It s never too young to be Money Wise! Activities to Motivate All Learners!

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1 It s never too young to be Money Wise! Activities to Motivate All Learners! For More Projects Like This One Go To:

2 5 th Grade TEKS 5.10 Personal financial literacy. The student applies mathematical process standards to manage one's financial resources effectively for lifetime financial security. 5.10A: Define income tax, payroll tax, sales tax, and property tax. 5.10B: Explain the difference between gross income and net income. 5.10C: Identify the advantages and disadvantages of different methods of payment, including check, credit card, debit card, and electronic payments. 5.10D: Develop a system for keeping and using financial records. 5.10E: Describe actions that might be taken to balance a budget when expenses exceed income. 5.10F: Balance a simple budget MASTERED

3 Name You are going on a financial mission: Before you begin your mission you must choose your occupation (career)! What occupation did you choose? Research the average salary for that particular occupation. Do not change your mind based on the salary that you have researched! Average annual salary for your occupation: Now you must determine what your monthly gross and net income will be by following the steps below: Gross Income: The amount of money you actually make. Net Income: The amount of money you actually receive after deductions on your paycheck. Divide your annual salary by 12. (Some occupations pay by the hour, if this is the case, instead multiply your hourly pay by 40. Then multiply that number by 4.) Your Monthly Gross Income: Determine the following deduction amounts and then subtract the total from your monthly gross income: Gross Monthly Income: 26% Federal Taxes: (For example, if the gross monthly income is $1,600: 1,600 x.26) 3.5% Social Security: (For example, if the gross monthly income is $1,600: 1,600 x.035) 3% Health Insurance: (For example, if the gross monthly income is $1,600: 1,600 x.03) 1% Dental and Vision Insurance: (For example, if the gross monthly income is $1,600: 1,600 x.01) Total Deductions: Net Monthly Income:

4 *Some states deduct state income tax. We are going to pretend that you have graduated from either high school or college and you are ready to start preparing your first budget. Now that you know your monthly net income it is time to create your monthly budget: The following items must be in your budget: Car Payment Car Insurance Rent Water Bill Electricity/Gas Bill Cell Phone Cable Internet (Wireless) Food Before we can begin making our budget; we have many things to calculate: How much will your car payment be? Determine the following: What model of car do you want to purchase? How much will the total cost of the car be? Do you want a new or used car? After you ve chosen the car model you d like to purchase and the year of the car, research the sales price of that car. What is the sales price of the car that you are going to finance? What is your car model and year? After you ve determined the sales price of the car and the model you d like to purchase and the year (new or used), go to the calculator below online to determine your monthly car payment. You will use an interest rate of 10%. You will finance your automobile for 4 years. What will your monthly car payment be?

5 Now that you ve determined your occupation and what car you are going to drive, you will need to find a place to live. Being that you are just starting your career, it is wise to rent for a short time and save money to purchase your first home. You will need to determine the following things before you find a rental unit: How many bedrooms do you need? What amenities do you want? (swimming pool, exercise facility, garage) Use this site to choose an apartment: Name of Your Apartment Complex: What will your monthly rent be? Now it is time to determine your utilities: You will have to pay each of the following each month: Electric/ Gas: The average American household pays $97.79 a month. Cable: Cable TV bills in the United States can run anywhere from $36 a month to $129 a month based on how many channels a customer wants and whether or not they receive premium channels such as HBO or CINEMAX. Internet: The average wireless internet bill in America is $44.99 a month. Cell Phone: The average American pays $69.99 a month for cell phone service; it may be more if they have a data plan or unlimited text messages. Water Bill: The average American pays $45.89 a month for water.

6 Write the total cost of each of your utilities below: Electric/ Gas: Cable Bill: Internet: Cell Phone: Water Bill: Total Cost of your Monthly Utilities: What will your car insurance costs? Anyone that drives a car is also responsible for having car insurance in case you are in a car accident. This will not only repair your car if there is damage; but it will repair the other driver s car if you cause the accident. Car insurance also helps pay for hospital bills in case anyone is injured in the accident. The average price of car insurance in the United States is $72 a month. How much do you spend each month on food? Will you cook most meals at home? Will you eat out for most meals? All in all, you will eat 90 meals a month assuming you eat breakfast, lunch and dinner every day. The average meal at McDonalds with a beverage is $6.79. The average meal at Chili s with a beverage is $ Determine a way to calculate how much you will spend on food each month. What do you predict your monthly food cost will be?

7 Use all of the information in your packet to calculate your monthly budget! Your Net Monthly Income: Your Monthly Expenses: Rent: Car Payment: Car Insurance: Gas/ Car Repair: $100 Electric/ Gas: Cable Bill: Internet: Cell Phone: Water Bill: Food Costs: Total Expenses: Net Income Total Expenses = $ Your Total Disposable Income: How will you spend your disposable income each month? Clothes: Toiletries: Movies/ Entertainment: Investments:

8 By just investing a few dollars a month at a young age; you can retire early someday and become financially independent at a much younger age. Ways to Invest Your Money Wisely: Savings Account: If you have never had a savings account, you may ask, How does a savings account work? You can set up this type of account with a bank or credit union. The advantage of a savings account is that you can earn interest on your money, allowing your account to grow over time. The bank is basically paying you for the use of your money, yet you are free to withdrawal it at any time. Did you know that if you put $50 in a savings account at the age of 20 and keep doing that for 20 years, by the time you are 40 you will have $128,000 in the bank? CD (Certificate of Deposit): CDs are a good investment. Although savings accounts are a solid first step to securing your finances, they offer few advantages beyond that. The interest rate on savings accounts are quite low and it takes a long amount of time to watch your money grow. CD s offer a higher interest rate than savings accounts, so you can watch your money grow faster. The drawback? You can look but you can't touch -- at least not without a penalty. Unlike savings accounts, a CD has a maturity date, after which you can withdraw your funds in full. If you choose to withdraw before that date, you'll have to pay an early-withdrawal fee. Therefore; if you re willing to invest your money for a long period of time without withdrawing it; a CD would be a better investment than a savings account. Stock Market: Have you ever thought to yourself, This is a great company, I wonder what it would be like to own a piece of it? Did you know that Google has a total of 314 million shares. One person can own many shares of Google. In fact, Google founders own half of Google shares. The total profits of Google are then divided by 314 million shares and paid to shareholders as dividends. On February 27 th of 2013, a share of Google cost $617. If a company goes public, it allows anyone to own a share or part of it, would you like to own a share of Facebook? Amazon? Or even Dell? If the company is doing well, it will pay out high dividends to all those who own shares. If a company is losing money, the stocks go down and the shareholders lose money on their investment. The stock market is very similar to gambling. However, if you make the right investment, you can make money quickly. The only problem is that you can lose money quickly if you make the wrong investment.

9 Checking Account: A checking account is a service provided by financial institutions (banks, savings and loans, credit unions, etc.) which allows individuals and businesses to deposit money and withdraw funds from a federally-protected account using a paper check. How does a checking account work? You put money in a bank just as if you were putting it in your shoe. When you deposit money it is added to the amount in your account; when you cash a check it is removed from the account. Checking accounts can be a bonus because provide a way to pay for goods or services without exchanging cash. Debit Card: A debit card is connected to your checking account. It is used to make an electronic withdrawal from your checking account, to purchase goods at stores or pay bills online. How do debit cards work? A debit card, usually has a MasterCard or Visa logo on it, but it's attached to your checking account. You do not receive a monthly bill for it. You have to have enough money in your checking account before making a purchase. You can use it with a pin number which means it's auto-debited from your account, or you can swipe the card and sign for it- this uses the card as a 'credit' but it STILL comes out of your checking account. Most people like debit cards because they can buy things online with them and pay for things in the store without having to write a check. Credit Card: A plastic card having a magnetic strip, issued by a bank or business authorizing the holder to buy goods or services on credit. A credit card has a maximum credit limit that the owner may spend. A credit card allows the owner to purchase goods that they can t afford otherwise. How do credit cards work? Have you ever really wanted something but you don t have the money to buy it right now? Depending on how well you have paid your bills in the past, companies will let you spend money you don t have if you promise to pay it back. They will give you a card with a Mastercard or Visa logo on it. However; they can t do this service for free so they will charge you a fee and interest to buy things you can t afford. Many companies charge up to 29% interest to use their cards! For example: Let s say you wanted to buy a video game for $59.99 but you didn t have enough money saved to buy it. You used a credit card and made 9 payments of $15.00 to pay it back. That video game ended up costing you $135. Some people start charging so many things with their credit cards that they can t afford all their monthly debt and they dig a debt hole so big that they can never get out! Electronic Payments: Electronic payments are payments that are made directly to the person you re paying a bill to from your bank accounts using security features over the Internet to process the transactions.

10 Penny Wise! Penny Wise grew up in a middle income home in Wisconsin. Penny loved school and she enjoyed playing outside with her friends when she was home. She rarely asked her parents for anything as she was grateful that they provided her with a nice home, food to eat and great clothes that her mother found at the local discount store. Penny wanted to go to college when she grew up so she began saving money at an early age. When she was eight years old she asked her father to open a savings account at the nearby bank in her name so that she could start saving her money with a bank. Every time relatives and friends gave her money for her birthday or holidays Penny would put her money in the savings account. By the time Penny was 18, she had saved $35,000. This was enough to pay for her college for two years. She also used part of the money she had saved to buy a used car for $3000 in order to drive to college and back to see her parents on the weekends. She borrowed money to pay for the last two years of college because she had good credit established and she was given a loan at a low interest rate. After Penny graduated from college with a degree in engineering she landed a job at a nice engineering firm in downtown Madison. Each month she was paid a net income of $5500. When she received each monthly paycheck she would deposit 30% ($1650) into savings and $300 into a CD (Certificate of Deposit). Penny lived in a nice, but inexpensive one room apartment as she decided it was more important to save money for her future so that one day she could afford a home of her dreams. She continued to drive the used car that she purchased in college so that she could save more money and pay off her college loans and she also reasoned that if the car is working well she didn t need to upgrade. Penny only had one credit card that she kept for emergencies, as she always said, If I don t have the money to buy it, I don t really need it. Before Penny made any purchase she would think to herself, Is this something I NEED or WANT? By the time Penny was 30 years old she had saved over $150,000 and she had a CD in the bank worth $52,000. Penny decided to buy her dream home and she was able to pay for half of it with the money she had invested. She took out a mortgage loan and borrowed money to buy the other half of the house because she had amazing credit and they charged her a very low interest rate. Penny had no worries in life other than to work hard and make good choices! She was excited for the day that she could retire early and travel the world using some of the money that she had saved.

11 Penny Spendsalot! Penny Spendsalot grew up in a middle class family in Seattle, Washington. Penny loved school and it was very important to her that she was always wearing the nicest clothes of everyone in her class. She would beg her mother to buy her outfits at the cool clothing store in the mall that sold designer clothes. Penny received money for her birthdays and holidays from family and friends and she would use that money to buy pictures or knick knacks to decorate her bedroom or she would go shopping for the latest cool outfits at the mall. She never had enough money left over to save. After high school Penny went to college to earn a degree in fashion merchandising; but she had to take out many loans to pay for college as she had not saved money for her college education. Her parents didn t save money for her either because they spent so much money on her designer clothes. When Penny was in college she applied for several credit cards from department stores so that she would look stylish on campus. After Penny graduated from college she landed a great job at a famous designer brand department store in downtown Seattle. She was bringing home a net monthly paycheck of $5500. Even though Penny had several credit card payments and student loan payments that she was obligated to pay every month; she rented an expensive loft downtown. She also wanted to impress her co-workers so she purchased a convertible car making payments of $559 a month. She also applied for more credit cards to decorate her cool loft and to have more money available to eat at nice restaurants with her friends. Soon Penny found that it was very difficult every month to keep up with her rent, student loans, credit card payments and car payments so she started taking out loans from banks. Because she was over extending herself and had so many credit cards the banks would only loan her money at extremely high interest rates. She would use the loans to pay off her credit cards; but eventually she would start charging more things with her credit cards and she would max them out again. Now Penny had rent, student loan payments, car payments, credit card payment and loan payments to make every month. Her bills were over $6000 a month and her net monthly income was $5500 a month. Penny stopped paying her bills and creditors began calling her every morning, afternoon and night. Penny couldn t sleep at night because she was worried about paying her bills. She was worried that the Repo Man might come and repossess her car during the night because she couldn t afford to pay her car payments. Penny realized she would have to work until she was over 70 years old because she was not saving money to retire. Penny started getting depressed and eventually had to quit her job because she couldn t perform well at work.

12 Needs: Things that you absolutely need to survive day to day. Needs are food, basic clothing, shelter, water, toiletries and medical care. Wants: Things that you want; but don t need to survive. Examples of wants might be; video games, designer clothes, posters, manicures, Hot Wheels, Legos, etc. In each category below fill in examples of wants and needs that you found in The Tale of Two Pennies. Wants Needs Which Penny do you feel is most like you from The Tales of Two Pennies : (Use complete sentences to explain your reasoning.)

13 Did you know adults get grades as well? Did you know that when you become an adult (18 years old) you will be given a credit score that determines how much money you can borrow, whether or not you can get a mortgage (loan to buy a house), whether or not you can get a car loan and whether or not a company will give you a credit card? Your credit score is your trustworthiness. If you develop a good record of paying on time you will have a high credit score. If you use too many credit cards and miss payments to people you owe; you will ruin your credit. When you apply for any type of loan or credit card a company will run a credit report on you to determine if they should give you the loan or credit card. With bad credit you will only get a loan with high interest rates; and sometimes you can t get a loan at all. Credit scores range from Scores above 700 are generally considered to be credit worthy. Once people have bad credit; it takes them years to raise their score. With low credit people end up paying higher mortgage payments and car payments because their interest rate is extremely high. It is extremely important to always pay your bills on time, not apply for too many credit cards, and not use very much of your credit. For example; if a company gives you a credit card with a maximum limit of $1000, try to only use $100 of it at a time. It is difficult for people to lead a quality life once they establish bad credit. Every financial decision you make after the age of 18 will affect your credit score for years. People can work for a higher credit score by paying their bills on time and paying off their credit card balances. Write three reasons below that it is important to maintain a good credit score when you become an adult: (Use complete sentences and explain your reasoning.)

14 Explain each of the following terms thoroughly to show your financial IQ : (Use complete sentences and explain your answer.) Checking Account: Credit Card: Debit Card: Credit Score: Wants vs. Needs: Net Income: Gross Income: Deductions: Disposable Income: Credit Worthiness:

15 Budget: The amount of money you will spend each month on savings, utilities, rent, and other payments. It allows people to keep track of their spending and not overspend. Checking Account: A checking account is a service provided by financial institutions (banks, savings and loans, credit unions, etc.) which allows individuals and businesses to deposit money and withdraw funds from a federally-protected account using a check. Credit Card: A plastic card having a magnetic strip, issued by a bank or business authorizing the holder to buy goods or services on credit. Credit Report: A credit report contains information about your credit - and some bill repayment history - and the status of your credit accounts. This information includes how often you make your payments on time, how much credit you have, how much credit you have available, how much credit you are using, and whether a debt or bill collector is collecting on money you owe. Credit Score: A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus. Credit Worthy: You have established good credit by paying all of your bills on time and you don t use credit cards regularly. Debit Card: A bankcard used to make an electronic withdrawal from funds on deposit in a bank, as in purchasing goods or obtaining cash advances. Deductions: Amounts that are taken out of your paycheck. Disposable Income: Money you have left to invest or spend after you ve paid all of your expenses each month. Electronic Payments: Electronic payments are payments that are made directly to the person you re paying a bill to from your bank accounts using security features over the Internet to process the transactions. Expenses: Bills you must pay each month. Gross Income: The amount of money you actually make without deductions. Income Tax: Money taken out of everyone s paycheck to pay for schools, roads and etc. Net Income: The amount of money you actually receive after deductions on your paycheck. Obligations: Bills you must pay every month. Over-Extended: Your bills add up to more than your monthly net income. Max: Spending the entire limit of credit that you are extended. Sales Tax: Tax you pay on items that you purchase at the store.

16 Write a parody of a fairy tale in which one of the characters is financial wise and one of the characters is wasteful and not credit worthy. Pretend you are a pop celebrity and you have a budget of $200,000 to spend each month. Pretending you are that celebrity; create a monthly budget for that person. Write a pretend credit report for someone who has not shown good creditworthiness. List the names of credit cards they have (for example: Macy s, Bank of America, and Dillards). List how many payments they have missed, how much they owe to each company and provide them with a faux credit score. Research the salary of a president of a major company (for example: Dell, IBM, Google, and Kellogg s). Determine their gross pay by dividing their salary into 12 months. Then deduct 35% for federal taxes, 5% for state taxes, $400 for healthcare, 3.5% for social security, $50 for vision and dental. Create a faux paycheck for that person using the deductions listed above. Write a story about twins who grew up in the same home. One twin ended up being very Money Wise and one twin grew up being very Money Unwise.) Saver Spender Create a four stanza poem about being credit worthy and paying your bills on time. Write a six frame comic strip about the Credit Hero who rescues people with bad credit. The hero saves people before they are about to make a financial mistake. Create a guide that explains three different ways that students could start investing money wisely. Use at least three visuals in your guide. Write a story about the family called the Spendtoomuches who keep spending and spending until finally they can t spend anymore. In the story explain the difference between wants and needs. Complete three projects in tic tac toe order.

17 All projects are finished and you followed the directions. 40 Points Your projects are neat and organized. 30 Points Your projects make financial sense...20 Points Projects were completed on time.10 Points Total Possible 100 Points Student Name Total Points Grade

18 Personal Finance Money Wise Task Cards Grades 4 th -6th #1. If you have just been given $1000 to invest and you want to save the money for college in 6 years; which of the following would be the best choice? A. Savings Account B. CD (Certificate of Deposit) C. New Wardrobe D. All of the above. #2. You just found out you have a credit score of 550. Which of the following below should you do? a. Apply for more credit cards. b. Buy a new car. c. Pay down the credit card balances. d. All of the above. #3. Which of the following is an example of a need? A. Video Game B. Shelter C. Designer Clothes D. I Phone

19 #4. You have just been given $1000 and you would like to make the most money possible on your investment even if it is risky; which of the choices below would be the best option for your money? A. Savings Account B. CD C. Own a Business D. Stock Market #5. Which of the following is an advantage of a debit card? A. You can accidentally wash it in the washing machine. B. You can buy expensive items. C. You can purchase items online. D. You can use it at restaurants. #6. Which of the following is an example of something you would use disposable income to pay for? A. Electric Bill B. Food C. Movie Tickets D. Rent #7. Which of the following is deducted from everyone s paycheck in the United States whether they like it or not? A. Health Insurance B. Food Costs C. Utilities D. Federal Taxes

20 #8. Why is it important for you to understand your parent s household budget at your age? A. So that you can better understand the value of money and why some things are wants and not needs. B. So that you can help them pay the bills. C. So that you can decide if you should get a part-time job or not. D. To help them with the math. #9. Which of the following items might be included on a person s credit report? A. The limit a person has on their credit card. B. How many times a person has paid a bill late. C. How much a person owes a credit card company. D. All of the above. #10. Which of the following is an example of someone who is overextended? A. They have one credit card for emergencies only. B. They owe more bills each month than what their net income is. C. They pay with cash only. D. They pay all their bills on time. #11. Which of the following is a disadvantage of having bad credit? A. You will be turned down for credit cards. B. You will pay higher interest for loans. C. You will pay a higher deposit for electricity, water and gas services. D. All of the above.

21 #12. Which of the following is a good reason to have a budget? A. You can try and make more money. B. You can save money. C. You can keep from paying bills. D. You can learn how to spend money wisely. #13. Which of the following is an advantage of a credit card? A. You can buy anything you want. B. You can spend more than you should. C. You can buy something you need and pay it back in payments. D. You can buy things you otherwise couldn t afford. #14. Which of the following is a benefit of saving money and not buying all the things you want? A. Peace of mind. B. Freedom. C. Good credit score. D. All of the above. #15. Even though a credit card company might give someone a credit limit of $1000; why is it important that they don t max out their credit card and spend $1000? A. It is hard to pay the money back. B. They will end up paying three times more for each of their purchases. C. Bad credit. D. All of the above.

22 Answer Key: 1. B 2. C 3. B 4. D 5. C 6. C 7. D 8. A 9. D 10. B 11. D 12. D 13. C 14. D 15. D