Date:June 20, 2013

Financial Fitness for Life

These 17 lessons for students in grades 6-8 include a variety of activities that help students make thoughtful, well-informed decisions about important aspects of personal finance, including earning income, spending, saving, borrowing, investing, and managing money.

 

Theme 1: Lesson 1 – Resources Are Scarce  (download PDF)
Grades:  6-8

The students examine hypothetical companies that produce various goods made from wood. They discover some companies do better than others at producing goods that people want to buy. The companies that produce goods that people want to buy at prices high enough for the producer to be profitable will be successful.

Concepts:
Capital resources, Human resources, Natural resources, Entrepreneur, Scarcity, Unlimited wants

 

Theme 1: Lesson 3 – The Economic Way of Thinking  (download PDF)
Grades:  6-8

The students are introduced to the final two principles of the economic way of thinking: People’s choices have consequences, and People respond to incentives.

Concepts:
Consequence, Incentive, Opportunity cost

 

Theme 2: Lesson 4 – Why Stay in School?  (download PDF)
Grades:  6-8

Against a background of information about the relationship between educational attainment, employment, and income levels, the students weigh decisions about education in light of costs and benefits.

Concepts:
Benefits, Costs, Income, Marginal benefit, Opportunity cost, Wage

 

Theme 2: Lesson 5 – Choosing a Career  (download PDF)
Grades:  6-8

The lesson focuses on a deliberate approach to making career choices. The students examine statistics projecting future demand for workers in various occupations. They complete a self-assessment to identify career pathways that match their interests and abilities. After examining a number of  job descriptions, they compare each job’s requirements to the skills recommended by SCANS (Secretary’s Commission on Achieving Necessary Skills). Finally, they consider entrepreneurship as a career option.

Concepts:
Entrepreneur, Human capital, Opportunity cost,  Productivity

 

Theme 2: Lesson 6 – Productivity  (download PDF)
Grades:  6-8

The students examine ways to develop their human capital. They discover that they make themselves more productive by developing their human capital and by using capital resources, the tools of their trade. As they become more productive, they become more valuable to employers. As they become more valuable to employers, they gain earning power, thus improving their standard of living.

Concepts:
Capital resources, Human capital, Productivity, Wage

 

Theme 3: Lesson 8 – Choosing and Using Checking Account  (download PDF)
Grades:  6-8

The students learn the fundamentals of maintaining a checking account. They examine electronic banking methods, the writing of checks, and using a check register. They examine the features and costs of checking accounts, in preparation for the time when they acquire checking accounts of their own.

Concepts:
ATM card, Checking account, Checkbook register, Credit union, Debit card, Direct Deposit, Online banking, Overdraft

 

Theme 3: Lesson 9 – What Taxes Affect You?  (download PDF)
Grades:  6-8

This lesson focuses on taxes and the uses governments make of tax revenue. Tax revenue pays for public goods and services: roads, schools, court houses, police and fire protection, parks, national defense, and so on. Taxes are also used to fund transfer payments to people who receive Social Security, Medicare, disability, food stamp, and other benefits.

Concepts:
Income tax, Property tax, Public goods and services, Sales tax

 

Theme 4: Lesson 10 – Why Save?  (download PDF)
Grades:  6-8

The students learn about saving and investing, and they consider the importance of setting short-term, medium-term, and long-term savings goals. They use math skills to solve problems and they play a game designed to emphasize the importance of setting goals and working toward a goal. Finally, they engage in a family activity that focuses on the opportunity cost of saving.

Concepts:
Investing, Long-term goals, Medium-term goals, Opportunity cost, Saving, Scarcity, Short-term goals.

 

Theme 4: Lesson 11 – Let Lenders and Borrowers Be  (download PDF)
Grades:  6-8

The students learn how financial intermediaries foster exchanges between savers and borrowers. They learn how savers and borrowers benefit from these exchanges; they also learn about the opportunity costs of saving and borrowing.

Concepts:
Demand, Financial intermediaries, Interest, Opportunity cost, Profit, Revenue, Supply

 

Theme 4: Lesson 12 – Types of Savings Plans and Investments  (download PDF)
Grades:  6-8

The students learn about various types of government-insured savings instruments, noting the advantages and disadvantages of each. They learn that savings and investment instruments carry various types of risk, including inflation risk, interest rate risk, and financial risk. They also learn that risk must be measured against reward.

Concepts:
Certificate of deposit, Financial risk, Inflation risk, Interest rate risk, Money market deposit account, Opportunity cost, Portfolio, Savings account, Savings instrument, U.S. Savings Bond

 

Theme 4: Lesson 13 – Who Pays and Who Receives?  (download PDF)
Grades:  6-8

The students discover that three factors affect how money grows in savings accounts: the amount deposited, the interest rate, and the length of time the money is held on deposit. Students calculate interest and formulate a generalization about the difference between simple and compound interest.

Concepts:
Compounding, Compound interest, Interest, Interest rate, Opportunity cost, Rule of 72, Simple interest

 

Theme 4: Lesson 14 – Stocks and Mutual Funds  (download PDF)
Grades:  6-8

The student learn about stocks: how stocks are issued, different levels of risk, and differences in possible returns. In studying risk, the students also learn about mutual funds and diversification.

Concepts:
Capital gains, Diversification, Dividend, Equity, Mutual Funds, Risk, Stocks

 

Theme 5: Lesson 15 – Cash or Credit?  (download PDF)
Grades:  6-8

Most students are aware of the variety of payment options available to consumers. Cash, checks, debit cards, and credit cards are often used by their parents; however, the students probably do not understand the implications of each. This lesson examines the advantages and disadvantages of various payment methods and focuses especially on using credit. The students are challenged to calculate the cost of credit, compare credit card agreements, and analyze case studies.

Concepts:
Annual fee, APR, Credit limit, Finance charge, Grace period, Inflation, Interest, Interest rate, Late fee, Minimum payment, Opportunity cost

 

Theme 5: Lesson 16 – Establishing Credit  (download PDF)
Grades:  6-8

Lenders are in business to grant loans to individuals and businesses. However, the applicant’s ability to repay a loan can mean the difference between profit and loss for the lender. To reduce risk, the lender assesses the applicant’s creditworthiness by reviewing his or her character, capacity for repayment and collateral. They also pay particular interest to the applicant’s credit score. In this lesson, the students work through exercises to assess the three “Cs” of several loan applications. They discover how they can establish a credit record, and they learn about the rights and responsibilities they have as borrowers.

Concepts:
Credit history, Credit score, Character, Capacity, Collateral, The rights and responsibilities of borrowers

 

Theme 5: Lesson 17 – Comparison Shopping  (download PDF)
Grades:  6-8

The students identify costs and benefits of comparison shopping. They learn about a sevenstep approach that can help consumers make well-informed choices, and they practice using it. They also learn to avoid certain mistakes that consumers often make.

Concepts:
Comparison shopping, Consumer protection