| Pay now or pay later? Cash or plastic? Which plastic? Save or spend? Savings accounts or checking accounts? Mutual funds or certificates of deposit? Stocks or bonds? Which ones? Term or whole-life insurance?
CONSUMER REPORTS articles on money and financial services help consumers sort through the confusing choices that face them in making short-term and long-term financial decisions. The magazine frequently features major articles on money and finance. In addition, money matters are covered in the regular department, "Your Money."
Few of the magazine's money articles relate specifically to teens. But teens can pick up a lot of information about financial planning and money management from reading CONSUMER REPORTS.
 LEARNING OBJECTIVES
- To learn to use a consumer magazine for information about money management and financial services.
- To understand the importance of using money wisely.
- To understand the basics of financial planning and money management.
- To recognize banks, insurance companies, and other financial institutions as providers of financial services.
- To explore how financial services are marketed and sold.
- To learn how to evaluate, shop for, select, and use different financial services.
- To become aware of the rights and responsibilities of consumers and providers in financial transactions.
- To understand the benefits of various financial services.
- To understand taxes and their impact on financial planning.
- To understand that teen-agers are not too young to learn money-management skills.
VOCABULARY
budget
comparison shopping
financial institution
financial planning
financial security
financial service
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insurance
investment
money management
savings
tax
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KEY CONCEPTS
- Financial planning is the key to successful money management. It involves establishing goals, maintaining budgets, borrowing, saving and investing, carrying insurance, and considering the tax impact of financial decisions.
- Financial institutions offer a variety of financial services. Banks, savings and loans, credit unions, brokerage firms, mutual funds, and insurance companies are some of the financial institutions consumers use.
- Comparison shopping for financial services can lead to gains and/or savings. Financial services offered by different providers may vary widely.
- Savings and investment options have varying degrees of security and liquidity. Usually, the greater the security and liquidity, the lower the return.
- Insurance can help assure financial security by protecting consumers against loss by a specified contingency or peril. But insurance policies have different terms and costs.
- Different financial choices affect how much tax a person must pay. By understanding how taxes work, individuals can maximize their financial potential.
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TEACHING STRATEGIES
BEFORE READING
Introduce the concept of short- and long-term financial goals. Then explore the relevancy of the article under discussion to students' own lives and their own financial goals.
- Is this article about a financial service or money matter that affects you or your family now or in the future? Explain.
- What would you expect to learn from this article?
Questions and answers. Have students list questions they hope the article will answer. Then have students answer their own questions as they read the article.
Identify financial services and their importance. What financial services do you and your family use? (Explore life, health, home and car insurance; mortgage, loans, and credit cards; bank accounts, etc.) Why? Which services affect financial security? Quality of life? Convenience and life style? Which do you think are essential?
DISCUSSION AND ACTIVITIES
FINANCIAL SERVICES
Review the article with the class.
- What major points about this service are brought out in the article? Which points do you consider most important? Why?
- How does the service "work"? Are there different types? How do the services offered by various providers differ?
- Do you think this is a necessary service? Are there alternatives?
- Does the article include ratings? If so, what criteria were used to rate these services? Do you agree or disagree with those criteria? Would you use the ratings if you were shopping for this service? If so, how?
- How would you calculate the total cost of this service? Are there any hidden costs? Does the article warn against any pitfalls?
- Does the law provide protection to consumers? Explain.
- What are your legal rights and responsibilities as a consumer if you use this service? What are the rights and responsibilities of the provider of this service? What governmental agency regulates this service?
Analyze how this service is advertised and marketed.
- Have you seen advertisements for this service? If so, where? What promises and claims do the ads make? In light of the article, which seem plausible? Which don't? Explain.
- Are questionable marketing techniques used to sell this service? Explain.
FINANCIAL ISSUES AND PLANNING
Have the class consider the general financial advice provided by the article.
- What main points and/or recommendations does CONSUMER REPORTS make? Do you agree? Why or why not?
- Who's most likely to be interested in this information? How could they use it?
- Is the information of concern to teen-agers? Why or why not?
Student Activity 6-A1: Understanding Money
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ACTIVITY OBJECTIVES
- To summarize what a CONSUMER REPORTS article is about.
- To identify the main points or recommendations in a CONSUMER REPORTS money article.
- To determine why the information is important to consumers.
ACTIVITY PLAN
- Have students read a CONSUMER REPORTS money article.
- Discuss why the article is important to consumers. Encourage students to express their opinions on whether or not the information is important to them and to justify their answers.
ADDITIONAL ACTIVITIES
Write a brief consumer report. Have students use the key points they've gathered from the article to write a brief report on the topic. Have students make sure each key point is covered.
Plan a money symposium. Have students plan a symposium involving representatives from different financial institutions. The discussion should focus on an aspect of a money question the students are studying. Before the symposium, students should prepare some questions to ask.
Follow the stock market. Have each student select the stock of one corporation and follow its price for a set period of time. Then have students write a report and compare results. Follow up. Have students graph the data on a line graph. Also have them research and graph inflation and interest rates over that period of time. Based on the information, discuss what performance they predict for the future. Explain.
Compare interest rates for savers and borrowers. Collect information from banks and credit card companies about current interest rates and any fees. Have students compare the effective annual yield on savings accounts and CDs with the annual percentage rate (APR) charged for loans, mortgages, and credit card balances. Draw inferences. |
Student Activity 6-A2: Financial Planning
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ACTIVITY OBJECTIVES
- To summarize information from a CONSUMER REPORTS article.
- To judge whether the information and/or advice is important to young consumers.
- To determine how the information might apply to their own lives.
ACTIVITY PLAN
- Have students read a money article in CONSUMER REPORTS. Use the article to launch a discussion of the importance of financial planning. Discuss: What important advice does CONSUMER REPORTS offer consumers? Might this advice/information affect you or your financial plans? If so, how? What other group of consumers might benefit from this information/advice?
- Elicit students' opinions about establishing short- and long-range goals. Have students use the activity sheet to determine how the information in the article applies to their own financial goals.
ADDITIONAL ACTIVITIES
Identify short- and long-term goals. Have students create a list of financial goals. Then have them identify which are short-term and which are long-term. Brainstorm how these goals can be achieved.
Compound interest. Have students consult their math books to review how interest is compounded. Then have students estimate how much their money would grow if they saved $100 per month at 3%, 7%, or 9% for a year. Follow up. Have students compare the interest they would receive at current bank savings rates with the interest on a one-year CD, a mutual fund, and projected yearly earnings of a money management account. Discuss findings, potential earnings, and risks.
Calculate the cost of credit. How much would it cost students to buy on credit those expensive items they've been dreaming about? Have them research the cost and terms of using a credit card. Estimate how much they would pay in interest over the year (or however long it would take) before repaying what they owe. Compare to the cost of using cash (lost interest or principal from savings accounts). Weigh the pros and cons of paying cash or borrowing for major purchases. |
Student Activity 6-A3: Analyze Your Spending
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ACTIVITY OBJECTIVES
- To appreciate the importance of budgeting and financial planning.
- To analyze spending habits.
- To determine whether spending patterns meet short- and long-range goals.
- To devise a spending plan based on a financial analysis.
ACTIVITY PLAN
- Have students read a money article that touches on financial planning. Use it to launch a discussion of the value of developing a budget or financial plan. Encourage students to describe some of the problems that can arise when people don't have and follow a financial plan.
- Have students keep a financial diary of their income and expenditures for a two- to four-week period. Review with the class how to average weekly income and expenditures.
- Discuss the results in class. Are students staying within their budgets? Does their weekly income exceed expenditures? Are they saving?
- Encourage students to brainstorm how they could reduce their expenses or increase their earnings.
ADDITIONAL ACTIVITIES
Develop a savings plan. Have students determine their short- and long-term spending needs. Then have them determine how much they would have to save each week to meet these needs and how they could go about putting aside the money they need. Have students compare a variety of savings plans that are available to them. Discuss their findings in class. What sources did you use to find the necessary information? Based on their findings, have students determine which savings plan would be best for them and explain the reasons for their choices.
Compare investments. Divide the class into teams. Give each team an imaginary $1,000 to invest. Have each team choose an investment &emdash; CDs, bonds, stocks, mutual funds, etc. Have them follow their chosen investment over a set period of time. At the end of the period, determine how much money each would have. (Be sure to consider any fees and other expenses in the calculation.) Discuss the advantages and disadvantages of each form of investment. |
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