Money Essentials for Teens – Basic Money Management Program
Money Essentials for Teens – Module 1: Budgeting Money and Planning Spending
Dear Instructor,
We are convinced that learning basic money management skills can have a profound impact on a young person’s financial future. Young people benefit both personally and financially from learning effective money management concepts.
We developed Money Essentials for Teens, a financial literacy curriculum, using easy to understand concepts, robust discussion questions, and relevant hands-on exercises to help young people fully grasp multiple facets of managing money.
In this module, participants will learn basic budgeting and planned spending from easy-to-understand information and structured discussions about budgeting and spending money. Participants will also practice creating their own spending plan.
This module is broken into five sections.
#1. What is a spending plan?
#2. Why are spending plans important?
#3. Benefits of following a spending plan.
#4. How to create a spending plan.
#5. Complete a real-life spending plan.
About the discussion questions:
Facilitator’s Notes
Discussion questions are designed to allow participants an opportunity to share their thoughts and rephrase what they’ve learned from the lesson. The format is an open discussion so that participants can also learn from each other.
Discussion questions also helps the facilitator get all participants involved in the lesson.
Learning objectives:
Today’s lesson is about learning to use spending plans to help you manage your money.
In this lesson:
You will learn what a spending plan is and what it’s used for.
You will learn how spending plans help you make good financial choices.
You will learn the benefits of budgeting your money and planning your spending.
You will practice putting together your own spending plan.
Preview Part 1 – What is a Spending Plan?
A spending plan[1] is a snapshot of all the money you have coming in (income[2]) and all the various things you need to use that money for (expenses[3]).
Income is the total amount of money that you earn or receive (i.e., paychecks, allowances, gifts).
Expenses are the things that you use your money to pay for (i.e., gas, groceries, rent[4], utilities).
Expenses can be classified into two categories “needs[5]” and “wants[6].”
Needs are essential things such as food, clothing, and shelter.
Wants are optional things such as shopping at the mall, subscriptions, and entertainment.
Preview Part 1 Discussion Question:
Who can explain the difference between a need and a want?
Preview Part 2 – Why are Spending Plans Important?
#1: A spending plan helps you to make good financial choices.
Facilitator’s Notes
Let participants know they are about to watch a short scenario and discuss it afterwards.
Start the video and allow participants to watch the scenario. Replay the scenario a second time and then discuss using the discussion questions below.
Preview Scenario Discussion Question:
What would be the best way for Alicia to handle this situation? Why?
Facilitator’s Notes
Listen for responses such as: Get the maintenance done because a vehicle is more important than a phone. – I can get the new phone later. – I don’t want to risk messing up my vehicle for a new phone when I already have a phone. – I might cause damage to my vehicle and cost myself even more money later. I should stick to my spending plan.
If none of these things are mentioned be sure to interject them during the discussion.
Preview Part 2 Discussion Question:
How does a spending plan help you make good financial choices?
Preview Part 3 – Benefits of Following a Spending Plan
Several benefits can be gained from regularly following a spending plan.
#3: Spending plans help you develop good money management habits which help you become independent. When you’re good at managing your money, it’s easier for you to live on your own and not have to depend on others for the things you need.
Preview Discussion question:
Who can tell me a benefit of having a spending plan?
Preview Part 4 – How to Create a Spending Plan
This section will provide you with two opportunities to practice creating a spending plan.
Facilitator’s Notes
Let participants know they are about to watch a scenario and practice completing a spending plan based on the information in the scenario.
Start the video and allow participants to watch the scenario. After participants watch the scenario, pause the video, and tell them you’re going to play the video again. This time they will fill in their spending plan as they watch. Replay the video, pausing whenever specific financial details are provided, to give participants an opportunity to capture the information on their template.
Preview Scenario Discussion:
How much money does LaDonna have left over after she pays all her bills?
Preview Part #5 – Create a Real-life Spending Plan
This section is designed to give students an opportunity to create their own spending plan based on their own income and expenses (if applicable). If none of the participants have income and expenses skip to Scenario #3.
Money Essentials for Teens – Module 2: Understanding Banking and Credit
Dear Instructor,
In this module, participants will learn the basics of banking and managing personal credit. The lesson is made up of easy-to-understand information paired with structured discussions about basic banking and some of the financial benefits of banking. As well as discussions about personal credit, and why it’s important to manage personal credit.
This module is broken into four sections.
#1. What is a bank?
#2. How does banking support good money management?
#3. What is a credit score and how it impacts our ability to borrow money.
#4. Using credit wisely.
Learning objectives:
Today’s lesson is on learning the basics about banking and managing personal credit.
In this lesson:
You will learn what banking is.
You will learn how to use banking as tool to help better manage your money.
You will learn what it means to borrow money.
You will learn what personal credit is and why it’s important.
You will learn the difference between good uses and bad.
Preview Part 1: What is a Bank?
A bank[7] is a financial institution that provides various money-related services to the public. Some banks have physical branches that you can visit and complete transactions in person. Other banks operate only online, allowing you to do everything from a computer or smartphone.
#1: Financial transactions
A financial transaction is the transfer of money from one place to another. Financial transactions include things like cashing checks, paying for items with a debit card, withdrawing cash from an ATM, or sending money to family and friends.
Preview Part 1 Review Discussion:
What are the primary three functions of a bank? (Answer: facilitate financial transactions, provide a safe place for customers to store their money, and loan money to select individuals.)
Preview Part 2: How Does Having a Bank Account Support Good Money Management?
Bank accounts help you with everyday money management. They help you keep track of how much money you have. They help you to easily separate the money you are saving from the money you plan to spend. Most importantly, bank accounts help you to quickly pay bills[8] or transfer money from one place to another.
There are two account types of accounts that banks offer: checking accounts and savings accounts.
A saving account[9] is designed to hold money that we don’t intend to spend any time soon. This could be money you’re saving to buy a new vehicle, money that you’re setting aside in case of an emergency, or money you’re planning to use for travel sometime in the future. Keeping savings separated from money you intend to spend right away helps to prevent you from accidentally spending money you were saving for something else.
Facilitator’s Notes
Start the video and allow participants to watch the short scenario, then discuss.
Preview Scenario Discussion:
Why would it be good to keep money in two accounts instead of just one account?
Facilitator’s Notes
Listen for responses such as: to prevent her from confusing spending money with savings or to her easily keep track of how much money she has saved.
If none of these things are mentioned be sure to interject them during the discussion.
Opening a bank account
Anyone age 18 or over can open their own bank account. People under the age of 18 must have a parent or guardian set up the account for them.
To open a bank account, you would simply visit the bank where you want to open an account, fill out the application, show the appropriate identification; (driver’s license, government issued ID card, social security card or birth certificate) and provide proof of your current address.
Facilitator’s Notes
Start the video and allow participants to watch the short scenario, then discuss.
Preview Part 2 Review Discussion:
What is the difference between a checking and savings account? (Answer: Checking accounts are used for everyday financial transactions such as paying bills or buying for with a debit card. Saving accounts are used to store money than we plan to keep for a while.)
Preview Part 3: What’s a Credit Score and How it Impacts our Ability to Borrow Money
Every now and then we may need to make a major purchase that we don’t have enough cash to pay for. Things such as college tuition, a new vehicle, or buying a home. Banks typically loan people money to pay for these types of things. When the bank loans someone money, that money is a debt, and the bank expects to be paid back.
Although banks loan money, they do not loan to everyone. Banks loan money only to people with good personal credit. Personal credit is based on a person’s overall level of responsibility and their financial ability to pay back any money that they borrow.
Facilitator’s Notes
Start the first video and allow participants to watch the scenario. Then start the second video and then discuss both videos.
Preview Scenario Discussion:
Why do you think the bank denied Cedric’s loan request?
Preview Part 3 Review Discussion:
Name a habit that will help someone build a good credit score.
Preview Part 4: Using Credit Wisely
It’s important to make good decisions when it comes to borrowing money or using credit cards. It’s best to only borrow money or use credit cards for things you absolutely need and don’t have any money to pay for. It’s best to only borrow money for assets such as a home. You want to avoid borrowing money for things like fancy clothes, furniture, vacations, or jewelry. Borrowing money for these kinds of things can lead to having too much debt. The more debt you have, the more bills you have. The more bills you have, the more your paycheck is spent before you even get it.
Facilitator’s Notes
Start the first video and allow participants to watch the scenario. Then start the second video and then discuss both videos.
Preview Scenario #1:
We have James. James does the right things when it comes to managing his money. He follows a spending plan, pays all his bills on time, and doesn’t buy many things on credit. As a result, James has an excellent credit score. So far, he has only borrowed money to buy a vehicle for getting to and from work. James receives LOTS of credit card offers. However, he declines those offers because he wants to be able to purchase a home in the next two years.
Preview Scenario Discussion:
Both James and Jackie have borrowed money. Who borrowed more wisely? Why?
Preview Part 4 Review Discussion:
Give me an example of a bad purchase using borrowed money or a credit card?
Money Essentials for Teens – Module 3: Saving & Investing
Dear Instructor,
In this module, participants will learn about saving and investing money using easy-to-understand concepts along with structured discussions about the concept of saving and how to save. Additionally, participants will learn what it means to invest money and the potential to grow their money through investments.
This module is broken into six sections.
#1. What does it mean to save money?
#2. The purpose of saving money.
#3. How do you save money?
#4. Where should you keep the money that you’re saving?
#5. What is investing?
#6. Making wise investing decisions.
Preview Part 1: What does it mean to save money?
The place we choose to live, the vehicle we choose to drive, and the clothes we choose to wear, are all lifestyle[10] choices. It’s important to consider your income when making lifestyle choices to ensure that you don’t spend all the money you earn or worse, more money than you earn.
When it comes to your lifestyle, the goal should be to choose a lifestyle that allows you to pay all your expenses and still have some money left over. That leftover money is called “savings[11].” Saving money is a critical element in your financial success.
Facilitator’s Notes
Let participants know they are about to watch a short video and discuss it afterwards.
Preview Part 1 Review Discussion:
Why is it important to match your lifestyle to your income?
Facilitator’s Notes
Listen for responses such as: to be able to save some of the money you make, to have some money left over after all your bills are paid, or to avoid never having any money.
If none of these things are mentioned be sure to interject them during the discussion.
Preview Part 2: The Purpose of Saving Money
When it comes to saving money, it’s good to decide what you’re saving money for. There are several different reasons one might need to save money. It could be building up enough cash to cover yourself in an unexpected situation. It could be saving up money for a specific purchase. It could be saving up for something big that it will take lots of money to pay for.
Facilitator’s Notes
Let participants know they are about to watch a short video and discuss it afterwards.
Preview Scenario Discussion:
If Jacob did not have emergency savings, what would his options have been for replacing his tire?
Preview Part 2 Review Discussion:
What are some purposes for saving money? (Answer: To build up funds to cover you in an emergency, to make specific major purchases, to plan for long-term events like retirement)
Preview Part 3: How Do You Save Money?
In a consumer driven society where it’s easy to find lots of stuff to buy, it can be a challenge not to spend everything you earn. For this reason, it’s important to be intentional about saving money.
Preview Part 3 Review Discussion:
Name one of the four keys to saving money. and why they’re important.
Preview Part 4: Where should you keep the money that you’re saving?
When it comes to your savings there are several places to safely store your money. For example, there are checking accounts, savings accounts, and certificate of deposit accounts. The option you choose should be based on what you plan to do with the money.
A checking account is primarily used to hold money needed for short-term expenditures. Things like monthly bills, money to pay for food, or money you plan to purchase a ticket for next week’s concert. Checking accounts usually come with a debit card that you can use to complete these various transactions.
Preview Part 4 Review Discussion:
Which of these three accounts above is likely to pay the most interest? (Answer: Certificate of Deposit CDs)
Preview Part 5: What is investing?
After you’ve mastered the habit of saving part of your income. It’s a good idea to also start investing some of the money you save. Investing is a way of letting your money generate more money. Investing also allows your money to grow more than it would if you kept it in a regular savings account.
Facilitator’s Notes
Let participants know they are about to watch a short video that demonstrates how investing works.
Preview Scenario Discussion:
How many of you all would like to have $1,054,907.88 in your retirement account by the time you turn 65? Why? (Show of hands. Ask some of the participants to share why they would like to have that amount of money.)
Preview Part 5 Review Discussion:
Can someone explain the concept of investing?
Preview Part 6: Making wise investment decisions.
Unfortunately, many people never learn how to properly invest money and miss out on opportunities to grow their money. The key to successfully growing your money is making wise investments decisions. Not all investments opportunities are the same. Some investments are very good. Other investments are very risky and could cause you to lose all your money.
Facilitator’s Notes
Let participants know they are about to watch three short videos and then discuss which of the three they think is the best investment and why.
Sample Scenario:
Scenario #1:
A friend has developed a new type of headphones. The headphones are really good. They’ve received great reviews from everyone who’s tested them so far. Your friend believes his idea can become something big once the product is massed produced and made available for purchase. Your friend approached you and asked if you wanted to invest money in exchange for a 10% stake in his new company.
Preview Scenario Discussion:
Who would invest in scenario #1? (Show of hands) Ask each student why would choose that investment. Ask some of the students who did not raise their hand why they would not choose that investment.
Preview Part 6 Review Discussion:
Why is it important to make wise investment decisions?_
Sample Key Financial Terms
Bank – a financial institution that provides financial services to the public. Banks basically serve three functions; facilitate financial transactions, provide a safe place for customers to store their money, and loan money to select individuals.
Bill – an expense such utilities, phone service, credit card or loan payment.
Expenses – anything that you spend money on (i.e., bills, food, gas, movie tickets).
Income – any money that you have coming from a job or some other source.
Investing – Using your money to generate more money by buying assets that usually increase in value over time (i.e., stocks, real estate).
Lifestyle – choices that you make about things such as where to live, what type of vehicle to drive, and what type of clothes to wear.
Needs -things that we need to survive (i.e., food, shelter, clothing)
Rent – a monthly fee paid for a place to live.
Savings – any money you have left over after you have paid all of your expenses.
Savings Account – a bank account used to store money that you’re saving up. Savings account usually pays interest on the money that you keep in the account.
Spending plan – a snapshot of all your income and all your expenses.
Wants – things that we desire to have but can survive without (i.e., latest gym shoes)