Banking Basics Warm Up

What Comes to Mind?

Take two minutes to jot down everything you know or have heard about banks. What are they for? What services do they offer? Have you or your family ever used a bank? If so, for what?

Discussion Question

Imagine you just got paid from your first job. Where would you keep your money and why?

Banking Basics Cool Down

One Big Idea

In one sentence, summarize the most important thing you learned about banking today.

Question for Tomorrow

What is one question you still have about banks or managing money?

Station 1: Checking Account Cards - Managing Your Daily Money

Manipulatives

For this station, you will use a set of Transaction Cards and Checking Account Register Cards.

• Transaction Cards: Each card describes a single checking account event (e.g., "Deposit Paycheck - $500", "Buy Groceries with Debit Card - $75", "ATM Withdrawal - $40", "Write a Check for Rent - $600", "Online Bill Pay - $120", "Receive Birthday Money (Deposit) - $50").
• Checking Account Register Cards: Blank or partially filled cards representing a checking account register with columns for Date, Transaction, Deposit (+), Withdrawal (-), and Balance.

Instructions

Work with your group at this station. Follow the instructions for your assigned tier. Remember to discuss your decisions and reasoning with your group members.

Tier 1: Foundational - Identifying Transactions

Goal: Accurately identify deposits and withdrawals and understand their impact on a balance.

Materials: Transaction Cards, one pre-filled Checking Account Register Card with an initial balance and several completed transactions, and a few new blank lines.

Task:

1. Take 5 new Transaction Cards.
2. For each card, determine if it is a deposit (money coming in) or a withdrawal (money going out).
3. On the provided Checking Account Register Card, write in the next few transactions on the blank lines. You do not need to calculate a new balance, just accurately record if it's a deposit or withdrawal.
4. Discuss: What happens to your account balance with a deposit? What happens with a withdrawal?

Tier 2: Application - Balancing Your Books

Goal: Accurately record transactions and calculate the running balance in a checking account register.

Materials: Transaction Cards, one partially filled Checking Account Register Card with an initial balance and a few transactions already recorded, and several blank lines.

Task:

1. Identify the current balance on your Checking Account Register Card.
2. Take 5 new Transaction Cards.
3. For each card, record the transaction in the correct column (Deposit or Withdrawal) on your register.
4. Calculate the new running balance after each transaction.
5. Discuss: Why is it important to keep your register updated? What could happen if you don't?

Tier 3: Analysis - Strategic Spending & Saving

Goal: Analyze a series of transactions, identify potential issues, and make recommendations for better financial habits.

Materials: Transaction Cards (a larger set with some challenging scenarios like overdraft fees or insufficient funds), one Checking Account Register Card with an initial balance and several transactions to record (including some that might lead to a negative balance).

Task:

1. Start with the initial balance on your Checking Account Register Card.
2. Take 7-8 Transaction Cards. Record all transactions in order.
3. Calculate the running balance after each transaction. Pay close attention if your balance goes below zero!
4. After recording all transactions, analyze the results. Did you overspend? Did you have enough for all your needs?
5. Discuss and write down: What financial advice would you give to the person using this account to avoid issues? What could they do differently in the future?

Station 2: Savings Scenario Cards - Planning for Your Future

Manipulatives

For this station, you will use a set of Savings Goal Cards and Strategy Cards.

• Savings Goal Cards: Each card describes a financial goal with a target amount (e.g., "New Gaming Console - $400", "Emergency Fund - $1,500", "Down Payment for a Car - $5,000", "Summer Trip with Friends - $700", "Laptop for College - $1,200", "First Apartment Deposit - $800").
• Strategy Cards: Cards suggesting different savings methods (e.g., "Save $25/week", "Save 10% of every paycheck", "Sell unused items", "Work extra hours", "Cut unnecessary expenses").

Instructions

Work with your group at this station. Follow the instructions for your assigned tier. Discuss how different goals require different approaches to saving.

Tier 1: Foundational - Identifying Savings Goals

Goal: Distinguish between short-term and long-term savings goals and identify basic savings strategies.

Materials: Savings Goal Cards, Strategy Cards, and a simple T-chart labeled "Short-Term Goals" and "Long-Term Goals" to sort cards.

Task:

1. Take 6 Savings Goal Cards.
2. Sort each goal card into either the "Short-Term Goals" (under 2 years) or "Long-Term Goals" (2+ years) category on your T-chart.
3. Take 3 Strategy Cards. For each strategy, discuss which type of goal (short-term or long-term) it might be most helpful for.
4. Discuss: Why is it important to have different savings goals?

Tier 2: Application - Matching Goals with Strategies

Goal: Apply appropriate savings strategies to various financial goals and consider the time commitment.

Materials: Savings Goal Cards, Strategy Cards, and blank paper or a whiteboard for group notes.

Task:

1. Take 5 Savings Goal Cards.
2. For each goal, select 1-2 Strategy Cards that would be most effective for achieving that specific goal. Explain your reasoning.
3. Estimate (roughly) how long it might take to achieve each goal using your chosen strategy, assuming a reasonable income.
4. Discuss: Which goals seem easier to save for? Which are more challenging and why?

Tier 3: Analysis - Developing a Comprehensive Savings Plan

Goal: Create a detailed savings plan that includes multiple goals, prioritizes, and uses a combination of strategies.

Materials: A larger set of Savings Goal Cards (8-10), all Strategy Cards, and a blank "Personal Savings Plan" template (or just blank paper) for outlining the plan.

Task:

1. As a group, choose 3-4 Savings Goal Cards that represent a mix of short-term and long-term goals.
2. Using the Strategy Cards, develop a realistic savings plan for each chosen goal. Your plan should include:
   • The goal and target amount.
   • Specific strategies to achieve it.
   • An estimated timeline.
   • How these goals might impact each other (e.g., saving for a car might delay a vacation).
3. Discuss and write down: If you had limited income, how would you prioritize these goals? What sacrifices might you need to make to achieve your most important goals?

Station 3: Loan Application Scenarios - Understanding Borrowing

Manipulatives

For this station, you will use a set of Loan Scenario Cards and Loan Factor Cards.

• Loan Scenario Cards: Each card describes an individual or family needing a loan (e.g., "Maria needs $15,000 for a used car", "The Chen family wants a $250,000 mortgage for a new home", "Jamal needs $8,000 for a small business startup", "Sarah wants a $1,000 personal loan for an unexpected medical bill").
• Loan Factor Cards: Cards with different factors that influence loan decisions (e.g., "Good Credit Score", "Poor Credit Score", "Stable Job History", "New to the Job Market", "Large Down Payment", "No Down Payment", "High Debt-to-Income Ratio", "Low Debt-to-Income Ratio").

Instructions

Work with your group at this station. Follow the instructions for your assigned tier. Focus on the responsibilities of borrowing and the factors that influence a loan.

Tier 1: Foundational - Identifying Loan Purposes

Goal: Understand common reasons people take out loans and identify basic factors affecting loan approval.

Materials: Loan Scenario Cards, Loan Factor Cards, and a simple sorting mat labeled "Good for Loan" and "Bad for Loan" factors.

Task:

1. Take 5 Loan Scenario Cards. For each card, discuss: What is the person trying to achieve with this loan?
2. Take 5 Loan Factor Cards. Sort these cards onto your sorting mat, deciding if each factor generally makes it "Good for Loan" approval or "Bad for Loan" approval.
3. Discuss: Why do banks consider these factors when deciding to lend money?

Tier 2: Application - Analyzing Loan Eligibility

Goal: Evaluate loan scenarios based on various financial factors and identify responsible borrowing practices.

Materials: Loan Scenario Cards, Loan Factor Cards, and blank paper or a whiteboard for group analysis.

Task:

1. Take 3 Loan Scenario Cards. For each scenario, combine it with 2-3 relevant Loan Factor Cards (e.g., "Maria needs $15,000 for a used car" + "Good Credit Score" + "Stable Job History").
2. As a group, discuss: Would the bank likely approve this loan? Why or why not? What advice would you give the borrower to improve their chances or be more responsible?
3. Discuss: What does "responsible borrowing" mean to you?

Tier 3: Analysis - Risk Assessment & Loan Advice

Goal: Critically assess complex loan scenarios, identify potential risks, and propose comprehensive advice for responsible borrowing and financial health.

Materials: A larger set of Loan Scenario Cards (4-5, with more complex situations), all Loan Factor Cards, and a "Loan Advisor Report" template (or blank paper) for detailed responses.

Task:

1. As a group, choose 3-4 Loan Scenario Cards. For each scenario, select 3-4 Loan Factor Cards to create a detailed borrower profile.
2. For each profile, act as a loan advisor. Your report should include:
   • Loan Recommendation: Approve, Deny, or Approve with Conditions (explain why).
   • Risk Assessment: What are the potential risks for the borrower and the bank?
   • Financial Advice: Provide specific, actionable steps the borrower should take to ensure responsible repayment and improve their overall financial situation (e.g., budget, build credit, save more).
3. Discuss: How do banks balance the risk of lending with the goal of helping people achieve their financial goals?

Banking Basics Worksheet

Part 1: Checking Accounts (Day 1 Review)

1. What is the primary purpose of a checking account?
   
   
   
   

2. List three common ways you can use money from a checking account.
   a.
   
   
   
   b.
   
   
   
   c.
   
   
   

3. Imagine you have an initial checking account balance of $300. Record the following transactions and calculate your new balance:

   • Deposit paycheck: +$450
   • Buy new shoes with debit card: -$80
   • ATM withdrawal: -$60
   • Pay phone bill online: -$45
   
   | Transaction | Deposit (+) | Withdrawal (-) | Balance | | :--------------------- | :---------- | :------------- | :------ | | Initial Balance | | | $300 | | Deposit paycheck | $450 | |
   | | Buy new shoes | | $80 |
   | | ATM withdrawal | | $60 |
   | | Pay phone bill online | | $45 |
   |

   What is your final balance?
   
   
   
   

Part 2: Savings Accounts (Day 2 Review)

1. How is a savings account different from a checking account?
   
   
   
   
2. What is "interest" when it comes to a savings account?
   
   
   
   
3. Provide an example of a short-term savings goal and a long-term savings goal.
   • Short-term:
     
     
     
   • Long-term:
     
     
     
4. Why is having an emergency fund important?
   
   
   
   

Part 3: Loans & Responsible Borrowing (Day 3 Review)

1. Explain what a loan is in your own words.
   
   
   
   
2. What is the "principal" of a loan?
   
   
   
   
3. List two common types of loans and what they are typically used for.
   a. Type:
   
   
   Used for:
   
   
   
   b. Type:
   
   
   Used for:
   
   
   
4. Why is it important to have a good credit score when you want to borrow money?
   
   
   
   
5. Imagine a friend wants to take out a loan for a new gaming console, but they don't have a steady job. What advice would you give them about responsible borrowing?
   
   
   
   
   
   
   

Banking Basics Answer Key

Part 1: Checking Accounts (Day 1 Review)

1. What is the primary purpose of a checking account?
   A checking account is primarily used for daily transactions, such as making deposits, withdrawals, and paying bills, providing easy access to your money.

2. List three common ways you can use money from a checking account.
   a. Using a debit card for purchases.
   b. Writing a physical check to pay for goods or services.
   c. Making online bill payments or transfers.
   d. Withdrawing cash from an ATM.

3. Imagine you have an initial checking account balance of $300. Record the following transactions and calculate your new balance:

   • Deposit paycheck: +$450
   • Buy new shoes with debit card: -$80
   • ATM withdrawal: -$60
   • Pay phone bill online: -$45

   Transaction	Deposit (+)	Withdrawal (-)	Balance
   Initial Balance			$300
   Deposit paycheck	$450		$750
   Buy new shoes		$80	$670
   ATM withdrawal		$60	$610
   Pay phone bill online		$45	$565

   What is your final balance?
   The final balance is $565.

Part 2: Savings Accounts (Day 2 Review)

1. How is a savings account different from a checking account?
   A savings account is designed for holding money not needed for immediate expenses, typically earns interest, and is used for long-term financial goals. A checking account is for frequent, daily transactions and usually does not earn significant interest.

2. What is "interest" when it comes to a savings account?
   Interest is money paid to you by the bank for keeping your money in a savings account. It's essentially the bank's way of rewarding you for letting them use your money.

3. Provide an example of a short-term savings goal and a long-term savings goal.

   • Short-term: Saving for a new video game, concert tickets, or a new phone.
   • Long-term: Saving for a car down payment, college tuition, or a house.

4. Why is having an emergency fund important?
   An emergency fund is crucial because it provides a financial safety net for unexpected expenses like medical emergencies, car repairs, or job loss, preventing you from going into debt.

Part 3: Loans & Responsible Borrowing (Day 3 Review)

1. Explain what a loan is in your own words.
   A loan is money borrowed from a bank or financial institution that you promise to pay back over a set period, usually with an additional fee called interest.

2. What is the "principal" of a loan?
   The principal is the original amount of money borrowed, not including any interest or fees.

3. List two common types of loans and what they are typically used for.
   a. Type: Car Loan - Used for: Purchasing a vehicle.
   b. Type: Mortgage - Used for: Buying a home.
   c. Type: Student Loan - Used for: Paying for higher education.
   d. Type: Personal Loan - Used for: Various personal expenses or consolidating debt.

4. Why is it important to have a good credit score when you want to borrow money?
   A good credit score shows banks that you are a reliable borrower who pays back debts on time. This makes it easier to get approved for loans and often results in lower interest rates, saving you money in the long run.

5. Imagine a friend wants to take out a loan for a new gaming console, but they don't have a steady job. What advice would you give them about responsible borrowing?
   I would advise my friend against taking out a loan for a gaming console without a steady job. It's generally not responsible to borrow money for non-essential items, especially without a reliable income source to ensure repayment. I would suggest saving up for the console instead or getting a job first to ensure they can afford the payments without facing financial difficulty.