items by the time I graduate from college (or within 5 years after I graduate high school). Laptop computer and new economy car. 4. Here is how I was able to purchase these items. I used the money I earned from parttime and summer jobs and continued to contribute to my savings and investment accounts to buy these things.

120 109 LEVEL THReE Volunteer s guide Activity 9 Balancing Risk and Reward t e a c h i n g t i p s This lesson is designed to teach students that investments can be both financial and non-financial; that is, an investment is something into which one puts time, money, or energy. It also stresses that students consider the risk vs. the reward before making any type of investment. The lesson provides several examples of risk vs. reward read these, give examples of your own, and encourage the students to come up their own examples as well. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity encourages students to consider the risks vs. the rewards of several scenarios, and further asks them to come up with examples of each and why it s important to consider these factors in many life decisions. Answers will vary. Here is a sample response to the questions asked in the activity: a. Risk might involve loaning money to someone you know, but you aren t sure that they will pay you back. b. A reward might be that they do pay you back and you develop a better relationship. c. Life is full of risks and rewards. You take risks in friendship. You need to know when not to take a risk if you are being asked to do something that doesn t feel right. Critical Thinking Activity Ask students to think about an investment they have made either in time or money, and challenge them with these questions: Answers to these questions will vary. Here is one possible response. 1. What risks did you take? I tried out for the cheerleading squad as a freshman. 2. What was your return or reward? I worked very hard and got in. The reward for all our hard work was that we won the state championship in my senior year. 3. What is the relationship between the two? There s an expression nothing ventured, nothing gained. That is, if you don t take risks, you won t get any rewards. The larger the risk taken; the greater the potential reward. 4. How comfortable are you with risk? I am now more comfortable taking greater risks when I see how good I felt when we lifted that championship trophy.

121 110 LEVEL THReE Volunteer s guide Risk and Reward Worksheet Answers will vary. Sample responses are shown on this worksheet. Write the potential risks and rewards of each situation described below. 1. You loan your friend $100 to start a lawn-care business. Potential risks: My friend might not pay me back if he does not make enough money to cover his expenses or if his equipment breaks down and has to pay to fix it. If he cannot pay this money back on time, we risk damaging our relationship. Potential rewards: The $100 I loan my friend could help him launch his business or buy better equipment so that he can work more efficiently and earn more money. 2. You invest $200 in materials to make jewelry. You plan to sell finished necklaces, bracelets, and rings for $25 each. Potential risks: One risk is that few people will buy the jewelry I make for $25 each, and I will not get back my investment in the materials. If I reduce the price, it will decrease the profit I had planned to make on each piece I sell. Potential rewards: If I sell out all the jewelry I make with the materials I bought and earn a fair profit, I can buy more materials and earn even more money. 3. Your brother asks for a $50 loan. You agree that he will pay you back $55 in one week. Potential risks: If my brother doesn t pay me back in one week, I ll be out $50 maybe when I need it. He s my brother, so I m stuck. Potential rewards: If my brother pays me back $55 in one week, I ve earned $5.00, or 10% interest in one week!

122 111 LEVEL THReE Volunteer s guide Activity 10 Getting the Most Value for Your Dollar t e a c h i n g t i p s This lesson introduces the expression Let the Buyer Beware. It encourages students to investigate the products and services they want to buy before making a purchase. It also promotes doing research on the seller from whom they are making the purchase. Students can find such information on the Internet, in consumer magazines and newspapers, and in consumer features on their local news. The important point to convey to students is always to look before you buy. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity takes students through the process of buying their first car. It asks them to discuss how they will research both the car and the seller. Then it asks them to come up with ways to confirm their decision before purchasing. Answers will vary. Here is a sample response to the questions asked in the activity: a. It s important to look before you buy so that you are sure you are getting the best product at the best price. b. It is also important to do research on the seller to be sure they will support and service the product after the sale. c. You can find information about products on the websites of the companies that make them as a start, but then you should look at consumer websites that rate such products, provide feature and prices comparisons, and offer customer reviews. Answers to the question will vary. Critical Thinking Activity 1. Why is it important to do the right amount of research before you make a big purchase? When you make a major purchase, such as a car, you want to be sure that you buy the right one. After all, you will most likely be using some of your hard-earned savings to buy it and you will need to use it for several years. You want to make sure that you are making the right decision. 2. Why is it also important that you know your seller s reputation before you buy? It is important to know if your seller provides good service and support after the sale. If there is a problem with your purchase, you want to be sure you made it from a trustworthy seller.

123 112 LEVEL THReE Volunteer s guide Smart Buyer Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. You re about to buy your first new car. What are some types of websites you should look at before heading out to the dealer? I should check out the car manufacturer s websites first, so I can read about the features of each car that I m interested in. Then I should check websites such as Edmunds, Kelley Blue Book, and AutoTrader to compare ratings, prices, reliability, and so on. 2. Let s say that you decided on which vehicle you want to purchase. How will you determine which dealership has the best selection and the best prices? I will shop around. I will check the local newspaper s website automotive section and visit the dealers themselves to be sure I will be comfortable with my decision. 3. Once you decide on a dealership, how will you find out what other car buyers think about their experiences working with this dealer both before and after the sale? First I will ask my friends and family members who may have purchased a car from this dealer to find out about their experience. I will also continue to check car-oriented consumer websites to see if I can find any additional information about the dealer I selected.

124 113 LEVEL THReE Volunteer s guide Activity 11 Understanding Your Consumer Rights t e a c h i n g t i p s This lesson informs students about their rights as consumers and the laws that protect them from being taken advantage of by businesses. It warns them that businesses cannot practice false or misleading advertising. Students also learn about the role of two government agencies in protecting their consumer rights. If you have Internet access in your classroom, you may wish to show students the Federal Trade Commission Consumer Protection website: S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to respond to several scenarios related to consumer rights. It also asks them to discuss how a class-action lawsuit is an example of consumer rights in action. Answers will vary. Here is a sample response to the questions asked in the activity: a. Truthful advertising means that a business cannot make false claims in advertising about their products and their prices. b. The government protects our rights as consumers by passing and enforcing laws that prevent businesses from practicing misleading advertising and deceptive pricing. It also requires companies to post information, such as nutritional labels, on products that allow us to be more informed consumers. c. Consumers might sue a large company in a class-action suit when they believe that the company s products have caused them personal damage. Examples might be car, drug, or even toy companies. d. A product claim that sounds to be good to be true might be something like a product for seniors that claims This product will make you young again! or a product that claims it s Guaranteed to make you rich! Critical Thinking Activity Let s say you own a sporting goods store. You decide to sell a set of 10 golf clubs for $400, while your competitor sells the same model clubs, but with 14 clubs included, for $500. Your advertising claims $100 less than the competition. Is it legal for you to claim that you are selling this set of clubs for $100 less than the competition? Why or why not? Answers to the question will vary. No, it is not legal for me to do so as this is misleading and deceptive advertising. I am not selling the same item as my competitor, since the set I m offering has 4 fewer clubs. Thus it is not really $100 less than the competition, since it is not the same item that the competition is offering.

125 114 LEVEL THReE Volunteer s guide Consumer Rights Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. You ve heard the expression, If something sounds too good to be true, it probably is. Give an example of how this might apply to consumer rights and the practice of misleading advertising. You receive a credit card offer in the mail. Printed on the envelope in large letters are the words: 0% interest initial rate.* Initial can mean for one day or the asterisk could indicate a variety of conditions that would actually make the true interest rate very high. It s too good to be true for there would be no benefit to the card s issuer if they charged 0% interest. 2. You ve seen the Nutrition Facts label on cans, bottles, and boxes of food. How are these labels an example of the government protecting your rights as a consumer? The Nutrition Facts label provides the number of calories per serving as well as percentages of fat, cholesterol, sodium (salt), potassium, carbohydrates, protein, vitamins, and additives contained in the food. It shows these percentages as a total of a standard daily diet so that you can decide if a food item is too high in fat or salt, for example. It also allows you to make comparisons between two or more products. Thus the Nutrition Facts label lets you be a smart consumer of the foods you buy and eat. 3. What is the difference between a lawsuit brought by an individual and a class-action lawsuit? With a class-action lawsuit, a group of consumers gets together to sue a company. For example, let s say a particular brand of child car seat is found to be defective. A group of consumers may file a single lawsuit against the manufacturer on behalf of the class. 4. You receive an claiming to sell a medicine you take for one-third the regular cost. When you receive your order, you find out that it s not the same medication stated in the . The company refuses to refund your money. What should you do? You should contact your state s consumer protection agency and report the details of the incident.

126 115 LEVEL THReE Volunteer s guide Activity 12 Preventing Identity Theft t e a c h i n g t i p s This lesson teaches students about the dangers of identity theft, how identity thieves work, and how to avoid becoming a victim. It also informs students that if they are victims of identity theft their credit rating could suffer. If you have Internet access in your classroom, you may wish to show students the Federal Trade Commission Identity Theft website: S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students about how identity thieves obtain personal information illegally and ways they can minimize the chances of being a victim of identity theft. The activity also asks student why, if they use a credit card, it is important to check their credit report annually. Finally, it challenges students to explain why identity theft is actually declining in the United States. Answers will vary. Here is a sample response to the questions asked in the activity: a. Identity thieves work by stealing personal information from individuals and then using that information to impersonate, or pretend to be that individual and taking their money or other financial resources. b. Identity theft can do a lot of damage. For example, it can ruin the credit rating of the victim and destroy their ability to use credit cards or borrow money from a bank. Other information, such as a stolen medical insurance card, could prevent the victim from getting health benefits when they need them. c. To prevent identity theft, you should remove anything that shows your social security number from your wallet or purse, shred unneeded financial documents, not give out personal information over the phone to strangers, keep a list of all your accounts in a safe and secure place. You should also check your bank and credit card statements carefully each month to be sure they agree with your records and that there are no unusual charges. Critical Thinking Activity Why should you shred all personal financial documents you no longer need, even items such as free credit card offers? Answers to the question will vary. One common method of stealing someone s personal information is by going through that person s garbage. This is known as dumpster diving. Identity thieves could be looking for payment receipts, identification cards, cancelled checks, bank statements, and other sources of personal information. Thus it is essential that you shred all your personal financial documents even unsolicited offers sent to you in the mail.

127 116 LEVEL THReE Volunteer s guide PROTECTING MY IDENTITY Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. List five ways identity thieves obtain personal information illegally. a. Stealing mail or going through garbage that contains personal information. This is known as dumpster diving. b. Eavesdropping on public transactions, such as ATM withdrawals, to obtain personal data. This is known as shoulder surfing. c. Robbing payment receipts or identification cards, either by pick pocketing them or by skimming cards through a card reader. d. Stealing personal information from computers and computer databases. e. Posing as someone else to get the victim s credit information. This is known pretexting. When this is done online, it is known as phishing. 2. Why might you wish to check your credit report at least once a year? What should you do if you find any problems, such as, to your surprise, you have a long past due bill from a local department store whose credit card you rarely used? You should check your credit report at least once a year to be sure all of the information is accurate and up to date. For example, you may find a loan that you have paid off long ago still listed as open or you may see that you owe money to a store where you have never shopped. Perhaps you owe money to a department store in a town where you no longer live, but they still have your old address. First the store sends your bills to that address, and eventually, when your bills go unpaid, they call in a collections agency. Such problems do often occur and can seriously damage your credit rating.

128 117 LEVEL THReE Volunteer s guide 3. List three ways to minimize the chance that you ll be a victim of identity theft. a. Remove anything that shows your social security number from your wallet or purse. b. Shred all personal financial documents that you no longer need, and store those that you do securely. c. Don t provide any personal information over the phone unless you re absolutely sure about who is on the other end of the line. For example, you can do so safely only when you have initiated a call directly to your credit card company. 4. Research surveys show that, from 2003 to 2006, there was actually a decrease in the total number of victims as well as a decrease in the total value of identity theft in the U.S. from $47.6 billion in 2003 to $15.6 billion in The average identity theft per person also decreased from $4,789 in 2003 to $1,882 in Why do you think this drop-off occurred? The most likely reason for a decrease in identity theft is increased awareness of the dangers of identity theft. People became more cautious with their personal financial information, shredded personal documents when no longer needed, and implemented security measures on their computers. Business also took similar measures to protect themselves and their customers.

129 118 LEVEL THReE Volunteer s guide Activity 13 Building Good Credit t e a c h i n g t i p s This lesson illustrates that people establish good credit in their personal lives by returning the things they borrow. When it comes to money, the same is also true a person builds a good credit history when they pay back what they ve borrowed in full and on time. The lesson also teaches students about the different types of credit history. Talk to students about the advantages of building up a good credit history. The lesson also introduces the power of compounding; that is, earning interest on previously invested principal and interest. A bank also earns interest on unpaid credit card balances by adding finance charges to the next bill. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity covers the different types of credit history no credit, bad credit, and good credit. It asks them to define and give examples of each. Answers will vary. Here is a sample response to the questions asked in the activity: a. You build a good credit history by borrowing money taking out a loan or using a credit card and then paying back the money you borrow in full and on time. Good credit lets you borrow more when you need it and at better rates. b. If you have a large credit card balance and only make the minimum payment, it will take a very long time to pay off your balance, and you will pay a lot in interest (or finances charges) to do so. The more you charge; the larger the interest payments and the longer it will take to pay off your balance. c. Because you re making only the minimum payment and making little progress towards paying down your balance, you will be viewed as a bad credit risk for additional loans. Critical Thinking Activity How does the power of compounding, in this case compounding of finance charges by the bank that issues your credit card, affect you negatively when you don t pay your credit card bills in full each month? Answers to the question will vary. When you don t pay your credit card bill in full each month, you will be assessed Finance Charges on your next month s bill at the interest rate you agreed to when you applied for your card. Thus if you owed $100 and only paid $25, your next month s bill will be $75 plus finance charges and credit cards generally carry high interest rates. Compounding hurts you further because the larger your balance and the longer you take to pay it off, the more you will pay in finance charges and the further behind you ll get.

130 119 LEVEL THReE Volunteer s guide Credit History Worksheet Answers will vary. Sample responses are shown on this worksheet. Define the following types of credit histories and give an example of how a person might have gotten that kind of credit rating. 1. No credit Definition: Someone who has never borrowed money before has no credit. An example of someone who might have no credit would be: A student who has just entered the workforce or who has just graduated college, assuming they had no credit cards or loans where they would have built up a history of paying off their debts. 2. Bad credit Definition: Someone who has borrowed money in the past and not paid it back either in full or on time has bad credit. An example of someone who might have bad credit would be: A person who runs large credit card balances each month and perhaps has defaulted, or failed to pay back a car, home, or other type of loan. In general, this person lives beyond his or her means. Lenders view this person as a bad credit risk. 3. Good credit Definition: Someone who has borrowed money and paid it back in full and on time has good credit. An example of someone who might have good credit would be: A person who has been in the workforce a while and has a history of paying off credit cards on time and perhaps has also paid off a car or student loan.

131 120 LEVEL THReE Volunteer s guide Activity 14 Determining the Cost of Credit t e a c h i n g t i p s This lesson teaches students the ins and outs of using credit. It details all the costs involved in credit card use and emphasizes the importance of making timely and meaningful payments. The lesson conveys to students that conscientious use of a credit card helps build a good credit history. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to work a simple math problem on the cost credit. The problem compares paying in cash vs. using credit in terms of the additional cost incurred when credit is used. Answers will vary. Here is a sample response to the questions asked in the activity: a. If you pay in cash, you pay for the item in full and it is truly yours. There are no additional fees to pay. When you use credit, either through a loan or by using a credit card, you can also get the item immediately, but there may be additional fees to pay, especially if you do not pay off your balance in full when it is due. This drives up the purchase price of the item. b. Fair or unfair, this is the fee the bank charges to loan money in this case to make the purchase and to cover their costs in doing so. c. Jason could delay buying the bike until he saves up the full purchase price, sells something else he owns to raise cash, or borrows the money from a family member at a lower interest rate. Critical Thinking Activity Your friend just got her first credit card. She tells you about all the things she will buy with it and that she will just make the minimum monthly payments. Why is this a bad idea? Answers to the question will vary. If she buys more than she can afford and just makes the minimum payments each month, she will be assessed finance charges on every bill. Credit cards have very high interest rates. The more she charges, the impact of her minimum payments will be less and less in terms of reducing her debt, which will continue to grow bigger as compound interest takes ever larger bites out of her payments. What is more, she will be developing a bad credit history and will be seen by lenders as a bad credit risk if this behavior continues.

132 121 LEVEL THReE Volunteer s guide Cost of Credit Worksheet Answers will vary. Sample responses are shown on this worksheet. Let s say you want to buy a laptop computer that costs $1,000. You have $500 in your savings account to spend on it, and you decide to finance the rest by taking out a $500 loan at your local bank. The bank charges an annual interest rate of 8 percent. Here is the comparison of what it will cost you to use cash to buy the computer vs. what you will pay using the loan: Cost of Using Cash to Buy Computer Cost of Buying the Computer with Credit* $1, $ Loan Payment $ Cost of Credit* $40.00 Price of Computer Cash Payment $1, $1, Cost of Computer Cost of Computer The cost of credit is the amount of interest you pay, which in this case is 8 percent of $500, or $ X $ = $40.00 It is up to you to weigh the cost vs. the benefits of buying the computer now with credit vs. waiting to save up the additional $ C o s t o f C r e d i t E x e r c i s e Jason wants to buy a new road racing bike. The bike costs $1,400. He has $400 saved, but will have to finance the rest. His local bank is willing to lend him $1,000 at an annual interest rate of 9 percent. The loan must be paid back in one year. Calculate the price of buying the bike using credit. Cost of Using Cash to Buy Bike Cost of Buying the Bike with Credit Price of Bike $1,400 Cash $400 Loan $1,000 Cost of Credit $90 Cost of Bike $1,400 Cost of Bike $1,490

133 122 LEVEL THReE Volunteer s guide Activity 15 Using Credit Cards Responsibly t e a c h i n g t i p s This lesson further teaches students about responsible credit card use. Students will learn how to read a credit card statement. Students are warned that, before they charge any purchase on a credit card, they must be sure that they will have enough money to pay the bill in full on or before the due date. Emphasize to students that a credit card is a convenience, not a personal bank that you use to make yourself loans automatically. Also stress that no matter what limit the bank sets on their credit card, it is up to them to know their spending limits. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to consider lower-interest alternatives to credit card use. It also has them work a problem to determine whether they can actually afford to make a large purchase using a credit card. Answers will vary. Here is a sample response to the questions asked in the activity: a. Since savings accounts pay relatively low interest rates, the interest you lose by withdrawing from savings to make a purchase is less than what you would pay by incurring credit card finance charges. b. Create a scenario for making a credit card purchase or ask for volunteers to do so. Try to pick a scenario where the person s budget makes this purchase a borderline decision for using a credit card. Conduct an open discussion with your class on whether or not the person should make this purchase with a credit card. Then alter the parameters of price, interest rate, and payment schedule to see if this changes any opinions. Critical Thinking Activity What should you consider before making a large purchase and charging it to your credit card? Answers to the question will vary. You should make sure you will have enough money to pay the bill in full on or before the due date. Think about your income and expenses for that month and the next month. Is a large payment due that would prevent you from paying off your credit card? Are there other non-recurring expenses that might stop you from paying off your credit card in full and on time?

134 123 LEVEL THReE Volunteer s guide Credit Card Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. Why do you think banks set a credit limit on new credit cards they issue? The credit limit set on a card is based upon the cardholder s credit rating. In trying to ensure that the person is capable of paying back that amount, they are helping the cardholder to use their credit card responsibly. 2. Why might it be a better idea to use your savings to pay off a credit card balance rather than paying the minimum amount due and taking on finance charges? Credit cards charge high interest rates, while savings accounts pay relatively low interest rates. Thus the interest you lose by withdrawing from savings is less than what you would pay by incurring credit card finance charges. If you need to withdraw from savings to pay off a credit card on time, make a plan to pay back your savings account as soon as possible. 3. You have your eyes set on a new guitar that costs $1,000. You earn $150 a week working in a grocery store. Your monthly expenses amount to $200 total. You try to save $200 a month, and so far you ve been able to bank $800. You re thinking about using your credit card to purchase the guitar. Can you afford to do this? Why or why not? What if the guitar costs $2,000? Could you afford it then? Again, why or why not? Yes, I can afford to use my credit card to buy the guitar, as I earn about $600 a month and already have $800 in savings. When the bill comes due, and if I save at least $200 during the month (about one-half my monthly income less expenses), I would have $1,000 to pay off the credit card. No, I really cannot afford a $2,000 guitar. I have only $800 in savings, and even if I saved every penny I earned less my monthly expenses, the total would amount to $1,200, not nearly enough to pay the credit car bill in full when it was due.

135 124 LEVEL THReE Volunteer s guide Activity 16 Give and Take: The Benefits of Philanthropy t e a c h i n g t i p s This lesson introduces students to the joy of giving to good causes, or philanthropy. Students also learn about non-profit organizations and foundations. Encourage students to give their time, talent, and money to help make the world a better place. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to which types of organizations and causes they might wish to donate. It also probes to determine the social and environmental issues that concern the students and how they see themselves making a difference. Answers will vary. Here is a sample response to the questions asked in the activity: a. Sometimes people need a helping hand. It is important that people in the community help those less fortunate individuals when in need. It s the right thing to do, and you feel good for doing it. b. A nonprofit organization is not in business to make money its goal is to try to improve an aspect of society. Critical Thinking Activity If you could create your own foundation, what would it do? Whom would it help? What would your foundation s mission statement be? Answers to the question will vary. I wish to create a foundation to sponsor non-profit organizations that help feed the hungry in my country. My foundation s mission statement would be: Let no one go hungry in this land of plenty.

136 125 LEVEL THReE Volunteer s guide Philanthropy Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. If your business or investments made a profit of $100 this year, to which nonprofit might you donate $10? Circle one answer below and explain your choice. a. A public garden in my neighborhood b. A fund to help children in another country c. A cancer-research lab d. A nonprofit that fights ocean pollution e. Other (create your own suggestion) I would choose to donate $10 to this nonprofit because... I would donate to a public garden because it would involve the entire community in growing fruits and vegetables and donating them to those who are hungry and who would benefit by having healthy food to eat. 2. What are three social or environmental problems that concern you? Why do you think solving these problems is important and how can you make a difference? Problems: a. World hunger. We have so much to be thankful about in my country, and I wish to help those who are less fortunate. I can help by starting with my community and helping to feed people who are currently living in homeless shelters. b. Natural resource management. We have beautiful mountains, lakes, and streams in my country that need to be protected from pollution and overuse. I can contribute money to non-profit organizations that seek to protect these resources. c. Climate change. I am worried that we will lose many rare species if the Earth s temperature continues to increase. I can again work with organizations seeking to protect these species.

137 126 LEVEL THReE Volunteer s guide Activity 17 Responsibility to Your Community AND Volunteering t e a c h i n g t i p s This lesson discusses socially responsible businesses and the benefits of volunteering in your community. Emphasize to students that, even if you cannot afford to donate money, everyone has something to give that could help make the world a nicer place. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity challenges students to come up with ways that they can help people in their community. It also dares them to write a letter to one of their classmates asking for a donation to their philanthropy. Answers will vary. Here is a sample response to the questions asked in the activity: a. Volunteering in my community benefits those who are in need of shelter, food, or just help in general. I also benefit by volunteering I enjoy it and it makes me feel good. b. I volunteer by reading to the elderly in my community. Some can no longer read to themselves, so they really appreciate a young person helping out. Besides, I really think they like having the company. c. There are many opportunities to work for pay in life, and I will do that throughout my adult life. However, even though I am not paid to be a volunteer, I get real life experience and the reward of helping someone out who is in need. Critical Thinking Activity Describe any giving you currently do in your life. What are the benefits you are receiving? How could you give more? If you don t give your time, money, or skills to help anyone currently, create a plan for doing so, and describe the benefits you think you ll get. Answers to the question will vary. Currently I give to a food bank in my area. This is especially important around the holidays. Besides donating money, I can volunteer on the weekends to stock or pass out food.

138 127 LEVEL THReE Volunteer s guide Helping Your Community and Volunteering Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. List below three ways that you could give time, money, or something else to help people in your community. a. I can work in our community garden, and help pass out food to those who are hungry. b. I can volunteer at our county food bank on weekends, stocking and distributing food. c. I can donate 5% of my earnings to help feed and clothe the homeless. 2. Write a short letter or to one of your classmates. Ask them to join you in giving $10 to the cause you decided to donate to on the Philanthropy worksheet. Explain the purpose of the charity and how it will benefit from the donation. Also explain how contributing the money will benefit your classmate. Dear [Classmate]: Please join me by donating $10 to buy seeds and plants for our community garden. Last year we were able to give 500 lbs. of fruits and vegetables to our local homeless shelter. I know the people receiving the food were very grateful and I felt great about my role in helping to grow it. Please join me this year by making this donation. You won t regret it. If you like, I can also give you this summer s schedule for volunteering to work in the garden. Sincerely, Your Classmate

139 128 LEVEL THReE Volunteer s guide Activity 18 Developing a Personal Giving Plan t e a c h i n g t i p s In this lesson, students learn about public charities and the tax benefits of donating their money to them. It also helps students develop a personal giving plan and commit to it. Talk to students about the many rewards of donating to charities. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to think about the many benefits of giving and illustrates the tax advantages of doing so. Answers will vary. Here is a sample response to the questions asked in the activity: a. Like financial planning, getting involved in personal giving takes a plan and commitment. b. Giving allows you to improve life for other people, based on what is important to you. It can introduce you to people who can become new friends or new business connections. The money you give away can be tax-deductible. And it feels good! Critical Thinking Activity Even if you are currently involved in giving, what other community or volunteer work would you like to do? Where might you see yourself in terms of philanthropy five years from now? Answers to the question will vary. I am committed to feeding the hungry and sheltering the homeless, so any additional community or volunteer work I do would have to involve that. Five years from now, I see my commitment to this growing stronger, and I might be running a local food bank or starting other programs in this area to accomplish my goals.

140 129 LEVEL THReE Volunteer s guide Personal Giving Plan Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. If you don t give your time, money, or skills to help anyone currently, create a plan for doing so below and describe the benefits you think you ll get. I would like to give 5 percent of what I earn to charitable causes five years from now and increase that to 10 percent five years later as my income increases. The area that interests me most is providing medical care to regions around the world where it is currently unavailable. I know that by giving I will help those people and I will feel good about myself. I hope to meet many new and interesting people through my charity work. Also, my donations will be tax-deductible, which will help me achieve my financial goals as my income increases Circle the correct answer below. 2. If your yearly income is $50,000 and you must pay 20% of your income in taxes, how much income tax do you pay each year? a. $10,000 b. $5,000 c. $20, Using the example in #2, giving away $5,000 would lower the income on which you pay taxes to: a. $40,000 b. $45,000 c. $9,000

141 130 LEVEL THReE Volunteer s guide Activity 19 Understanding Health Insurance t e a c h i n g t i p s In this lesson, students learn about the importance of carrying health insurance and the costs involved. They are taught to see the value of health insurance as a job benefit, especially as they get older. Students also learn to distinguish among the different types of healthcare plans. Use the recent national debate over healthcare to stimulate a class discussion about healthcare. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to discuss the importance of carrying health insurance and asks them to respond to questions about different healthcare plans and their costs. Answers will vary. Here is a sample response to the questions asked in the activity: a. Having health insurance is necessary because the cost of not having it can be huge. Without health insurance, a serious injury or surgical procedure could ruin a family financially. b. An indemnity health insurance plan provides flexibility in selecting doctors and hospitals, but it is the most expensive. An HMO provides managed care your healthcare is managed by your primary care physician. This is the least costly option, but also the least flexible. In a PPO, health insurance companies contract with a network of preferred doctors and hospitals. It is a more flexible option than an HMO and the costs generally fall in the middle between indemnity and HMO plans. Critical Thinking Activity In , health insurance became the subject of a major national debate with the government effort to provide healthcare to the 47 million Americans who had no health insurance, while providing a more cost-effective option for those who did. Total healthcare spending in the U.S was $2.4 trillion in 2007, or about $7,900 for every American, and it s going up at about 7 percent a year. Is providing healthcare to all and controlling healthcare costs a good use of your income taxes? Why or why not? Answers to the question will vary. Here is a sample response. Yes, a national healthcare plan is essential. Healthcare costs have been skyrocketing, taking more and more from people s paychecks, and there is no end in sight. Many millions of Americans cannot afford to have health insurance, and this would give them at least some basic coverage. Many countries, such as Canada and the United Kingdom, have national healthcare plans, and the citizens of those countries receive good healthcare at reasonable, controlled costs.

142 131 LEVEL THReE Volunteer s guide Health Insurance Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. Why do you think it s important for you to have health insurance? Medical care is very expensive, even for regular office visits. What is more, you can t predict when you might need emergency care. The costs of unplanned, or even planned surgeries and hospital stays can quickly add up to tens if not hundreds of thousands of dollars. Without medical insurance, such events can be financial catastrophic for a family. Circle the correct answer below. 2. Which type of medical plan is the most expensive, but provides the most flexibility? a. HMO b. PPO c. Indemnity plan 3. Which type of medical plan allows you to select a doctor from a network of preferred providers? a. PPO b. Indemnity plan c. HMO 4. In which type of medical plan, does your primary care physician manage your healthcare? a. HMO b. Indemnity plan c. PPO 5. A copay is a(n): a. Payment you make every time you visit a doctor. b. Payment you share with your employer for health insurance. c. A whole life insurance premium.

143 132 LEVEL THReE Volunteer s guide Activity 20 Understanding Life Insurance t e a c h i n g t i p s This lesson teaches students about the reasons for buying life insurance. It explains the different cost components of a life insurance policy. Finally, it discusses the advantages and disadvantages of the different types of life insurance. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to discuss the importance of carrying health insurance and asks them to respond to questions about different healthcare plans and their costs. Answers will vary. Here is a sample response to the questions asked in the activity: a. Life Insurance pays your family money if you die or suffer a critical injury or terminal illness. It protects your family members against the loss of your income. b. Term Life Insurance provides coverage for a specific time period and has no cash value while the policy is in effect. Whole Life Insurance remains in effect for the insured s entire life and requires a fixed premium to be paid every year. Whole life insurance has a cash value at the end. Universal Life Insurance allows you, within limits, to change the death benefit and vary the amount or timing of premium payments. A part of your premium can go towards building cash value that earns interest. Answers to the question will vary. Critical Thinking Activity 1. At what point in life might it be necessary to purchase life insurance? The time to buy life insurance is generally when you have people who depend on you financially, and the loss of your income would be harmful to them. This is often when you have a spouse, partner, or children that you support. 2. Describe the circumstances under which each different type of life insurance might be most suitable. Term life insurance is generally the least expensive. Thus it is probably best to carry this type of policy when you are early in your career but still have people that depend on you financially. Whole Life Insurance is best to buy when you are established in your career and have a family that depends on you financially. Whole life insurance should be viewed as an investment. Universal Life Insurance is probably most appropriate when you are mid-career and seeking opportunities for investment. It provides flexibility in terms of payments and benefits and builds up a terminal cash value.

144 133 LEVEL THReE Volunteer s guide Life Insurance Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. Why is having life insurance a necessity when you are working and supporting a family? Life insurance is a necessity when you have family members or a partner that depends on you for financial support. If you die or suffer a critical injury or terminal illness, life insurance protects your family members against the loss of your income. Circle the correct answer below. 2. Which type of life insurance policy has no cash value while the policy is in effect? a. Whole life b. Term life c. Universal life 3. Which type of life insurance policy remains in effect for the insured s entire life and requires a fixed premium to be paid every year? a. Whole life b. Term life c. Universal life 4. Which type of life insurance policy provides that a part of your premium can go towards building cash value that earns interest? a. Whole life b. Term life c. Universal life

145 134 LEVEL THReE Volunteer s guide Activity 21 Understanding Home AND Car Insurance t e a c h i n g t i p s This lesson teaches students about home, renter s, and car insurance and the concept of liability. It also informs students that some events, such as earthquakes or floods, may not be covered by a standard homeowner s policy. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to discuss the importance of carrying insurance on their homes or apartments. It also asks them to talk about why it s necessary for them to have car insurance once they start driving, aside from the fact that the law requires it. Answers will vary. Here is a sample response to the questions asked in the activity: a. Home and renter s insurance covers your residence in the event of theft or fire. Without such insurance, you would be responsible for replacement costs in the case of a loss. (In the case of a home, you would not even be able to obtain a mortgage without homeowner s insurance.) b. A renter should carry insurance because he or she still has valuables that need to be covered in the case of theft or fire. For example, the renter would have to pay for the cost of a new TV or stereo if they were stolen. c. If someone doesn t carry insurance, then they are fully liable, or responsible, for all costs in the event of a loss. This can be the replacement cost of valuables or the cost of someone s injuries in the case of a car accident. Critical Thinking Activity Suppose you don t have car insurance and you were involved in a car accident where you hit a person who was crossing the street. This person has several serious injuries and medical bills amounting to over $50,000. Discuss your liability in this situation. Answers to the question will vary. My liability would be total in this case since I not insured. My liability could go beyond the $50,000 in medical bills for this person s pain and suffering.

146 135 LEVEL THReE Volunteer s guide Home AND Car Insurance Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. Why is having home insurance a necessity? Houses are often the largest investment a person makes in their lifetime. They cost hundreds of thousands of dollars. Add to this the cost of one s valuables, and the loss in case of a fire, for example, would be devastating without insurance. 2. Even if you don t own a house but are renting an apartment, why is it a good idea to have renter s insurance? A renter should carry insurance on their apartment because they have valuables too, such as furniture, home electronics, dishes, books, and so on that need to be covered in the case of theft or fire. 3. Aside from it being the law, why is it necessary for you to have car insurance once you start driving? The law requires all drivers to carry life insurance. Aside from this, it s the smart and right thing to do. First of all, the cost of repairing or replacing a car in the case of an accident is very high. But beyond this, personal injuries also often result from accidents. In such a case, it s necessary cover yourself, your passengers, and the people in the car you hit in the event that there are injuries.

147 136 LEVEL THReE Volunteer s guide Activity 22 Assessing Your Aptitudes, Skills, AND Competitive Advantage t e a c h i n g t i p s As an introduction to career planning, this lesson asks students to consider their aptitudes, skills, and traits. It also discusses what competitive advantages they might have in the workforce due to these factors. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to think about the things that they do well and what type of job might they pursue based on their top strength. It also asks students to define their competitive advantage. Answers will vary. Here is a sample response to the questions asked in the activity: a. Student volunteers should talk about the things they do well be it music, art, sports, writing, speaking on the phone, working with computers, and so forth. Then encourage students to think about careers that might involve their strengths. Remind students that the best job is one where you get to do something you love to do. b. Student volunteers should declare their competitive strengths; that is, what aptitudes, traits, and skills they have that may give them an advantage over others in their careers. These strengths can be things such as intelligence, creativity, physical strength, social skills, and so on. Critical Thinking Activity Let s say you re an employer. Justin always shows up on time, but produces fewer widgets each day than Alissa. Alissa is always 10 minutes late, but she is your most productive employee. Eduardo is punctual, courteous, and tries very hard, but his widgets have a higher percentage of quality flaws. Based on these traits, who would you say is your most valuable employee? Answers to the question will vary. Alissa is the most valuable employee, since she produces the most widgets at an acceptable quality. Eduardo could become a good employee if he can learn to produce good quality widgets. Justin also could become a better employee if he can learn to be more productive. An employer s responsibility is to train staff and enable them to achieve their full potential. Thus this employer should speak with Alissa about the importance of punctuality; with Eduardo about the need to pay attention to detail and focus on making good quality products; and with Justin about how to improve his widget output.

148 137 LEVEL THReE Volunteer s guide Strengths and Competitive Advantage Worksheet Answers will vary. Sample responses are shown on this worksheet. 1. List three things that you enjoy doing and that you also do well: a. I like working with people; communicating by telephone. b. I like working with computers. I am good with software applications, especially databases. c. Of the part-time and summer jobs I ve worked, I enjoyed selling the most. 2. Which of these three things do you think you do the best? (This is your number one strength.) I enjoy selling products and services. 3. What kind of job do you think you could get using your number one strength? Why? I would be good at telemarketing or telephone technical support. I like communicating with people by phone and I enjoy selling. With either telemarketing or technical support, I will need to work with customer or troubleshooting database. 4. What do you think is your competitive advantage? I ve had sales experience in two summer jobs I ve worked. I am also certified on a popular database software program.

149 138 LEVEL THReE Volunteer s guide Activity 23 Finding the Right Job for You t e a c h i n g t i p s This lesson teaches students the differences between a job and a career. It also introduces the concepts of working to gain experience, learning how a business works, and building contacts, sometimes through unpaid or temporary positions. The lesson also presents the idea of a business organization s hierarchy, noting that people tend to start at the bottom and work their way up. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity has students conduct a two-part aptitude survey. First it has them choose among a number of statements the ones that best describe themselves. Then, based on their responses to the first part, students receive suggestions for which types of careers they might be suited. Answers will vary. Here is a sample response to the questions asked in the activity: a. Student volunteers should talk about how they felt about rating themselves some may find it fun, while others may resent it. Some may believe the questions are fair and relevant, while others do not. Try to draw them about why they feel one way or the other. b. Ask for student volunteers to comment on what the survey told them about their potential careers. Did they think the suggestions were on the mark or way off base and why. Critical Thinking Activity Think about your ultimate career goal. What type of jobs should you seek out to help you gain the right experience to achieve your goal? Answers to the question will vary. I would like to be a mechanical engineer. Perhaps I could work in a machine or automotive specialty shop to gain some experience.

150 139 LEVEL THReE Volunteer s guide Aptitude Inventory Worksheet Answers will vary. Sample responses are shown on this worksheet. P A R T # 1 To choose a career, you have to know your aptitudes, skills, and competitive advantage. Circle one of the letters in each of the groups below that best describes you. 1. a. I m not afraid to talk in front of a class. b. I like to take things apart to see how they work. c. I keep up with the latest fashions. d. I m always offering advice to my friends. e. Math is my favorite subject. f. I enjoy sports. 2. a. I talk on the phone a lot. b. I like doing research for reports better than writing them. c. Music is very important to me. d. I m not shy about expressing my opinions. e. I like to play backgammon or checkers. f. I know how to use tools. 3. a. I enjoy explaining things. b. My favorite TV shows are about science or nature. c. I d rather make a valentine than buy one. d. I hate to sit still. e. I m very organized. f. I d rather be outside than inside. 4. a. I eat healthy food and exercise as much as possible. b. I m interested in plants and animals. c. I really like art class. d. I d rather work with a group than work alone. e. I like going to natural history museums. f. I enjoy working with my hands.

151 140 LEVEL THReE Volunteer s guide 5. a. I like to help people. b. I m curious about a lot of things. c. I keep a diary. d. I like being a team leader. e. I m shy about speaking in a group. f. I d rather do something physical than sit and watch TV. P A R T # 2 Enter the number (amount) of each letter you have circled in Part 1 here: A s 0 B s 3 C s 0 D s 0 E s 0 F s 2 If you have a score of three or more next to one of these letters, you could be interested in the careers listed next to the corresponding letter below. You might also consider starting a business that would require similar talents and interests. If you did not score three in any one category, that just means your talents and interests are still developing. A: You are interested in people and their problems. Maybe you could do some childcare or volunteer work. You would probably enjoy helping others. Examples: Doctor Social Worker Teacher Day-Care Center Owner Nurse Therapist/Counselor B: You are curious about how things work. Your curiosity could lead you to a career or business that requires problem-solving ability. Examples: Scientist Market Researcher Detective Engineer Financial Analyst Mechanic C: You are interested in what makes you tick and in expressing your feelings through art or music. You might like creative work. Examples: Cartoonist Musician Photographer Graphic Artist Advertising Executive Architect D: You are outgoing and like to get people to work together. You might like a career that involves persuading, leading, or directing others. Examples: Salesperson Lawyer Politician School Principal Restaurant Owner Coach E: You are attracted to school subjects and hobbies that require logical thinking. Work involving attention to detail and organizational skills might be attractive to you. Examples: Accountant Banker Laboratory Worker Chemist Secretary Weather Forecaster F: You like to be physically active. Your hobbies might include gardening or building things. You may wish to explore a career that would involve working with your hands. Examples: Carpenter Gardener Contractor Archaeologist Surgeon Veterinarian

152 141 LEVEL THReE Volunteer s guide Activity 24 Your Education The Best Investment You ll Ever Make t e a c h i n g t i p s This lesson stresses the financial benefits of getting a college education. It also introduces a number of ways to help fund it. Finally, the lesson discusses the cost components of a college education, such as tuition, room, and board. Ask for volunteers to state the level of education they hope to achieve and note these on the salary chart provided in the lesson. Then encourage students to discuss different ways save or invest in their college education. S t u d e n t A c t i v i t y r e v i e w q u e s t i o n s The student activity asks students to answer common question related to the cost of going to college. It also contrasts these costs with the financial benefits of earning a college degree. Answers will vary. Here is a sample response to the questions asked in the activity: a. Tuition is the cost you pay to attend a college. It does not include the cost of where you live, what you eat, books, and social activities. b. On average, with a four-year college degree your lifetime earnings will about 75 percent higher, or nearly $1 million more than that for a high school graduate. With a two-year, or associate s degree, you can expect to earn about 22 percent more over the course of your lifetime than a high school graduate. Critical Thinking Activity Why is it important to invest in college education early? (Hint: Think about what you learned about the time value of money and compound interest.) Answers to the question will vary. It is very important to start saving for college early because of the time value of money and the power of compounding. Here s an example. In one case, $100/week was saved for college starting at birth. In the other example, college savings didn t start until 10 years of age. All other things being equal, by starting a college fund at birth nearly $100,000 more is saved it s the difference between covering the cost of a college education or not. Savings Factors Starting at Birth Starting at 10 Years Old Amount Saved/Week $100 $100 Interest Rate (monthly compounding) 5.0% 5.0% Total Saved $151,951 $51,233

153 142 LEVEL THReE Volunteer s guide Saving for College Worksheet Answers will vary. Sample responses are shown on this worksheet. Circle the correct answer below. 1. Tuition is: a. The cost of going to college, including food and a place to live b. The cost of going to college, minus food and a place to live c. The cost of not going to college 2. What s the difference between Coverdell ESA and a 529 College Saving Plan? a. A Coverdell ESA has tax advantages. b. A 529 College Saving Plan is designed to be used for higher education expenses only. c. A Coverdell ESA is a good savings option for grandparents. 3. What is the maximum contribution you can make to a Coverdell ESA in 2010? a. $3,000 b. $2,000 c. $5, How much higher are your lifetime earnings expected to be if you have a 4-year college education vs. a high school diploma? a. 50% b. 100% c. 75%