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UNIT 11Goals, Saving, Interest and Banking(12 days)

UNIT 11 - GOALS, SAVING, INTEREST AND BANKING (13days)All teaching resources in this document are free for teachers. Here is how to you access them:1. Many are hyperlinked in the document, so you can get started right away. 2. Lessons that do not have a hyperlink can be found on the lesson plan resource calledVirtual Economics 4.5 or 5.0 (VE). All teachers can and should get this resource for freeby participating in a VCEE training session. Visit www.vcee.org for more information.3. Lessons from Financial Fitness for Life are on VE. They also have educationaltechnology tools that can be found here:https://www.econedlink.org/resources/collection/fffl-9-12/Setting goals and creating a plan to achieve them sets a path to follow. Learning about thereasons people often fail to meet goals prepares students to be on guard against the pitfalls thatundermine achievement of goals. Understanding interest as a payment for the use of money,which is not only paid out by borrowers but also received by savers, is important in taking thelifelong view of one’s finances. Being banked is necessary as a preliminary means to saving andreceiving interest.EPF.17 The student will demonstrate knowledge of personal financial planning bya) identifying short-term and long-term personal financial goalsf) explaining how economics influences a personal financial planDay 1 Saving requires foregoing spending; goals and why they’re so hard to achieveDay 2 Creating a plan to help achieve goalsEPF.10 The student will develop consumer skills byd) determining the consequences of conspicuous consumption.h) examining the impact of advertising and marketing on consumer demand anddecision-making in the global marketplaceDay 1 Stay on track towards meeting your goalsEPF.18 The student will demonstrate knowledge of investment and savings planning bya) comparing the impact of simple interest vs. compound interest on savings.Day 1 What is interest? Calculating simple interestDay 2 Compound interest, the rule of 72, and the time value of moneyEPF.12 The student will demonstrate knowledge of banking transactions bya) comparing the types of financial institutions.b) comparing how financial institutions affect personal financial planningDay 1 Financial institutions, check cashing, and payday loansEPF.12 The student will demonstrate knowledge of banking transactions byc) evaluating services and related costs associated with personal bankingd) differentiating among types of electronic money transactions1Virginia Council on Economic Education

Day 1 Understanding how funds are transferred and calculating the costs and benefits ofbankingEPF.12 The student will demonstrate knowledge of banking transactions bye) preparing all forms necessary for opening and maintaining a checking and saving accountDay 1 Completing application forms and examining a bank statementEPF.12 The student will demonstrate knowledge of banking transactions byf) reconciling bank statementsDay 1 Finding the errorsEPF.12 The student will demonstrate knowledge of banking transactions byg) comparing costs and benefits of online and traditional bankingDay 1 Traditional and online bankingEPF.12 The student will demonstrate knowledge of banking transactions byh) explaining how certain historical events have influenced the banking system and otherfinancial institutionsDay 1 Panics, depressions, inflations and recessionsDay 2 September 11 and the financial crisis of 2007-2009Evaluation Day2Virginia Council on Economic Education

EPF.17 The student will demonstrate knowledge of personal financial planning bya) identifying short-term and long-term personal financial goalsf) explaining how economics influences a personal financial plan.Day 1 - Saving requires foregoing spending; goals and why they'reso hard to achieveContent KnowledgeStudents want many things—but, like everyone else, they can’t have everything they want. Theymust choose some things and give up others. The consequences of their choices will lie in thefuture. Understanding why people fail to save and spend wisely can give students insight thatcan help them make and stick to a plan to succeed.VocabularyLong-term Goal - Something a person or organization plans to achieve at least five years in thefuture.Short-term Goal - Something a person or organization plans to achieve within a one-year timeperiod.Virginia Board of Education FrameworkEPF.17a: A short-term financial goal is to have funds to buy things that require money abovewhat is normally allowed by a budget (e.g., emergencies, vacations, social events, automobileand home repairs, gifts).A long-term financial goal anticipates major purchases that require extensive saving (e.g., homeownership, education, retirement, investments).EPF.17f: Key economics principles that influence personal financial planning include thefollowing:● People must make choices due to scarcity.● Every choice incurs an opportunity cost.● All choices have consequences.● Secondary effects of choices are important.Applying these key principles to financial planning means the following:● A budget details how one plans to use limited income to satisfy wants.● There is a tradeoff between spending now and saving.● Financial plans and financial products should take into account the goals of theindividuals.Teaching Tips3Virginia Council on Economic Education

1) Review scarcity and opportunity cost. What is opportunity cost? and What do we giveup, when we put money aside in savings? (We sacrifice the use and enjoyment of goodsand services that could have been purchased now.)2) Lead students in a brief discussion of what they spend money on, and whether they havebeen able to save.3) Why is it a problem if we don't save? How do the students want to be living when theyare adults? Get several volunteers to share their dreams for the future, and have themelaborate on their future past college, past marriage & having children, on into old age.As they mention things that would qualify as goals, list them, but without explicitlycalling them goals. Ask whether there's a word describing all of these items as a whole:things that they want in the future - "goals".4) Engage students in a discussion of immediate goals. Discuss immediate goals in thecontext of the current day; tomorrow; next month; etc.5) Ask: Do you always meet your goals? If not, why? What's easier, achieving immediategoals, or the future goals? Why do people have trouble meeting goals?6) At this point you may choose to implement an activity from the suggested lessons listedbelow. The Guide to Economic Reasoning states that we weigh our costs and benefitswhen we make choices, that we respond to incentives, and that important consequencesof our choices lie in the future. Elaborate on the current sacrifice of spending that savingrequires. Often, the problem is stated as, the future is uncertain; therefore, we have anatural tendency to prefer immediate rewards over ones that take longer to achieve.Discuss behavioral goals as well as ones that require money outlay. Can we come upwith incentives to get ourselves to behave in ways that are in our long-term best interest?Suggested homework: Assign the reading from more.com for the next instructional day.Have students write an essay or blog entry on how they could apply at least threemethods to assist themselves in reaching a short term goal (within 1 year), a medium termgoal (more than 1 but less than 5 years) and a longer term goal (5 years or more in thefuture).Lessons and ResourcesCapstone Lesson 1: Economic Reasoning: Why Are We a Nation of Couch Potatoes?Lesson demonstration found at:https://www.econedlink.org/resources/economic-reasoning-why-are-we-a-nation-of-couch-potatoes-lesson-demo/Financial Fitness for Life Grades 9-12 Lesson 2: The Economic Way of ThinkingLearning, Earning and Investing Lesson 15: Why Don't People Save?4Virginia Council on Economic Education

Day 2 – Creating a plan to help achieve goalsContent KnowledgeIt’s common knowledge that failing to plan means planning to fail. Making and implementingplans gives students a start on a sensible path towards positive futures.Teaching Tips1) Ask for student volunteers to share short, medium, and long-term goals from theirhomework (suggested on the previous day.)2) Ask: What will be needed to achieve the goals? What are some sacrifices that could bemade towards achieving the goals? (First discuss goals that require changes in behaviorother than spending; then discuss money requirements for some of their goals.)3) Assign students to research average costs of their goals. Be sure to have them useexamples from each of the three categories (short-, medium-, and long-term goals).4) Ask: What are some sources of money to achieve your goals? (Parents, gifts from otherrelatives, own earnings, loans.) Have them select one short, one medium, and onelong-term goal and calculate the amount of money per week or per month that should beset aside to achieve each goal. (Students should keep these calculations to use againlater.)Provide students with a template that provides space for listing goals in priority order,with each goal having space to indicate its estimated cost, months to achieve it, and sumto be set aside monthly towards achieving the goal.5) Many or most students will see that they are unable to meet medium and long term goalswith their current sources of money. Stress that this is why these are not short term goals.What can they do now that will set them on a path to achieving these goals? Remindthem that they already learned something about the importance of human capital. Theywill learn more about that in a later unit (unit 13). They will also learn about putting thesavings that they are able to achieve, to work to earn more money. It’s too soon to losehope of achieving their goals!6) But before they get into those topics, they need to look further at obstacles to saving.Assign students to bring in either a physical piece of advertising from a newspaper ormagazine, or a description of a television advertisement, that they find persuasive.Lessons and ResourcesLearning, Earning and Investing: High School Lesson 1: Why Save?5Virginia Council on Economic Education

Take Charge Today lesson: Introduction to Spending Planshttps://takechargetoday.arizona.edu/system/files/Introduction_to_Spending_Plans_Lesson_Plan_1.2.4.pdfResource bank:Investing in a College Education topic from Econedlink.https://www.econedlink.org/topics/12EPF.10 The student will develop consumer skills byd) determining the consequences of conspicuous consumption.h) examining the impact of advertising and marketing on consumer demand anddecision-making in the global marketplaceDay 1 – Stay on track towards meeting your goalsContent KnowledgeA financial plan is not worth much if there’s no follow-through. Temptations abound that canderail a financial plan. Students need to engage in reflection and discussion to understandadvertising and status-seeking motives that can lead them astray from their goals, and intoconspicuous consumption.VocabularyConspicuous Consumption – Purchasing goods or services with the intent of having them seenby others, usually in an effort to signal status or wealth.Virginia Board of Education FrameworkEPF.10d: Conspicuous consumption refers to buying goods and services not for their intrinsicvalue but for the purpose of impressing others in hopes of improving one’s social status.Conspicuous consumption can lead to spending beyond one’s means. This requires borrowing,and excessive borrowing can lead to credit problems.EPF.10h: Examination should address the impacts of marketing strategies on consumerdecisions, with emphasis on advertising features that may be informative and features that maybe misleading (e.g., infomercials, celebrity endorsements).Teaching Tips1) As an introductory activity, play the Millionaire Game from Financial Fitness for Life lesson1 (below). As you debrief the game, be sure to contrast the sober behavior that millionairesexhibit, with conspicuous consumption.6Virginia Council on Economic Education

2) Ask: Have you ever intended to save, but instead spent money on things you wanted? Whatinfluenced you to spend instead of save? Does advertising influence you? Are advertisers justtrying to make you aware of products, or trying to motivate you to buy? How important islooking cool in front of your friends? Is looking cool really important in the long run? Contrastthe temporary nature of looking cool, with the important goals for which they need to plan.Discuss conspicuous consumption and how it can derail good intentions to save. You may wantto use the video as a humorous piece indicating that it seems simple to save, but remind studentsof what they’ve learned about what makes saving difficult.3) Some people use social reinforcement to help achieve goals. For example, some find thatwhile they have trouble motivating themselves to work out alone, they do better when they take aclass. They find that the shared experience of working to improve their fitness, and the fact thatothers are expecting their participation makes it easier. Likewise, some people find it helpful toparticipate in investment clubs, where the members work together to research investments and tosave in order to invest. Do they have friends or relatives that they could work with to reinforcesaving behavior?4) Ask: How can you guard against spending that keeps you from attaining savings goals?(Having a plan that we revisit regularly; keeping an illustration in view to remind ourselves ofour goals; thinking critically about advertising; using social support to remind ourselves not tospend unnecessarily; keeping money where we don't have immediate access to it.) Encouragestudents to locate or create pictures to remind them of their goals.5) Discussion: Remind them about the calculations they did the previous day. Some goalsrequire funds beyond what students have currently. Does saving mean just putting money asidefrom earnings, or does it mean the saved money can earn more money? Introduce the idea thatmoney can earn additional money, by means of interest, dividends, and increased value ofinvestments.6) Assign those students who have savings accounts or whose parents have savings accounts tofind out what rate of interest the account is currently paying.Lessons and ResourcesFinancial Fitness for Life Grades 9-12 Lesson 1: How to Really be a MillionaireChoices and Changes in Life, School and Work: Grades 7–8, Lesson 6: Choices Have Benefitsand CostsChoices and Changes: In Life, School and Work Grades 9-10 Lesson: Planning for Action: AContract with MyselfEconEdLink.org Deceptive Advertising: Crossing the Linehttps://www.econedlink.org/resources/deceptive-advertising-crossing-the-line/7Virginia Council on Economic Education

VideoDon’t Buy Stuff You Can’t Affordhttp://www.nbc.com/saturday-night-live/video/dont-buy-stuff/n12020?snl=18Virginia Council on Economic Education

EPF.18 The student will demonstrate knowledge of investment and savings planning bya) comparing the impact of simple interest vs. compound interest on savings.Day 1 - What is interest? Calculating Simple InterestContent KnowledgePutting to work, money that has been set aside, is crucial to achieving long term goals.Students need to recognize that interest is a payment in compensation of opportunity cost for asaver/lender. People or firms that provide funds for loans are sacrificing the opportunity to usethe money for their own consumption. In foregoing this use, they are entitled to compensation.Students should also be able to make simple interest calculations to arrive at estimates of theirearnings on savings, or their costs of borrowing.VocabularyInterest - Money paid regularly, at a particular rate, for the use of borrowed money.Maturity – The length of time money is borrowed or invested.Principal - An original amount of money invested or lent.Virginia Board of Education FrameworkSimple interest is paid annually on the principal.Teaching Tips1) Understanding the concept of interest—whether it is interest paid to a saver, or interestthat a borrower must pay on a loan, leans partially on the idea of opportunity cost. Whenborrowing money, the rate of interest that is paid is partially a compensation ofopportunity cost. The saver or lender of funds could do any number of things with themoney involved, including spending it on goods and services. The saver/lender choosesto postpone consumption (opportunity cost) in return for payment in compensation. Thesize of the payment (how high the interest rate is) depends on the degree of risk involved.2) Calculating simple interest is based on the equation: Interest = Principal x Rate x Time.The amount of interest is based on how much is owed, multiplied by the rate of interest(usually expressed as an annual or yearly rate) multiplied by the number of time periods(usually years) in the loan. Thus, the simple interest on a loan of $1,000 (principal) at arate of 3% for one year would be expressed as Interest = 1,000 x .03 x 1. This equals $30.The teacher can create additional problems. It is advisable to provide alternate problemswhere the amount of interest is provided and other factors have to be calculated.(Example: What is the simple rate of interest on a $1,500 loan over two years, if theinterest payment is $225? The problem can be set up as $225 = $1,500 x Rate x 2 or$225/($1,500 x 2) = Rate. Answer is 7.5% or .075)Lessons and Resources9Virginia Council on Economic Education

Financial Fitness for Life Grades 6-8 Lesson 13: Who Pays and Who Receives?Financial Fitness for Life Grades 9-12 Lesson 14: All About InterestLearning, Earning, and Investing: High School Lesson 12: Building Wealth Over the Long TermEconEdLink Lesson Timing Is Everythinghttps://www.econedlink.org/resources/timing-is-everything/EconEdLink Lesson. Calculating Simple Interesthttps://www.econedlink.org/resources/calculating-simple-interest/Econedlink Ed Tech: Compound Interest Calculatorhttps://www.econedlink.org/resources/compound-interest-calculator/Day 2 - Compound interest, the rule of 72, and the time value ofmoneyContent KnowledgeStudents need to understand that by allowing interest or dividends to continue growing (that is,allowing money to “work” for them), they can achieve significant results. The Rule of 72provides a simple way to estimate how long it will take a sum to double given a particular rate ofinterest. The time value of money permits comparison of the value of money to be paid in thefuture, with money in the present.VocabularyCompound Interest - Interest that is earned not only on the principal but also on the interestalready earned.Rule of 72 - A mathematical rule for determining the number of years it will take for aninvestment to double in value. The number of years is determined by dividing 72 by the annualrate of return. Thus, an investment expected to earn interest at a rate of 8 percent will double aninvestor's funds in 72/8, or nine years. Dividing 72 by the number of years in which an investorwishes to double his or her return will yield the necessary rate.Time Value of Money – This is the value of a sum of money at a different period of time. It canbe expressed as the future value of a sum when the present amount, the rate of interest or return,and the maturity; or the present value when the future value, the rate of interest or return and thematurity are known.10Virginia Council on Economic Education

Virginia Board of Education FrameworkThe rule of 72 reveals how long it takes for an investment to double in value:72 ÷ interest rate = number of years it will take for the money to doubleThe value of money today is greater than the value of the same amount of money in the future.The time value of money is the amount of money one would need to receive today to equal acertain sum in the future. For example, a lottery winner who wins $1 million has a choice of (1)receiving a certain amount of money every year until the total is $1 million or (2) receiving asum today (present value), which when invested at current interest rates would yield $1 million(future value) over the same period of time.Teaching Tips1) Start by reviewing the previous day’s learning on interest. Ask: What would happen ifyour interest earned interest? Demonstrate the effect of a rate of return of 8% on a$1,000 investment over a period of nine years, compounding the interest (e.g., at the endof year one, the investment is worth $1,080; at the end of year two, the investment isworth $1,166.40; at the end of year three, the investment is worth $1,259.71; at the end ofyear three, the investment is worth, $1,360.49; etc.). The middle school lesson listedbelow, Who Pays and Who Receives? in student exercise 13b, includes a table that spellsout the calculations for determining compound interest. Have students notice when theamount of the investment has doubled.2) The teacher should tell students there is a way to estimate doubling time that is quick andsimple. Explain the rule of 72 (72 / interest rate = doubling time).3) Students should be given a number of interest or growth rates to practice finding theestimated doubling time. Ask: What rate of growth (interest rate) would allow theirinvestment to double in 5 years, in 10 years, in 15 years? (The formula is simply72/doubling time = interest rate (which is the same as growth rate)).4) Have students calculate the doubling time on an investment yielding 6%. (Doubling timeis 12 years.) Have students determine how many 12s are between their current age and ananticipated retirement age of 67. (If the student is 17, there are 50 years, so there areapproximately four 12s. Have them double an investment four times ($10,000 x 2 x 2 x 2x 2).5) Emphasize the importance of time in the formula for calculating interest earnings. This iswhy it is so crucial that they start saving at a young age. The high school FinancialFitness lesson listed below, “What's the Cost of Saving and Spending?” emphasizes thispoint.6) Explain the concept of the time value of money by pointing out that if you have a sum ofmoney now, it can be generating income right now; whereas if you don’t receive it untilsome time in the future, it amounts to receiving less, because you’re lost the interest that11Virginia Council on Economic Education

could have been earned between now and when you receive the funds. We need a meansof comparing the value of a sum received in the future, with a sum in hand now. This isdone by calculating the present value of the future sum. In preparation for teaching thismaterial, you may want to refer to the Khan Academy video cited below. Consider usingthe Family Economics and Financial Education lesson below with your class.7) As an introduction for the next day, ask: Where does the money have to be, to earninterest? (In a financial institution.)8) For homework, have each student who has a relationship with, or whose parent(s)has/have a relationship with a financial institution, report the name of the institution.Lessons and ResourcesFinancial Fitness for Life Grades 6-8 Lesson 13: Who Pays and Who Receives?Financial Fitness for Life Grades 9-12 Lesson 20 : What's the cost of saving and spending?Learning, Earning & Investing Lesson 12: Building Wealth over the Long TermEconEdLink Lesson. Time Value of Moneyhttps://www.econedlink.org/resources/time-value-of-money/It’s Your Paycheck, Lesson 5: Savvy Savershttp://www.stlouisfed.org/education_resources/paycheck.cfmCompound Interest Calculator - Interactivehttps://www.econedlink.org/resources/compound-interest-calculator/VideoKahn Academy, Time Value of Moneyhttp://www.youtube.com/watch?v=As1QpFGlGbg12Virginia Council on Economic Education

EPF.12 The student will demonstrate knowledge of banking transactions bya) comparing the types of financial institutionsb) comparing how financial institutions affect personal financial planningDay 1 - Financial Institutions, Check Cashing & Payday LoansContent KnowledgeKeeping one’s money in a bank, credit union or other financial institution allows one to earninterest, and to cash or directly deposit paychecks free of charge. It can also keep money out ofone’s hands to help one resist the urge to spend it unwisely. In contrast, use of check cashingservices and payday loan companies is expensive. The use of payday loan companies cansabotage a financial plan. Due to the financial complexity of today’s world, students need tounderstand the various types of institutions that are available to them, identify basic services,evaluate costs and benefits connected with each, and decide on their banking status. Many oftoday’s banks include brokerages and insurance companies within service offerings.VocabularyBank – A financial institution that provides various products and services to its customers,including checking and savings accounts, loans and currency exchange.Broker – an individual who provides investment services to other individuals, assisting in thebuying and selling of stocks, bonds and other investment instruments.Certificate of Deposit (CD) – A certificate issued by a bank to a person depositing money in anaccount for a specified period of time (often six months, one year or two years). A penalty ischarged for early withdrawal from CD accounts.Check – A written order to a financial institution directing the financial institution to pay a statedamount of money, as instructed, from the customer's account.Checking Account – A financial account into which people deposit money and from which theywithdraw money by writing checks.Consumer Loan – A loan made to an individual or household for purposes of buying or payingfor a consumer good (car, appliance, etc.).Credit Union – A nonprofit financial institution owned by its members; offers various financialservices including accounts and loans; regulated by the National Credit Union Association(NCUA).National Credit Union Administration (NCUA) – The federal agency that regulates creditunions and administers the insurance fund that insures member credit unions' deposits.Depositors' accounts with member credit unions are insured up to $250,000..Deposit – Money put into a financial account. Also, to place money in a financial account.Federal Deposit Insurance Corporation (FDIC) – A federal agency that guarantees depositors'savings up to $250,000 per account in most commercial banks, savings banks and savingsassociations.Pay-day Loan Company – A loan issued to a borrower who writes a post-dated check made outto a lender (usually a company specializing in payday loans and other financial services targetedto low-income customers) for the amount he or she wishes to borrow plus a fee. The lender then13Virginia Council on Economic Education

gives the borrower cash in the amount stated on the check, minus the fee, and holds the checkuntil the borrower's next payday, when the lender cashes it. No credit background check isrequired. The cost (in fees and interest) to those who use payday loans is often high, however,when calculated as an APR.Savings Account – An interest-bearing account (passbook or statement) at a financial institution.Savings and Loan – A type of financial institutions that specializes in but is not restricted tolending money to consumers for mortgages.Virginia Board of Education FrameworkCredit unions, banks, and savings and loan companies generally offer checking accounts, savingsaccounts, consumer loans, certificates of deposit, and check cashing for depositors.Banks and savings and loan companies are generally insured by the Federal Deposit InsuranceCorporation (FDIC) and credit unions by the National Credit Union Share Insurance Fund(NUSIF). Consumers should be aware that not all deposits are insured.Some consumers do not have bank accounts and use check-cashing services when they must casha check. Companies charge a very high fee for this service.Payday loan and check-cashing companies typically charge higher rates than banks for theirservices.Many banks offer brokerage and insurance services, as well as financial management advisors.Teaching TipsToday’s lesson might encompass three distinct components.1) The first should be a discussion of the basic services one expects from banks and othersimilar financial institutions, and how using a financial institution can contribute toachieving one’s financial goals. The basic services include transaction accounts(checking), savings accounts, and loans. Note: you can start by reminding students thatin Unit 9 they learned that financial institutions serve as intermediaries.2) The second should be an exploration of the types of financial institutions that exist inyour area. These will likely include banks and credit unions, but may also include savingsand loans (called thrifts in some areas). Include a very brief explanation of the twoorganizations that provide deposit insurance for customers. The Federal DepositInsurance Corporation (FDIC) covers banks and savings & loans (thrifts) and is agovernment entity. The National Credit Union Share Insurance Fund insures creditunions. Deposits are only insured up to a certain amount.3) Explain and explore how check cashing services and payday loan companies work, andhow detrimental they can be to one’s financial health if you are careful.Lessons and Resources14Virginia Council on Economic Education

Financial Fitness for Life Grades 9-12 Lesson 9: Banking BasicsLearning, Earning & Investing Lesson 11: Financial Institutions in the US EconomyOnlineMoney Smart: A Financial Education Curriculumhttp://www.fdic.gov/consumers/consumer/moneysmart/It’s Your Paycheck Lesson 3: Cash the Check and Track the Dough, Handout 3.2: What do youknow? http://www.stlouisfed.org/education_resources/paycheck.cfmIt’s Your Paycheck Lesson 8: So How Much Are You Really Paying for that Loan?https://www.stlouisfed.org/~/media/Education/Curriculum/pdf/Its-Your-Paycheck-Lesson-8.pdf?la=enMeka’s Story. Video of a payday loan victim (Facebook).https://www.facebook.com/watch/?v=176707117001175815Virginia Council on Economic Education

Day 1 - Understanding how funds are transferred and calculatingthe costs and benefits of bankingContent KnowledgeThe technological changes in banking mean that the array of services offered has becomebroader. The availability of online banking, remote deposits and withdrawals, and the securityrisks that can accompany such transactions, all affect the benefits and costs associated with usingfinancial institutions.VocabularyAutomated Bill Payment – a process that allows consumers to make regular bill payments fromtheir banking accounts using electronic methods such as consumers and arranged drafts.Automated Clearing House (ACH) – An electronic network for financial transactions in theU.S. The network processes batches of debits and credits to various financial institutionsallowing for fast, safe and efficient transfer of funds.Automated Teller Machines (ATM) – A machine that provides cash and performs bankingservices (for deposits and transfers of funds between accounts, for example) automatically whenaccessed by customers using plastic cards coded with personal identification numbers (PINs).Check Clearing for the 21stCentury Act (Check 21) – An act of Congress that allows banks touse and transmit digital images of checks rather than transport paper checks for return. Thisallows for services like remote deposit of checks and facilitates bill-paying.Checking Account – A financial account into which people deposit money and from which theywithdraw money by writing checks or using an ATM or debit card.Credit Cards – A small, specially coded plastic card issued by a bank, business, etc.,authorizing the cardholder to purchase goods or services on credit.Debit Card – A small, specially coded plastic card issued by a bank; allows the cardholder totransfer funds electronically and immediately from his or her checking account, as if thecardholder were writing a check to pay for a purchase.Direct Deposit – The electronic transfer of a payment (for a month's salary, for example) directlyfrom the payer's account to the recipient's account.Loans – An amount of money provide by one party to another with the understanding that themoney will be returned, in full, often with interest.Remote Deposit – This is the process of depositing funds from a home or office without visitinga financial institution. The customer scans an image of the check and then transmits it to thefinancial institution where the transaction is completed.Savings Account – An interest-bearing account (passbook or statement) at a financial institution.Funds are accessed by withdrawing funds at the institution or using an ATM or debit card.Virginia Board of Education Framework16Virginia Council on Economic Education

EPF 12 c: Benefits of services provided by financial institutions include:● check cashing● interest earned● debit cards● ease of bill paying● online account management● direct deposit● automated teller machine (ATM)● improved access to loans.Costs for services provided by financial institutions include interest on loans and fees, such as:● ATM Fees● late fees● minimum balance fees● returned check fees.Consumers who are unbanked may have difficulty:● establishing credit● cashing checks without paying a service fee● mailing bill payments● acquiring loans● receiving direct deposit income● keeping income safe.EPF 12d: Types of electronic monetary transactions include● direct deposit● remote deposits● check cards and debit cards● automated teller machine (ATM) banking● online banking and bill paying● online investments● wiring of funds.The Automated Clearing House (ACH) is the system used to process electronic monetarytransactions.The Check Clearing for the 21st Century Act, or Check 21, makes check processing easier andless expensive for financial institutions by creating substitute checks that can be exchangedelectronically.Teaching Tips1) If computers are available, provide a vocabulary list and have students seek outdefinitions of the vocabulary terms and how funds are transferred electronically. Have17Virginia Council on Economic Education

them visit financial institutions’ websites, and record fees associated with variousservices.2) Bring the class back together to discuss the information gathered including the costs andbenefits of using financial institutions within the discussion. Use the PACED decisionmaking model to help facilitate the selection of a financial institution based on individualstudent’s financial future goals.Lessons and ResourcesThe Great Economic Mysteries Book: A Guide to Teaching Economic Reasoning Grades 9-12Chapter 3, Lesson 15: Why are ATMs Everywhere? Big Piggy Bank MysteryFinancial Fitness for Life: 9-12 Theme 3, Lesson 9: Banking BasicsOnlineEconEdLink.org The Role of a Bank Tellerhttp://www.econedlink.org/lessons/docs_lessons/367_activityone1.docIt’s Your Paycheck Curriculum http://www.stlouisfed.org/education_resources/paycheck.cfm18Virginia Council on Economic Education

EPF.12 The student will demonstrate knowledge of banking transactions byf) reconciling bank statements(BUS6120.066)Day 1 - Completing application forms and reading a bank statementContent KnowledgeWhile many students may have accounts, often these were set up for them by parents,grandparents, or guardians. Students need practice preparing the forms for opening accounts,writing checks, deposit and withdrawal slips. Practice reading a bank statement will prepare theway for reconciling statements the following day.VocabularyBank Account - An arrangement by which a bank holds funds on behalf of a depositor. Also, thebalance of funds held under such an arrangement, credited to and subject to withdrawal by thedepositor.Bank Statement - A monthly summary providing the status of a depositor's financial accounts(checking and/or savings).Check Register - A form (usually located in the back of a checkbook) on which users ofchecking accounts may record checks they have written and deposits they have made.Information thus recorded helps people keep track of balances in their accounts.Checking Account - A financial account into which people deposit money and from which theywithdraw money by writing checks or using a debit card.Savings Account - An interest-bearing account (passbook or statement) at a financial institution.Funds are accessed by withdrawing funds at the financial institution or by using an ATM or debitcard.Signature Card – A document bearing a person's signature, held on file in a financial institution.In cases of suspected forgery, signatures of doubtful origin can be checked against those recordedon signature cards.Virginia Board of Education FrameworkOpening and maintaining a checking or savings account involves● completing an application● completing a signature card● presenting approved identification document● writing/maintaining checks, stubs, and check register● endorsing checks● completing deposit and withdrawal documents.Teaching Tips19Virginia Council on Economic Education

1) There are a number of banking units available from state and national trade groups. Mostwill have sample documents that can be reproduced. Sample documents can also beobtained from local financial institutions in order to compare and contrast the informationrequired on forms.2) In showing the students how to read a bank statement, discuss the effect of individualtransactions as well as total transactions. Also, draw students’ attention to variousservice charges that may be listed.Lessons and ResourcesFinancial Fitness for Life: Grades 6-8 Theme 3, Lesson 8: Choosing and Using a CheckingAccountEconEdLink.org Using an Excel Checkbookhttps://www.econedlink.org/resources/using-an-excel-checkbook/Banking Basics – publication that provides an overview of banking for teenagershttp://www.bos.frb.org/education/pubs/banking2.pdfVideoHow to Open a Bank Account http://www.youtube.com/watch?v=or-_aXJQbygUnderstanding Your Bank Statement http://www.youtube.com/watch?v=YK9o3eNcGE020Virginia Council on Economic Education

Day 1 - Finding the errorsContent KnowledgeReconciling a bank statement is an important aspect of maintaining and securing your financialhealth. Too many people don’t do it.VocabularyReconciliation – The process of comparing one’s financial records (checkbook or passbook) tothe records of the financial institution (bank statement) to find errors.Virginia Board of Education FrameworkReconciliation is the process of bringing the checkbook register into agreement with the bankstatement. This may be done electronically or manually.Teaching Tips1) If the teacher doesn’t reconcile his or her bank statement, this lesson may be harder thanit appears. Be sure to run the process through before demonstrating in class.2) When searching for errors, there are two steps:a) If the amount is an even number, look for an error of half the amount but posted to thewrong side. A $25.00 deposit mistakenly entered as a $25.00 withdrawal will result in a$50.00 error.b) Likewise if the amount of discrepancy is divisible by nine, the error is likely to be atransposition error. $73.00 mistakenly entered as $37.00 will result in a discrepancy of$36.00. The amount is divisible by nine. Additionally, the product (4) indicates thedifference between the numbers transcribed. (7 – 3 = 4).Lessons and ResourcesTwilight – Reconciling Edward Cullen’s Bank Statementhttp://studylib.net/doc/8417563/twilight---reconciling-edward-cullen-s-bank-statementFamily Economics and Financial Education lesson plan – Checking Account SimulationTake Charge Today lesson: Checking Account and Debit Card Simulation.http://wp.lps.org/bjames/files/2015/03/Student-Assessment-Checking-and-Debit-Account-Simulation.pdfVideo21Virginia Council on Economic Education

How to Reconcile a Checkbook/Bank Statementhttp://www.youtube.com/watch?v=0eciD5AhRUI22Virginia Council on Economic Education

EPF.12 The student will demonstrate knowledge of banking transactions byg) comparing costs and benefits of online and traditional banking(BUS6120.067)Day 1 - Traditional and online bankingContent KnowledgeCustomers of financial institutions have an increasingly wide array of options for makingpayment. While paper-based transactions (checks, physical deposits) still are used, more andmore people are choosing options like automatic withdrawal, automated bill-payment andelectronic deposits. These options present advantages and disadvantages for the consumer.Virginia Board of Education FrameworkBenefits of traditional banking may include● comfort of the familiar● confidence about privacy and security● availability of expert advice and customer service.Costs of traditional banking may include● limited access● more paper to file● possible account fees.Benefits of online banking may include● convenience● 24-7 availability● ease of updating transaction records.Costs may include● time to learn system● concern about privacy and security● reduced relationship with bank● possible account fees.Teaching Tips1) Discuss how to establish automated payments through a creditor (like your mortgagelender or utility company) and/or the bank (regular transfer payments to a family memberor other entity).2) Discuss the trade-offs and the costs & benefits of traditional paper-based payments vs.electronic payments. In the discussion, include aspects like memory (forgetting that a23Virginia Council on Economic Education

payment is withdrawn regularly) and timing (knowing when the payment arrives at thecreditor and when the money is withdrawn). If the PACED decision model (referencedin Unit 1) was not used in evaluating which financial institution to use, have students useit to decide whether electronic online services are best for themLessons and ResourcesFinancial Fitness for Life, 3rd Edition. Lesson 9 - Financial Institutions and Services.It’s Your Paycheck Lesson Plan – Choosing a Bank Account. “Cash the Check and Track theDough.”https://www.stlouisfed.org/~/media/education/curriculum/pdf/its-your-paycheck-lesson-3.pdfThe Financial Literacy Project Online Banking SimulatorInstructions: http://finlitproject.com/products/insurance/Simulator: http://finlitproject.com/simulator/Ed Tech:My Kids Bank. A free, easy-to-use online play banking experience for students. Great for use inclassroom mini-economies.http://mykidsbank.org/24Virginia Council on Economic Education

Day 1 - Panics, depressions, inflations and recessionsContent KnowledgeIt would be easy to think that banks have always been as safe and convenient as they are today.But that would not be true. Believe it or not, at one time, different parts of the country even haddifferent currencies. A look at U.S. history will show that bank failures were not uncommonprior to the establishment of the Federal Reserve System and the FDIC (Federal DepositInsurance Corporation). The Great Depression occurred soon after the establishment of the Fedand many feel the Fed was ineffective in controlling bank failures. Many depositors who losttheir savings in bank failures never trusted banks again. The Federal Deposit InsuranceCorporation was established to guarantee savers that they would not lose their savings. Today, ifyour bank fails, the FDIC will cover your losses. Naturally, because the FDIC has to make goodon deposits in failed banks, they want rules to protect depositors and rules that keep banks fromengaging in risky behavior.An understanding of the history of financial panics, depressions, and other economic crises willgive students perspective on the historical development of our financial system and thedevelopment of the Federal Reserve System.VocabularyGreat Depression – The period from 1929 to 1939. It was a series of severe recessionscharacterized by high unemployment, falling prices, and large numbers of bank failures.Panic of 1907 – A financial crisis brought about by an attempt to corner the copper market. Theensuing collapse of the market led to first to widespread failure of banks, and ultimately to thecreation of the Federal Reserve System.Virginia Board of Education Framework18th and 19th centuriesThe Industrial Revolution brought an economic shift in the United States from bartering andtrading to exchange of currency for goods and services; individuals moved from beingself-supporting to working for others; increased use of money allowed for purchases and theinitiation of consumer credit, as well as seasonal bank loans for farmers; the period also saw highbank interest rates.● 1791 — First Bank of the United States established● 1816 — Second Bank of the United States established20th century Transition from an agricultural economy to an industrial economy and anexpansion of purchasing power and credit● World War I — War debt incurred by United States25Virginia Council on Economic Education

● Panic of 1907● 1913 — Federal Reserve System established● 1920s — Stronger credit● 1920–1980 — Credit made available to most Americans● 1929 — Stock Market Crash● 1930s — Great Depression; decade of consumer distrust of credit and investment● 1940s–1960s — Stable inflation rates; low interest rates● 1970s — Rapid economic growth; overuse of credit; high inflation rate; consumer creditprotection legislation; birth of credit counseling● 1990s — Credit as a major marketing tool across industries; major stock market gains;longest peace time expansionTeaching Tips1) Use a timeline for this lesson. First, it will show that financial crises are impossible toavoid. Regardless of the financial structure and regulation, problems occur. Second, itwill show that financial crises can teach us lessons about ways to improve the economicenvironment, by revealing weaknesses in the financial system.2) Consider using the bank panic simulation from lesson 3 of The Great Depressioncurriculum below.Lessons and ResourcesTeaching Financial Crises Lesson 1: A Comparison of the Panic of 1907 to the Crisis that Beganin 2007Focus: Understanding Economics in U.S. History Lesson 16: Andrew Jackson and the SecondBank of the United StatesThe Great Depression: A Curriculum for High School Students Lesson 3: What Really Causedthe Great Depression?https://www.stlouisfed.org/education/great-depression-curriculum-unitReadings“The First Bank of the United States”https://www.philadelphiafed.org/-/media/publications/economic-education/first-bank.pdfA Lesson to Accompany “The First Bank of the United States: A Chapter in the History ofCentral Banking”https://fraser.stlouisfed.org/files/docs/publications/education/frbphi-chapters-first-bank-lesson.pdf26Virginia Council on Economic Education

The Panic of 1907http://www.bostonfed.org/about/pubs/panicof1.pdfClosed for the Holiday: The Bank Holiday of 1933http://www.bos.frb.org/about/pubs/closed.pdfVideoThe Bank Run from It’s a Wonderful Lifehttps://www.youtube.com/watch?v=iPkJH6BT7dMDay 2 - September 11 and the Financial Crisis of 2007-2009Content KnowledgeToday’s students were very young in 2001, so the events of September 11 need to be discussed,as they affect current financial markets. Currently, the US continues to experience repercussionsfrom the recent financial collapse involving credit default swaps and the collapse of housingvalues. Students need to come to an understanding of these events in order to participate asinformed citizens in political issues regarding regulation of the banking system and fiscal andmonetary policy.Virginia Board of Education Framework21st centurySeptember 11, 2001 — Terrorist attacks on the World Trade Center, the Pentagon, andPennsylvania led to major stock market losses. Threats of further terrorism continue to influencethe financial markets.The latter part of the first decade was marked by a significant economic recession that resulted infailed banks, foreclosures, and high unemployment.Teaching Tips1) Ask students what they know of September 11, and in particular whether they recognizeit as a seminal event for our country. Describe the atmosphere of shock that envelopedthe US and the repercussions worldwide that resulted. Address the effects on oureconomy by using the Open and Operating video below.2) Use a simulation of the effects of securitization on investing in the housing market, andthe use of leveraging, contained in Lesson 6 of Teaching Financial Crises.3) You may wish to assign as homework, the article by economist Joseph Stiglitz listedbelow. Assign students to write an essay on Stiglitz’s explanation for what caused the27Virginia Council on Economic Education

Great Depression and what ails the economy in 2012. Require them to contrast Stiglitz’sexplanation of the Great Depression with the explanation in lesson 3 of The GreatDepression curriculum.Lessons and ResourcesTeaching Financial Crises Lesson 6: The Role of Housing in the Financial Crisis of 2007-2009;Lesson 7: The Instruments and Institutions of Modern Financial Markets; Lesson 8:Understanding Financial Markets, 2007-2009“The Subprime Mortgage Crisis: Who Messed Up?” Lesson plan and skit available through theVCU Center for Economic Education (available by request, shday@vcu.edu).The Great Depression: A Curriculum for High School Students Lesson 3: What Really Causedthe Great Depression? https://www.stlouisfed.org/education/great-depression-curriculum-unitVideoOpen and Operating : The Federal Reserve Responds to September 11http://www.frbsf.org/education/teachers/open/index.htmlReadingArticle: The Book of Jobs by Joseph E. Stiglitzhttp://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201EVALUATION DAY28Virginia Council on Economic Education