5th Grade Financial Literacy Module

By Denise Foster,2014-06-28 20:24
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5th Grade Financial Literacy Module ...

    th5 Grade Financial Literacy Module

Module Overview: thThe 5 Grade Financial Literacy Module contains three lessons. In the module,

    students will learn personal finance principles and participate in a variety of exercises.

    The lesson plans in this module were written by Professor Grant McQueen and his

    graduate assistant Assunta Forgione (Brigham Young University’s Marriott School). The

    material is based on ABA Foundation’s ―Bank on Your Future: Be a $mart $aver!‖ lesson

    plans. Each lesson should last approximately 60 minutes.

Lesson Overview:

    1. Budgeting:

    Students will learn about the different sources of income and create a list of possible

    expenses, categorizing them as "wants" or "needs." Together with the presenter, the

    class will create a simple budget (income and expenses) for a hypothetical family. In the

    process, the students will learn about how much things such as utilities, food, and

    insurance cost. Finally, students apply the concepts they learned to their own finances.

2. Managing Money:

    Students will find out about the role of banks including instruments such as savings and

    checking accounts, and credit cards. The students will learn about interest and when

    interest is an expense and when it is income. They will participate in an activity that has

    them complete a check register, write a check, and calculate an ongoing balance based

    on a case study of a hypothetical student run business.

3. Saving and Investing:

    Students will learn how interest is calculated and participate in simple activities to reinforce

    the concept that money can grow. The various ways money can be saved (i.e. money,

    bonds, and stocks) will be mentioned and the effects of compounding over time at different

    rates will be demonstrated. The students will participate in an exercise called the ―Game of

    Life‖ that displays the effects of money decisions on one’s life.

Instructional Notes to BYU’s Personal Finance Students:

    ? Contact the teacher well before the first module and stay in contact throughout the


    ? Read the teaching hints given in Appendix A and B

    ? Plan for up to 30 students in the class.

    ? Prepare photocopies and transparencies of any materials used for the lessons.

    ? If learning assessment is needed, have the teacher give a pre-test sometime

    before the first module and a post-test after the third (see Appendix C).

    ? Students shouldn’t need calculators, but can use them if they have them.

th5 Grade Financial Literacy Module

Lesson 1: Budgeting:

Objectives - Students will be able to:

    1) Feel comfortable working with the presenters

    2) Understand the different ways money can be accumulated

    3) Learn that having money to meet both needs and wants involves setting


    4) Conclude that most families must set priorities for spending

    5) List common items in a family budget and understand what it costs to live

    6) Rank expense items in order of priority

    7) Apply the terms "income" and "expense" to their own experience

    8) Create a personal budget

    9) Create a savings plan for a future purchase/expense


    ? Copies of the blank Monthly Family Budget and the Student Budget worksheets for

    each student

    ? Calculator for each student, if teacher has them available

    ? Overhead transparencies of both of the Monthly Budget worksheets (family and


    ? Cards for the matching game (may need backing so students can’t see through)

Making the Presentation

1. Carry out a creative activity to introduce the BYU team. (Suggestion: tell an interesting

    fact about each BYU student, so the elementary students have something to remember

    them by).

2. Discuss the different ways the students accumulate money and write the responses on

    the board (jobs, gifts, allowance…). Explain that money must be earned before it can be

    spent. Describe the term "income" to mean the money earned from the different sources.

3. Have students brainstorm about things on which they spend money. Write these on the

    board as they are suggested. Define the term "expense" as the money spent on both

    needs and wants.

4. Discuss the difference between "needs" and "wants," using one or two examples from

    the expense items students suggested. Following this discussion, go over each word on

    the board and ask students to classify it as a "need" or a "want" and help them to prioritize

    items in each category. Remind them that a ―need‖ is something they cannot do without for

    their day-to-day living and a ―want‖ is something that would make life more comfortable for

    them but often can wait. Explain that prioritizing is important because in most cases, we

    have limited resources.

5. Explain that they will learn how a family budgets their money so they will always have

    enough to meet their ―needs‖ and hopefully most of their ―wants‖ and will gain an

    appreciation for how much it costs to meet these needs and wants. Together with the

    class, fill in a blank overhead transparency of the Monthly Family Budget. First, with input

    from the teacher and observations of the classroom demographics and neighborhood characteristics, develop an idea of the income level of the students’ families. Second, with

    the class, decide on the size of the hypothetical family. (Be sensitive. Emphasize that the budget is for a hypothetical family, not a specific student’s family, so as to eliminate

    potential embarrassment and/or comparisons). Third, with a family income level and size in mind, work with the students to fill in the Monthly Family Budget. There is no ―correct‖

    Family Budget; however, two budget illustrations (one for an upper middle class family and one for a lower middle class family) are given to help the presenter.

Make the Family Budget process interactive. For example:

    a. Ask a student if the family will have one or two parents working outside the home (Both illustrations include one full-time salary and one part-time salary).

    b. If students do not have realistic estimates of income, start by asking them about hourly wages.

    c. Ask a student what income taxes are and how much of a family’s income goes to taxes.

    d. Ask whether the hypothetical family rents or owns their home and whether they understand the differences. Ask how big the home is and how much it costs. e. Ask what utilities are (electricity, natural gas, water, sewer, garbage, phone(s), cable, internet) and how much they cost.

    After filling in income and expenses, have someone in the class compare the two. Often the students’ choice of house, car, cable, etc. result in expenses exceeding income. In this case, have the students eliminate some of the ―wants‖ by choosing a smaller house, older car, or fewer cable channels, etc.. Ask students if they plan to work forever or retire around age 67. Discuss the need to save each month.

    Hand out blank Family Monthly Budgets for the students to complete at home with their parents. With approval of the teacher, this could be a homework assignment.

    Indicate that many financially successful families ―pay themselves first.‖ That is, in the hypothetical budgets, savings is what is left of income after expenses are paid. In contrast, many families set aside money for savings first, then budget the remaining income toward expenses. Suggest that saving first is a good idea.

    6. Some groups/individuals may be capable of taking what they have learned about family budgeting and relating it to their personal budgeting. Depending on time constraints, the instructors can follow a similar process for the individual student’s budget as was done for

    the hypothetical family budget. Using an overhead transparency, guide students through the worksheet. Begin with a brainstorming session about personal income and expense items. Try to incorporate some of the ―need‖ and ―want‖ items mentioned in the first exercise into the budget so that the children can apply what they have learned to their lives. Help the children to set goals and priorities and create a personal budget.

    7. Have the students brainstorm about something they would like to buy and determine how long it will take them to save money before they can purchase the item. Then have them complete the exercise by answering the questions:

     "What do you really want to buy?"

     "How much does it cost?" (Calculate taxes and shipping for the item)

     "How long will it take you to save enough to buy it?"

    Show students how to divide their monthly savings into the total cost of the item they want to determine the number of months it will take them to save.

    8. Discuss options students have for saving their money, including keeping the money in a jar at home, asking their parents to hold the money for them, and putting the money into a savings account at a commercial bank. Discuss the pros and cons of each strategy, introducing the concept of using financial institutions that will be taught in the next module.

    9. Review terms learned during the lesson: Needs vs. Wants, Income vs. Expense, Budgets, etc.

    10. Time permitting, play a matching/memory game as a review exercise. For example, with 10 pictures taped with their face to the wall or board, let students or teams turn over two pictures at a time trying to find a match. For example, one picture could be of food which matches to the word ―necessity,‖ and another could be of a snow board which

    matches to the word ―want‖ (see material below).

Module #1 Time Frame These are only recommended times to be spent on each activity.

    Times will need to be adjusted based on the level of understanding of the class.

Activity Time (min)

    1. Introduce Presenters (BYU Students) 5

    2. Brainstorm Activity (Income) 3

    3. Brainstorm Activity (Expenses) 3

    4. Discuss Differences Between "Needs" and "Wants" 3

    5. Family Monthly Budget Worksheet Activity 15

    6. Personal Monthly Budget Exercise 7

    7. Purchase from Savings Activity 3

    8. Saving Your Money Discussion 3

    9. Review Vocabulary from Lesson 3

    10. Matching game 10


Family Monthly Budget for Hypothetical, Upper Middle-Class Family of

    Six (Do not use this budget in class. This budget gives “reasonable”

    numbers to the instructor; however, the class should fill in the blank

    budget together with the instructor)

(1) Monthly Income = money you receive.

    Parent # 1’s salary $5280 Parent # 1’s monthly salary:

    Parent # 2’s salary $1320 22 days X 8 hrs/day X $30/hr = $5280

    Investment income $ 100 Parent 2’s monthly salary:

     22 days X 4 hrs/day X $15/hr = $1320

    Other _______

    Total $6700

    (2) Monthly Expenses = money you spend.

    Taxes: federal, state, and FICA taxes Taxes (25%) $1675

    Utilities: electricity, gas, water, sewer, Rent/mortgage $1000

    garbage, internet & cable Food/toiletries $ 600

     Telephones $ 100

    Insurance: car, home & health insurance Utilities $ 300

     Car(s), gas, rep.s $ 600

    Other: clothes & furniture Insurance $ 800


     Clothes, shoes

     Vacation/hobbies $ 300

     Entertain., gifts

     Donations $ 300

     Other $ 300

     Total $ 5975

(3) Income should be more than expenses.

    Subtract total expenses from your total income.

    Put the extra money in your savings account! Income $6700

     Expenses(minus) - $5975

    Total Savings $ 725

    Family Monthly Budget for Hypothetical, Lower

    Middle-Class Family of Six (Guidelines for

    TeacherDo not use in class)

(1) Monthly Income = money you receive.

    Parent # 1’s salary $2640 Parent # 1’s monthly salary:

    Parent # 2’s salary $ 616 22 days X 8 hrs/day X $15/hr = $2640

    Investment income $ 0 Parent # 2’s monthly salary:

     22 days X 4 hrs/day X $7/hr = $ 616

    Other _______

    Total $3256

    (2) Monthly Expenses = money you spend.

    Taxes: federal, state, and FICA taxes Taxes (15%) $ 488

    Utilities: electricity, gas, water, sewer, Rent/mortgage $ 750

    garbage, internet & cable Food/Toiletries $ 400

     Telephones $ 50 Insurance: car, home & health insurance Utilities $ 200 Car(s), gas, rep.s $ 300 Other : clothes & furniture Insurance $ 700


     Clothes, shoes

     Vacation, hobbies $ 100

     Entertain., gifts

     Donations $ 100

     Other $ 200

     Total $3288

(3) Income should be more than expenses.

    Subtract total expenses from your total income.

    Put the extra money in your savings account! Income $3256

     Expenses(minus) - $3288

    Total Savings ($ 32)

    Family Monthly Budget for ________________

(1) Monthly Income = money you receive.

    Mom’s salary _______

    Dad’s salary _______

    Investment income _______

    Other _______

    Total _______

    (2) Monthly Expenses = money you spend.

     Taxes _______

     Rent/mortgage _______

     Food/Toiletries _______

     Telephone _______

     Utilities _______

     Car(s), gas, rep.s _______

     Insurance _______

     Doctor/Dentist _______

     Clothes, shoes _______

     Vacation, hobbies _______

     Entertain., gifts _______

     Donations _______

     Other _______

     Total _______

(3) Income should be more than expenses.

    Subtract total expenses from your total income.

    Put the extra money in your savings account!

    Income _______

    Expenses(minus) - _________

    Total Savings _______

Personal Monthly Budget for ________________

(1) Monthly Income = money you receive.

    Earnings you receive Add together any gifts, allowance and

     earnings you receive.

    Allowance you receive

    Gifts you receive



    (2) Monthly Expenses = money you spend.

    Subtract total expenses from your total income. Add together money you spend for Books/CDs/Movies yourself, your family, and friends.

     Gifts you buy




(3) Income should be more than expenses.

    (1) Income Put the extra money in your savings account!

    (2) Expenses (minus) -

    (3) Total Savings

    Think of something you’d like to buy: _______________

    How much does it cost? ________

    How long must you save to buy it? (Cost Monthly Savings) ________

    *Use monthly estimates.

    th 5 Grade Financial Literacy Module

Lesson 2: Managing Money:

Objectives - Students will be able to:

    a. Understand the role of banks and other financial institutions

    b. Use a check register, calculate an ongoing balance based on a case study, and

    write a check

    c. Define terms such as: checking, savings, credit cards, bank loans and interest.

    d. Discuss the merits of saving.


    ? Copies of South Street Service Club Case Study (Part I for January and Part II for

    February) and worksheets for each student and an overhead of the worksheet.

    ? An overhead of the blank South Street Check

    ? An example of a check book (checks and registry)

    ? If desired, a bag of candy, preferably chocolate coins.

    Making the Presentation

1. Review module #1 lesson terms (income vs. expense, want vs. need, budgets and


    2. Discuss the students experience with the budgeting exercise (collect homework if assigned). Explain that families use financial institutions like banks to help them manage

    their money. Ask how many students have accounts at a bank. Discuss the benefits of and

    differences between checking accounts, savings accounts, and interest on savings. Also

    explain the terms ―deposits‖ (i.e., an individual puts money into a bank, also known as a

    ―credit‖) and ―payment‖ (i.e., an individual takes money out of the bank, also known as a

    ―withdrawal‖ or ―debit‖).

3. Show the students a check book with registry and introduce its purposes. Explain that,

    like the budget they learned about last class, the check registry helps families/individuals

    keep a record of where the money goes so that they make sure that they are not spending

    more than they have.

4. Give each student a copy of the South Street Snow Club Case Study Part I (January’s

    transactions) worksheet with check register. Walk through the case with the students on

    the overhead and worksheets.


    ? Read the case study with the class and demonstrate how to use the check register

    by stepping through the first 3-4 line items. Mention to the students that the case

    involves children similar to their age group who decided to earn some money.

    Similarly, their parents have to do the same exercise when they are taking care of

    the family expenses. The first check is already entered in the register. Have

    several students each fill out a different part of the blank check #106 on the


     Explain that payments reduce the balance and deposits increase the balance. ?

    Together with the students, work through the register use black pin for deposits

    and red for withdrawals.

    ? Use the opportunity to discuss the proper use of a savings or checking account

    and cover terms such as deposit and payment or withdrawal. Mention that money

    can earn interest when placed in a checking account. Also, discuss what students

    think the members of the club should do with the (open savings accounts) and with

    the balance in the checking account.

    ? Introduce and hand out part two of the South Street Snow Club (February’s

    transaction) and, if time permits, have the students work in teams to finish part II.

    Alternatively, part II could be assigned as homework.

5. Introduce other means of accessing money (i.e. credit cards, bank loans). Recall the

    situation in the case study and demonstrate that in the event that the balance was

    negative, the business may have borrowed money to temporarily pay for their supplies.

    Explain the advantages and disadvantages of borrowing money. Describe how interest

    plays a role when borrowing. Explain how individuals or businesses can buy things with

    credit cards, but must pay for them eventually. For example, the South Street Snow Club

    could have purchased the shovels for $60 with a credit card, but at the end of the month

    the club would have to pay the $60 (with interest if not paid promptly) to the bank issuing

    the credit card. Reiterate that when they save their money, the bank PAYS them interest

    but when they borrow money, the bank CHARGES them interest. Further emphasis that

    when a consumer pays interest, the rate of interest is very high (even 21 percent on credit

    cards); whereas, when a individual earns interest on savings, the interest rate is lower

    (currently less than 5 percent).

6. Remind the students that the objective of working is to earn money to pay for ―needs‖

    and ―wants‖ in the present as well as into the future. Therefore, individuals should make

    more than they spend (income > expenses) so that they can save their money for future

    purchases. Recall the case study again and demonstrate that the friends in the South

    Street Snow Club had money left over that they could save. Explain that during the next

    class, the students will learn what to do with the money they save so that the money grows.

7. Review the meaning of ―interest,‖ ―checking account,‖ ―savings account‖ and other


8. Consider offering each student a choice: one piece of candy today or two pieces of

    candy the following week when you return. (Put in context of interest)

Module #2 Time Frame- These are only recommended times to be spent on each activity.

    Times will need to be adjusted based on the level of understanding of the class.

Activity Time (min)

    1. Review Module #1 Vocabulary 3

    2. Bank Discussion 5

    3. South Snow Service Club Case Study Activity 30

    4. Interest and Borrowing Discussion 5

    5. Interest and Saving Discussion 5

    6. Review Vocabulary from Lesson 3

    7. Candy Choice 5_


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