Introduction to Finance

Lesson Objectives Explain what finance is and why

learning about it is valuable Identify how financial knowledge can be

applied to real life Explain how the time value of money is

a fundamental component of financial literacy

Describe the financial services industry and the financial system that it serves

Financial Literacy Surveys show that almost half of all teens

have a desire to save money, though 38% admit to spending all of their money.

The number of 18- to 24-year-olds declaring bankruptcy has increased 96% in 10 years.

The average student loan debt after college is $20,000.

In the last year, more young people declared bankruptcy than graduated from college.

Financial Literacy All of the previous statements are true What do these statements say about teens

and their spending habits? These types of facts, financial literacy is a

topic that young people should be concerned about

Learning financial responsibility and how to manage money correctly is crucial to your financial future and overall well-being in general

Financial Goals Everyone has some sort of goal in life Being financially literate can help you

achieve those goals

Financial Goals I would like to own my own car. I would like to go to college. I would like to purchase a home. I would like to support a family. I would like to have health insurance. I would like to retire comfortably. Which 3 would you like to achieve?

Financial Goals How can you achieve these goals? The goal of this class is to teach you

how money works and what it can do for you

Am I Financially Literate? Download- Reading: Am I Financially

Literate? While reading everyone must

Circle five key words Write a summary that incorporates their key

words Turn into classpress

Time Value of Money Last week your neighbor borrowed $100 from you to

purchase a cell phone. She has finally rounded up the money from various babysitting jobs to pay you back. Instead of giving you all of the money today, she asks if she can repay you $20 a week for the next five weeks. She is really hoping that you will allow her to pay you back in installments. After contemplating her request, you decide that you will allow her to pay you back in future installments. As you’re walking across the street to let her know, you bump into a friend. He asks you what you’re up to and you explain the situation to him. He just stares at you in what appears to be disbelief. Wondering what his problem is, you ask, “Does it really make a difference when she pays me back as long as I get the full $100?”

Time Value of Money This is arguably the most important

concept in finance Luckily we will focus on this in the next

activity

Time Value of Money Download- Reading: Time Value of

Money This is called a jigsaw activity At your tables, I will assign you a

section, your group will Read the entire section independently Write down one question you have about

the reading Write a short summary of your section

Time Value of Money Now all but one person get up from

each group and find a new group that has not read your section

Each expert is to read your summary to the new group so they can get an understanding of your section

Return to your groups and read out the questions that you came up with

Time Value of Money Understanding of the time value of

money is critical to the understanding of finance

Taking advantage of the opportunities to use money to earn interest or pay off debt is a skill that they can apply to your own lives immediately and will support you in making wise monetary decisions in the future

Time Value of Money Based on the scenario at the beginning of

class: Does it really make a difference when the

neighbor pays you back as long as you get the full $100?

Not only does having the money now put you in a position to increase the future value of their money but it also mitigates the risk that is involved with borrowing and lending

Financial Services Industry All financial transactions involve a

change in the status of the finances of two or more businesses or individuals

Although there are many types of financial transactions, the most common type is a purchase

Think about the last five purchases that you made

Financial Services Industry I stopped at the grocery store to

purchase some bread and eggs. I paid a late fine at the library for an

overdue book. I purchased two new songs on iTunes. This morning I had to stop and get

gasoline and a cup of coffee.

Financial Services Industry The financial services industry is

involved in some way or another with each one of their financial transactions

In fact, banks are businesses that are based almost entirely on financial transactions, and every one of your purchases involves a bank in one way or another even if you paid in cash

Financial Services Industry Download- Anticipation Guide: Financial

Services Industry Complete individually with at least one

sentence for each statement

Financial Services Industry Presentation

Financial Services Industry Complete the I Learned section of the guide to turn

in to classpress The presentation covers most of the mainstream

and/or traditional financial services institutions, it does not cover the alternative businesses that are a part of the financial services industry

Although most people use banks, credit unions, and other traditional financial institutions to meet their needs, there is a large population that relies on alternative financial services companies such as check-cashing outlets, payday lenders, and pawnshops to facilitate their monetary transactions

Financial Services Industry Some people find the services provided

by these companies to be convenient, the fees and rates that are charged for their services can be much higher than those charged at a local bank or credit union

The Importance of Financial Literacy You are about to take part in a very

important task You are going to write letters to the United

States Treasury Secretary explaining the importance of financial education

Once you have completed the letter you will also get the opportunity to have your voice be heard by actually sending your letter directly to the White House!

The Importance of Financial Literacy What does financial literacy mean? Why is it important? In what ways can

financial knowledge be applied to real life?

How does the financial services industry support the individual, businesses, and society?

The Importance of Financial Literacy Download- Letter-Writing Frame: Letter

to the United States Secretary of the Treasury

Download- Assessment Criteria: Letter to the United States Secretary of the Treasury The frame is to be used as a guide to

write your letter You can organize your letter any way you

wish.

The Importance of Financial Literacy Meaning of financial literacy Why it’s important? Why do you need financial services?

Financial Literacy Give your letter to a partner to review Please respond to:

The point that stands out to me the most is…

I appreciated…

Enrichment Test your knowledge of financial literacy Visit SavingAdvice.com or http://www.savingadvice.com/quiz.php?quiz=7&page=quiz to take the original financial literacy test produced by Jump$tart.org.

Enrichment Choose a contemporary economist to

research such as Paul Krugman, Greg Mankiw, or Thomas Sowell

Present your findings to the class with a general biography of the individual along with interesting facts and career highlights

Cross-Curricular Integration Continue to investigate spending habits Get in teams of three or four and challenge each

group to research the spending habits of various groups Demographic groupings can be broken up by

gender, age, socioeconomic status, ethnicity, geographical region, etc

Prepare bar or pie graphs to visually display your results

Present your graphs to your classmates and compare and contrast the findings.

Link Financial Literacy Quiz