Students create a simple personal budget, or spending plan, based on their projected monthly income and expenditures. They will share their budget and bank with their family. Students will also present the money the class collected to the charity of their choice (see Attachment One: Decision-Making Model from Lesson Three: Making Good Money Choices).
One Forty–Five Minute Class Period
The learner will:
- identify personal income and expenditures.
- create a personal budget reflecting spending, saving, investing, and donating.
- act as a philanthropist in giving money to a charity of the classes choosing.
The students provide the planned service by presenting the money to the agreed-upon charity.
If appropriate, have the students make cards, draw pictures, produce a videotape, or write letters to go along with the donation.
If possible ask a representative of the charity to explain the importance of budgets and budgeting for the success of their non-profit organization.
- Overhead transparency of Attachment One: My Budget!
- Four-part banks, one for each student (directions for making spend, save, donate banks using recycle materials available here http://learningtogive.org/lessons/unit135/lesson5.html)
- Optional: purchase four-part banks from www.moonjar.com
- Attachment Two: A Note to Families
Hold the four-part bank up for display and briefly review the definitions of spend, save, invest, and donate. Ask students which of the four bank sections they would use to temporarily store the income they earned from their recently competed coin drive. (Hopefully they will all say donate!) Tell students that today they will think and plan what to do with the money that they take in, their income. Ask students if they remember Alexander, the main character in “Alexander Who Used To Be Rich Last Sunday” and what he did with his income.
Explain to the students that they will learn about a way to plan for what they spend, save, invest, or donate that will help them avoid the problems that Alexander created for himself. It is called a budget, a time-based spending plan that helps people keep track of money and reach financial goals.
- Draw a circle graph on the chalkboard and divide into four sections – approximately 5% savings, 10% investment, 10% donate, 75% money to spend. Discuss with the students how much of the money people earn goes into the different categories. The percentages will vary, but this will give students a general, visual idea. Discuss generally what things adults might save for, invest in, donate toward, and on what things they needs and wants they spend on. Ask the students to share ideas for what they might spend, save, invest, and donate. Review why people choose to donate money.
- Show the students the four-part bank.Tell them that they are going to create a personal budget to help plan for how they might use the bank at home. The bank can be used to plan what they will spend on immediate needs and wants, save for a special purchase in the short-term, donate for the common good, or invest for the long-term.
Teacher Note: For the purposes of this lesson, short-term refers to saving for things in the coming weeks or months, certainly under a year. Long-term typically refers to investing savings for periods longer than a year.
- Write the words budget, income, and expenses expenditures on the board and explain to students the meanings of these three words:
- Budget - a spending plan to help keep track of money
- Income - money coming in from any source
- Expenditures-money “going out” (includes all spending, saving, donating, and investing money) also known as expenses.
- Show and review with students Attachment One: My Budget! on the overhead projector. Review the income side and the expenditures side of the budget and the definitions. Model some examples of budget entries.
- Distribute a copy for each student. After some reflection, ask students to record in pencil on their copy of the blank budget sheet the kinds and estimated amounts of income they will be receiving in a month. Count things such as allowance, earnings from other jobs, gifts, etc. Assist students individually as needed with identifying, estimating, and calculating income for the time period.
Teacher Note: Preparing a monthly budget probably offers the most learning efficiency for the students, unless a shorter term budget, such as two weeks, is desired. Be sensitive to the act that some students may get no allowance and may have no money income or way to generate income. For all students, a simple, but accurate budget is best. Younger students can also illustrate the ideas for which they will use each container of money in the four-part bank.
- After entering income data, ask students what they plan to do with their expenditures, the money they will be dividing up among their four-part banks at home. Encourage them to think about something short-term for which they would like to save their money. Remind them that saving typically means learning to live on less than what they have, cutting spending on unnecessary wants, and includes, of course, an opportunity cost.
- Ask them to think about to what charity or cause they would like to donate some of their money. Ask them to think of things they would like to spend money on soon after they receive it. Finally, ask students to identify how they would like to save and invest some portion of their income in the long-term.
- Using Attachment One: My Budget, assist students with writing their planned expenditures, and using simple math calculations to make sure that income equals expenditures for their budget.
- Discuss with students the questions at the bottom of Attachment One: My Budget.
- Ask students to share how they could show and explain their personal budgets and banks with their families. Offer suggestions as needed. Tell students that since a budget is a plan based on a certain time period, it can be changed, but it should not be changed often. A real attempt to work and live within this budget for the one-month period should be the goal.
- Using the overhead transparency of Attachment One: My Budget! demonstrate for the class a real-life example of adjusting a budget if income and/or expenditures change for some reason from what was planned during the month. Ask for student-generated examples of what could change and how they could rebalance it.
- Ask for a show of hands of those who thinks they can live within their newly created budget for the next month. Suggest to students that progress with the budget throughout the month will be monitored periodically in class.
- Distribute for each student to take home:
- the bank
- a copy of Attachment Two: A Note to Families, signed by you.
- the student’s completed budget, Attachment One: My Budget!
- the Money Smart Children: Financial Literacy and Philanthropy Parent Guide
- At an appropriate time, do a final count the money collected by the class for the agreed-upon charity, if necessary. Present the donation to the charity or cause decided on in Lesson Three, to a representative invited to the class, by mail or during a visit to the location.
- Ask students to reflect on making the donation by writing, illustrating, or sharing verbally, how they felt, what difference it made for the common good, and why or why not they might donate in the future.
Teacher observation of student participation.
Display the four-part bank. Give students story paper and have them draw a picture and/or write to show how they would use the money (monthly or in general terms) they receive in their own lives. Use the following rubric for scoring:
4 - Pictures or writing showing three or more supports, use of three vocabulary words along with constructive thought and legible writing.
3 - Pictures or writing with two or more supports, use of two vocabulary words and legible writing
2 - Simple picture, one support sentence, one vocabulary word included.
1 - Simple picture.
The teacher may create a quiz assessing understanding of the vocabulary presented in the unit.
Ask the students to write a letter to their families, that they will take home with the bank and Parent Guide. The letter should include the following information (as appropriate to student level):
- what they learned about being smart with money,
- the name of charity to which the class collection was donated
- how the class chose the charity to receive their class donation
- how they felt about the donation
- plans for using their budget
Interactive Parent/Student Homework:
Send home a letter (see Attachment Two: A Note about the Learning to Give Four Part Bank) explaining the purpose of the bank. Encourage families to help the children set reasonable goals for spending, saving, donating, and investing.
During the next month, have class discussions to see what the students have been doing with their banks. Where does the money come from? How much have they saved? To whom are they planning to donate? How have budget plans changed for individuals during the month?
Lesson Developed By:John Noling
allowance, gifts, other earnings
Save, Spend, Donate, Invest
list most important first
The Learning to Give four-part bank your child received has been designed with a special purpose. Our class been learning about different ways to use money: spending for immediate wants and needs; saving for something big or special in the short-term run (in the coming weeks and months, less than a year); investing, a special kind of saving for the long-term (one year or more); and donating to a cause or charity. This bank will help your child plan for these four important money decisions.
As your child receives or earns money for any purpose in the coming weeks, such as allowance, gifts, earnings, etc., he or she can place coins in appropriate parts of the bank to plan for its use. If appropriate, please work with your child to determine some ways they can earn money in the next month in order to have some income to use with the bank.
Help your child make appropriate plans, or refine the plan already made, for the money he or she earns or receives. Any financial plan, or budget, is just that, a plan. Please feel free to review, discuss and adjust the budget your child has brought home. Budgets are meant to be revised with careful thought - this is a good thing!
Thank you so much for helping to reinforce the concepts of budgeting in positive way with your child. The objective is for your child to try to keep in mind where their money comes from, where it is meant to go, and to make it happen that way! Learning how to budget with real life situations, starting small, and being successful with their first budget, is an important first step in financial literacy.
Just a word about donating. The students are excited about the importance of philanthropy, giving our time, talent, or treasure for the common good. Using
“treasure” in the donate part of the bank is just one of many ways we can give or share with others. By choosing a charity or cause with your child and making a contribution, however small, a valuable life-long lesson on the importance of giving can be learned.
The Parent Guide your child brought home with the bank is intended to give you additional ideas and strategies for helping your child become financially literate. Your efforts in reinforcing these lessons will “pay dividends” for your child far into the future.
Thank you once again for your interest and participation with your child in our “Money Smart Children” unit and in making good use of the Learning to Give bank.
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