Personal Finance Banking & Credit Unit

Farmington Public Schools Grade 11 & 12 Business Education

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 1

Table of Contents Unit Summary ………………….….…………..page 3

Stage One: Standards Stage One identifies the desired results of the unit including the broad understandings, the unit outcome statement and essential questions that focus the unit, and the necessary knowledge and skills. The Understanding by Design Handbook, 1999 …………………………….... pages 4 - 7

Stage Two: Assessment Package Stage Two determines the acceptable evidence that students have acquired the understandings, knowledge and skills identified in Stage One. ……………………………… pages 8 - 9

Stage Three: Curriculum and Instruction Stage Three helps teachers plan learning experiences and instruction that aligns with Stage One and enables students to be successful in Stage two. Planning and lesson options are given, however teachers are encouraged to customize this stage to their own students, maintaining alignment with Stages One and Two. ………………..……………… pages 10 - 13

Appendices ….....………………………. page 14

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 2

Unit Summary

Students in Personal Finance will be introduced to topics such budgeting, investing, savings, taxes and insurance to help them meet personal goals and become financially literate. This four to five week unit on Banking and Credit will be taught at the beginning of the semester, establishing a framework for setting up a personal budget and providing a solid introduction to the next unit of Savings & Investments. All Personal Finance classes are multi-level and comprised of grade 11 and 12 students.

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 3 Stage One: Standards

State and National Standards for Business Education

1. Personal Decision Making - Rational decision-making is essential as it applies to the roles of citizens, workers, and consumers.

(National Standard (NS) 63, I , State Standard (SS) http://www.crec.org/cte/BsEd/BsEdStandards.xls, F 43-44)

Students will:

a. Apply opportunity costs and trade-offs to personal decision-making. b. Recognize and assume responsibility for the consequences of economic choices. c. Apply the decision-making process to various types of decisions at different stages of the life cycle.

2. Banking - Financial deposit institutions provide a variety of services to consumers in order to aid in the transfer of funds.

(NS 65, VI, SS F 46)

Students will:

a. Identify various types of financial deposit institutions. b. Identify the basic services provided by financial deposit institutions. c. Describe why there are various means of transferring funds.

3. Using Credit – There are a variety of factors that affect the choice of credit, the cost of credit, and the legal aspects of using credit. Various choices are available to consumers for protection against risk and financial loss.

(NS 66, VII, VIII , SS F 47, 48)

Students will:

a. Describe the risks and responsibilities of using credit. b. Identify the opportunity cost of credit. c. Determine advantages and disadvantages of credit. d. Identify the various types of credit including the various types of credit cards.

4. The Role of Consumers/Citizens – There are limited personal financial resources and more of the wants and needs of members of a society can be satisfied if wise consumer decisions are made. Consumers have to be knowledgeable of their rights and responsibilities

Students will:

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 4

a. Understand the economic/consumer laws, which affect them as residents of the state of Connecticut. b. Explain the importance of the individual citizen consumer/producer in the American economic system. c. Learn that there is an orderly process for changing laws and that there is a legitimate process for seeking redress when their rights have been violated.

Essential Understandings and Content Standards

Technology Essential Understanding #2: Communication – Technology can be used to create written, visual, and multimedia products to communicate ideas, information, or conclusions to others.

Content Standard: a. Students will use video, audio, and multimedia tools to create clear and meaningful presentation of ideas.

Technology Essential Understanding #3: Data Analysis – Technology can assist with the statistical analysis of data as a powerful means for explaining, understanding, and predicting issues of the human condition or physical world.

Content Standard: a. Students will present complex data in appropriate charts and graphs in a meaningful way. b. Students will build statistical models and use them to make real- world predictions.

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 5 Unit Outcome Statement

As a result of this unit, the students will understand the role that banks play in the American economic system and the various services they provide. By examining these services and the various aspects of credit and its benefits, the students will begin to develop their own financial portfolio and build financial literacy.

Essential Questions

What is the role of banks and how do we use them? What does your credit score mean? How does “borrowing” shape the world we live in? How do you setup a personal financial management system?

Knowledge and Skills

I. Knowledge

• Role of banks in the lives of U.S. consumers • Various services offered by banks and how to choose the ones to fit our individual needs • Purpose of various bank forms and materials • Describe the various ways a bank can help to manage your money • Costs and benefits of consumer credit • Five C’s of credit: Character, Capacity and Capital, Collateral and Credit History • Function and purpose of credit cards • Ways to establish and maintain good credit • Consumer rights and responsibilities as they relate to financial institutions and privacy

II. Performance Skills

• Maintain a checkbook and accompanying check register • Balance a bank statement • Use and understand various types of check and endorsements • Calculate bank fees and identify alternatives to these services • Compare and list the features of a commercial bank and a credit union • Fill out credit and bank account applications • Chart the financial cost of borrowing money • Calculate financial charges including annual percentage rate (APR)

III. Thinking Skills

• Analyze and evaluate outcomes when consumers decide to bank or not • Review and analyze the questions they should ask before selecting a bank • Examine how banking needs change over a lifetime • Compare and analyze the “cost of credit” vs. opportunity cost

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 6 • Contrast the differences between various credit cards and make informed decisions based on calculation of costs • Explain how credit worthiness is measured and interpret various credit forms • Identify potential pitfalls of credit card use for college students • Look for ways to alleviate the financial stress that could lead to bankruptcy • Evaluate the impact of bankruptcy on one’s credit and financial goals • Summarize consumer rights under the Fair Credit Reporting Act (FCRA) • Compare/contrast the various types of bankruptcies (Ch. 7, 13, 11) and identify financial options

IV. Technology Skills

• Creative effective and organized presentations • Demonstrate ability to chart, graph and analyze financial data • Use the internet effectively to sort through relevant financial data • Utilize technology to fill out forms and obtain personal financial information

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 7 Stage Two: Assessment Package

Authentic Performance Task

Goal: Your task is to demonstrate basic financial literacy with regards to your bank accounts and maintain/improve/establish your credit rating.

Role: You are a college student beginning your sophomore year trying to convince your parents/guardians that you are fiscally responsible and can manage your own finances.

Audience: Your parents/guardians and potential lending companies.

Situation: You are about to begin school and you ask your parents/guardians for a car. They have some misgiving about your financial responsibility but agree to help you out if you can demonstrate over the next year that you are serious about this by establishing credit, opening up your own bank accounts and maintaining accurate records, budgeting your money (to be discussed later) and researching insurance companies (to be discussed later).

Performance: You will perform the following tasks:

• Research various banks, their services and fees and compare them in a table • Print out and complete application for a checking account • Write out checks and deposit slips for the given transactions • Maintain an accurate checkbook register • Reconcile your bank statement to your checkbook • Research various credit card companies, their services and fees and summarize relevant information in PowerPoint slide(s). • Print out and complete application for a credit card • Obtain your credit score • Write a two-page persuasion paper outlining the things you considered in your research and choices as well as ways to improve your credit score and increase your bank account balance (could be given to your parents or used as a timeline to show improvement for a credit analyst when obtaining a car loan)

Standards & Criteria for Success: Your paper reflects a thorough understanding of the decision-making process, clearly summarizes your argument and demonstrates forward thinking. All of your forms, applications and record keeping should be free of errors, legible and organized. A rubric will be used to grade your paper, bank table, checkbook records and reconciliation, applications and credit card charts on a 4-3-2-1 scale in various categories.

Content standards addressed with assessment: • 1-a, 1-b, 1-c • 2b • 3-a, 3-c • T.E.U. 2-a, 3-a

Tests, Quizzes, and Other Quick Assessments

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 8 • Essay on the various services offered by banks and what factors should be considered in electing the various services Content standards addressed with assessment: ƒ 1-a, 1-b, 1-c

• Essay explaining importance of credit and how it is necessary in our economy Content standards addressed with assessment: ƒ 3-b, 3-d ƒ 4-a, 4-b

• Question responses regarding the various forms of bankruptcy and how society’s perception of this has changed Content standards addressed with assessment: ƒ 4-a, 4-b, 4-c

• Calculate and chart various credit charges and estimate time to pay off balances Content standards addressed with assessment: ƒ 3-a ƒ T.E.U. 3-b

• Quiz on components of a check and endorsements Content standards addressed with assessment: ƒ 2-c

• Quiz on evolution of banks and credit unions Content standards addressed with assessment: ƒ 2-a

• Test on various types of credit, fee calculations, APR and components of credit score Content standards addressed with assessment: ƒ 4-a, 4-b, 4-c, 4-d ƒ T.E.U 3-b

Checks for Understanding

List the various types of financial institutions Explain bank fees and other charges Describe the need for banks and checks List components of a check Know the 5 C’s of Credit Define opportunity cost Define and Calculate APR? Compare/contrast forms of bankruptcy

Stage Three: Learning Experiences and Instruction

Learning Experiences and Instruction Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 9

Guiding Questions Instructional Strategies Checking for Understanding Lesson 1: The Role of Banks in the economy (2 Days) Hook: What is a bank? Have students work in pairs to list what they already What roles do banks play? know about banks and dispel myths through class Does everyone need banking discussion. services and what happens to those that don’t? In same pairs, have students come up with the various What did people do before roles that banks play in our banks? lives, in businesses and society. Discuss as a class.

In groups of 4, have students complete worksheet on “To Bank or Not to Bank” (10 Each group will go over their each) and explain their list of options for those non- choices. bankers and come up with a consensus. In addition, they Individually, have students will discuss what people did come up with options for before there were banks and those that choose not to bank. report back to class. Lesson 2: Financial Institutions and Services (3 Days) Hook: What are the different types Students to read book on of financial institutions? differences among financial institutions and fill out chart. Who runs banks? Have student go online and Which services are offered? search for types of financial institutions and the services What should we consider they offer. Complete when choosing a bank? worksheet and discuss.

How do we select the services Classroom discussion on that best fit our needs? things to consider when choosing a bank.

In pairs, discuss the types of services they found on line and discuss how important they are to each of them

In pairs, have students go Quiz -Similarities/differences online and have students find of banks, credit unions and two different bank ads and other financial institutions. print out. Share their findings. Individual essay on the various services offered by Classroom discussion on who banks, people that use them runs banks, how banks get and things to consider when customers and make money. choosing among alternatives. Lesson 3: Savings vs. Checking Accounts (3 Days) Hook: What is the difference Have students work in pairs between savings and checking to list what they already Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 10 accounts? know about various bank accounts and discuss with What are other methods of class. transferring funds? Have students go online and Are checking and saving research various methods of accounts free? transferring funds and fees associated with different Is it necessary to have a accounts. Complete worksheet checking account? individually.

In groups of four, have students come up with Exit questions: laundry list of uses of check - Does “trust” have anything writing and report their to do with checks? findings. Discuss - What is the “best” type of alternatives. account…… payment method?

Guest Speaker on Banking Lesson 4: Opening and Maintaining an Account (4 Days) Hook: How do I open an account? Reflect on previous exit questions. What are the important parts of a check? Have students work in pairs and come up with things How might filling out a check necessary to open an account incorrectly be a problem? and restrictions. Discuss.

Is it necessary to keep an Distribute handout on parts of accurate check register? a check and go over using visual aides and text. How do I balance my checkbook? Demonstrate how to record information in check register

Class discussion on importance of balancing Quiz – Check components and checkbook and potential endorsements errors of people and banks. In groups of 3-4, have Go on computers and create students come up with spreadsheet with formulas to potential pitfalls of writing mimic checkbook. false or inaccurate check and who is affected. Hand-in. Use visual aids to demonstrate in pairs how to Individually, students to reconcile checkbook and bank perform basic checkbook statement. reconciliation on computers.

Lesson 5: Pros and Cons of Various forms of Credit (2 Days) Hook: What does “credit” mean? Pair share: Have students Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 11 speculate on the various meanings of credit….good and bad perceptions. Discuss

Is all credit the same? Ask students to recall any personal experiences and discuss. Students to read book on differences among types of When is credit good? credit and fill out chart.

Have students rate themselves on scale of 1 to 10 on how often they use credit and have When is credit bad? them complete worksheet on when is it best to use credit for various scenarios. Essay explaining importance of credit and how it is Students to work in pairs and necessary in our economy go online to seek out rates on different types of loans and Exit question: Reflect on the discuss variances. statement….”All credit and loans are not equal.” Lesson 6: Credit Cards and the Consumer (3 Days) Hook: How do credit cards work for Reflect on previous exit consumers…for creditors? question.

What are the potential pitfalls In groups of 3-4, have of credit cards? students come up with timeline of events from point What are some key of purchase using a credit differences among various card to when they get the bill credit cards? and discuss.

What does opportunity cost In same groups, have students mean? list potential pitfalls of credit card use and who is most What does APR mean? likely to be affected. List on Exit question: Reflect on the board. statement….”Opportunity cost Am I using credit wisely by is…” paying the “minimum Have students go online and balance”? fill out table on fees, rates and Have students chart various advertisements. credit card charges and calculate payoff figures Discuss opportunity cost question and have students Exit question: Why is the read book on APR…show “minimum balance” a calculation on board. dangerous way to pay?

Lesson 7: Maintaining Good Credit (3 Days) Hook: How do I establish credit? Suggest and discuss ways Who calculates my credit someone can establish credit. score? Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 12 Have students work in pairs What are the components of and research online the my credit score? various credit agencies, components of a score and Why is maintaining good services available and fill out credit important? worksheet with results. Discuss. Who looks at my credit score? Have students read book on How do I fix my score? the 5 C’s of credit and components of a score and What are your credit rights? answer questions.

Pair share: Come up with Complete worksheet on rights ways that a bad score can of consumer rights and Fair hurt you and privacy rights of Credit Reporting Act. credit applicants. Discuss.

Suggest ways to fix your score, discuss alternatives Test – Various types of credit, with class. fee calculations, APR and credit scores. Lesson 8: Bankruptcy: Repair or Despair (3 Days) Hook: Is bankruptcy the answer to Have students work in pairs financial stress? to list what they already know about bankruptcy and Who is affected by discuss with class. bankruptcy? Have students read book and Is all bankruptcy equal….do it go online to research various fix all your problems forms of bankruptcy (Ch. 7, permanently? 11, 13) and complete chart.

What are warning signs of In pairs, students to research debt? various websites on financial Response questions on the counseling and list warning various forms of bankruptcy signs of debt. Discuss. and society’s perception. Lesson 8: Banking and Credit…..Putting it all together (3 Days) Hook: What are my responsibilities Review response questions on as a consumer/citizen? bankruptcy.

How do I demonstrate good financial sense as a Guest speaker on financial Authentic Performance borrowing and payer? counseling. Task (2 Days)

Pete Chrzanowski DRAFT: 6/30/06 Farmington Public Schools 13

Appendices

Worksheets, Rubrics, Handouts and Test/Quizzes to be attached later.

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