Mastering Personal Finance

• PSHE
• Further Education (Key Stage 5)

Mastering Personal Finance

Learning Objectives

At the end of the lesson, you will be able to 

• identify different types of income and expenses, 
• understand the importance of budgeting and savings, 
• explain how to open and manage a bank account, 
• understand the risks and benefits of different types of loans,  identify and avoid common financial scams.

Introduce the learning objectives to the students and explain how each objective will be covered in the lesson.

What do you already know about managing your money?

What does APR stand for?

1. Annual Percentage Rate
2. Adjusted Percentage Ratio
3. Average Payment Rate
4. Annual Payment Reduction

What is the purpose of a credit score?

1. To evaluate overdraft fees
2. To determine tax liability
3. To calculate loan interest rates
4. To assess creditworthiness

What is National Insurance used for in the UK?

1. To cover overdraft fees
2. To invest in the stock market
3. To pay off personal loans
4. To fund state benefits

Types of Income

Income can come from various sources such as salary, wages, tips, bonuses, and commissions.

Ask students to share examples of different types of income and discuss how each type of income affects their budget.

Types of Expenses- which of these examples are fixed? 

Expenses can be categorized as fixed, variable, or periodic such as

•  rent
• utilities
• groceries
• entertainment
•  car repairs.

Ask students to share examples of their expenses and discuss how they prioritize their spending.

Budgeting Basics

Budgeting is the process of creating a plan for your income and expenses. It helps to prioritize spending, reduce debt, and save for the future.

Explain the importance of budgeting and give examples of how budgeting can help manage personal finances.

Savings Strategies

Saving money is essential for emergencies and long-term goals. Strategies such as setting financial goals, tracking expenses, and using apps can help save more effectively.

Discuss different savings strategies and ask students to share their own savings goals.

Bank Accounts

Banks offer different types of accounts such as checking, savings, and money market accounts. Each type of account has different fees, interest rates, and benefits.

Managing a bank account involves regularly checking balances, monitoring transactions, and avoiding overdraft fees.

Explain the differences between different types of bank accounts and how to choose the right one for their needs.

Different Types of Bank Accounts 

Current account: A current account is the most common type of bank account and is used for everyday banking, such as receiving income, paying bills and withdrawing cash. Most banks offer current accounts with a range of features such as overdrafts, mobile banking and contactless payments.

Basic bank account: A basic bank account is a simple current account that allows people who may not have a credit history or who have poor credit to manage their finances. They usually do not come with overdrafts or other credit facilities.

Student account: A student account is a type of current account designed specifically for students. It may come with benefits such as interest-free overdrafts and discounts on travel, but usually requires proof of student status.

Savings account: A savings account is designed to help people save money for a specific goal, such as a holiday or a deposit on a house. Interest rates on savings accounts can vary depending on the bank and the type of account, and some accounts may have restrictions on withdrawals.

Cash ISA: A cash ISA is a savings account where you can save up to a certain amount tax-free each year. Interest rates on cash ISAs vary depending on the bank or building society you choose.

Credit Scores

Credit scores are used by lenders to assess the risk of lending money. A high credit score can lead to lower interest rates and better loan terms.

• Register on the electoral roll
• Build a credit history 
• Make regular payments on time

Explain how credit scores are calculated and how to improve or maintain a good credit score.

Why should you work towards having a good credit score?

Types of Loans

There are different types of loans such as personal loans, student loans, and auto loans. Each type of loan has different interest rates, fees, and repayment terms.

Discuss the differences between different types of loans and explain how to choose the right loan for their needs.

Risks and Benefits of Loans

Loans can help to finance large purchases or investments, but they also come with risks such as debt and interest payments.

 

Discuss the risks and benefits of taking out loans and how to manage debt effectively.

What are the benefits and risks of taking out a loan?

Financial Scams

Financial scams can take many forms such as phishing, identity theft, and investment fraud. It is important to be aware of common scams and take steps to protect personal information.

Most Common Scams in the UK 

Investment scams: Fraudsters convince people to invest money in fake schemes promising high returns but ultimately disappear with the money.

Phishing scams: Scammers send emails or messages pretending to be from legitimate banks or financial institutions, asking people to provide personal and financial information.

Banking scams: Scammers call or text people pretending to be from their bank, convincing them to transfer money or provide sensitive information.

Romance scams: Scammers create fake online profiles to form romantic relationships with people, gaining their trust and eventually asking for money or access to their bank account.

Lottery and prize draw scams: Scammers notify people that they have won a prize or lottery but ask for a processing fee before releasing the funds.

Explain different types of financial scams and how to avoid becoming a victim of fraud.

How can you protect the money in your bank account?

Resources

Mint - Mint is a free app that allows users to track their spending and budget, set financial goals, and receive personalized money-saving tips.

Personal Capital - Personal Capital is a financial planning app that offers a range of investment management tools, including retirement planning and tax optimization.

YNAB (You Need a Budget) - YNAB is a budgeting app that helps users stay on top of their finances by tracking their expenses, setting financial goals, and providing personalized budgeting advice.

Share resources that students can use to continue learning about personal finance and managing their money.

Write down 3 things you learned in this lesson.

Have students enter three things they learned in this lesson. With this they can indicate their own learning efficiency of this lesson.

Write down 2 things you want to know more about.

Here, students enter two things they would like to know more about. This not only increases involvement, but also gives them more ownership.

Ask 1 question about something you haven't quite understood yet.

The students indicate here (in question form) with which part of the material they still have difficulty. For the teacher, this not only provides insight into the extent to which the students understand/master the material, but also a good starting point for the next lesson.