STUDENT MODULE Educational unit on financial concepts

Money List all the ways you can make or earn money now. How will you make money in the future?

What do you DO with your money? Answer TRUE or FALSE: 1.I can pay for everything I need every week (or month).TF 2.I always plan all my weekly (or monthly) expenses.TF 3.I know exactly how I spent my last paycheque/allowance.TF 4.I save money from every paycheque (or allowance).TF 5.I have started saving money to meet my future goals and dreams.TF

How to spend money If you answered “ F ” for one or more questions, then it ’ s time to improve your financial habits. The money you earn should be able to cover your weekly (or monthly) expenses, including things you have to buy (bus pass, lunch, books, etc.). Your money should be used to get what you need, get what you want, meet your goals today (like buying that mp3 player), and meet your goals for your future (maybe travelling around the world?).

the budgeting process phase 1: Assess your personal and financial situation (needs, values, life situation). phase 2: Set personal and financial goals. phase 3: Create a budget for fixed and variable expenses based on projected income. phase 4: Monitor current spending (saving, investing) patterns. phase 5: Compare your budget to what you have actually spent. phase 6: Review financial progress and revise budgeted amounts. teens – lesson 3 - slide 3-A

goal-setting guidelines teens – lesson 3 - slide 3-B well-written personal and financial goals SHOULD: be realistic A student working part-time is not likely to be able to afford a new car every couple of years. be specific “I want to save $5,000 for a down payment to buy a house.” have a timeframe “I want to pay off my credit card within the next 18 months.” state the action to be taken “I want to start an automatic deposit savings account with monthly withdrawals from my checking account.”

Worksheet #1 1.What do you need? 2.What do you want? 3.What are your goals today? 4.What are your goals and dreams for the future?

Did you know… On average, Canadian youth spend $__ on clothes, food, and entertainment: a)$14 million annually b)$14 billion annually c)$140,000 annually

How to BUDGET Your budget should include all your expenses. What are your expenses? Money you spend on things you NEED and WANT Money you SAVE Money you INVEST

Worksheet #2 1.Are you always able to buy what you want and need? Why or why not? 2.Calculate how much money you earn on a monthly basis. 3.Now, from Question 1 and 2, select items which you buy on a monthly basis. Be sure to include ALL the items you NEED on a monthly basis, and add in the items you WANT. Add up the total cost of the items you list. 4.Compare your answer in question 2 with the total in question 3. Are they the same, close, or way off? 5.If you are not close, or way off, can you think of ways you can rework your budget in order to meet your monthly income? (i.e. cut back on expenses, pack a lunch, etc.) 6.Why is it important to budget?

How to SAVE Look at the items you listed under “Wants”. Do you currently make enough money to buy these things? Look at the items you listed in under “Goals for your Future”. What will you have to do to make sure you can buy these things in the future?

Worksheet #3 1.Name different ways you can save (or economise). 2.How much money should you be saving? 3.Why is it important to save money? 4.When should you start saving? Why?

How to INVEST Investing: giving money to someone else (e.g. a financial institution) with the expectation you will get a return; what the return is will depend on what you invest in. Get information and advice before you invest your money.

Worksheet 4 1.What does investing mean to you? 2.How can you learn more about investing money? 3.Why is it important to start investing money when you are young? 4.What does a Financial Advisor do? 5.Would you rather receive $10,000 now – or – a penny a day, doubled everyday for a month (31 days)?

There are 3 characteristics that apply to all investments: Expected return: interest, dividends, or capital gains you expect to receive from your investment Risk: the possibility of losing some, all, or more than the amount you invested, or the possibility of earning a lower rate of return than expected Liquidity: how easy – and/or quick – it is to sell or redeem the investment

Types of Investments AdvantagesDisadvantages Savings Account Safe; insured by government (to a limit) Pays interest Running Record Returns are usually low GICs (Guaranteed Investment Certificate) Safe Higher interest than Savings Account Keep money in deposit until it matures Returns are relatively low Bonds Usually fixed interest rate to the buyer at set intervals The market value can drop due to interest rate increases or an issuer’s bad credit rating Mutual Funds Generally safer than corporate stocks Allows diversification Allows investing smaller amounts Depending on type of Mutual Fund, market value may decline sharply Stocks Unlimited potential on the return on investment Stock value may decline sharply Risk is greater than for Mutual Funds For more detailed information about investment categories and specific type of investments, please refer to the ‘Investment at a Glance’ brochure.

Budget, Save, Invest! Now plan a FINAL BUDGET that takes into account the money you earn, the money you spend, the money you SAVE, and the money you INVEST. Use your answers from all 4 Worksheets to come up with your budget (refer to Worksheet 5).

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