HAPPY BIRTHDAY BANNER DJ FLASHY PARTY HIRE PARTY STORE PARTY SONG Invisible Money It s Easy to Spend More Money than you Have! Brought to you by LIST PARTY party
This Activity Answers The Question... PAGE 2 How are invisible payment methods connected to money in my personal bank account? Once your child understands the basic money management concepts of Earn, Save, Spend and Donate, they are ready to understand the most invisible type of spending of all credit cards. After talking to 7-10 year olds it was apparent they were confused about credit cards and therefore need to understand how they work. One child studied the credit card and asked, Is there money inside there? Another group of children guessed parts of the card they thought held the money. In addition, many parents are being confronted with outrageous credit card bills racked up by children using mobile phones and tablets and unknowingly making purchases with the push of a button. They are forced to discuss this topic with their children and could use a video to show the invisible process of credit cards. Why is this important? This is important because cash is being used less and less as a form of payment. In addition, digital technology purchases are tied to a credit card but once an account is set by an adult often all a child has to do is type in a password or push 1 click ordering and Cha-Ching, money is invisibly spent. Most of the time kids never see the credit card statement that comes from all of those plastic purchases. And they certainly never see that an adult who pays that bill does so through their bank account. It s even harder for a child to understand that credit cards make it possible for someone to spend more than they actually have, hence borrowing money and putting them into debt. Debt means that items bought actually cost more than what was originally paid because of interest. The problem with interest and debt is that once the invisible money is spent, it s hard to pay off. Try not to spend more than you have!
Music Video: Invisible Money PAGE 3 Party Store 20.00 DJ Flashy Party Hire 60.00 10.00 Happy Birthday Banner Party Songs Jay's Pizza Laser Lights Bus Ticket Phone Bill 10.00 20.00 20.00 1.00 9.00 TOTAL: TOTAL: 150.00 Minimum Payment Due 15.00 It s Prudence s birthday and the other band members decide to throw her a party. They have a budget of 200 cash saved from their last gig to spend on everything they need for the party. As they buy things they make purchases with both cash and credit cards, without keeping track of how much money they have in the bank OR how much they are spending. Charity buys party hats with her store card. Pepper uses her Dad s credit card to pay for the DJ. They buy a Happy Birthday banner, music, pizza, and lights through online stores. Even the bus ride and the invitations they sent out through text messages cost money. After the party they receive the credit card bill with all the invisible purchases they made. They are shocked when the credit card statement arrives and they owe money they don t have. Prudence is distressed, locks up anything and everything that creates invisible money. Cash only until the invisible money charges are paid. Prudence then explains how this happened and shows them what to do now. Since they don t have enough money in the bank to pay the bill, the bank will pay the money they owe for now. The problem with that is since they can t pay their bill in full they will be charged interest. Interest is money added to the bill because the bank has to lend it to them until they work to pay it off. After a lot of hard work by the whole band they finally earn back enough money to pay the bill. As they slump into exhaustion they realize that everything they bought cost more than it should have because of the interest.
Do-Together Activity PAGE 4 DISCUSS CREATE REVIEW Start this activity by watching the music video. Then ask the following questions and discuss with your child(ren): What do you know about credit cards? How does a credit card work? Does it cost anything to buy something on a mobile, tablet or online? How does it work? Where does the money come from to pay for credit card or digital purchases? What happens if there isn t enough money in the bank account to pay for all that we bought? What is interest? 1) Reverse Create Your Own Party Prudence helped to explain how the band spent more than they have using invisible charges. Compare each of the attached Bank Statements with the Credit Card Statements. Talk about: a) how much cash was withdrawn from the bank account for the party; b) how much money was spent on the credit card for the party; c) whether there is enough money in the bank account to afford the withdrawals and the credit card charges. If money spent is more than money in the bank, talk about a plan for paying it off and figure out how much more it will cost due to interest. If money spent is not more than the amount of money in the bank, talk about what to do with the extra money and why. Now that you have reviewed real budgets, credit card statements and bank statements answer the following questions together: Is spending on credit cards good or bad? Why? What can you do to be sure that money spent on a credit card is not more money than you have in the bank? Is spending money on a credit card or digitally easy or hard? What could we do to make it harder so that we are more careful with how we invisibly spend? What is good about interest? What is bad about interest? 2) Use the Party Budget Planner to start over and plan a party for a friend or parent that allows you to buy what you want for the party but does NOT allow you to spend more money than what is in the bank. 3) Extra Credit: a) write what was bought with the withdrawal money on the bank statements; b) make your own statements using real life situations!
BANK STATEMENT 1 Type Balance BANK OF CHA-CHING Amount Balance 200.00 Withdrawl 20.00 Withdrawl 60.00 Withdrawl 10.00 Withdrawl 10.00 Withdrawl 20.00 Withdrawl 20.00 Withdrawl 60.00 180.00 120.00 110.00 100.00 80.00 60.00 00.00 Available Balance 0
CREDIT CARD STATEMENT 1 BANK OF CHA-CHING ITEM Party Store DJ Flashy Party Hire Happy Birthday Banner Party Songs Jay s Pizza Laser Lights Bus Ticket Phone Bill AMOUNT 20.00 60.00 10.00 10.00 20.00 20.00 1.00 9.00 TOTAL: 150.00 MINIMUM PAYMENT DUE 15.00
BANK STATEMENT 2 Type Balance BANK OF CHA-CHING Amount Balance 200.00 Withdrawl 20.00 Withdrawl 40.00 Withdrawl 10.00 Withdrawl 10.00 Withdrawl 20.00 180.00 140.00 130.00 120.00 100.00 Available Balance 100
CREDIT CARD STATEMENT 2 BANK OF CHA-CHING ITEM Party Store DJ Flashy Party Hire Party Songs Phone Bill AMOUNT 10.00 60.00 10.00 9.00 TOTAL: 89.00 MINIMUM PAYMENT DUE 8.90
Party Budget Planner Expenses Cash Expenses Credit Card Food Food Decorations Decorations Music Music Lights Lights Transportation Transportation Phone Bill Phone Bill Sub Total Sub Total Total Expenses Cash Credit Card Total Total
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