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Students expand their knowledge
and understanding of economics and banking.
Overview
Children need to understand the concept of money: its use, its buying power, and its conservation. This banking unit engages students in operating a real bank, where they manage and handle real money. Students experience using a savings account and learn that a savings account can provide a good investment and a safe way to store funds. The operation of the school bank helps students apply and reinforce their learning, especially in calculation and record keeping. The experience teaches students that they, as consumers, have an impact on banking and the economy. This lesson is recommended for the upper-elementary grade levels; however, younger students also may benefit from participation and eventually become "bank" employees.
Teaching Activity
Teaching Economic Concepts
Consumers and Producers
We are all consumers and producers. Have students search magazines for pictures of products and of people using those products. Discuss who is a consumer. Paste pictures on a large poster board labeled Consumers. Ask students to draw pictures of their favorite and least-favorite items to purchase. Discuss the difference between a producer and consumer. Brainstorm a list of producers needed to keep a school running well. Discuss the role of family members as producers and consumers.
Goods and Services
Producers make goods; consumers purchase goods. Explain the definition of services. Discuss durable and nondurable goods using a glass of water as an example. Ask the class what is consumed and what is not. Have the class think of other examples and list them on the board.
Wants and Needs
Read the Grimm's Fairy Tale The Fisherman and His Wife. Discuss how age, geographical location, and climate can affect the needs and wants of people.
Choices and Decisions
The things we value are usually evident by our goals, choices, and decisions. Discuss with students the definition of goal. How do we achieve a goal? What do we have to give up in order to reach a goal? List different goals for different age groups, from children to senior citizens. Instruct students to interview someone outside of the classroom using the interview questions on Handout 1. Have students share their interviewees' responses with the class. Discuss the steps in decision making.
Money Skills
Take time to discuss the history of money using the resource From Rocks to Riches, published by the New York Fed. (This publication is no longer in print. Check your local library or substitute another publication on the history and evolution of money.) Then read Looking After Your Own Money (published by the National Schools Committee for Economic Education, Inc.) and discuss how to handle money. The ability of students to handle money quickly and easily is important. Time spent with this content is valuable.
Discuss with the class the term barter. Remind students of the early settlers and American Indians and their use of bartering. Ask students if they have ever traded with their friends. List the problems and benefits of barter and money.
Brainstorm and discuss with the class the evolution of money — topics such as barter, gold, design changes, and counterfeit features. Have students work in groups to research and report on a specific category of money. Reports may include use of posters, skits, and maps.
Show different samples of money to students for identification purposes. Create play money and ask students to bring in empty boxes and cans to set up a store situation in the classroom. Instruct students to set prices and practice buying items and receiving change.
Creating a Student Bank
Preparation
As students explore banking topics, the use of field trips and guest speakers will prove beneficial. Secure a commitment from a local bank — possibly one the school deals with — in order to set up an account for a student-run bank. This account is referred to as a master savings account. Individual student accounts will be set up within this master account.
What is a bank? Set up a field trip or invite a parent who is a banker or a representative from the bank that holds the master savings account to visit the class. Discuss the roles of branch manager, customer service representative, teller, and bookkeeper. If possible, tour the bank, including the lobby, offices, and vault. Ask bank employees to show students the forms used in each area of the bank. Ask students to write a reaction to the field trip.
Assign students to read Banking Basics, published by the Boston Federal Reserve, and discuss it as a class. Have students work in groups to become experts on assigned topics presented in Banking Basics. Review the specific forms a bank uses to conduct business, referring again to the resource Looking after Your Own Money. Introduce checks and electronic transactions to the class, and discuss why they are helpful to customers. If appropriate, ask students to read and discuss the New York Fed's The Story of Banks in small groups.
Invite a bank official to speak to students about the qualifications and responsibilities of a board of directors in a bank. Ask students to list important facts about a board of directors. Then ask students to elect a board of directors for their own bank (e.g., president, vice president, head customer service representative, head teller, head bookkeeper, and head of security).
Job Training
It is now time to train students to run the school bank. Introduce students to the Training Manual, Handout 2. Review bank policies and job descriptions. Demonstrate how to complete each bank form using handouts, an overhead projector, or a PowerPoint slide show. Then ask students to practice using the forms and practice handling the money individually and with partners. Introduce the use of electronic calculators during student training.
Next, discuss the interview process and the importance of a complete application and resumé. Have students complete applications for specific bank jobs and conduct interviews for these jobs. Assign students to different roles in the banking operation; rotate the roles periodically. In this way, students are trained for all of the jobs required to run the bank. Students can understand and experience all of the bank's operations. This experience also provides an opportunity for them to learn their own particular strengths, weaknesses, and preferences.
Begin advertising the opening of the bank to other classes in the school. Set regular banking hours. Obtain permission slips for students to participate in the school bank.
Technology Notes
A computer software program is a vital tool in record keeping for the school bank, for computing interest, recording transactions, and confirming accuracy of ledgers. Such a program backs up paper records generated by student-bank employees. A software program can be designed in partnership with a local high school computer class, purchased from a software company, or obtained by other means. Collegiate's school bank — the Cougar Savings Club — purchased their school-bank software program from Mark Didelot at www.didelot.com. This software program was an important part of making the lesson a successful one for both teacher and students.
Visit the Cougar Savings Club on the Powell Endowment Web site at www.powellendowment.org/pages/Cougar%20Savings%20Club.htm for a complete list of operations and documents needed for all banking transactions.
Conclusion
Student participation in real-world situations, such as this banking unit, provides an excellent opportunity for understanding and retention of economic concepts relating to the handling and management of money. Students also learn the importance of accurate record keeping and that a savings account is a good investment and a safe way to store funds.
Economic Concepts
Allowance A set amount of money paid to an individual on a regular basis to meet personal expenses. Balance The total amount of money in a customer's account at a point in time. Bank A business that provides financial services for customers: receives deposits, cashes checks, makes loans, offers savings accounts, and pays interest. Bills/Currency Paper money used in society. In the United States, bills (Federal Reserve notes) are printed at the Treasury Department's Bureau of Engraving and Printing and are issued to commercial banks by the Federal Reserve System. Check A means by which depositors can withdraw funds from their accounts at their financial institutions. Coins A form of money — round, flat pieces of metal, which have certain values and can be used to buy goods and services. In the United States, coins are made by the U.S. Mint. Consumer A person who uses goods and services. Credit A sum added to a bank account. Debit A sum deducted from a bank account. Denomination The specific value of a unit of money, such as 1-dollar bill, 5-dollar bill, quarter, dime, nickel, and penny. Deposit Slip A form filled out to record the amount of money a customer adds to his/her account. Finance Charge A fee charged for a transaction, such as withdrawals in excess of three per quarter. Financial Institution A business that provides financial services, e.g. banks, credit unions, savings and loans. Interest Money paid for the use of money. 1) Banks use the money held in savings accounts. In return, banks pay money (interest) to savings account holders. 2) When people borrow money from the bank, they pay money (interest) to the bank for its use. Interest Rate The percentage charged on money borrowed or paid on money saved. Invest To put money into a business, real estate, stocks, or bonds with the expectation of obtaining an income or profit. Investment The amount of money used in expectation of earning income or profit. Money The official coins and currency (paper bills) authorized by a government as a medium of exchange — used to pay for goods and services. Monthly/Quarterly Statement A written document from a bank listing the customer's deposits and/or withdrawals for a month or three months; finance charges and interest are also included. Receipt A duplicate copy of deposit or withdrawal slips for the customer's records. Bank personnel must stamp the receipt. Savings Account A bank account where a customer places money for safekeeping and to earn interest. Savings Register A record of deposits and withdrawals to a customer's savings account. Verify To prove to be true by demonstration, testimony, or evidence. Withdrawal Slip A form filled out to record the amount of money taken out of an existing account. |