This guide is intended to help teachers gain a clear understanding of the General Financial Literacy standards and objectives.

Background Knowledge Quizzes Terms Attention Getters

Background Knowledge: 

Strand 3 focuses on saving, investing, and retirement planning – all subjects that your students might not be 100% convinced are important or necessary at this point in their lives. Do you know of any teenager who is thinking of or planning for retirement? For high school students, retirement seems so far in the distance many believe it will never happen. At the same time, many educators may not feel confident teaching students about investing. While this standard may be challenging to teach, it can also be the most rewarding for our students. The Strand 3 E-Charts are full of interesting and engaging ways for you to present this to your students.

Some students may have already developed the habit of saving money, others may find a place to spend every penny they earn, and a few have no source of income. Regardless of their savings habits, your students need to learn or be reminded of the importance of saving a portion of any money they earn. Unfortunately, we live in a society where saving money is not a popular activity. In 2010 Americans saved just over 6 percent of their income. That number pales in comparison to other developed nations (the Chinese save 30 percent of their income). Whether it is because of "Keeping up with the Joneses," instant gratification, the ease of using plastic or trying to maintain a certain lifestyle, your students may have a hard time seeing the necessity of saving instead of spending. Saving money is hard!

Just as you will have students that have become experts at saving money, you will probably have students who are experienced investors. If you do not feel comfortable teaching your students about investing this might be a good time to invite a guest speaker into your classroom. There are a lot of bankers, stockbrokers, or investment advisors who would be willing to share their expertise with your students. Remember, your goal as a GFL teacher is not to turn your students into investment professionals, but to take away some of the mystery and misunderstandings your students may have about investing.

At the minimum, your students should understand:

• Different investment vehicles (stocks, bonds, mutual funds, real estate, collectibles)
• Investment strategies (buying on margin, short selling, diversification, etc.)
• The difference between long-term and short-term investments
• Government protection for investors (the regulatory pyramid)
• Sources of investment information (prospectus, annual reports, etc.)
• Methods of buying and selling investments (discount, online, and full-service brokers, etc.)

The Stock Market Game is another excellent tool that allows your students to apply the things they have learned about investing. "Your students will think they're playing a game. You know they're learning economic and financial concepts they'll use for the rest of their lives" (www.smgww.org).

The second objective in standard three covers some important concepts that will help your students understand the difference between saving and investing. Return, risk, liquidity, inflation, and the time value of money are all taught in this objective. For example, where would be the best place to save or invest your money if you are planning on a European vacation next summer? What if you want to start putting money away for your retirement? What type of return do you hope to achieve? What type of risk are you willing to take? How liquid does the savings or investment need to be? It makes a difference where you put your money.

That brings us to retirement planning. You might hear comments such as these from your students: "I'm only 17. I won't retire for 50 years. I have plenty of time." "My grandparents are still working and they're old. I'm sure I'll have to work until I die." Or, this good one: "I know the world will end long before I retire." These comments show that teaching a 17 or 18 year-old about retirement planning can be a challenge.

Your students should understand how company pensions are a dying breed in America today. That puts the burden of planning and investing for retirement on the shoulders of the individual. Is Social Security enough to live on? Will Social Security still be around when our students retire? How much does Social Security pay each month? These are important questions to discuss with your students since many of them may be thinking that they will live on Social Security when they retire. They should understand that the retirement investment options for most people today include a 401(k) or 403(b) or a traditional or Roth IRA.

The key (and the reason we are teaching retirement planning to teenagers) is to start early. When you spend some time showing your students the miracle of compound interest, help them to see that they have an advantage that you, their parents and grandparents, and even their older siblings don't have – TIME! Time is their ally right now. If they start saving and investing for retirement when they are young they will be well prepared when the day of retirement finally approaches. It is life changing!

Risk management is a means of dealing with potential personal or financial lost. When the potential loss is large, most people prefer using insurance to share or transfer some of their risk. Risk itself comes in a variety of forms. Illness, disability, theft, accidents, and death are all risks we can protect against. Whether misfortunes are unexpected or the result of our own risky behavior, their resulting costs can be tremendous. Most people do not have the financial resources to cover them on their own. Aninsurance policyis a written contract detailing what an insurance company will cover, how much it will pay, and how much the insured will pay. Thepremiumis simply the amount a person has to pay for an insurance policy. Adeductibleis the out of pocket amount of a loss that must be paid by the insured before the insurance company will step in and pay the rest. Think of a deductible as "self-insurance," or the amount a person is willing to pay for a covered loss before the insurance payments kick in.

• Disability insurance is insurance designed to pay a percentage of a customary salary or wages in the event of becoming disabled and not being able to work.
• Homeowner's insurance is insurance coverage for risks to a home such as fire or theft.
• Life insurance is designed to protect heirs or survivors after death. If a person is single or married with no children and has a spouse with a job that pays enough so his income is not needed, he may not need life insurance.
• The legal responsibility involved in a car accident is extraordinary. This is why automobile insurance is important to cover your losses is involved in an accident.

Many people think of estates as belonging only to the rich or elderly. However, the fact is, is that everyone has an estate. An estate is all property and assets owned by an individual. During working years, a common financial goal is to build an estate by acquiring and accumulating money for current and future needs. However, as people grow older, their point of view will change. Instead of working to acquire assets, they start to think about what will happen to their hard-earned wealth after they die. In most cases, people want to distribute that wealth among to their loved ones. That is why estate planning becomes import. Estate planning is the process of creating a detailed plan for managing personal assets to make the most of them while still living, and to ensure that they are distributed wisely after death. An estate plan involves various legal documents such as a will and a trust. A will is a legal declaration of a person's wishes regarding disposal of his or her estate after death. A trust is an arrangement in which a designated person known as a trustee manages assets for the benefit of someone else.

Terms: 

• 401 (k)

• Diversification

• Federal Deposit Insurance Corporation (FDIC)

• Investment

• IRA

• Pay Yourself First (PYF)

• Risk/Reward

• Roth IRA

• Rule of 72

• Saving

• Time Value of Money (TVM)

Attention Getters/Hooks: 

• Play "Don't Stop" by Fleetwood Mac.  Ask the students to write down ideas on how this song relates to saving, investing, and retirement planning.

• Read some children's literature, such as "Alexander Who Used to be Rich Last Sunday" to the class.  Use the worksheet available at FITC to guide a discussion on what Alexander wanted to save his money for and where he ended up spending it.  How does that relate to your student's saving experiences?

• Show the video about the 14 year-old investor, Damon Williams.

• Play the card game Pit.

• Use a water jug, ice, and water to teach the concept of liquidity (ice is not "liquid" because it takes time to access, same with assets that are hard to get the cash from, such as real estate.  A savings account or checking account is liquid because it is easy to access, same with the water dripping from the jug.

• Show the PBS Frontline report, "Can You Afford to Retire?"  The first segment which is about 7 minutes is plenty and a good introduction to disappearing pensions.

• Discuss "Start on Your First Million at 16" with your students.

Standard 1: Describe and discuss financial institutions, and demonstrate how to manage personal financial accounts.

• Explain the role of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA).
• Compare the roles of financial institutions and their services, such as banks, credit unions, investment or brokerage firms, insurance companies, and loan agencies.
• Demonstrate how to manage checking/debit and saving accounts, both manually and/or electronically, including reconciliation.
• Describe available consumer banking technologies.

TEACHING SUGGESTIONS: (Note: The following are simply suggestions or ideas to help you in teaching the General Financial Literacy class. You WILL need to supplement these suggestions with additional resources based on your teaching style and your students’ learning styles).

ENGAGE	View Damon Williams: 14 Year Old Investor on Track to Become Millionaire! video (4:44) Ask students to share how they felt while watching the video.  Discuss whether it motivates them, gives them hope, makes them jealous, etc.  Have them silently identify aspects of their lives that could develop into money making opportunities.
	Challenge students to figure out the Dow Jones (pdf) company by a simple description.
	Use a water jug with a dispenser, ice, and water to teach the concept of liquidity.  Fill the jug with ice and demonstrate that nothing will come out when a drink is desired.  This represents non-liquid assets.  Ice is not "liquid" because it takes time to access.  This also applies to assets that are hard to get the cash from, such as real estate.  Add the water to the jug, allowing the ice to float.  A savings account or checking account is liquid because it is easy to access when needed, just like getting water from the dispenser from the jug.  Point out that it is good to have both ice AND water in the jug, equating to liquid and non-liquid assets in a portfolio.
	Show the Compound Interest simulation on EconEdLink and discuss any questions students have.
	Play the song “Don’t Stop” by Fleetwood Mac (3:17) or Glee (3:10).  Have students write a paragraph on why it is important to always have retirement in mind.
	Take the Millionaire Quiz (pdf).
EXPLAIN	Show Saving PPT.
	Distribute and review Money Talks – Savings Made Simple (pdf). Have students mark suggested ways to save that would work in their lives.  Discuss strategies they already use to save as well as strategies they will start using.
	Review the savings vocabulary (pdf) for 10 minutes.  Divide students into groups of three.  Two students will play the Savings Memory Game (pdf) and one will referee.  The referee can use the vocabulary list.  To play, mix the cards and turn them answer side down. Participants take turns flipping over two cards each turn, trying to find the correct match between the term and the definition. If a student thinks he/she has a correctly matched pair, he/she may ask the referee. If it is a match, he/she keeps the pair and takes another turn until he/she is wrong. If he/she picks an incorrect pair, his/her turn is finished.  The person with the most pairs at the end of the activity wins.
	View Saving Money in Plain English video (3:49) to learn how compound interest works. A simple explanation of how money saved in a bank grows, thanks to compound interest.
EXPLORE	Display from a computer on a projector or have students in a computer lab.  Direct them to the Hands On Banking – Tips for Saving More $.
	Play the Chair the Fed game
EXPAND	Write a short story about a main character who works and saves to reach a financial goal.  Be sure to include the feelings and emotions he experienced, as well as any setbacks, obstacles, or effective saving strategies.
	Reflect on a time you saved to purchase an item.  What did you save for?  How did it go?  Did you succeed?  What went well?  What didn’t go well?  If you did it again, what would you do differently?
	An article states, "Only the most unexpected of expenses should cause you to borrow. It is hard to wait until you have enough money to buy what you want, but learning to wait is a critical part of self-discipline."  What are some things you could do to wait and save money to buy expensive items?  What are you saving for right now? What "big ticket," or expensive, items are on your wish list?
	Suppose you go in for an interview for a part-time job. The boss offers to pay you $50 a day for a 5-day, 10-week position OR you can earn only one cent on the first day but have your daily wage doubled every additional day you work. Which option would you take?  Why?

More info & resources from the Federal Reserve can be found at the following links:

• Philadelphia Fed
• St. Louis Fed
• San Francisco Fed

Standard 2: Discuss the dynamics of saving and investing.

• Explain how paying yourself first (PYF) early and often influences positive progress toward long-term, financial goals.
• Identify and understand basic saving options such as savings accounts and Certificates of Deposit. Understand that savings are designed to preserve principal.
• Identify and understand investment options, including retirement planning, long- and short-term investments, and dividend re-investment plans. Understand that investments put principal at risk.
• Identify types of long-term retirement investments, such as IRA, Roth IRA, 401(k), and 403(b), as well as reasons to invest.
• Demonstrate time value of money (TVM) principles by using the rule of 72 and by manipulating the five variables used in basic TVM calculations.
• Discuss the long-term investment potential associated with the stock market, focusing on fundamentals such as diversification, risk/reward, and investor behavior.
• Identify and define the types of financial risks, including inflation, deflation, and recession.

TEACHING SUGGESTIONS: (Note: The following are simply suggestions or ideas to help you in teaching the General Financial Literacy class.  You WILL need to supplement these suggestions with additional resources based on your teaching style and your students’ learning styles).

ENGAGE	Read Alexander Who Used to be Rich Last Sunday to the class. Have students complete the Alexander Worksheet (pdf) and discuss his ability to save his money.
	Challenge students to figure out the Dow Jones (pdf) company by a simple description.
	Use a water jug with a dispenser, ice, and water to teach the concept of liquidity. Fill the jug with ice and demonstrate that nothing will come out when a drink is desired. This represents non-liquid assets. Ice is not "liquid" because it takes time to access. This also applies to assets that are hard to get the cash from, such as real estate. Add the water to the jug, allowing the ice to float. A savings account or checking account is liquid because it is easy to access when needed, just like getting water from the dispenser from the jug. Point out that it is good to have both ice AND water in the jug, equating to liquid and non-liquid assets in a portfolio.
	Display laminated poster boards around the room to introduce the Age Group Activity (pdf). Each poster has specific age groups on it. For example, one poster would be for those in their 20s. Assign each student to an age group. Each group discusses items that would be important to save for during the specified years.
	Hide several (2-3 per student) large denomination "play-money" (pdf) bills around the classroom before students arrive. Play a song that deals with money while students wander around the room searching for money. Once it has all been found, ask the following questions: What would you purchase with your money if it was real? Do you have enough money in real life to purchase this item? If not, how would you obtain enough money to purchase this item? If so, what is an item that you want but don't have enough money to purchase? How would you avoid spending the money you saved? Explain to students that they will learn the "secret" to choosing to save rather than spend money.
	Explain the instructions for playing Pit using the instructions in Pit game. Divide participants into groups of 3 – 8 players for each card game. Have participants set up the card game and play. After participants have finished the game, hold a class discussion using the Discussion Questions Pit lesson plan (pdf).
	View Time Value of Money video (3:17) After viewing, give students ten minutes to free write about any thoughts, feelings, and experiences they have pertaining to the clip. Ask if anyone would like to share what they wrote, then discuss.
	Complete the Agree/Disagree chart on the Killing Time worksheet (pdf). Students compare their responses with a partner, and then participate in a brief class discussion on the statements.
	Display the Rule of 72 Interactive on a projector to introduce the Rule of 72.
EXPLAIN	Distribute and review Money Talks – Savings Made Simple (pdf). Have students mark suggested ways to save that would work in their lives. Discuss strategies they already use to save as well as strategies they will start using.
	Review the savings vocabulary (pdf) for 10 minutes. Divide students into groups of three. Two students will play the Savings Memory Game (pdf) and one will referee. The referee can use the vocabulary list. To play, mix the cards and turn them answer side down. Participants take turns flipping over two cards each turn, trying to find the correct match between the term and the definition. If a student thinks he/she has a correctly matched pair, he/she may ask the referee. If it is a match, he/she keeps the pair and takes another turn until he/she is wrong. If he/she picks an incorrect pair, his/her turn is finished. The person with the most pairs at the end of the activity wins.
	Present the information in What is Savings and Why is it Important? (pdf) (FEFE)
	Familiarize students with specifics of investing by presenting the Stocks, Bonds and Mutual Funds Lesson Plan (pdf). Include accompanying PPT.
	Guide students through reading a stock quote table using the Stock, Stock, Stock Lesson Plan and worksheets (pdf). See pages 4-10. Include accompanying PPT.
	Allow students independent computer time to guide themselves, either alone or in pairs, through CNN Money – Basics of Investing online lesson. Have students take notes on what they learn so they can share details during the PPT discussion/lecture. **See Evaluate, CNN Money – Basics of Investing online quiz.
	Show Types of Investments PPT. **See discussion prompts in Notes View.
	Show Savings vs Investments PPT. **See discussion prompts in Notes View.
	Compare the differences between saving and investing (pdf). See pages 33- 34.
	Emphasize the effect of inflation on purchasing power (pdf). See page 40.
	Work through the examples of compounding interest using the Time Value of Money lesson plan.
	Show Retirement Planning PPT.
	Lecture about Starting to Prepare for Retirement Early (pdf). See pages 66-68.
EXPLORE	Guide students through the scenario in Reward Yourself By Saving (pdf) (See pages 17-20). Discuss as a class to pros and cons of each choice.
	Allow students to apply what they learn by completing the Stock Market & You worksheets (pdf).
	Visit Evaluate a Stock to gather stock details on a specific company.
	Analyze How a Stock is Bought and Sold (pdf).
	Analyze How to Read a Stock Table (pdf).
	Participate in an online learning environment at Hands On Banking Program for Young Adults. Complete all six items in the gray and black box on the right.
	View Time Value of Money video (2:52). Discuss how compounding interest can influence saving and investing.
	Complete the Time Value of Money worksheet (pdf).
	Read Uncle Mort's Money, from the lesson Why Study the Stock Market (pdf). See pages 7-8. Decide what you and your group think Jody should do with the money. Discuss the potential costs and benefits of each alternative.
	Practice! Complete Compound Interest (pdf) worksheet.
	Figure out how long it will take money to double or the needed interest rate for a set term. Rule of 72 Practice worksheet (pdf).
	Emphasize the importance of starting early in retirement planning by using the Time Value of Money Excel spreadsheet (xls). Click on the narrative tab at the bottom of the screen to understand how to demonstrate using the spreadsheet.
EXPAND	Reflect on a time you saved to purchase an item. What did you save for? How did it go? Did you succeed? What went well? What didn't go well? If you did it again, what would you do differently?
	Write the letters S A V I N G vertically near the left margin of a piece of paper. Write a descriptive word, starting with each of these letters, explaining a fact, an experience, an emotion, or a myth about saving. Under each word, explain your word choice.
	Research stock prices of some of your favorite companies. Find out what the stock prices were for these same companies a year ago, five years ago or ten years ago.
	Imagine you hear someone make the following statement: "Stock prices mean nothing. Every day they change, up or down. It is just a way to cheat the public and take their money. I don't understand why the government keeps changing those prices." Based on what you have learned, write this person a letter, commenting on his or her misunderstandings.
	Read the stock market section of the business page of a newspaper for three days. Identify five terms or ideas you do not understand which seem important to understanding how the stock market works. Share these unknowns with your classmates and teachers so everyone can help one another understand key ideas while learning about the stock market.
	Compare saving and investing using a VENN diagram (pdf).
	Create analogies (pdf) for saving and investing. Display student analogies around the room. Have students view each other's work and add other bullets of ways the analogy is true. See sample student work (pdf).
	Create an action plan for completing the steps you need to start building wealth in the next one to three years and beyond. Create a visual timeline on a calendar.
	Write one paragraph about the kind of lifestyle you would like to have when you retire. Include ideas on how much you think it will cost to maintain this lifestyle. (Do you want to live on the amount of money you have been used to, more than they are used to, or less then they are used to?) Write a second paragraph on where their income will come from after retirement. See slide 2 (ppt).
EVALUATE
	Saving Expert – Steve Spender (pdf)
	Respond to the following situations: Scenario 1: Aiden's car is 12 years old and he's worried it might break down, so he's trying to save three months of expenses for unexpected repairs, while also saving for a new car. What are the best savings strategies for Aiden so he can keep his money accessible for repairs, but also save for a new car? Scenario 2: Madeline's friends invited her to go to Cancun next year for vacation. She really wants to go, but she's not sure if she can afford the $1,000 trip. She has $500 saved in her dresser and has one year to save the rest, but she's not sure where to keep her money so she can maximize her savings. What is the best savings strategy for Madeline and why? Scenario 3: Scott is a freshman in high school and plans to attend college someday. His grandparents gave him $5,000 to start his college savings, but he's not sure where he should keep this money until he's ready to go to college. What would be the best savings strategy for him?
	Jack Considers an Investment (pdf) - See page 48
	CNN Money – Basics of Investing online quiz. **Only use this quiz if students completed the CNN Money – Basics of Investing online lesson, see Explain.
	Reading the Financial Page Quiz (pdf)
	Why Study the Stock Market (pdf) - Double Down (pdf) group assessment/review.
	Summarize saving and investing tips while showing Investing Rules to Becoming Rich PPT.
	Role play the scenarios in the Retirement Planning PPT. See slides 26-29.
	Play Fly Swatter Game (pdf). To play the Fly Swatter Game, project a list of terms on the wall (not recommended to be projected on a screen). Divide students into two teams. The first person in each team holds a fly swatter while facing the screen. When the teacher reads the definition or a question to which the students can identify the answer on the screen, they swat the answer with the fly swatter. Keep track of points. Rotate through the team. Change the PPT terms/answers as needed for items you need to review/assess with your students.

Standard 3: Understand the role of risk management in asset protection.

• Discuss the purposes of insurance/risk management.
• Define common insurance options and their purposes, such as automobile, health, home owner/renter, whole/term life, long-term care and disability.
• Define terms of a basic insurance policy, such as contract, limits of coverage, premium, deductible, grace period, and lifetime limit.
• Discuss insurance needs at different stages of life.
• Understand identification and designation of beneficiaries.

TEACHING SUGGESTIONS: (Note: The following are simply suggestions or ideas to help you in teaching the General Financial Literacy class.  You WILL need to supplement these suggestions with additional resources based on your teaching style and your students’ learning styles).

ENGAGE	Show Allstate Mayhem videos. Have students share stories of mayhem that have required insurance in their lives.
	Ask a student volunteer to answer the questions from the Longevity Game. Repeat if desired. In small groups, discuss the choices that can be made to live a longer, healthier life.
	Divide students into groups of four to five. As a team, brainstorm the number of risks a student might face in a typical day. Each team has five minutes to brainstorm every type of risk a student might face in a typical day (physical, financial, social, etc.). For example, a student runs the risk of choking when eating breakfast, being involved in an accident on the way to school, falling down the stairs at school, getting a paper cut when a test is distributed, etc. The team with the highest number of risks wins the contest. After brainstorming, ask the following questions: Which risks do you feel are more likely to happen to you? What are the different ways you handle these risks? How do you feel knowing that there is risk in living every day?
EXPLAIN	Show Insurance & Risk Management PPT.
	Share Unit 5 – Protect Your Wealth (pages 25-28) of Building Wealth: A Beginner's Guide to Securing Your Financial Future (pdf). As they read, or after, have students complete the Building Wealth – Protect Your Wealth worksheet (pdf).
	Learn about estate planning with CNN Money online estate planning lesson plan. See EVALUATE below.
EXPLORE	Assess the insurance coverage needed at different stages of life. Complete Insurance Needs Through Life worksheet (pdf).
	Demonstrate that we are exposed to risks every day by engaging students in the Everyday Risk of Living Activity (pdf).
	Divide students into six groups. Assign each group one of the following types of insurance: Health, Home, Auto, Life, Disability, Property. Each group has 10 minutes to research its assigned topic, and then up to three minutes to "teach" the basics about that insurance to the class. Each presentation should address: the purpose of the insurance, who is a logical candidate for the insurance, if it is expensive or cheap, sources of the insurance ways to lower the cost of the insurance. My Perfect Plan (pdf) (See page 2) is helpful.
	Prepare situation and match handouts for students using the Insurance Matchmaker Activity (pdf) (see pages 3-4). As students find their matching partner, have them discuss the scenario and explain to the class why they chose that match.
EXPAND	Write a paragraph on whether or not you will need life insurance five years after you graduate. Prepare your opinions for a small group or class discussion on the topic.
	Write a short story about an event and how insurance provided protection against big loss.
	Analyze a real situation where insurance is needed by learning to Insurance Investigation (FEFE) (pdf).
	Create a Sunshine Wheel. Form groups of four to five students. Each group selects a particular type of risk that students actually face, and then, using a Sunshine Wheel diagram, brainstorms at least four practical actions they can take to reduce the chance of loss from that risk. These items are the ray on the sunshine. Each group presents and explains its Sunshine Wheel to the class. Ask the following questions: How likely are you to put into practice some of the suggestions made today about handling risk? Why? How do you motivate other people to take steps to reduce their exposure to risks in their lives? How has your perception of risk changed?
EVALUATE
	Spoon Activity (pdf)
	Take an online estate planning quiz. (Use in conjunction with CNN Money lesson under EXPLAIN).
	There's A Way Activity (pdf) (see pages 5-6).