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Overview

In this lesson, students learn personal financial management strategies based on budgeting and theoretical concepts involved with budgeting and financial management, including income, expenses, savings, and debt. Students watch a video segment from the PBS series What's Up in Finance? to see how a college student learns to manage his budget. They then complete hands-on activities to create three different saving and spending scenarios based on their own lives and expenses. After completing these activities, students use an online interactive game to apply the financial management concepts and strategies they have learned. As a final activity, student brainstorm ways to manage their own budgets while making room for important investments, like classes, that will help their personal development in the long run. In this way, students examine ways to save money to" invest" in themselves, for a return in their lives over the long-term.

Objectives

• Understand the components of a budget
• Compute savings
• Compute debt
• Learn financial management
• Learn the nature of opportunity costs
• Understand the importance of self-regulation

Grade Level:

7-12

Suggested Time:

(3) 50 minute class periods

Media Resources:

Moving Out QuickTime Video

In this video segment from What’s Up in Finance?, a college student consults a financial planner for strategies to manage his finances.

Bank It or Bust Flash Interactive

In this interactive game from What's Up in Finance?, players make financial decisions to help them meet their goal of buying a car.

Materials:

• Financial Management Terms Teacher Organizer
• Dreams for the Future Student Organizer
• Debt Savings Student Organizer
• Computers with Internet access for interactive game
• Board and or chart paper
• Calculator

Before The Lesson

1. Bookmark the web site used in the lesson on each computer in your classroom. Using a social bookmarking tool such as del.icio.us or diigo (or an online bookmarking utility such as portaportal) will allow you to organize all the links in a central location.
2. Preview all of the video segments and web sites used in the lesson to make certain that they are appropriate for your students, currently available, and accessible from your classroom.
3. Download the video clips used in this lesson onto your hard drive or a portable storage device, or prepare to stream the clips from your classroom.

The Lesson

Introductory Activity: Setting the Stage

1. Open the discussion by asking if any of the students have saved money or maintain a budget of any kind.
2. Write the following terms and their definitions on the board: budget, income, expense, savings, and debt. (See the Financial Management Terms Teacher Organizer.)
3. Discuss with the students what each term means, and how savings and debt are a result of different combinations of income and expenses.
4. Discuss with the students any dreams they have for the future, and what investments they could make now to achieve those dreams. For instance, if one person would like to play in a band, they may need guitar lessons now to achieve that dream in the future. Ask the students to think about how they could save enough money to pay for a current expense that is necessary to achieve that dream.
5. Pass out the Dreams for the Future Student Organizer to each student. Ask students to brainstorm four different dreams for the future, and the steps they need to take now to achieve that dream. Ask them to also think about the potential cost of the current steps.

Learning Activity

1. Now ask if any of the students have thought about living on their own. Make a list of some of the costs that students might have to consider if they were living on their own (for example: rent, food, transportation, laundry, phone and internet, entertainment).
2. Explain to the class that they will be watching a video segment from What’s Up in Finance? where they will meet Eddie, a young person who is living on his own for the first time. Eddie is facing some challenges maintaining a budget and saving money.
3. Ask students to think about the areas where Eddie could spend less money as they watch the segment. Play the Moving Out segment.
4. Discuss the segment with students, pointing out that Eddie had to re-work his budget in order to afford his dream: attending a four-year college. Review some of the ways Eddie adjusted his budget to spend less money.
5. Ask students to discuss why attending a four-year college might help Eddie achieve his future goals.
6. Hand out the Debt Savings Student Organizer. Explain that this is a template to use for hypothetical budgets. The students fill them out based on their own expenses or projected expenses, but all the scenarios assume that the students are making $500 a month in income.
7. Ask students to complete the column titled "Scenario 1: Debt" with as much expense as they would like in each category. They need to spend more than $500. If the students think of additional expenses beyond those listed on the organizer, they can add them below "Books/Magazines" on the chart.
8. Students will then add up their expenses, and subtract them from the income figure of $500. The expenses should be higher than $500, so the total will be negative. This means the students have gone into debt and the debt figure should go in the "Debt" row.
9. Next, ask students to fill out the column titled "Scenario 2: Break-Even." The goal here is to spend exactly $500. This means that students will have to lower their expenses in certain areas from the "Debt" column.
10. Students will add up their expenses to confirm that their expense and income totals are equal. They will then have no savings or debt, so a "0" should go in the "Debt" and "Savings" rows.
11. Then, ask students to complete the column titled "Scenario 3: Savings." The goal with this column is to lower their costs below those of the "Break-even Scenario" in order to have savings.
12. Students will add up their expenses and subtract the total from the income figure of $500. This figure should go in the "Savings" row.
13. Discuss with students how they were able to achieve savings. Ask students how they set their spending priorities in order to lower some expenses, and ultimately save money.
14. Explain to students they will play the online game "Bank It or Bust" to utilize the financial management concepts and strategies they have learned. In "Bank it or Bust," students create and modify a budget, and then stick to it for ten weeks with the goal of saving up to buy a car. While playing, ask students to focus on some strategies for saving money.
15. After the students have finished playing "Bank it or Bust," review some of the savings strategies they used in the game. Ask students if they can name things that happened to them during the game that provided them with extra cash (answers will vary). Ask them to name some "emergencies" that occurred that required to students to use some of their savings (answers will vary).

Culminating Activity

1. Ask students to take out their Dreams for the Future Student Organizer and to think back to the initial discussion regarding their dreams. Have the students review the monthly cost of the current activities they brainstormed – the “personal investments” that would help them in the future.
2. Next, ask students to take out their Debt Savings Student Organizer, and look at their figures for "Scenario 3: Savings."
3. Students should look at the monthly savings figure, and determine if they have saved enough for their "personal investment."
4. If students have not saved enough for their personal investment, they should re-work their Savings Scenario on the Student Organizer one more time to come up with the necessary monthly savings to cover these investments in their personal development.