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Welcome, Parents! Welcome to It’s Worth It. SM: Thinking Smart About Your Money. After each session, you’ll receive a brief summary of the session’s topics, your student’s homework reminders and some tips on how you can help expand your child’s knowledge in financial matters. Having a clear understanding of money and finances is a key component to success throughout life. Money may not buy happiness, but it sure does have a big impact on it. The earlier the next generation begins learning about money, the more likely it is society will change from being debtdependent to financially fit. During the first session, your student discussed evaluating needs vs. wants when considering how and when to spend money. Understanding the difference between needing something and wanting something is the first step in creating good spending habits. In class, students discussed needs as being necessary for survival, such as food and shelter. A want is something you could live without, like concert tickets. To help cement the ideas and concepts each session, please continue the classroom discussion at home. As homework for this session, your student has a list of items to classify and an additional section for their own ideas. Have a discussion with your student about how your family identifies needs vs. wants, and then add some family items to the list for discussion in the next session. Homework Reminders Think About It Session 1 Welcome to the first session of “It’s Worth It: Thinking Smart About Your Money. ” This 12 -session program is designed to teach students about what it takes to be financially responsible and successful. As your student becomes a young adult, he or she will begin to explore the financial world. Your student may earn money, pay for items or use credit for the first time within the next few years. Now is the time for your student to learn financial fundamentals and begin to understand how monetary decisions can affect the future. During this course, students will look at basic concepts and explore important ideas, including budgeting, savings and bank accounts, spending, college financing, credit cards and career preparation. Financial Literacy Word of the Day Financial Literacy Financial literacy is the understanding of how to budget, save and make smart decisions about your money. For Session 2: • Complete the “Create Good Spending Habits” work sheet — Categorize items and discuss with your parents. • Complete the “Avoid Budget Killers” work sheet.
Differentiating Between Spending on Needs vs. Wants Think About It Session 2 Understanding the difference between needs and wants is the first step to creating good spending habits, but it’s only the first step. In today’s session, students discussed how this determination impacts overall spending habits, as well as goal setting and planning for the future. Students learned today that it is important to set goals, especially when it comes to money. Without a plan about how to meet your goals, you may never accomplish what you want to achieve. For the rest of the program, students are going to work on a group project in which they come up with savings tips. As a class, students set a goal of how many savings tips to create by Session 12. Students know they will need to work together, and that they also need to tell others about the goal. Those people can hold the class accountable and help students reach the overall savings tips goal. Your student worked as part of a team to prioritize spending by reviewing their homework list and determining which item was the most important and which they could live without. Following the prioritization activity, the class discussed goal setting. Understanding the importance of goal setting is an important part of life, both within and outside of money management. Setting goals and creating a plan to achieve them will build confidence and help your student develop strategy skills. Do you set goals as a family? Is your student part of the planning process to achieve your family goals? Involving your student in some of your family planning will help him or her see the process in action and provide a feeling of ownership over part of the outcome. Talk to your student about goals you’ve set in your life and how you were able to achieve them. If you have set goals that you haven’t yet achieved, share these as well. Ask your student to share the list of goals they created in class. In the next session, the class will go deeper into financial planning and start discussing how to build a budget — this session’s homework focuses on family spending and goal setting. To help prepare, your student has a family spending worksheet to complete. Review your family spending plan with your student and help them identify a few items they can share in the next session. Homework Reminders For Session 3: • Start gathering savings tips to add to the class list. • Complete the “What Does Your Family Spend Money On? ” work sheet. • Share your goals and get people you shared them with to initial them. Financial Literacy Words of the Day Needs and Wants A need is something that you cannot live without — people’s basic needs are food, shelter and clothing. When making a budget, a need usually has to do with the cost of housing, utilities (electricity, gas and water), food and other basic necessities. A want is something you can live without. People can live without cable television and other entertainment. A budget can help you assess what you can afford when it comes to your wants.
Creating a Spending Plan I Budgeting and savings were themes of today’s lesson. In the last two sessions, students have discussed needs vs. wants and how to prioritize their choices. This session, they took the next step and started identifying the means to spending money: income. The class looked at an example of a family budgeting work sheet. Students were surprised at how many different expenses a single family has each month. Ask your child about some of the categories he or she did not realize needed to be accounted for in a family’s budget, such as pet supplies, school lunch money and insurance. Following the discussion on budgets, students reviewed a sample pay stub to understand all the deductions that come out of a paycheck. One of the main purposes of this exercise was to get students to understand that they do not take home their entire salary each pay period. Following the discussion on income, your student was given a budget outline and an income of $300. As homework, your student is to identify how they plan to use $300 by developing a spending plan. It may be helpful to discuss how your family uses budgeting techniques in your spending plan. At the next session, the class will have a guest speaker from a local bank, who will share a little bit about banking and credit unions. The class will have the opportunity to ask questions, so as part of this session’s homework, your student needs to brainstorm at least three questions to ask the guest speaker at the next session. Homework Reminders For Session 4: • Complete three questions for our guest speaker — You will need to turn in the questions. • Begin the “Learn to Live on a Budget” work sheet. • Remember to keep adding to your savings tips! Think About It Session 3 Things that families need on a day-today basis can be expensive. Your student may not even realize all the things that you as parents have to pay for. Keeping homes cool in the summer or warm in the winter or being able to turn on the faucet and get running water may be some things that students take for granted — but those take money. If you have not already done so, talk to your students about ways that you can save money in your own home. Can you cut back on things such as eating out or turning up/down thermostat? Everyone in the household should try to conserve no matter who is the one paying the bills. Financial Literacy Words of the Day Gross Pay and Net Pay Gross pay is the amount of salary paid to an employee; it includes regular pay, overtime pay and any other compensation included with an employee’s salary. If a person has an annual salary of $24, 000 and is paid monthly, their gross pay is $2, 000 per month. Net pay is the amount of money that is actually paid to the employee in each pay period after all deductions (such as insurance premiums, federal and state taxes, and 401(k) contributions) are taken from the gross pay. Net pay is always less than gross pay.
Creating a Spending Plan II Today, the class had a guest speaker from [INSERT BANK OR CREDIT UNION NAME], who discussed the different opportunities and programs banks and credit unions have to help individuals achieve their financial goals. A big focus of today was on the importance of savings. The guest explained to students what a bank or credit union does, why it is important to open a savings account and how to open a savings account. Savings should be a permanent line in the development of any budget or spending plan, and the class discussed the idea of paying yourself first as the best way to prepare for the future and unplanned expenses. As a class, the students have been compiling a savings tip list at the beginning of each session and have set a goal for 100 tips by the end of the program. This list is a great discussion topic for you and your student — think about how you personally save a few bucks here and there, and have your student add them to the list for our next session. Today’s homework assignment is due at Session 7 and involves a field trip. After hearing the guest speaker’s discussion about different bank programs, each student should visit a local bank and briefly talk to a personal banker about free savings accounts. Learning what programs exist locally to help students begin saving for the future is an important part of building good money management habits. Each student was given a list of possible locations, as well as an outline of the assignment. Think About It Session 4 Starting and maintaining a savings account does not take a great deal of money. Through compound interest, the amount of money in a savings account grows after an initial deposit. Everyone should be encouraged to have a mechanism for saving for the future. Sometimes, people save to reach a goal, to make a desired purchase or to have money in case of an emergency. Some banks offer special accounts for children under 18 — help your child explore the options and start saving! Saving money can be difficult. What is the easiest way to save money? Would it be beneficial to save money in a bank? Now that students have had the opportunity to speak to someone who works at a bank, this is a good opportunity to talk with your student about the benefits of having a savings account. Financial Literacy Words of the Day Compound Interest Homework Reminders For Session 5: • Begin the “Visit a Bank or Credit Union Activity” work sheet — Remember you have until Session 7 to complete this assignment. • Finish the “Learn to Live on a Budget” work sheet. • Remember to keep adding to your savings tips! When money in a savings account earns interest (money paid to you by the bank for the privilege of using your money to fund their business), you benefit. One nice feature of most savings accounts is that they allow interest to compound. This means that the interest is added to the balance in your account, and the amount in your account grows even if you don’t add more money to it. And, the next time interest is calculated, it is calculated on the increased balance, so you actually make interest on your interest!
Creating a Spending Plan III The focus of today’s class was how to earn money. In order to live in the world, students need some money so they can purchase things they need. If they budget wisely and save, they will also be able to purchase items that they want. Students brainstormed about ideas for jobs that they could do as teenagers. Some ideas included a pet-sitting service, mowing lawns or removing snow, and painting houses. Students were directed to several job search websites for ideas. Jobs that might interest the students after they graduate high school or college were also discussed. Students were shown how to use a job search site to narrow down the list of possibilities to jobs that fall into their interests or expertise and are located in their area. Homework Reminders For Session 6: • Continue working on the “Visit a Bank or Credit Union Activity” work sheet — Remember you have until Session 7 to complete this assignment. • Remember to keep adding to your savings tips! Think About It Session 5 There are many ways to find a job. While students are in school, they can start their own business. Students can offer babysitting services (be sure to get trained in CPR), car washing services, lawn care services, or even services to help adults understand how to use a computer for accessing the Internet, email or social media sites such as Facebook. It is never too early to start thinking about the career that may be in a student’s future. Encourage your student to take interest and career placement tests to get some ideas if he or she does not already have some. School counselors can help you locate these tests and help you interpret the results. Another great idea for students is to do some job shadowing of family members or friends and to find internships to help them get a variety of experiences. Financial Literacy Word of the Day Budget A budget is an estimate, often itemized, of expected income and expenses for a given period in the future.
Life Store After five sessions of discussing needs vs. wants, savings and budgeting, today your student walked through a typical month of bill paying. He or she had to evaluate spending choices from owning or renting a home to day care and insurance expenses. Your student participated in Life Store, a budgeting exercise that assigns each student a career, monthly income, credit score and family status and then asks him or her to go through the process of organizing a month’s worth of financial decisions without going into debt at the end of the month. Different life circumstances were reviewed, some of which are controlled by the student’s choices and others that are controlled by life itself, such as taxes. Life circumstances also included marriage and children and how each life choice impacts an individual’s monthly responsibilities. Review your student’s budget work sheet and choices and have a discussion on how this compares to your own monthly work sheet. In addition, help your student prepare for the next session’s continued discussion of the banking world and discuss how you use banking or credit union services as part of your budgeting strategy. Homework Reminders For Session 7: • Complete the “How Do Your Parents Bank? ” work sheet. (Please do not include personal information. ) • The “Visit a Bank or Credit Union Activity” work sheet is due next session. • Remember to keep adding to your savings tips! Think About It Session 6 Whew! Who knew that adulthood could be so expensive? Hopefully, your student walked away from the Life Store experience with a little more appreciation of the financial responsibility that you as parents have on a monthly basis. Life can be costly, but it really comes down to daily choices. It is easy to want to live beyond your means, but hopefully this activity made your student aware of the concept of actual needs versus wants. This activity is also a good reminder that budgets can be adjusted for unexpected expenses and to help people keep track of where their money is going. Financial Literacy Words of the Day Certificate of Deposit A certificate of deposit, commonly referred to as a CD, is a type of longterm savings account available to depositors at banks and other financial institutions. In exchange for depositing funds for a specified length of time, the depositor will receive interest rates that are typically higher than standard savings account rates. Certificates of deposit are commonly available in threemonth, six-month, nine-month, one-year and multiple-year lengths of time. Quite often, the longer the deposit term, the higher the interest rate.
Checking, Savings and Debit Cards I Practice makes perfect was the idea behind today’s class activity. Your student was introduced to different forms of banking and finance items such as check writing, debit cards and an account register. Students were given sample bills to pay and learned the difference between a savings account and a checking account. The class also looked at some real bills to help students understand how to read them and what they need to do to pay them with a check. Since every family and individual is different, there are, of course, many different ways to use banking, checking and savings accounts. Discussing how you use these items with your student will help him or her better grasp and form financial habits before reaching this step as an adult. Try to involve your child in some of your financial habits by letting him or her see you paying bills or using a check or debit card at the store. See if he or she has questions about the process and consider setting up a savings account for your child. The next session is going to take today’s lesson a bit further by showing students how to fill in and balance a checkbook register. Review your student’s homework assignment from today and talk about the different types of debt you’ve encountered in your life and lessons or habits you think are important. Think About It Session 7 Everyone has bills to pay. It is important that students learn what a bill looks like and what their responsibilities are when paying them. They should be able to locate the due date on a bill, understand which portion of the bill they should return with their payment and what they are being charged for. Some students do not understand the difference between a checking account and a savings account. After today’s lesson, they should know the difference. Not only can you not lose money in savings accounts (like checking accounts, they are insured by the federal government up to $250, 000), you also earn money — through interest — by keeping it in the bank. The more you save, the more you earn. Financial Literacy Words of the Day Direct Deposit Homework Reminders For Session 8: • Fill out a check for the BGE bill in your binder. • Remember to keep adding to your savings tips! Direct deposit is a process where your employer automatically sends funds electronically into a bank account of your choice. Direct deposit replaces the process of receiving your wages via paycheck and manually depositing at the bank.
Checking, Savings and Debit Cards II Although online banking is popular, it is good for students to be able to use and maintain a checkbook. Today, students learned what a checkbook register is and how to use one to make sure that they are always aware of how much money they have to spend. That old joke about the person who overdrew his checking account and was confused because he still had checks in the checkbook is a well-worn but valuable story. Students worked through the process of writing out checks and recording the transactions into a check register. While many families have gone away from using a physical check register, opting now for online checking and tracking options, many stores still accept checks and it’s often a good way to start a young person out in the world of finance. Physically writing a check creates more of a memory for the transaction than simply swiping a debit card. Recording the transaction into a register is an additional reminder as it’s often hard to remember to log on to the computer to check things out later in the day. The class also spent some time talking about debit cards and paying bills using online banking and electronic funds transfers (EFT). These are easy and convenient ways to pay bills. During the next lesson, students will begin to look at what it means to borrow money. Review your student’s homework assignment from today and talk about the different types of debt you’ve encountered in your life and lessons or habits you think are important. Homework Reminders For Session 9: • Complete the “A Loan Is Money You Have to Pay Back” work sheet. • Remember to keep adding to your savings tips! Think About It Session 8 Many people practically live their lives online. They get information, pay bills, get entertainment and more from the Internet. So why is it important for your child to know how to write a check or balance a checkbook? There are going to be times when your student wants a record of payment and cannot make that payment electronically. Also, no one should rely solely on the bank to do the math correctly. Your student needs to take the responsibility to track all payments (by check, debit card or online) to make sure they are appropriately recorded. Financial Literacy Words of the Day Electronic Funds Transfer (EFT) Electronic funds transfer (or EFT) is the process of moving money from one bank account to another without the use of paper — everything is completed using computers. An EFT may be used when you have your paycheck direct deposited to your checking account, when you pay a bill using a debit card or you pay a bill using online bill payment software.
Borrowing and Credit Cards Debt is a huge problem for Americans today — both as a nation and as a society. National debt continues to grow, and advertisements continue to bombard the public with ways to reduce or pay off debt. While the nation struggles to overcome today’s debt problems, the next generation must be better educated so they can prevent future problems. In today’s lesson, the class talked about different ways to borrow money, including loans and credit cards, and the responsibilities that come along with each type of debt. Understanding that a loan is money that must be repaid, with interest, is an important concept for everyone to grasp as early as possible. In addition to the list you helped your student with on “A Loan Is Money You Have to Pay Back, ” the students worked together in groups to discuss how and why credit cards are used. Your student helped a team brainstorm different reasons a credit card could be used and then discussed whether this was a good or bad use of a credit card. As the class discussed loans, student loans became a part of the conversation, which brings the discussion right into the next session — Financial Aid for College. This session’s homework assignment is to pick out a college in Iowa and find out how much it costs to go there for one year. If your student isn’t familiar with colleges in Iowa, help him or her pick one out and find the information needed to complete the “Find College Costs” work sheet. The results will be discussed in the last session. Homework Reminders For Session 10: • Complete the “Find College Costs” work sheet. • Begin work on the “Discover Iowa Colleges” work sheet. • Remember to keep adding to your savings tips! Think About It Session 9 Many people believe that credit cards are bad. Credit cards can be beneficial if and when they are used responsibly. Just like any other borrowed money, credit cards have to be treated like the loans they are. Why do people use credit cards? If it is to buy things they couldn’t otherwise afford, that’s not a very responsible reason. There always going to be things your student wants but cannot afford at the time, but the key word is “want” — does he or she need these things? Too often credit cards (loans) are used to buy things that people don’t really need and can’t really afford. They end up paying a lot of money after it is all said and done. Remember: The higher the interest rate, the longer it will take to pay back the debt. Financial Literacy Words of the Day Minimum Payment A credit card bill always shows a minimum payment that is due with each billing cycle. This amount is the monthly payment you must make, based on the outstanding balance, to avoid any penalties. Unfortunately, if you do not pay the entire balance each month and only make the minimum payment, interest will accrue on your balance. This means that you will pay a great deal more for an item than its actual price if you only make the minimum payment. For example, if you purchase an item for $500 with a credit card that charges 10% interest and make only the minimum payment each month, it may take 44 months to pay off the purchase and you may have paid $650. 87 for that $500 item because of interest charges.
Financial Aid for College Studies by Lumina Foundation on Education show that the future workforce will need education and training beyond high school for more than 60% of the jobs in the marketplace. The big question these days isn’t so much should your student go to college, but rather, how can you pay for college? Many factors feed into the cost of college and how to cover the expenses of a college education. The good news is financial aid is available and in today’s lesson, your student began learning about those options. Your student worked in a group with other students and compared the different costs of different colleges from around the state of Iowa. Each group was given a sample chart that detailed the cost of a college for one year and then offered different types of financial aid to help cover those costs. One important point was that aid is available to help pay for college, but you have to seek it out and apply for it. Too often, families think they won’t qualify for aid so they don’t apply, and they end up missing out on many opportunities for grant or scholarship money. Talk to your student and review the materials covered in this lesson. In the next session, the class will have another guest speaker — a former [SCHOOL NAME] student who completed a postsecondary education and is coming back to tell students about the experience. Your student once again has an assignment to come up with questions to ask the guest speaker. Now is a good time to talk to your student about college and discuss questions you both may have so your child can ask our guest. Homework Reminders For Session 11: • Continue working on the “Discover Iowa Colleges” work sheet. • Complete questions for the guest speaker — You will need to turn the questions in. • Remember to keep adding to your savings tips! Think About It Session 10 College can cost a lot of money. Most of you probably already knew this. It is important that you also know there are many ways to make college affordable no matter where your student chooses to go. While attending college seems far in the future for your student, you should start saving now if you haven’t already. Just putting away a little bit at a time can really start to add up. If you started saving $1 a day right now, you could potentially have more than $2, 000 when your child starts college. Any money that you can save and pay out of pocket will decrease the amount that your student will have to borrow and pay back with interest. Also, you can talk to your bank about a savings account that earns interest, which has the potential for even more saved money. Financial Literacy Words of the Day Gift Aid Gift aid is a form of financial aid that comes in the form of scholarships and grants. This is a type of aid that does not need to be repaid (assuming that the recipient meets all of the qualifications). Students who want to qualify for scholarships and grants need to fill out the appropriate applications. Colleges can offer scholarships and grants known as institutional aid, and students can apply for private scholarships offered by such groups as community organizations, places of employment, religious organizations and many others.
College and Career Planning I Today, a guest speaker talked to the students about college. [NAME OF GUEST SPEAKER] is a graduate of [SCHOOL NAME] and went to college at [COLLEGE NAME]. It was good for students to hear someone, who not too many years ago sat in the same room they are in now, talk about success in college. It helped bring a personal connection to the idea of going to college. Our guest speaker discussed the challenges of getting through college (including how to pay for college) and also touched on the benefits of going to college. Remind your student that the college admission visit assignment is due at the next class session. Also for the next session, help your student complete the personal assessment worksheet, evaluating their abilities, interests and values. This assessment can also be taken online at http: //www. ihaveaplaniowa. gov. After your student completes the assessment, talk to your student about three possible careers he or she is interested in and research the education required to work in that field. Homework Reminders Think About It Session 11 Many opportunities are available for postsecondary education — that is, education beyond high school. This can mean different things for different people — some will go to a four-year college and study to be an accountant or a doctor, while others will go to a community college to get a certificate in an area they want to pursue. Many students start at a community college and then transfer to a four-year college to help save money — classes are cheaper at a community college, and many core classes can be taken there for less money. Be sure your student works with an academic adviser on campus if he or she plans to take this route. Your student should be sure that all credits will transfer and, if he or she can get an associate degree on top of the transferring credits, that is all the better. Financial Literacy Word of the Day FAFSA For Session 12: • Bring in your completed “Discover Iowa Colleges” work sheet. • Complete the “Find the Right Fit for You” work sheet. The Free Application for Federal Student Aid, or FAFSA, is a form that every person attending college should complete. This form is the gateway to many federal and other financial aid opportunities. In addition to determining how much a family is expected to contribute to the costs of college, the results of the FAFSA calculations help determine grant and federal loan types and amounts, as well as work-study eligibility.
College and Career Planning II College means many things to many different people. For some, college is a four-year experience — they move away from home, live on campus and take classes in many different areas, as well as classes for their major, before obtaining a four-year degree that starts them on a particular career path. For others, college is a training program for nine months that focuses solely on specific and detailed information needed for a particular occupation. In middle school, students don’t necessarily need to know what career path they want to pursue or what college they want to attend. What’s important is for the conversation to happen. A good place to start learning about various careers is at the U. S. Bureau of Labor Statistics’ Occupational Outlook Handbook website at http: //bls. gov/ooh. Students need to know that their education should be a priority. Their education, especially once they start high school, impacts their future decisions. Everything from college and job opportunities and scholarships can depend on how seriously students take their education and how much effort they put into it from the first day of their freshman year. This session’s handout and class discussion centered on the different training and education options after high school. Review this handout with your student and see how it fits into the personal assessments he or she completed last session. For students to really believe they can achieve, the most important support can be their parents. The class also received a list of [NUMBER] savings tips that they gathered over the 12 class sessions. Talk to your student about the list and see how many items from it you can implement at your house. Think About It Session 12 The class has discussed a lot of topics over the 12 class sessions on financial literacy. Hopefully, you were able discuss some of these things at home, not only to become knowledgeable about financial literacy but to also put what your student has learned into action (just like his or her goals). What changes will your student make? Do you think your family will make any changes based on what your child learned? Financial Literacy Words of the Day 529 Plan 529 plans are state-sponsored college savings accounts for those looking to contribute tax-deferred savings toward their children’s college expenses. Each state has slightly different rules and benefits for its 529 plan, prompting many parents to open plans in states where they are not a resident. You can learn more about Iowa’s 529 plan at www. collegesavingsiowa. com.