Fidelity Learning LabSM

Grades 9-12

Grades 9–12

How to Really Be a Millionaire

This lesson is designed to get students interested in economics and personal finance. While financial planning may seem to be dull and time-consuming, finding out how to become a millionaire is a topic likely to stir up considerable interest. Of course the lesson does not pretend to offer a fail-safe procedure for achieving wealth. It emphasizes, instead, self-discipline, planning, and making sound choices—about getting a good education, spending wisely, saving early and often, and taking prudent risks. Nor does the lesson imply that the main goal in life is to become wealthy. Wealth, in itself, is no guarantee of happiness. But wealth can expand the range of choices available to people as they establish and pursue their life goals.

Objectives

At the end of this lesson, the student will be able to:

  • Describe the characteristics of millionaires.
  • Explain how sound financial decisions can increase wealth and a person’s standard of living.

Economic and Personal Finance Concepts

  • Compound interest
  • Income
  • Long-term investing
  • Saving versus spending

Materials

  • A transparency of Visuals 1.1 and 1.2
  • A copy for each student of the Theme 1 Introduction from the Student Workbook
  • A copy for each group of 3–4 students of Exercise 1.1 from the Student Workbook
  • An 8.5" x 11" sheet of paper, with a large “T” printed on one side and a large “F” printed on the other side, for each student group (see Procedure 3)
  • An 8.5" x 11" sheet of paper with “Millionaire” printed on it

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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The Economic Way of Thinking

This lesson introduces a process of reasoning that is often referred to as the economic way of thinking. The process is summarized in the Handy Dandy Guide, a six-point primer on economic reasoning. Using the Handy Dandy Guide, the students analyze two situations.

Objectives

At the end of this lesson, the student will be able to:

  • List and explain the basic principles of economic reasoning.
  • Use economic reasoning to explain how families can use money-management skills to improve their standard of living.
  • Use economic reasoning to explain why people who have more education usually benefit from more opportunities and higher incomes in the future.

Economic and Personal Finance Concepts

  • Incentives
  • Opportunity cost
  • Voluntary exchange

Materials

  • A transparency of Visual 2.1
  • A copy for each student of Exercises 2.1 and 2.2 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Decision Making

The students learn to use a particular model for making decisions. They apply the model in exercises that call for choosing a college and buying a personal computer. The model focuses on explicit identification of problems, alternative possibilities for solving problems, criteria for evaluating those possibilities, and the opportunity cost of the decisions arising from the process. The need to make decisions is shown to be based in the condition of scarcity.

Objectives

At the end of this lesson, the student will be able to:

  • Explain how scarcity affects economic choices.
  • Describe the five-step decision-making model.
  • Use a decision-making grid in making economic choices.

Economic and Personal Finance Concepts

  • Choice
  • Opportunity cost
  • Decision-making model
  • Scarcity

Materials

  • A transparency of Visuals 3.1 and 3.2
  • A copy for each student of Exercises 3.1, 3.2, and 3.3 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Looking for a Job

Getting a job is fundamental to achieving economic success. Most people begin their work lives working for others. While obtaining a job can be a challenge, there are widely accepted practices in business and government that make the process less difficult. This lesson provides an overview of steps for finding job openings, writing a letter of application, preparing a resume, completing an application, and participating in an interview.

Objectives

At the end of this lesson, the student will be able to:

  • Identify the key steps in the job application process.
  • Practice job interview skills.
  • Write a letter of application and a resume.

Economic and Personal Finance Concepts

  • Job application
  • Job search
  • Resume

Materials

  • A copy for each student of the Theme 2 Introduction from the Student Workbook
  • A copy for each student of Exercises 4.1, 4.2, and 4.3 from the Student Workbook
  • A copy for each student of Activity 4.1

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Making Your Own Job

Not everyone works for someone else. Some people make jobs for themselves. They are called entrepreneurs. This lesson focuses on entrepreneurs. It identifies characteristics of entrepreneurs, compares advantages and disadvantages of becoming an entrepreneur, and examines potential areas for success through entrepreneurship.

Objectives

At the end of this lesson, the student will be able to:

  • Identify the characteristics of entrepreneurs.
  • Compare the conditions of employment for entrepreneurs and people who work for someone else.
  • Identify opportunities for entrepreneurs in service, retail, and franchising businesses, including Internet-related opportunities.

Economic and Personal Finance Concepts

  • Entrepreneurship
  • Incentives
  • Risk

Materials

  • A transparency of Visuals 5.1 and 5.2
  • A copy of Activity 5.1 for each group of 3–4 students (see Procedure 6)
  • A copy for each student of Exercises 5.1 and 5.2 from the Student Workbook
  • A copy of Exercise 5.3 from the Student Workbook for each group of 3–4 students
  • Several pieces of poster board and markers for students to use in completing Exercise 5.3
  • A small prize for the group with the best commercial in Exercise 5.3

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Why Some Jobs Pay More than Others

Why do some people earn more income than others? This lesson explores that question. It begins by clarifying what income is. Then it focuses on the relationship between human capital and income. It culminates with an activity linking levels of education to the fastest-growing occupations.

Objectives

At the end of this lesson, the student will be able to:

  • Identify and explain the meaning of key terms such as income and human capital.
  • Explain the relationship between human capital and income.

Economic and Personal Finance Concepts

  • Determinants of income
  • Human capital
  • Sources of income

Materials

  • A copy of Activity 6.1 cut into strips
  • A copy for each student of Exercises 6.1 and 6.2 from the Student Workbook
  • Six plain sheets of 8.5" x 11" paper for each group of 3–4 students
  • Optional: A small prize for each member of the winning team from Activity 6.1

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Uncle Sam Takes a Bite

Young people are sometimes surprised to learn that the pay they earn is not the same as the pay they take home. This lesson introduces students to the concepts of gross pay, net pay, marginal tax rate, income taxation, and tax planning using pretax dollars for retirement savings and insurance, and the completion of Form 1040-EZ. It teaches them how to compute tax savings from using pretax dollars for insurance and retirement plans. It asks the question, “Is it better to get a tax refund or to withhold lower tax payments throughout the year?” The students use paycheck stubs, W-2 forms, and tax tables to calculate taxable income, marginal tax rates, and taxes owed. They also complete a 1040-EZ form.

Objectives

At the end of this lesson, the student will be able to:

  • Identify and explain the meaning of key terms such as gross pay, net pay, deductions, benefits, tax credits, itemized deductions, marginal tax rate, withholding, personal exemption, standard deduction.
  • Identify the types of benefits provided by employers.
  • Distinguish between required and optional tax deductions.
  • Compute tax savings from using pretax dollars for insurance.
  • Calculate taxable income and the amount of a tax refund.

Economic and Personal Finance Concepts

  • Gross pay
  • Income taxation
  • Marginal tax rate
  • Net pay

Materials

  • A transparency of Visuals 7.1, 7.2, 7.3, 7.4, and 7.5
  • A copy for each student of Exercises 7.1, 7.2, 7.3, and 7.4 from the Student Workbook
  • A copy for each student of Illustration 7.1 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Managing Your Money

This lesson introduces some basics of money management. By means of a radio call-in show script, students learn about setting up a family budget and distinguishing between income and net worth. To practice making budgeting decisions, the students make budgeting recommendations for a young family.

Objectives

At the end of this lesson, the student will be able to:

  • Identify and explain the meaning of key terms such as disposable income, family budget, variable expense, fixed expense, occasional expense, and net worth.
  • Identify the elements of a typical monthly family budget including income, expenses, and savings.
  • Make spending recommendations for a fictional young family, taking account of the costs and benefits involved.

Economic and Personal Finance Concepts

  • Budget
  • Disposable income
  • Fixed expense
  • Net worth
  • Variable expense

Materials

  • A copy for each student of Theme 3 Introduction from the Student Workbook
  • Five copies of Exercise 8.1 from the Student Workbook
  • A copy for each student of Exercises 8.2A, 8.2B, and 8.3 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Banking Basics

This lesson provides an overview of four types of financial institutions. It invites the students to investigate services available from financial institutions in their own community. As an example of a common financial service, the lesson stresses checking accounts—their main features and the mechanics of using them.

Objectives

At the end of this lesson, the student will be able to:

  • Identify the key deposit, credit, and investment services offered by commercial banks, savings and loan associations, credit unions, and brokerage firms.
  • Identify different types of checking accounts.
  • Explain the steps taken in setting up and managing a checking account.
  • Differentiate between the uses of an ATM and a debit card.

Economic and Personal Finance Concepts

  • Automated teller machine (ATM)
  • Brokerage firm
  • Checking account
  • Commercial bank
  • Credit union
  • Debit card
  • Savings and loan associations (S&Ls)

Materials

  • A transparency of Visual 9.1
  • A copy for each student of Exercises 9.1, 9.2, 9.3, and 9.4 from the Student Workbook
  • A copy for each student of Illustrations 9.1, 9.2, 9.3, 9.4, and 9.5 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Managing Risk

As people begin to earn income and acquire assets, they begin to think about how to protect what they have against the risk of financial loss. Toward this end, many people buy insurance. This lesson explains how insurance works and provides an overview of different types of insurance. The students participate in a simulation activity that allows them to use their understanding of the costs and benefits of purchasing insurance.

Objectives

At the end of this lesson, the student will be able to:

  • Analyze insurance as a way of reducing risk.
  • Explain that insurance is a way of spreading risk among people in an insurance "pool."
  • Identify key types of insurance such as health, auto, homeowner's, renter’s, life, and disability.
  • Explain the costs and benefits associated with choices regarding the purchase of insurance.

Economic and Personal Finance Concepts

  • Auto insurance
  • Disability insurance
  • Health insurance
  • Homeowner’s insurance
  • Life insurance
  • Renter’s insurance
  • Risk

Materials

  • A copy for each student of Exercises 10.1 and 10.2 from the Student Workbook
  • One or two decks of cards with one suit—ace (counted as a 1) through queen (counted as a 12)—for each small group to use in the Big Risk simulation. Each group should receive 12 cards of the same suit, with the king excluded from the set of cards.

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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What Is Credit?

Decisions about credit loom large in the lives of adults as they consider buying big-ticket items, such as a home or a new car. Young people often use credit, too—using credit cards to buy goods and services, for example, or taking out loans to pay for college expenses—and the decisions they make in these cases can have important consequences. This lesson introduces the concept of credit, with special attention paid to the advantages and disadvantages of using credit. It also describes particular types of loans, including home mortgage loans, car loans, college loans, personal loans, and credit card loans.

Objectives

At the end of this lesson, the student will be able to:

  • Identify and explain the meaning of key terms such as credit, interest, risk, and credit score.
  • Explain the advantages and disadvantages of using credit.
  • Identify types of financial institutions that offer credit.
  • Explain that most credit transactions are voluntary ones in which both sides expect to gain.

Economic and Personal Finance Concepts

  • Credit
  • Credit score
  • Interest
  • Risk

Materials

  • A copy for each student of Theme 4 Introduction from the Student Workbook.
  • A copy for each student of Exercises 11.1, 11.2, and 11.3 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Making Credit Choices

In deciding whether to use credit, individuals must consider many factors. The considerations are often situation-specific, and they are often subject to different interpretations by different prospective borrowers. The underlying question in each case is whether the advantages of using credit outweigh the disadvantages. In this lesson, the students address that question in an examination of four hypothetical cases, acting as financial advisors to clients considering the use of credit.

Objectives

At the end of this lesson, the student will be able to:

  • Identify advantages and disadvantages of using credit.
  • Make decisions about the wise use of credit.

Economic and Personal Finance Concepts

  • Credit

Materials

  • A copy for each student of Exercise 12.1 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Applying for Credit

This lesson explains what a credit report is and how to read one. To learn about credit reports, the students play the role of loan officers, reviewing excerpts from the credit reports and credit scores of loan applicants. They evaluate each applicant's credit history and use the information to determine whether to grant the loan requested.

Objectives

At the end of this lesson, the student will be able to:

  • Identify the qualities that a lender looks for in a loan applicant.
  • Describe what a credit report is and how it is used.
  • Describe the elements of a credit score.
  • Explain how credit scores affect creditworthiness and the cost of credit.
  • Explain the factors that improve a credit score.
  • Identify organizations that maintain consumer credit records.
  • Compare and contrast favorable and unfavorable credit reports.
  • List the types of information contained in a credit report.
  • Use a credit report and score to determine whether to grant a loan.

Economic and Personal Finance Concepts

  • Credit history
  • Credit report
  • Credit score

Materials

  • A copy for each student of Exercises 13.1, 13.2, and 13.3 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site , opens in new window.

© Council for Economic Education

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All About Interest

To compare the cost of different loans, students must understand finance charges and interest rates. In this lesson, the students learn how to compute finance charges, how to differentiate between add-on and annual percentage rates, and how the annual percentage rate and loan repayment period affect the cost of a loan.

Objectives

At the end of this lesson, the student will be able to:

  • Describe the factors that determine the cost of credit.
  • Describe the differences between an add-on and an annual percentage rate.
  • Calculate finance charges using different interest rates.
  • Calculate APRs given different finance charges and loan repayment periods.
  • Analyze relationships among the finance charge, principal of the loan, APR, and loan repayment period.

Economic and Personal Finance Concepts

  • Add-on interest rate
  • Annual percentage rate (APR)
  • Finance charge
  • Interest rates

Materials

  • A transparency of Visual 14.1
  • A copy for each student of Exercise 14.1 from the Student Workbook
  • Small prizes for the Assessment activity

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Shopping for a Credit Card

In 2007, nearly three-fourths of all U.S. families had at least one credit card. According to the Federal Reserve, 46% of families carried a balance on their cards. The median balance carried was $3,000. Americans are obviously in love with their credit cards, but they are not always well-informed about them. They may not know that all credit cards are not created equal. The first part of this lesson emphasizes that credit cards differ from one another in terms of annual fees, annual percentage rates, grace periods, and credit limits. The second part shows students how to read a credit card statement so that they can see the real cost of charging goods and services.

Objectives

At the end of this lesson, the student will be able to:

  • Describe differences among credit cards, including fees, annual percentage rates, grace periods, and credit limits.
  • Read and understand a credit card statement.
  • Evaluate the costs and benefits of using a credit card to purchase goods and services.

Economic and Personal Finance Concepts

  • Annual fee
  • Annual percentage rate (APR)
  • Credit card
  • Credit limit
  • Grace period

Materials

  • A transparency of Visual 15.1
  • A copy for each student of Exercises 15.1 and 15.2 from the Student Workbook
  • Optional: credit card solicitation letters and/or information sheets that accompany credit card statements

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Shopping for a Mortgage

In this lesson, the students use a computer loan calculator to determine the monthly payment on different mortgage loans. Understanding how to use computer loan calculators is very important for mortgage calculations. There are many loan calculators on the Internet; many software packages, such as Quicken®, also provide loan calculators.

Objectives

At the end of this lesson, the student will be able to:

  • Explain what it means to amortize a loan.
  • Use a computer program to amortize several mortgages.
  • Identify and explain ways to reduce the cost of buying a home on credit.

Economic and Personal Finance Concepts

  • Amortization
  • Mortgage loan

Materials

  • A copy for each student of Exercise 16.1 from the Student Workbook
  • Student access to an Internet-connected computer, a computer lab, or a computer equipped with mortgage-calculation software

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Shopping for an Auto Loan

Wise consumers shop for credit just as they might shop for a car or a computer. In this lesson, to begin learning the skills needed to shop for credit, the students fill out a credit-comparison chart for a hypothetical auto loan. Then, using the same techniques, they shop online for a loan. Finally, the students compare the cost of the same loan at various local lending institutions. In the course of these inquiries, they also take account of costs of automobile ownership, over and above the purchase price and credit cost.

Objectives

At the end of this lesson, the student will be able to:

  • Compare costs of different loans and choose the loan with the lowest cost.
  • Demonstrate how to shop for a loan online.
  • Explain the factors that reduce the cost of a loan.

Economic and Personal Finance Concepts

  • Annual percentage rate (APR)
  • Auto loan
  • Credit

Materials

  • A copy for each student of Exercises 17.1, 17.2, 17.3, and 17.4 in the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Consumer Credit Protection

This lesson provides an overview of legal protection for those who use consumer credit. It stresses federal laws designed to protect consumers in the case of certain problems arising from credit transactions. The applicable laws include the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, and the Fair and Accurate Credit Transactions Act.

Objectives

At the end of this lesson, the student will be able to:

  • Identify features of key federal legislation that help protect consumers in credit transactions.
  • Analyze specific credit problems by reference to federal credit legislation.

Economic and Personal Finance Concepts

  • Consumer credit protection

Materials

  • A transparency of Visual 18.1
  • A copy for each student of Exercises 18.1, 18.2, and 18.3 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Scams and Schemes

While most credit transactions are completely legal, there are some that are not. This lesson introduces scams and schemes, including identify theft, loan scams, and credit-repair loans. The lesson also identifies legal but high-cost credit practices, such as payday loans and rent-to-own plans.

Objectives

At the end of this lesson, the student will be able to:

  • Identify and describe various fraudulent practices related to consumer credit.
  • Identify and describe high-cost credit practices.

Economic and Personal Finance Concepts

  • Identity theft
  • Payday loans
  • Rent-to-own plans

Materials

  • A transparency of Visual 19.1
  • A copy for each student of Exercise 19.1 and 19.2 from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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There Is No Free Lunch in Investing

Risk is inherent in all investments. Some risks are ones investors cannot control. Other risks can be managed. The key is to develop a risk/reward ratio with which you are comfortable. The greater the risk, the higher the potential reward. Given that relationship, there is no free lunch in investing. Investors who choose low risk may earn meager returns. Investors who seek higher returns through high-risk investments may suffer big losses. In this lesson, the students learn about five types of risk, and they compare the risks and rewards associated with several frequently used investment vehicles. The lesson provides an overview of the modern investment world.

Objectives

At the end of this lesson, the student will be able to:

  • Describe five types of investment risk.
  • Describe the relationship between investment risk and investment reward.
  • Distinguish between real and nominal rates of return.
  • Describe the characteristics of several investments, including savings accounts, U.S. government savings bonds, stocks, mutual funds, and real estate.
  • Analyze the pyramid of risk and reward.
  • Compare and contrast the risks and rewards of several types of investments.

Economic and Personal Finance Concepts

  • Certificate of deposit (CD)
  • Financial risk
  • Fraud risk
  • Inflation risk
  • Liquidity risk
  • Market risk
  • Money market mutual funds
  • Nominal rate of return
  • Real estate
  • Real rate of return
  • Savings account
  • Stock index funds
  • Stock mutual funds
  • Stocks
  • U.S. government savings bonds

Materials

  • A transparency of Visuals 21.1 and 21.2
  • A copy for each student of Exercises 21.1 and 21.2 from the Student Workbook
  • Several sheets of paper

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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Internet Tools and Investing

This lesson provides an overview of basic investment options; it also introduces certain investment strategies. The lesson culminates with an activity that can be used to learn or review key economic and financial terms.

Objectives

At the end of this lesson, the student will be able to:

  • Define key investment terms.
  • Explain key investment strategies.
  • Define the characteristics of investment alternatives.

Economic and Personal Finance Concepts

  • Bonds
  • Index funds
  • Mutual funds
  • Rule of 72
  • Stocks

Materials

  • A transparency of Visual 22.1
  • Copies of Bingo Markers, cut from Activity 22.A—enough for each student to have 24 markers
  • A copy for each student of Activity 22.B
  • A copy of Activity 22.B, with each slip of paper cut out and placed in the Investment Bingo box
  • An Investment Bingo box
  • A copy for each student of Exercises 22.1, 22.2, 22.3, 22.4, 22.5, 22.6, and 22.7 from the Student Workbook
  • A small prize for the winner(s) of the Bingo activity

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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