OVERVIEW Nothing beats the feel of a crisp new $20 bill in your hand. But as you move toward the real world after high school, you ll run into situations where handing someone cash isn t the best option if it s an option at all. And credit cards aren t always the best choice either. Especially since the interest can mushroom into a mountain of debt fast. Luckily, there are plenty more ways to spend and receive money. In this lesson you will learn about how to use a checking account. LEARNING OUTCOMES In this lesson students explain how checking accounts are used to handle business transactions. Along the way they will: Discuss reasons to use check payments. Demonstrate how to use a checking account. Explain how to reconcile a checking account. Students will demonstrate what they learn by using a checking account. PREPARATION Order a Module 5 Student Guide for each student. (The Guide is also available online to download.) Preview the lesson PowerPoint presentation, learning tasks, and the Module 5 Student Guide, particularly pages 3-21. Print or download the Student Learning Plan for this lesson so each student has a copy. WHAT YOU WILL NEED Module 5 Student Guide (pages 3-21) PowerPoint Presentation 5-1 Student Learning Plan 5-1 Activity 5.1: Proof of Payment Activity 5.2: Check Writing 101 Activity 5.3: Making the Deposit Activity 5.4: Keeping Track Activity 5.5: Does it Balance? Task: Balance Zoe s Bucks Challenge 5-A: Use a Checking Account NOTES: Approximate time: 45 minutes (minimum) - 90 minutes (with extension activities) Resources: These non-profit organizations support education about the banking system and services: Consumer Financial Protection Bureau, www.consumerfinance.gov Federal Reserve Education website, www.federalreserveeducation.org Goodwill Community Foundation education website, www.gcflearnfree.org/moneybasics 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 1 June 2014
1. There s a new song you want quick! Brainstorm as many different ways you can shop for and/or pay for this item. TIME ESTIMATE: 5 minutes [Slide 2] Give students a two- or three-minute time limit to brainstorm as a class the different ways they could shop and pay for a new music. Create two columns on the black/whiteboard, one for shop and one for purchase. Document the lists students create. Prompt students so brainstorming lasts the full two or three minutes. If they start running out of ideas halfway through, encourage them to think of places to buy used items. (from a friend, yard sale, discount store, library sale, online, etc.) EXTENSION: Follow-up by polling students to see how many of these different places to shop and payment methods they have used themselves. This will help give you a sense of previous experience, potential classroom experts, and which security/fraud topics you should cover later in the Module. [Slide 3] Preview the Learning Outcomes in the Student Learning Plan. By the end of this lesson, the students should be able to demonstrate how to use a checking account. [Slide 4, pages 3-4] Introduce Jason and Brianna as the young people featured in the Student Guide. The students will follow Jason and Brianna as they learn about using financial services to handle their payments. Module 5 Student Guide Student Learning Plan Pages 3-4 SLIDES 2 Ways to Pay? 3 Preview 4 Meet Jason and Brianna 2. Brianna knows how to handle gift cards and cash but has never had to use other ways to pay for items. Have you? Find out how checking accounts are used for payments. TIME: 5-10 minutes Use the information on pages 4-5 to discuss reasons people might choose to pay for goods and services in ways other than using cash. Use this to transition into the benefits and potential negatives of using a checking account for purchases (page 6). [Slide 5] Explain that checking accounts are considered types of demand deposit accounts because the account funds are accessible to the customer without any advance notice to the bank or credit union. Either as a whole class or in small groups, have the students brainstorm responses to Activity 5.1: Proof of Payment. Pages 4-7 SLIDE 5 Demand Deposits ACTIVITY Activity 5.1: Proof of Payment 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 2 June 2014
3. Learn how to use a checking account to give and receive money. Complete Activity 5.2: Check Writing 101 and Activity 5.3: Make the Deposit for practice. TIME: 10-15 minutes Explain that when a person writes a check or makes an electronic payment with checking account funds, s/he is ordering the bank or credit union to immediately transfer funds to someone else. When the check is signed or debit card used, the payer (owner of the checking account) enters into a contract to agree to pay the designated amount when the payee (person receiving payment) deposits the check or accepts the electronic payment. Revisit responses from the opening activity to point out that many checking account payments are made electronically, whether online, by phone, or with a debit card. However, there will be occasions when someone may need or choose to pay with a paper check. [Slide 6] Use the slide and information on pages 8 and 10 to point out the information that is displayed on every check. Stress that a check needs to be filled out clearly, accurately, and in permanent ink to avoid any opportunities to misinterpret data or to prevent fraud. Use Activity 5.2: Check Writing 101 for students to practice writing checks. [Slide 7] Show an example of the completed activity. ALTERNATE ACTIVITY: Arrange for the students to complete the Check Writing tutorial on the Goodwill Community Foundation education website, www.gcflearnfree.org/moneybasics/6. Additional tutorials are available on this site for additional practice. Remind the students that they need to have sufficient funds in their checking accounts to have money available for payments. A checking account is not like a credit card account. Rather, they will need to ensure that they deposit enough money into their accounts to have money available to pay on demand, whether by check or a debit card. [Slide 8, pages 16-18] Use the slide to illustrate how to fill out a deposit slip. In some cases of making a deposit at an ATM, a deposit ticket might not be needed. Regardless, every deposit will require the depositor to designate the account receiving the funds and the amount when making a deposit. Use Activity 5.3: Make the Deposit so students practice filling out a deposit slip. [Slide 9, pages 17-18] Show examples of endorsements that are written on the back side of a check, behind the Pay to the Order of phrase written on the front side of the check. Point out that the bank receiving the endorsed check will match the endorsement with the designated payee on the front of the check. Pages 6, 8-10, 16-18 SLIDES 6 What s on a Check? 7 Check Writing 101 8 Make the Deposit 9 - Endorsements ACTIVITIES Activity 5.2: Check Writing 101 Activity 5.3: Make the Deposit (alternate activity) access to Internet 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 3 June 2014
4. Jason paid out a lot of money in fees because he wasn t tracking his spending. Can you do any better? Complete Activity 5.4: Keeping Track and the Balance Zoe s Bucks task to practice keeping track of payments and deposits from a checking account. TIME: 10-15 minutes [Slides 10-11] Read about the problem Jason had keeping track of his checking account transactions. (Student Guide, pages 14-16). Stress that an account holder is responsible for keeping track of how much money is really available in the checking account. Demonstrate how to keep track of payments from and payments to a checking account as you record Jason s transactions. Note that his ending balance is different from the bank s ending balance because he recorded the $25 check payment which was not accepted by the bank. Arrange for the students to practice tracking checking account transactions as they complete Activity 5.4: Keeping Track. Slide 11 shows a sample answer key. Note: Point out examples of codes often used by individuals or banking institutions to describe the transaction type. The codes used in Slides 11 and 12 are included in the list below. However, individuals might choose to create their own coding system based on personal preferences and what seems logical for their own record keeping habits and what is used by their banking institution. d/c = debit card payment fee = banking institution fee w/d = withdrawal dep (or) D = deposit [#] = check number ACH = automatic clearinghouse POS = point-of-sale withdrawal ATM = automated teller machine For additional practice, arrange for students to work independently or in pairs to complete the Balance Zoe s Bucks task. Slide 12 shows a sample answer key. [Slide 13] Point out the value in comparing your checking account records with the bank information. Explain how to reconcile an account as a way to compare the bank statement with an individual s records. Stress the importance of routinely reconciling each account at least once a month to ensure that account records are complete and accurate. Have the students complete Activity 5.5: Does it Balance? To verify Jason s account balance. [Slide 14] This is a good time to provide tips to find math errors when reconciled amounts don t match. Pages 14-16, 18-21 SLIDES 10 Jason s Transactions 11 Keeping Track 12 Balance Zoe s Bucks 13 Does it Match? 14 Hints to Find Math Errors ACTIVITIES Activity 5.4: Keeping Track Task: Balance Zoe s Bucks Activity 5.5: Does it Balance? 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 4 June 2014
5. Demonstrate how to track checking account payments and deposits. Complete Challenge 5-A: Use a Checking Account. Reconcile the account at the end of each month to verify your calculations. [Slide 15] Assign the students to independently complete Challenge 5-A: Use a Checking Account. EXTENSION: Have students create fictitious checking accounts that track deposits and withdrawals for two weeks time. Tell the students to balance their own checking account records. Then instruct students to become a two-person team in a financial relationship (roommates, married, parent and teen, business partnership, etc.) and balance the joint checking account. Pages 21 SLIDE 15 Challenge ACTIVITY Challenge 5-A: Use a Checking Account REFLECTION What is your preferred method of payment checks, debit cards, or cash? Why? Ask the students to reflect on their preferred method of payment and give reasons for their preference. TAKING IT HOME: Ask an older family member if s/he has ever used a check cashing service. Assign students the Taking it Home activity. As an alternative question, guide the students to ask an older family member if s/he has ever had a checking account with a financial institution. If so, ask about the fees and services that were offered by the bank or credit union. Also inquire about what influenced the family member s decision to use this particular institution over other options. FURTHER PRACTICE Internet Complete tutorials to review and practice using checking accounts. Arrange for the students to complete the Check Writing tutorial on the Goodwill Community Foundation education website, www.gcflearnfree.org/moneybasics/6. Additional tutorials are available on this site for additional practice. FURTHER STUDY: Research the rights and responsibilities of using various payment methods. Consider arranging for students to work alone or in pairs to research and report back on one of the payment options listed. Be sure that they cite the source(s) of their information. 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 5 June 2014
TAKING IT HOME Ask an older family member if s/he has ever used a check cashing service. If so, ask about the pros and cons to using check cashing services and ask if there was a fee charged for using the service. FURTHER PRACTICE Complete a Check Writing tutorial on the Goodwill Community Foundation education website, www.gcflearnfree.org/moneybasics/6. Additional tutorials are available on this site for additional practice. FURTHER STUDY A written check is a contractual agreement used to transfer money from one person to another. When you open a bank account, you sign papers that are also considered a contract. Research the rights and responsibilities of using various payment methods, including check, debit card, money order, or gift cards. 2014 National Endowment for Financial Education www.hsfpp.org High School Financial Planning Program 6 June 2014