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Personal Finances - Module 1
Personal Finances
The Basics of Credit
and Borrowing Money
by
Goodwill Industries of Greater Detroit
Birmingham Public Schools
&
Oakland Schools Career Focused Education
A collaborative effort to support financial responsibility for students of all ages
Instructional Credits
Content Presenter…………Simeon D. Hill
Curriculum Author…………Jason Wagner
Designer/Producer………...Joel S. Milinsky
© January 2010 Version 1
Personal Finance – The Basics of Credit and Borrowing Money
Module 1 Resource Guide
GRADE: 9th – 12th Grade Level
LESSON TIME: 50 Minutes
OBJECTIVES:
1. Establish a working vocabulary of consumer credit basics. Terminology will
focus on the concepts of credit, decision making, opportunity costs and
interest. Students will gain exposure to the 3 C’s of Credit (Capacity,
Collateral, and Character).
2. Determine the costs and benefits of using consumer credit. Students will gain
insight into the concept of budgeting and how the decision-making process
works when applying for personal loans, mortgages, and credit cards.
3. Identify ways and criteria to establish credit. Emphasis will be placed on the
evaluation of expenses (variable and fixed), debt and income.
STRATEGY/MODEL OF TEACHING:
This is a direct lesson plan
NATIONAL STANDARDS AND BENCHMARKS:
Communication
Foundations of Communication:
.
Participate in group discussions for problem resolution.
(Foundation of Communication - Level 3:2)
Social and Business Listening:
.
Listen for meaning.
(Social and Business Listening - Level 1:3)
.
Identify relevant information in oral messages.
(Social and Business Listening - Level 2:1)
.
.
Listen attentively for the purpose of taking accurate notes or completing forms.
(Social and Business Listening - Level 2:3)
Listen objectively and record major points of a speaker’s message.
(Social and Business Listening - Level 4:1)
Technological Communication:
.
Use computer networks (e.g., communicating computers, Internet, or on-line
databases) to facilitate collaborative or individual learning and communication.
(Technological Communications - Level 3:2)
1
Computation
Statistics and Probability:
.
Construct, read, and interpret tables, charts, and graphs.
(Statistics and Probability - Level 1:1)
.
Make inferences about data from tables, charts, and graphs.
(Statistics and Probability - Level 1:2)
MICHIGAN STANDARDS AND BENCHMARKS
Personal Finance:
.
Personal Finance Strategy- Develop a personal finance strategy for earning,
spending, and saving.
(Economic 4.1.3)
.
Key Components of Personal Finance – Evaluate loan rates, spending and
credit, and money management.
(Economic 4.1.4)
MATERIALS:
.
Module 1 Video Clip (Module 1 Video)
.
Module 1 Bell Work or Perpetration Handout
.
Module 1 Individual Worksheet
.
Module 1 Quiz
Visuals 1 and 2
(Distribute to students or open on desktop for self-paced instruction)
EXPLANATION:
In this lesson students will;
.
Learn consumer credit vocabulary.
.
Track their progress through the completion of an assessment model.
.
Learn to work with budgets and decide how to utilize consumer credit
effectively.
.
PREPERATION ASSIGNMENT: (10 minutes)
Each of the students will complete the “Module 1 Bell Work or Prep” as they
are coming into class and tell them they will have 10 minutes to complete the
assignment and inform the students that you will by asking them to provide
you with a product that they plan to purchase on credit. A series of questions
will be provided that ask them to explain their rationale for the purchase,
conduct a cost/benefit analysis, weigh the potential opportunity cost of the
decision from an implicit and explicit standpoint. We will then move right into
today’s lesson below. If you are doing the module in self-paced mode, gather
your work on the worksheet provided.
2
ENGAGE AND EXPLORE: (25 minutes)
Step 1:
Collect the “Module 1 Bell Work or Prep”.
Step 2:
Distribute a copy of “Visuals 1 and 2” and the “Module 1 Individual Worksheet”
to each student and instruct each student to place his/her name on the Individual
Worksheet.
Step 3:
Inform the students that the answers to the worksheet are contained in the
“Module 1 Video Clip” and that the answers follow in sequence with the Movie
Clip for the Multiple Choice and Short Answer sections only.
Step 4:
Inform the students that there will be a quiz upon completion of the Video Clip
and a brief review after the “Module 1 Individual Worksheet” has been collected.
Step 5:
Upon completion of the Video Clip, give the students a couple of minutes to
finish the “Module 1 Individual Worksheet” then collect it. Upon receiving all of
the “Module 1 Individual Worksheets” conduct a facilitative discussion with the
students focusing on the answers to the questions on the worksheet.
If you are working in self-pace mode, complete all worksheets and assessments
for review with your trainer or mentor on this subject.
EXTEND AND EVALUATE: (15 minutes)
Step 1:
Collect the “Module 1 Individual Assignment Worksheets”. Once you have
collected the “Module 1 Individual Assignment Worksheets” distribute the
“Module 1 Quiz. Make sure to instruct each student to place his/her name on
the quiz. Inform them that a quiz not received at the end of the class period
will result in a zero grade for the quiz.
3
Personal Finance – Module 1
Personal Finance - Module 1 Bell Work / Prep.
Directions: Please answer the questions below to the best of your ability.
Name:_________________________ Date:________________ Score: /6
PLANNING YOUR CREDIT PURCHASE on an Annual or
Special Event, Family Celebration or Extremely Hot Date.
1. What decision are you trying to make?
2. What goals do you hope to accomplish in making your
decision?
3. What are the alternatives? What opportunity costs exist?
4. If you use a credit card to make your purchase, what
are the benefits of using this option?
5. What are the costs of using a credit card?
6. Make your decision….
a) Which alternative best matches your goal?
b) What are the benefits of each alternative?
c) What do you give up with each alternative?
VISUAL 1
THE 3 C’s OF CREDIT
Capacity:
Your ability to pay back a loan
Capital or Collateral:
Your assets used as a guide to determine
your ability to repay the debt
Character:
Your reputation as a reliable and trustworthy person
VISUAL 2
GLOSSARY OF TERMS
1. Discretionary Expense:
An expense a person can choose to have
2. Principal:
The amount of money borrowed when someone takes out
a loan
3. Interest:
Additional time sensitive money that must be paid back
above the principal amount when someone takes out a
loan.
4. Debt:
Money owed.
5. Default:
When a borrower does not pay the money back.
6. Fixed Expense:
An expense that does not change from month to month.
7. Variable Expense:
An expense that a person must pay each month, but its
amount might change.
8. Mortgage:
A loan to buy a house.
9. Budget:
A plan for saving and spending.
10. Opportunity Cost:
What is given up when a decision is made.
Personal Finance Worksheet
Name: _________________________ Date: ________________ Score: /10
Directions:
While watching the “Module 1” video clip listen carefully because
answers to all of the questions are contained in the video clip. Visuals
1 and 2 may also be used to complete this worksheet.
Multiple Choice:
1. Money spent on ____________ is a fixed expense.
a) rent
b) electricity
c) gasoline
d) eating at restaurants
e)
2. Credit cards can be used to pay for _____________.
a) computers
b) tires
c) emergencies
d) all of the above
e)
3. Money spent on __________ is a variable expense.
a) gasoline
b) electricity
c) clothing
d) all of the above
e)
4. To have a balanced budget, your income must be ____________ the
amount of money you spend.
a) less than
b) twice as much as
c) equal to
d) greater than
e)
5. The 3 C’s of Credit contain all of the following EXCEPT _______________.
a) Character
b) Conversion
c) Capital or Collateral
d) Capacity
Short Answer:
6. Give an example of a discretionary expense.
7. List 2 types of loans that most Americans will take out during their lifetime.
8. How do you know if a budget is balanced?
9. What could happen if you spend more than you earn?
Personal Finance Worksheet
Personal Finance – Module 1
Personal Finance - The Basics of Credit Quiz
Name: _________________________ Date: ________________ Score: /10
Directions: Complete the quiz below. The questions were created from the
Module 1 video clip. The format will include Matching and Fill in the Blank
questions. Material contained in Visuals 1 and 2 were also used for this quiz.
Matching:
_____ 1. When income is equal to the amount of
money spent.
A. balanced budget
_____ 2. Money borrowed from a bank
B. interest
_____ 3. The amount of money borrowed when
someone takes out a loan
C. loan
D. mortgage
_____ 4. ‘Extra’ money that must be paid back over
time above the original amount when
taking out a loan.
E. principal
_____ 5. A loan to buy a house.
Fill in the Blank:
Word Bank
banks
fee
money
time
loan
1. People often borrow money from ___________________ to buy things
like houses and cars.
2. People take out a loan when they do not have enough _______________
to buy the thing that they want.
3. A bank charges a _________________ when a person borrows money.
4. A person has a specific amount of __________________ to pay back a
loan.
5. When a person repays a ____________, he or she pays the bank the
principal plus interest.