Part of Unit: Personal Finance
Lesson Plan Overview / Details
This lesson is designed to teach students the importance of preparing financial forecasts and budgets. This scenario is relevant to students and analyzes students who enter the workforce after graduation from college versus a student who enters the workforce after high school.
- One Class Period
- 55 Minutes
California Career and Technical Education Standards
- FB.C.C1.1 Create a budget to calculate long-term projections.
- FB.FS.5.3 Use critical thinking skills to make informed decisions and solve problems.
California Academic Content Standards (Reinforced)
- ELA.9-10.R.CAGT.2.5 Extend ideas presented in primary or secondary sources through original analysis...3
- ELA.9-10.R.SFIM.2.1 Analyze the structure and format of functional workplace documents, including th...32
- M.6.NS.1.4 Calculate given percentages of quantities and solve problems involving discounts...1
- M.7.NS.1.6 Calculate the percentage of increases and decreases of a quantity.11
Objectives and Goals
- Students will prepare a financial forecast and budget for two scenarios
- Students will calculate the budgeted savings or debt each year for each student's scenario as well as the cumulative savings for debt after each year.
- Students will summarize in writing the results of forecasting.
Activities in this Lesson
- It's Never too Early to Plan - Hooks / Set
Is it too early to plan your future? Have you thought about what will happen to you depending on the decisions you make today? Do you plan on going to college? Not everyone can play professional basketball right away!
Show clip "Lebron James"
Today we will be planning our financial future, either going to college or not, what is the difference anyway?
- Overview - Check Understanding
Read the article and highlight key terms about financial planning and budgeting for your future. Do the reading in pairs, using a whisper read, see the picture to see how students will be seated. One student highlights while one reads, switch after each paragraph.
What are revenue streams for you? What are some expenses you have today?
- Jack and Diane - Part 1 - Projects
We will model scenarios about Jack and Diane and their financial future. Who will have more money in the bank at the 10th year class reunion? Have student work through one expense increase calculation. (also see PowerPoint, slide #3) Explain that you use the previous years expense to calculate the increase.•Sample Equation•Clothing= $1,300 for the year, increases 4% each year.•First year = 1,300 x 1.04 = $1,352•Second year = 1,352 x 1.04= $ 1,406•Third year = 1406 x 1.04 = $1,463
Complete financials for both teenagers for the first 4 years. Use the First Four Activity Sheet.
- First 4 Year Activity Sheet [ Download ] Jack and Diane's first 4 Years - Activity Sheet
- Jack and Diane - Part 2 - Projects
Now that Diane has graduated from college, you will review some assumptions and complete years 5-10 of their forecast. What do you think will happen?
Review the assumptions first -
Diane graduates from college and lands a job with an accounting firm, starting at $35,000 a year. Diane gets her own place, buys a new car, takes a vacation, and can now spend more money on new clothes.
Use this information to complete Year 5 of the spreadsheet for Diane. Then forecast revenue and expenses for both Jack and Diane up to the point they meet again at their tenth-year high school reunion, making the following assumptions:
FOR DIANE: Revenue increases 10% each year over the prior year and all expenses, except the car payment, increase 4% each year over the prior year. Assume that the car payment remains constant and is made for four years, starting with Year 5.
FOR JACK: Same assumptions since graduating from high school.
- Part 2 Jack and Diane [ Download ] Jack and Diane - Part 2
- Assessment Types:
Have students write a brief explanation of the effect savings and debt have on Jack and Diane’s net worth, and the effect that each might have on their respective lifestyle options in the future. Have the students answer the following questions (also listed on PowerPoint Slide #5).
What year is the disparity in savings/debt the largest?
What year does Diane accumulate savings equal to that of her high school classmate?
Which student will save $100,000 first?
Compare year 4 to year 10 for both, what trend do you see developing?
What is the value of education?
- PowerPoint [ Download ] PowerPoint for Lesson