Description

What our Financial Literacy: Checking and Savings Accounts lesson plan includes

Lesson Objectives and Overview: Financial Literacy: Checking and Savings Accounts teaches students important information about money management by exploring the differences and similarities between checking and savings accounts. Students will learn how to open an account, parts of a check, how to write a check, the difference between a debit and credit card, and how to save money for a specific goal. This lesson is for students in 5th grade and 6th grade.

Classroom Procedure

Every lesson plan provides you with a classroom procedure page that outlines a step-by-step guide to follow. You do not have to follow the guide exactly. The guide helps you organize the lesson and details when to hand out worksheets. It also lists information in the orange box that you might find useful. You will find the lesson objectives, state standards, and number of class sessions the lesson should take to complete in this area. In addition, it describes the supplies you will need as well as what and how you need to prepare beforehand.

Options for Lesson

In the “Options for Lesson” section of the classroom procedure page, you will see some suggestions for additional activities or ideas to add to the lesson if you want to. Invite local bankers or financial institution representatives to class to explain how credit cards and debit and checking work. Local banks will often provide check registers for classroom use, so consider reaching out to a local bank and seeing what perks they might be able to provide. Have students create a class bank. Students can “earn” money, deposit it into their account, and spend it on rewards. For example, for test scores, deposit the score into a checking account. Students can buy homework passes or use the “funds” for other rewards in class. They will enjoy saving their school bucks for larger items or spending them as soon as possible.

Teacher Notes

The teacher notes page includes a paragraph with additional guidelines and things to think about as you begin to plan your lesson. This page also includes lines that you can use to add your own notes as you’re preparing for this lesson.

FINANCIAL LITERACY: CHECKING AND SAVINGS ACCOUNTS LESSON PLAN CONTENT PAGES

The Financial Literacy: Checking and Savings Accounts lesson plan includes three content pages. There are two different types of bank accounts: checking and savings. There is also something called an investment account, which may be part of the checking account or separate. An investment account is where you put an amount of your money into a stock or a money fund. Plus, it earns interest! More on that later.

Checking Accounts

A checking account is a bank account you can put money into from which you can write checks to pay for things. You can also access a checking account with a debit card, which is a card that looks like a credit card. The difference between a debit card and a credit card is that when you use your debit card, the amount you spend is taken immediately out of your checking account. With a credit card, you pay over time, and the financial institution charges you interest on the amount you spend. So, it costs more to purchase something if you use a credit card. Debit cards can be used at ATMs to withdraw cash from your checking account if you need it.

With checking accounts, you can put in and take out money whenever you want, so they are great for day-to-day use. They are designed for regular purchases and can be linked to debit cards. You can also connect your checking account to companies that you pay every month, and they will automatically debit (take out a set amount from) your account. For example, if you have a streaming service you pay for monthly—like Netflix, Hulu, Disney+, or Spotify—you can set up a direct debit with the company. This way, your membership will renew on its own, and you won’t have to worry about remembering to pay each time.

Opening an Account

To open a checking account, most financial institutions require that you open the account with funds between $25 and $100 as a minimum deposit. A deposit is what you put into the account. Another term for a deposit is a credit. When you deposit money into your account, the bank credits your account. The credit increases your balance, or the amount of money you have available to withdraw from your account. When you withdraw money, this is known as a debit. So, a credit is the opposite of a debit. Writing a check or using a debit card reduces the cash in your checking account.

If you use a debit card, the funds are immediately deducted from your balance. However, writing a check usually takes a short time before the amount is deducted. When a check is deposited, it takes time before it clears or is debited from one account and credited to the account receiving the funds. That means when you deposit a check, the funds will not be immediately available for use.

Fees and How to Avoid Them

Most financial institutions charge monthly maintenance fees if your balance drops below the minimum deposit. To not pay the fee, you must always keep a certain balance (amount of money) in your account. Financial institutions have different requirements for accounts, so it is essential to ask questions about fees when choosing a bank. Banks charge fees for other services as well. For example, many debit cards will charge a transaction fee if you don’t use specific ATMs or if the person you are purchasing something from has a charge for using a card.

Let’s say you have an account with Friendly Bank and want to use your debit card to withdraw some cash to buy your best friend’s lunch. Unfortunately, the nearest ATM isn’t owned by Friendly Bank. But you use your debit card to withdraw $20 to pay for lunch. The bank that owns the ATM charges your card $2 for the withdrawal, and Friendly Bank charges you another $1 for using a non–Friendly Bank ATM. The fees are debited immediately from your checking account. So, your account is debited for the $20 withdrawal + $2 fee + $1 fee, which equals $23. In other words, it costs you 15% to use a bank ATM that Friendly Bank doesn’t own. Fees can add up fast!

Savings Accounts

A savings account is designed for long-term money storage. It’s where you stash money you are not yet ready to use. It is a place to put away money so you can have it later for a large purchase or an emergency. Most people use them for short- to medium-range financial goals. Savings accounts are not meant for day-to-day use and only allow a certain number of transactions during a specific time limit. If you use it too often, the bank can charge a fee.

A savings account is different from a checking account because it pays interest on your average balance. The bank’s interest rate is usually around 0.1% to 1.5% per year. This is not as much as you would make investing your money, but a savings account does not have any risk. You will not lose your money by putting it there. Again, the important point to remember is that you don’t make withdrawals as often in a savings account as you do in your checking or debit account.

There are also special kid savings accounts at most banks. These accounts are for people under age 18 and come with perks, like no monthly fees, low balance requirements, and mobile apps kids can access to see their accounts.

You can link your checking and savings accounts together, which can be helpful if you want to transfer funds between the two accounts. For example, you might have extra money at the end of the month and want to move it to your savings account. Or you may have to transfer money from your savings account to your checking account if there is an emergency or large item you want to purchase.

Investment Accounts

Finally, there are special types of checking accounts called investment accounts. Earlier, we mentioned how some savings accounts pay interest on your average balance. For instance, suppose you open a savings account with $100. You don’t make any additional deposits or withdrawals for one year from the account. If the bank pays you 1.5% interest on your balance, you will have $101.51 in your account by the end of the year. You earned $1.51 in interest!

Now $1.51 doesn’t sound like much money. But adding to your monthly savings increases the interest you earn each year. Plus, there is no reason you can’t find higher-earning interest accounts that increase your rate of return, or the interest rate on your savings.

Investment accounts take your money and invest or place the funds into higher-earning accounts. They require you to keep large balances and restrict how often you can withdraw funds from the account. For example, let’s say you have $1,000 in an investment account. You earn 8% interest on the balance for five years. Suppose you don’t make any other deposits or withdrawals and keep the minimum balance, so there are no fees charged to manage the money. In five years, you will have earned $490 in interest. Your $1,000 investment would increase by nearly half of what you invested! In 10 years, it would more than double. Your $1,000 investment would be worth $2,220.

The key to saving is thinking long-term, adding to your account, and having your money invested in the safest and highest-earning accounts. So, now that you know the basics of checking, savings, and investment accounts, how much money would you like to save this year?

FINANCIAL LITERACY: CHECKING AND SAVINGS ACCOUNTS LESSON PLAN WORKSHEETS

The Financial Literacy: Checking and Savings Accounts lesson plan includes three worksheets: an activity worksheet, a practice worksheet, and a homework assignment. Each one will help students solidify their grasp of the material they learned throughout the lesson. You can refer to the classroom procedure guidelines to know when to hand out each worksheet.

LABEL AND WRITE THE CHECKS ACTIVITY WORKSHEETS

There are two activities for this lesson plan. For the first, students will label the different parts of a check. The second requires students to write two checks.

FINANCIAL GOALS PRACTICE WORKSHEET

For the practice, students will write the names of items on sticky notes. They will place their sticky notes on their desk and sort them into three piles: short-term (within 2 months), medium-term (2 months to 3 years), and long-term (3 years or more). Then they will fill in the table on the worksheet using the piles they created.

FINANCIAL LITERACY: CHECKING AND SAVINGS ACCOUNTS HOMEWORK ASSIGNMENT

Students will watch a video using the link on the page. Then they will answer questions according to what they learned in the video.

Worksheet Answer Keys

This lesson plan includes answer keys for the activity and homework worksheets. Correct answers are in red to make it easy to compare them to students’ responses. If you choose to administer the lesson pages to your students via PDF, you will need to save a new file that omits these pages. Otherwise, you can simply print out the applicable pages and keep these as reference for yourself when grading assignments.