PERSONAL FINANCIAL MANAGEMENT (PFM) CURRICULUM
Prepared for
THE RETIREMENT COMMISSION
2006
By Lyn Morris Enterprise New Zealand Trust
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Index
Background and history ……………………………………………………….…… 4 Essence statement………………… …………………………………………….… 6 The Framework of the PFM Curriculum …………………..…………………..….. 8 Framework Diagram ………………………………………………………… ..……9 The Framework in Detail ………………………………………………………….. 10 Strand – Income and Money Management………………………………….. …..14 Strand - Financial Planning and Wealth………………………………………..…15 Terms in Personal Financial Management ……………………...….…………... 17 Planning of a Personal Financial Management programme of work …..…….. 19 Template planner – Kiwi Conservation Trip……………………………...……….21 Template planner – Topic approach……………………………………………….22 Knowledge Strands …………………………………………………………….….. 23
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Background
Concern about rising financial illiteracy has been growing since the early 1990s both in New Zealand and in many countries overseas. Worldwide political, technological and social events have highlighted the poor state of financial literacy and have driven moves to include Personal Financial Management in school learning.
Why did this happen?
In the 1980s, a combination of political, technological and social changes impacted on the way people think about and use money. These included: A desire by governments for people to make their own decisions about their financial future. The move was to devolve decision making from governments to people. Demographic changes, with the Baby Boomers moving towards retirement and with Generations X and Y increasingly demanding instant gratification rather than deferring their spending activities. Globalisation of financial markets which, for New Zealand, included floating the dollar and removing exchange controls. The change in the way customers and financial institutions interact. A change in retail hours, which provides more flexible hours and opportunities for part time work. A changed attitude to debt, making it more socially acceptable than before. The changing nature and functions of banks, building societies, insurance companies and credit unions have resulted in highly complex and interrelated financial institutions. The proliferation of ATMs has resulted in 24 hour access to money. The use of cards has conceptualised transactions and made financial activity less concrete in nature for the current generation. Credit and loans have now become more widespread and socially acceptable. A range of credit cards are offered to students over the age of eighteen, often with enticing interest rates. There have been many changes in financial activity and environments. Deregulation of the financial services industry has increased the number and range of financial products, providing increased choice for many. Education costs have become more expensive for the consumer, with student loans taking a high profile in both student and parental thinking. Taxation rates have fallen from the levels experienced several decades ago. The Inland Revenue Department has taken on functions such as collection of ACC levies and repayment of student loans. Government moves since the mid-eighties to manage or reduce the cost of welfare, health and education have forced all consumers to plan their lives with greater care and insure themselves against possible personal risks and catastrophes.
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To take advantage of increased choice, today's consumers require greater levels of financial capability than those of three decades ago.
The impacts
Some of the results of these changes are: People making up their own minds about how to plan for their retirement rather than relying on a government provided transfer payment. Rapid use and uptake of technology in financial activity, including ATMs, EFTPOS, internet and telephone banking. A prematurely affluent teenage population – one which has money available for aspirations without having to fund their needs and essentials. A rapid increase in debt, with student loans the norm, and hire purchase and credit cards part of normal consumerism. Many of these changes are part of the lifestyle of the current school age population. The parents of our students often feel ill-equipped to help them become financially literate.
Implications for education and society
Large focus on marketing and consumer goods to the school age population is evident. Money, debt and consumerism loom larger in student thinking than several decades ago. Students are socialised into a working/spending/debt cycle. Students are focussed not only on schooling, but jobs, as well as sport and the many other activities they get involved in outside school. Jobs have become high priority as the teenage culture needs money. Students are working longer hours than earlier student generations did. School teenagers are prematurely affluent.
The question needs to be asked – are these changes of any significance for the education system? Personal Financial Management needs to be addressed both at home and at school.
The importance of Personal Financial Management and financial literacy
Becoming financially literate is the ideal result of Personal Financial Management. Paul O'Neill, at the United States hearing on Financial Literacy held by the Senate Committee in 2002, describes personal financial literacy as “The ability to read, analyse, manage and communicate about personal financial conditions that affect material well-being. It includes ability to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future and respond competently to life events that affect everyday decisions, including events in the general economy”.
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Essence statement
Personal Financial Management is learning directed towards building financial capability. The outcome of Personal Financial Management Education should be a financially literate person. It leads to the personal ability to make informed judgements and to take effective decisions regarding the use and management of money. A functional financial literacy description is a basic level of knowledge and skill required for an individual to effectively manage personal finances.
What will my students be learning?
Personal Financial Management takes a multi-disciplinary approach, that develops the knowledge, awareness, attitudes, values and skills that will develop capability in individuals and the community to make wise financial decisions. Financial decisions can be both straightforward or complex and are frequently overlaid with emotional considerations and cultural, religious and social values. An integrated multidisciplinary holistic approach to teaching and learning is appropriate for meeting the aims of Personal Financial Management. The Personal Financial Management Framework involves a way of thinking (mindsets) which impacts on the interwoven knowledge strands, competencies and values to achieve outcomes. The aims of Personal Financial Management are for students to develop: Aim 1 Aim 2 Aim 3 Aim 4 an appreciation of the mindsets applying to financial behaviour knowledge and understanding of financial information and processes and the impact they have on daily living personal financial management competencies that encourage confidence in undertaking financial activities recognition and development of their personal values set which makes it possible for them to achieve their personal goals.
Personal Financial Management aspires to enable students to make informed choices and financial plans as they move from dependence to independence and, in the process, recognise their personal responsibility to increasingly manage their own circumstances. Difficulties arise when individuals attempt to make the best decisions for themselves, within their cultural and economic values, but have neither an understanding of the underlying mindsets, nor a satisfactory knowledge base, nor sufficient levels of capability from which to operate. Only when they gain these capabilities can they make behaviour-changing decisions, or recognise whether current behaviour patterns are likely to allow them to reach their goals. Personal Financial Management is fundamental to becoming financially literate.
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Personal Financial Management competency descriptors
Effective personal financial management requires people to accept personal responsibility for the effects of their decisions on themselves and on others, within a legal and ethical context and to: Managing self set personal financial goals appropriate to personal values and changing circumstances, plan how to achieve the goals, implement the plan, monitor progress, and review goals understand the benefits and importance of financial independence identify and manage personal financial risks and opportunities understand the influence of time and the importance of personal commitment on the achievement of financial goals make informed financial decisions Thinking evaluate financial decisions and their consequences Using language, symbols and texts be confident with key terms and concepts of personal financial management select and use financial tools interactively to achieve financial goals
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The Framework of the Personal Financial Management Curriculum
Personal Financial Management takes place within a coherent and integrated framework to achieve the outcome of developing a financially literate person. The Personal Financial Management Framework consists of a group of mindsets which impact on the interwoven knowledge topics, key competencies and values to achieve outcomes. Students will achieve this outcome by creating a framework of understanding about the mindsets, and developing knowledge and understandings about financial activity as they study: the nature and role of income people receive how people manage their money the nature and importance of financial planning the significance of personal wealth creation
and by becoming skilled in the Personal Financial Management competencies as they use financial tools and language: to enable them to participate responsibly in society to support social cohesion and community well-being.
Mindsets
Knowledge strands + Personal Financial Management competencies + Values
Learning Outcomes
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FRAMEWORK DIAGRAM
Mindsets
Personal responsibility Our financial responsibility is up to us as individuals in the first instance. Financial planning is affected by: goals and decisions time, knowledge and commitment incentives risks legal and ethical considerations. Financial decisions impact on income, wealth and well being vary according to our situation and stage of life make trade offs between saving, spending and borrowing have consequences today and in the future.
Knowledge Strands
Income and Money Management Financial planning and Wealth
PFM Competencies
Managing self Thinking Using languages, symbols and texts
Values
Diversity Community and participation Respect Equity Integrity Care for the environment Innovation, inquiry and curiosity Excellence
Learning Outcomes
Take responsibility and manage one’s own financial well-being. Exercise long-term thinking, commitment, self discipline and personal responsibility in relation to personal financial management. Evaluate the consequences of a range of choices with regard to one’s goals. Recognise, understand and apply financial knowledge to meet personal, family and community needs during the life cycle. Develop, exercise and practise personal financial management skills to achieve personal, family and community needs. Recognise, evaluate and take responsibility for managed risk taking. Evaluate income and savings strategies. Investigate, interpret and communicate key personal financial ideas, using language. Identify priorities and understand and evaluate the consequences of personal financial choices in the short, medium and longer time frames. Reflect on personal financial knowledge and apply it to related contexts. Develop a sense of responsible stewardship for financial resources. Evaluate legal and ethical implications and considerations.
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The Framework in Detail
Mindsets
Mindsets are underlying competencies, ways of thinking and behaviours. They are the basis for how people manage their money – manage in a large context – and are similar in nature to the Key Competencies identified in the research outlined in the OECD DeSeCo Project. What mindsets are important? Personal responsibility As students move from dependence on the financial security of their family to relative independence, their level of personal responsibility increases. I t is important that they accept responsibility for their actions and acknowledge their responsibility to personally manage their financial activity. Although family will always be important and significant, with the demand for “rights” comes the acceptance of personal “responsibility” for their actions. Rights and responsibility are two sides of the same coin. People cannot expect to exercise personal rights and still require in the current environment, the community and government to make decisions for them and look after them financially. Goals and decisions Goals and decisions affect financial planning. Decisions and goals can be short or long term in nature. Financial decisions made in the short term can have long term consequences and so affect planning for the future. Time, knowledge and commitment Financial planning has three key elements – the time frame available, the knowledge base used to undertake the plan, and the level of commitment to the plan. The longer the time frame, the more flexibility is available, the greater the tolerance for poor decisions at an early age and the greater the opportunity to recover from mistakes. Decisions need to be made with an understanding of the information available. Poor decisions can emanate from a lack of knowledge. Once a decision is made and factored into the plan, the long-term outcomes will depend on personal commitment to the plan. People respond to different incentives. Incentives motivate people to do things. People are motivated by such factors as personal acknowledgement, community recognition, personal self worth, goals, non-financial rewards as well as financial ones. In order to motivate people to carry out a financial plan, the appropriate incentives need to be part of their plan. Risk management Risk is part of financial planning and needs to be understood and managed. With any decision, there is always a risk involved. Financial risk and reward are usually inversely related and risk is not necessarily bad. Students need to analyse the extent of the risk relating to a decision, and rather than be put off taking action, they need to consider the risk element and be aware of alternative possible actions.
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Legal, values and ethical considerations In all circumstances, people operate in a legal framework, which is the same for all citizens. There is also a values and ethics framework within which plans and decisions are made. Values and ethics may differ within and between communities and may explain differences in the nature of planning decisions. Impact on income, wealth and the well-being of both ourselves and others. Financial decisions impact on three areas. They impact on the income earned as decisions about career choices and work options influence the level of income likely to be received. Financial decisions about saving and spending that income impact on the level wealth accumulated. Financial decisions made regarding income and wealth influence the potential level of personal well-being experienced. Decisions are not made in isolation. As we are people living in households and communities, personal decisions not only impact on the individual but also in the individual’s family and community. Stewardship of income, wealth and well-being is encouraged. Situations and stage of life vary. As people’s situations change, their financial decisions may alter. A student entering the workforce immediately after leaving school may make significantly different decisions from a student intending to go to a tertiary institution. People may make quite different decisions as during the teenager years from those they may make in retirement. Trade offs determine financial well-being. It is unusual for people to make all or nothing decisions relating to spending, saving and borrowing. Decisions usually are made on the basis of “a little more of this, and a little less of that – a little more saving and a little less spending”. This is what is meant by trade offs at the margin. It is these trade-off behaviours which determine overall financial well-being. The consequences of the financial decisions made today will affect the future. All financial decisions have consequences. Some of these consequences are immediate or short term and are easy to relate to. Other decisions have consequences which are some way in the future. Such consequences may be outside one’s personal time vision and be extremely difficult to envisage. Hence, some decisions may not appear to have consequences. A student taking out a student loan may have difficulty imagining still paying the loan off twenty years later. Financial decisions should be made with their consequences in mind. Consequences may be non-financial as well as financial.
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Values
Financial decisions are not value free. People need to be mindful of the impact personal values have on financial decisions and act accordingly. In making their own financial decisions, they also need to be aware of the impact that decision may have on other people – family, friends, and other community members – and their values. When making financial decisions, students will develop their ability to: express their own values examine with empathy the values of others critically analyse values and values-based actions discuss and negotiate values differences make ethical judgments and decisions and act on them. New Zealand students are encouraged to value: diversity, as found in our different cultures and heritages community and participation for the common good, e.g. sharing respect for themselves, for others, and for human rights equity, which means fairness and social justice integrity, which involves being honest, responsible, and accountable and acting ethically care for the environment (the Earth and its interrelated eco-systems) innovation, inquiry, and curiosity, by thinking creatively, critically, and reflectively excellence, by aiming high and by persevering in the face of difficulties.
The Knowledge Strands
Teaching and learning in the Personal Financial Management Curriculum is built around two strands overlaid with mindsets and underpinned by values and Personal financial management competencies. The Personal Financial Management strands are Income and money management Financial planning and wealth
Strand aims, achievement objectives and indicators. Each strand has seven aims. All achievement objectives are derived from these aims. The achievement objectives are expressed in five progressive stages. The objectives at each stage are appropriate to students’ development and maturity as they move from junior primary to senior secondary school. The achievement objectives need to be viewed within the age appropriate context for each stage. Students learn at different rates, and therefore, at any time, individual students or groups of students of the same age could be working towards achievement objectives at different stages and across the strands.
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The indicators for the Achievement Objectives Indicators for the strands are expressed as sets. As a group, each set indicates how one of the achievement objectives could be met. Each set of indicators gives examples of what students may come to know or understand as a result of their learning experiences at a particular stage, and each set reflects concepts and ideas that relate to a particular achievement objective. The indicators provided with each achievement objective are not exclusive. Further indicators may be devised by teachers to supplement those provided. The indicators for the strands are intended to show how students could demonstrate knowledge and understandings. These indicators use verb stems. When developing specific learning outcomes, teachers may use a wide range of verb stems to reflect the many skills involved in developing students’ knowledge and understandings. INCOME AND MONEY MANAGEMENT KNOWLEDGE STRAND Students, along with their family households, participate in a world that uses money as a medium of exchange. They will learn what money is and different ways people earn income and receive money. They will understand that a level of income is necessary for personal well-being in today’s society. They will discover that the decisions that they make influence and impact not only themselves, but also the people around them. They will learn about day to day financial activity such as spending and depositing money, and transaction instruments such as cash, ATMs and credit cards. They will find out how to use money management tools, such as budgets and cash flows, to monitor their financial situation. They will discover the importance of ICT, handwritten records, and financial institution documents to keep records. They will learn about the role of credit and the management of good and bad debt. FINANCIAL PLANNING AND WEALTH KNOWLEDGE STRAND In addition to being a medium of exchange, money is also a store or wealth and can be used in the future as well as in the present. They will discover that they can plan how to use money in the future. They will learn that financial planning is a deliberate process, which is designed to create wealth. They will understand that the creation of wealth can entail risks, which can be estimated and managed. Students will examine what wealth is and how its creation can contribute to personal well-being, which impacts not only on themselves, but also the people around them.
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STRAND – INCOME AND MONEY MANAGEMENT
Achievement Objectives: Students will understand: Income The nature of income The contribution of income to personal well-being The influence/impact financial decisions have on income of ourselves and others. Money Management The nature of everyday financial activities and transaction instruments. The use of money management tools. The importance of financial record keeping. The role of credit and debt management.
Stage 1 What money is
Why money is needed Where income comes from What are spending and payment activities
Stage 2 How and why income is related to time and the value of effort provided How spending activities are undertaken What tools and records people use in order to manage money What credit is
Stage 3 How income is calculated Different sources of income How people use money management tools and records How and why people use credit
Stage 4 Different values and ethical factors relating to the use of income How money is managed over time Managing credit
Factors which influence choice of financial products
Stage 5 How life stages influence wealth creation and decisions How debt impacts on the future How financial record keeping assists money management capability How goals influence spending activity
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STRAND - FINANCIAL PLANNING AND WEALTH
Achievement Objectives: Students will understand: Financial Planning What financial planning is about The components of a financial plan The process of financial planning Managing risk is part of financial planning. Wealth The nature of wealth The contribution of wealth to personal well-being The influence/impact financial decisions have on wealth and well-being of ourselves and others. Stage 1 Looking after money Stage 2 How and where money is saved Stage 3 What organisations offer savings and investment opportunities Planning ahead The need to plan financially What risks exist to The need to manage personal and community risk well-being How wealth is created How wealth is calculated Stage 4 Risk and return in relation to popular financial products Financial planning for the future The need for financial protection Why and how people invest income Stage 5 Manage personal investment activity Create a personal financial plan How life stages influence wealth creation decisions The relationship between financial independence, life style and well-being
Why people save money
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Terms in Personal Financial Management
The diagram below highlights some of the concepts, terms and tools that are reflected in the two strands of the curriculum statement. The lists are not comprehensive. Teachers will use these lists selectively when planning concepts to study within their programme and add to them as appropriate. Some concepts appear in both strands: this should emphasise the integrated nature of the strands. Income and Money management Exchange Transactions Earned and passive income Purchasing power Financial documents Value for money Budgeting Credit Hire purchase Mortgages Borrowing Lender Currency Income deductions Transfer payments Interest Un/manageable debt Good/bad debt Trade offs Needs Aspirations Life cycle Inflation Credit worthiness Financial products Intangible assets Tax Income shocks Non-financial implications Goals
Financial planning and Wealth Safe storage Saving institutions Financial Financial resources Risk Wealth Investment Investment products Tools Financial plan Cash flow statements Financial independence Payment forms Sharemarket Financial records Savings commitment Cost/benefit analysis Financial protection Decision-making model Insurance Financial tools Interest rates Compound interest Scams Real and nominal return Assets Financial advice Well-being Wealth creation
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Including Personal Financial Management in the Curriculum
The New Zealand Curriculum provides an opportunity for developing teaching and learning programmes for Personal Financial Management through integration with existing learning areas, as a significant theme, or as a standalone unit study. Three types of relationships between the essential learning areas and Personal Financial Management exist. They are a: Content relationship Context relationship Process relationship
Social Studies Economics Mathematics English The Arts Health and PE Technology
Content relationship
PFM
Context Relationship
PFM
Process Relationship
PFM
Schools will develop a range of policies and practices through which the aims of Personal Financial Management can be met. Such practices can be used to establish appropriate organisational, operations, and curriculum objectives that promote a whole-school approach to personal financial management. The Personal Financial Management Framework ensures that the aims of Personal Financial Management are addressed in a coherent and consistent manner and that students are able to integrate learning.
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Planning of a Personal Financial Management programme of work.
The following steps outline a planning process for Personal Financial Management Programmes Step One. Identify students’ needs Effective Personal Financial Management will occur when students’ learning needs are considered and when the issues and topics chosen for study are meaningful and relevant to them. Provide opportunities for students to identify their interest and learning needs, which will form the basis of the teaching and learning programmes. Step Two. Review current programmes Current teaching and learning programmes may already include aspects of Personal Financial Management. Reviewing these programmes will help identify the extent to which they cover the aims, concepts, and dimensions of Personal Financial Management. Step Three. Identify new opportunities for the inclusion if Personal Financial Management within the New Zealand Curriculum Analysing the school’s current provisions fior Personal Financial Management isa likely to identify gaps. Using the Curriculum outlines, identify opportunities for meeting the aims and exploring the concepts and mindsets in teaching and learning programmes. Step Four. Identify possible links between school programmes and initiatives undertaken by the financial sector and the community The community and the financial sector can provide valuable support for school programmes. By establishing links with the initiatives of these groups, schools can access specialist expertise as well as help to build community partnerships. Step Five. Decide how Personal Financial Management will be managed with the Framework of the New Zealand Curriculum There are a number of ways of managing programmes to meet the aims of Personal Financial Management. Programmes can be focussed in one curriculum area, or using a cross curricular topic or thematic approach. Because Personal Financial Management is closely related to everyday activities, teachers may encourage an action-oriented approach or develop a Personal Financial Management course. Step Six. Develop programmes based on effective teaching and leaning approaches Learning in Personal Financial Management will be enhanced when students undertake purposeful learning activities in relevant situations and have
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opportunities to gain first hand practical experience. Within the context of learning in and about financial activities, this etachign approach will elp them use their knowledge, key competencies and values in everyday likfe. Step Seven. Select appropriate resources to support teaching and leaning programmes When selecting resources for Personal Financial Management programmes od work, consider: Content Competency development Language level Student interest Data Value perspectives Balance Step Eight. Plan how evaluation will be carried out Evaluation is an important component of Personal Financial Management because it provides information on the extent to which the aims of Personal Financial Management have been met and the extent of developing a financially literate person. It assists in reviewing teaching and learning programmes and considering how they might be reviewed.
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Topic - KIWI CONSERVATION TRIP FINANCIAL PLANNING KEY Aim To have the whole school visit the Kiwi Conservation Centre at Fairy Springs KEY Specific Learning Outcomes students should be able to… plan , budget, and fundraise for a specific purpose
Template Planner KEY Assessment To compile a balance sheet that shows date, projects, income and balance
INTEGRATED LEARNING AREAS
Personal Finance: Students will understand the financial impact of a financial decision on themselves ( individual budget) and others (class budget) What is money and how can we earn it? How much do we need? What tools and records people use to manage money Income is related to time and effort Science: Living World-endangered species Assess: Flow diagram of life cycle (L1&2), and stages of egg development (L3) English: All strands Assess: Oral presentation : L1 – recount”Our trip”, L2 report: „what is a kiwi‟, L3- Persuasive “Sponsor a kiwi”. Social Studies: Resources and Economics- ways in which people can participate in economic decision-making and planning. Assess: Chart or graph to show ways that people earned money for trip. (Label, title,key) Environmental Education Sustainability- protecting kiwis Personal responsibility for action Assess: Opinion and justify why we should sponsor a kiwi Resources Starters and Strategies: June 2005, Nov 2005 www.historyforkids.org/learn/economy/money www.kidsbank.com click on Mr Penny
Activities Research the costs for the trip(, entry to Fairy Springs, range of Kiwi sponsorship options) Design and Plan a budget with a timeframe and weekly balance ( discuss realistic goals) Design a money management sheet listing income projects(lawns, car wash, errands,etc) Get an expert to come and give advice on budget plans Plan income –earning projects and how to do them Operate a savings scheme and target balance sheet On-going peer and self evaluation of savings goals and income earning successes Establish regular reporting and communication with parent committee Key Competencies Managing self – keeping to budget targets Relating to others in income project teams Participating and contributing personal effort and time for the trip goal Thinking- decision-making and organising Using language and maths tools, budget spreadsheets and balance sheets
Values and Attitudes Caring for Others- sharing the financial load Caring for the environment – sustainability Cooperation – team work Responsibility – personal safety, team effort Perseverance – commitment to achieve goal
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Key Personal Financial Management Education Achievement Objective: The influence/impact financial decisions have on income of ourselves and others Significant Themes: Mindsets Values Sustainability Personal responsibility diversity Critical Literacy Goals and decisions community and participation Personal Finance Time, knowledge and commitment respect People respond to different incentives equity Risk management integrity Legal, values and ethical care for the environment considerations innovation, inquiry, and Impact on income, wealth and the curiosity well-being of both ourselves and excellence others Situations and stage of life vary Trade offs determine financial wellbeing The consequences of the financial decisions made today will affect the future Learning Area: Outcome: Assessment: Learning Area: Outcome: Assessment Activities: Learning Area: Outcome: Assessment
PFM Competencies Managing self Thinking Using languages, symbols and texts
Learning Area: Outcome: Assessment Resources:
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KNOWLEDGE STRAND
INCOME AND MONEY MANAGEMENT
ACHIEVEMENT OBJECTIVES AND INDICATORS
STAGE 1 (Level 1-2, Year group 1-3, Age 5-7)
Students will demonstrate knowledge and understandings of: What money is Students could demonstrate such knowledge and understandings when they: Describe and recognise notes and coins. Give examples of the exchange of money for goods and services. Identify notes and coins for simple payment transactions and recognise correct change. ∙ Where income comes from Students could demonstrate such knowledge and understandings when they: Investigate ways (including entrepreneurial activity) in which people can earn income or times when money is received as gifts. Identify skills and abilities that enable people to receive money and earn income. Explain why people are paid an income. Investigate regular and unpredictable sources of income. ∙ Why income is needed Students could demonstrate such knowledge and understandings when they: Demonstrate that purchases are made with money. Explain that money can be used now or in the future. Understand that there are consequences to having more or less money. Investigate what money is worth (purchasing power). ∙ What are spending and payment activities Students could demonstrate such knowledge and understandings when they: Give examples of spending and short term savings choices. Demonstrate spending options for the same amount of money. Discuss how people’s satisfaction from spending money may vary. Demonstrate, calculate and record simple transactions. Investigate everyday financial transaction documents.
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STAGE 2 (Level 2 - 3, Year group 4 - 6, Age 8 - 10)
Students will demonstrate knowledge and understandings of : ∙ How and why income is related to time and the value of effort provided Students could demonstrate such knowledge and understandings when they: Recognise the value of income received relative to the nature of the work completed. Describe earned and passive income. Discuss the impact/consequences of no or insufficient income. ∙ How spending activities are undertaken Students could demonstrate such knowledge and understandings when they: Identify regular financial commitments. Investigate items families spend money on and the opportunity cost of the choices made. Demonstrate different ways people make spending and short term savings decisions. Investigate and assess best buys and value for money for everyday consumer items. Demonstrate that product information is important to good decisionmaking. Discuss spending decisions on the basis of value for money and satisfaction from purchases. Give examples of different forms of payment and explain when and why they are used. Explain why an adequate balance is required in an account for ATM cards and cheques to be used to withdraw money or purchase goods. ∙ What tools and records people use in order to manage money Students could demonstrate such knowledge and understandings when they: Create and revise a simple budget for an activity or an event. Keep simple records of money transactions and transaction documents. ∙ What credit is Students could demonstrate such knowledge and understandings when they: Give simple examples of when credit is used to gain goods and services. Explain why credit is used to purchase some items. Investigate a range of credit arrangements, including utu. Investigate the nature of the relationship between the borrower and the lender.
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STAGE 3 (Level 3 - 4, Year group 7 - 8, Age 11 - 12)
Students will demonstrate knowledge and understandings of : ∙ How income is calculated Students could demonstrate such knowledge and understandings when they: Recognise and calculate the relative value of other countries’ currency, with reference to New Zealand. Investigate simple income deductions and demonstrate their influence on income. Calculate weekly net pay from an annual salary. ∙ Different sources of income Students could demonstrate such knowledge and understandings when they: Compare income opportunities at different stages of life. Analyse how income generates well-being. Investigate and compare government transfer payments. ∙ How people use money management tools and records Students could demonstrate such knowledge and understandings when they: Plan the allocation of income for spending and short term saving. Construct basic cash flow statements. Use money management tools to monitor or adjust expenses. Plan short and longer term spending decisions. Create and set up a system for keeping financial records. ∙ How and why people use credit Students could demonstrate such knowledge and understandings when they: Investigate how credit works (including interest costs) and identify a range of forms of credit. Understand the difference between manageable and unmanageable debt. Understand the difference between good and bad debt. Demonstrate trade offs between paying now or in the future. Investigate and calculate interest rates for simple interest.
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STAGE 4 (Level 4 - 5, Year group 9 - 10, Age 13 - 14)
Students will demonstrate knowledge and understandings of : ∙ Different values and ethical factors relating to use of income Students could demonstrate such knowledge and understandings when they: Prioritise needs and aspirations within the boundaries of a finite income. Explore ways in which needs and aspirations may be financed. Understand that consumers have rights and responsibilities. ∙ How money is managed over time Students could demonstrate such knowledge and understandings when they: Investigate different forms of payment and relate to different items of expenditure. Identify personal expenses for different living situations and at different life stages. Demonstrate what records are useful in order to develop money management capability. Explain the role of budgets in managing spending and saving in the short and medium term. Identify possible sources of budgetary advice. Investigate the impact of unplanned spending. Demonstrate the impact of inflation on income. ∙ Managing credit Students could demonstrate such knowledge and understandings when they: Understand the need to plan and manage debt. Show the impact of increasing debt on current and future spending options. Compare costs, obligations and time frames of different forms of credit arrangements. Describe what is meant by credit worthiness and the implications of a credit history. ∙ Factors which influence choice of financial products Students could demonstrate such knowledge and understandings when they: Investigate how life styles and life stages influence choices of financial products.
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STAGE 5 (Level 6 - 8, Year group 11 - 13, Age 15 – 18)
Students will demonstrate knowledge and understandings of : ∙ How life stages influence decisions Students could demonstrate such knowledge and understandings when they: Discuss the income value of intangible assets. Investigate possible income shocks/disruptions to earning an income. Investigate different taxes and their impact on income. Discuss and analyse life styles possible at different income levels. ∙ How debt impacts on the future Students could demonstrate such knowledge and understandings when they: Understand the long-term implications of credit arrangements and getting in to debt. Understand the implications and operation of the student loan scheme. Research interest rates and terms of credit arrangements. Employ a tool to calculate and evaluate different savings and debt options and match debt with the future value of purchases. Using a tool, demonstrate the benefits of early repayment. Compare financial and non-financial implications of spending now with spending later. ∙ How financial record keeping assists money management capability Students could demonstrate such knowledge and understandings when they: Reconcile statements from financial institutions with personal records. Evaluate different transaction instruments and relate them to personal requirements. Demonstrate the role of financial record keeping when monitoring wealth. ∙ How goals influence spending activity Students could demonstrate such knowledge and understandings when they: Use a decision-making model to demonstrate cost/benefit analysis for making choices among spending alternatives for major purchases. Evaluate the links between short term savings and the achievement of future goals.
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KNOWLEDGE STRAND
FINANCIAL PLANNING and WEALTH
ACHIEVEMENT OBJECTIVES AND INDICATORS
STAGE 1 (Level 1-2, Year group 1-3, Age 5-7)
Students will demonstrate knowledge and understandings of : ∙ Looking after money Students could demonstrate such knowledge and understandings when they: Show the need to keep money safe. Understand the consequences of losing money or having it stolen. Discuss where money can be safely stored for future use. ∙ Why people save money Students could demonstrate such knowledge and understandings when they: Demonstrate that money can be put aside for use later. Identify a personal or family short-term savings goal and discuss how to save for it. Give examples of when saving enables people to purchase goods which are too expensive for an immediate purchase with the current funds available. Investigate benefits and disadvantages of saving.
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STAGE 2 (Level 2 - 3, Year group 4 - 6, Age 8 - 10)
Students will demonstrate knowledge and understandings of : ∙ How and where money is saved Students could demonstrate such knowledge and understandings when they: Investigate places for saving money and savings opportunities. Compare the advantages and disadvantages of different places to save money. Discuss the role of financial institutions in saving money. Investigate the features of different savings accounts. ∙ Planning ahead Students could demonstrate such knowledge and understandings when they: Set goals for a short term project. Demonstrate that the project will require financial resources and estimate those requirements. Explain how those financial resources will be managed. ∙ What risks exist to personal and community well-being Students could demonstrate such knowledge and understandings when they: Give examples of personal or community actual or potential loss. Investigate risks that may exist. Discuss how risks can be managed. ∙ How wealth is created Students could demonstrate such knowledge and understandings when they: Investigate what wealth is. Examine life stages when wealth is a generator of income.
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STAGE 3 (Level 3 - 4, Year group 7 - 8, Age 11 - 12)
Students will demonstrate knowledge and understandings of : ∙ What organisations offer savings and investment opportunities Students could demonstrate such knowledge and understandings when they: Investigate the features of a range of savings accounts in relation to short and long term access. Show that savings decisions require trade offs between short and long term goals. Investigate and explain the role of various financial organisations in the community. Research various financial investment products. Give examples of interest rates varying over time. ∙ The need to plan financially Students could demonstrate such knowledge and understandings when they: Discuss short, medium and long term goals, needs and aspirations. Plan decision making on the basis of short and medium term events, activities or aspirations. Understand the implications of personal financial decisions on yourself. Prepare a financial plan for a personal goal. ∙ The need to manage risk Students could demonstrate such knowledge and understandings when they: Explain what risk is. Demonstrate which risks are insurable. Discuss which risks can be managed personally, and which can be transferred to someone else (via insurance). ∙ How wealth is calculated Students could demonstrate such knowledge and understandings when they: Calculate wealth. Understand how wealth creates financial independence.
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STAGE 4 (Level 4 - 5, Year group 9 - 10, Age 13 - 14)
Students will demonstrate knowledge and understandings of ∙ Risk and return in relation to popular financial products Students could demonstrate such knowledge and understandings when they: Investigate generic financial products available to young people in the short and medium term. Research the risk and returns involved in investment products, including the sharemarket. Investigate the terms and conditions that are offered by a range of retail investments. Give examples of different rights and responsibilities in relation to financial products. Compare the risk and return from savings and investment products over time. ∙ Financial planning for the future Students could demonstrate such knowledge and understandings when they: Investigate life stage related financial events. Demonstrate the longer term financial consequences of decision making. Show various savings commitments for different sorts of items and how decisions for these differ. Compare long term savings goals and trade offs with short term goals. Develop a simple financial plan. ∙ The need for financial protection Students could demonstrate such knowledge and understandings when they: Research the probability of personal and household insurance risks. Investigate a range of providers of insurance. Investigate changing risk management needs at various life stages and in relation to income and wealth. ∙ Why and how people invest income Students could demonstrate such knowledge and understandings when they: Investigate different ways of investing income to create wealth. Investigate and compare interest rates and terms over time. Employ a tool to demonstrate the benefits of compound interest. Demonstrate the impact of inflation on wealth.
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STAGE 5 (Level 6 - 8, Year group 11 - 13, Age 15 – 18)
Students will demonstrate knowledge and understandings of : ∙ Manage personal investment activity Students could demonstrate such knowledge and understandings when they: Investigate and explain the external influences on personal investment. Gather relevant information prior to making a significant financial decision. Recognise scams. Calculate real and nominal return. Compare investment performances. Recognise the consequences of borrowing for tertiary study Research and organise managing and assessing different kinds of risk for personal assets. ∙ Create a personal financial plan Students could demonstrate such knowledge and understandings when they: Understand the personal financial planning process. Investigate the components of a financial plan. Develop a tool to calculate and evaluate different savings and debt options. Design a personal financial plan. Investigate options for financial planning advice. Evaluate the nature of the advice given. ∙ How life stages influence wealth creation decisions Students could demonstrate such knowledge and understandings when they: Discuss the wealth value of intangible assets. Investigate opportunities to create wealth at different stages of life. Investigate different taxes and their impact on wealth. ∙ The relationship between financial independence, life style and wellbeing. Students could demonstrate such knowledge and understandings when they: Calculate the impact of time on compound interest. Analyse how income levels impact on wealth creation opportunities. Analyse the income risks of failing to plan financially. Discuss and analyse life styles possible at different wealth levels. Show the benefits of wealth creation and its relative impact on life style and personal well-being.
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