FINANCIAL LITERACY FOR THE ELEMENTARY CLASSROOM In Class Day One. Sponsored by: Maryland Council on Economic Education and Towson University College of Business and Economics.

Online material on Decision Making, Scarcity, Wants, Opportunity Cost. Questions?

Review  So, there are many instances where attitudes and assumptions about money influence our financial decisions, causing us to behave in unpredictable or irrational ways.  For example:  Buying more expensive name brand product over generic  Philanthropy, volunteering, charity  So lets take a look at these a little more…

Philanthropy  A personal or corporate interest in helping others, especially through gifts to charities, or endowments to institutions.  Does not always involve money.  Volunteer service – working to help others in the community without being paid (read-a-thon).  Charity – The voluntary provision of money, materials, or help to people in need (trick or treat with UNICEF, canned foods drive).

Standard One Make Informed, Financially Responsible Decisions Morning Session

Financial Goals – what are they?  Financial goals are the things you want to accomplish that cost or involve money.  Debt reduction  Wealth accumulation for retirement  Buy a house  Goals can be short term (one year), medium term (3-5 years) and long term (5+ years).  Some things to keep in mind when teaching about financial goals…

Developing Financial Goals  Goals based on personal values  What do you want to accomplish (helping others, self, community, church, family).  Allow them to define – do not tell what “should” be goal.  Age appropriate financial goals  Time preference and children (saving for college at 5?).  Budget size.  Ways to earn (job opportunities) and save for future (three jars)  What do people need? May include child or pet care (dog walking), or perhaps chores or errands for family or neighbor.

Final Decision - Where to Buy?  Market – where goods, services and resources are bought and sold. Where consumers and producers meet to exchange goods/services for money.  Markets exist in many places:  Face to face (school lunch, grocery store, babysitter)  Phone, mail or online (eBay, craig’s list, store websites or catalogs)  How do you choose?

Markets 1  Requires both a buyer and seller.  Producer (seller)  Consumer (buyer)  Do you remember this one? Simple Simon met a pie-man going to the fair Said Simple Simon to the pie-man, “Let me taste your ware” Said the pie man to Simple Simon, “Show me first your penny” Said Simple Simon to the pie-man, “Sir, I haven’t any”

Markets 2  Supply (producer) – quantity that a producer will provide for sale at various prices.  Goal: to maximize profits by providing goods or services that consumers desire.  Demand (consumer) – quantity that consumers are able and willing to buy at various prices.  Goal: Maximizing satisfaction (utility) with limited resources  Market interaction determines price.

Markets 3  Price can be changed if anything about supply or demand changes:  Consumers preferences for the good increase/decrease (advertising – more next class).  Consumer income changes.  Firms find cheaper ways to produce the good (outsourcing, new materials or methods)  Prices of related goods change (substitutes or complements)

Market Types  Just like there are many sources of income, there are many types of legal markets:  Output market – consumers and producers efficiently determine price and quantity of output available. Output is a good or service and can be a physical or virtual market.  Labor (input) market – employers and workers efficiently determine wages and quantity of labor hired.  Financial market – consumers and producers efficiently determine the price and quantity of the item (stocks, bonds, commodities) available.

Standard Two: Relate Careers, Education and Income Afternoon Session 1

Why do we work?  Financial decisions may include lifestyle changes or other purchases which require money.  Where do we get the money to make these purchases? (hint: it does not grow on trees).

What is Income?  Most people get money by earning it (income) in the labor market.  Brainstorm – where could you get money for a purchase if credit was not available?  What special skills and talents do I have?  How do I enjoy spending my time:  Do my friends, neighbors or family need help with something?  Are there things I have at home or could borrow – like computers, tools or art supplies – I could use to earn money?

Sources of Income  Income from employment:  Determined by education, training, interests, location, personal characteristics and luck.  Largest source for most.  Investment income:  financial skills, personal characteristics  Inheritance or gifts:  intergenerational impact

Job vs. Career  A job can lead to a career.  A career is a pattern of activities and positions involved in an individuals lifetime of work to which the person has made a long term commitment.  How many jobs/careers in a lifetime?  What impacts career choices? Education, personal characteristics, wealth, opportunities, interests, income potential, time preference…

Why care about jobs?  Jobs provide income  income allows for consumption  consumption creates job growth.  How does income impact spending?  Cash for consumption or saving (marginal propensity to consume)  Determines access to credit (more tomorrow)

Standard Three (supplemental) Plan and Manage Money Afternoon Session 2

Taxation  Taxes are a compulsory payment by individuals or organizations to the government; fees placed on income, property, or goods to support government programs.  What do taxes support?  How do taxes affect individuals, families, and communities.  Reasons for paying taxes. Why do we do it?