Twelve lesson plans, two units

Unit 1: Your first paycheck

Lesson 1: What the numbers on your pay stub mean

Objective. Read a pay stub and name the gap between what was earned and what arrived.

The lesson, in the student's words. Your pay stub has two big numbers: what you earned, and what you got. The gap is taxes and a few other things taken out before you ever see the money. It is not a mistake, and it is not the whole story either. Knowing the gap is the first grown up money skill, because everything else is planned from what you actually get, not what you earned.

The practice number. What did your last paycheck say you earned, before anything was taken out? In class mode a practice figure is offered; the student may keep it or type another.

The check. If about 20 percent came out, roughly what did you take home?

The answer, for the teacher. About 80 percent of the gross: with the practice figure of $1,200 earned, about $960 arrives. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find your real take home. Look at your pay stub or your bank deposit. Enter what actually landed in your account.

Talk about it. Why is the gap not a mistake? Who gets each piece of it, and what does each piece buy?

The usual misunderstanding. Students plan from the earned number. The lesson exists to move planning to the arrived number.

Lesson 2: The first hundred dollars you never see

Objective. Explain why money set aside before it is seen is easier to keep, and compute a year of it.

The lesson, in the student's words. The easiest money to save is money you never see. If a little comes out of each paycheck before it reaches you, you will not miss it, and it grows while you are busy living. Start small. The habit matters more than the amount, and the amount can grow every time your pay does.

The practice number. How much could you set aside from each paycheck without feeling it? In class mode a practice figure is offered; the student may keep it or type another.

The check. If you get paid twice a month, how much is that in a year?

The answer, for the teacher. The per paycheck amount times 24 for twice monthly pay: $50 becomes $1,200 a year. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find the transfer screen. Open your bank's app and find the screen where a recurring transfer is set up, the one that moves money to savings on a day you choose. Enter the day of the month such a transfer could happen.

Talk about it. What is the smallest amount that would not be missed? What happens to that amount when pay rises?

The usual misunderstanding. Students believe the amount matters more than the habit. The arithmetic shows a small habit over a year.

The calculator behind it. Open it on a projector and move the sliders while the class watches the answer change.

Lesson 3: The account that grows

Objective. Tell a savings account from a retirement account, and say what a match is.

The lesson, in the student's words. A savings account keeps money safe. A retirement account lets it grow for decades without being taxed along the way, and if your job offers one with a match, that match is free money on the table. If your job has no plan, you can open a Roth IRA yourself in about ten minutes, and money you put in as a teenager or twenty year old has more time than any money you will ever put in again.

The practice number. Does your job offer a retirement plan? Enter 1 for yes, 0 for no. In class mode a practice figure is offered; the student may keep it or type another.

The check. If you put in $50 a month from age 20 to 65 at 7 percent, roughly how much is that at the end? (Use the tool if you like.)

The answer, for the teacher. About $190,000: $50 a month from age 20 to 65 at 7 percent, compounded monthly, which the contributions calculator shows. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find the plan, or the door. If your job has a plan, find its enrollment page and the line that states the match formula. If it has none, find one low cost brokerage's page for opening a Roth IRA and what it asks for. Enter the name of what you found.

Talk about it. Why does money put in at twenty differ from the same money put in at forty? Who offers a match, and why would an employer do that?

The usual misunderstanding. Students hear retirement and think it is for old people. The number shows that time is the ingredient, and only the young have the most of it.

The calculator behind it. Open it on a projector and move the sliders while the class watches the answer change.

Lesson 4: The first credit card, without the trap

Objective. State what a credit card is, what it costs when a balance is carried, and what a credit record is for.

The lesson, in the student's words. A credit card is a loan you pay back every month. Used that way, it costs nothing and builds a record that later gets you a cheaper car loan and a cheaper mortgage. Used the other way, carrying a balance, it is the most expensive money most people ever borrow. The rule that keeps it safe has one line: never spend on it what you could not pay in full this month.

The practice number. What is the interest rate on a card you have or were offered? Around 24 percent is common. In class mode a practice figure is offered; the student may keep it or type another.

The check. If you carried a $1,000 balance for a year at that rate, roughly how much interest is that?

The answer, for the teacher. About $240: a $1,000 balance for a year at 24 percent. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find the autopay setting. In the card's app, find the setting that pays the full statement balance automatically each month, the one that keeps a card from ever carrying a balance. Enter the word found when you see it.

Talk about it. What does a card cost when it is paid in full every month? What does a lender look at years later, and why?

The usual misunderstanding. Students think a card is extra money. The arithmetic shows it is a loan with a price.

The calculator behind it. Open it on a projector and move the sliders while the class watches the answer change.

Lesson 5: One month of breathing room

Objective. Define one month of breathing room and compute how long it takes to build at a given pace.

The lesson, in the student's words. The first goal is not a fortune. It is one month of your bills sitting in savings, so a car repair or a slow month at work is a problem and not an emergency. Most people never get this far, and the ones who do stop worrying in a way that is hard to explain until you feel it.

The practice number. What do you spend in a typical month, everything counted? In class mode a practice figure is offered; the student may keep it or type another.

The check. At the amount you set aside per paycheck in step two, how many months until you have one month saved? Guess is fine.

The answer, for the teacher. Monthly spending divided by what is set aside each month: $1,400 of spending at $50 a paycheck, twice a month, is 14 months. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Name the account. Rename your savings account to something like Breathing Room, so you know what it is for. Enter the name.

Talk about it. What is the difference between a problem and an emergency? What changes for a person who has one month set aside?

The usual misunderstanding. Students aim at a fortune and give up. The lesson aims at one month.

The calculator behind it. Open it on a projector and move the sliders while the class watches the answer change.

Lesson 6: When someone has a sure thing

Objective. Ask who is on the other side of a sure thing and how they are paid, and compute an expected outcome.

The lesson, in the student's words. At some point someone you know will have a coin, a stock, or a scheme that cannot lose. It can. The people who get rich telling you about it get rich from you, not from the thing. The question that protects you is simple: who is on the other side, and how do they get paid?

The practice number. How much would it hurt to lose, right now, without changing your life? In class mode a practice figure is offered; the student may keep it or type another.

The check. If a thing pays off one time in ten and returns three times your money when it does, what do you have on average after ten tries of that amount? (Hint: less than you started with.)

The answer, for the teacher. Less than the stake: ten tries of $100 cost $1,000, one win returns $300, so $300 remains of $1,000. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Write your rule. Write one sentence about what you will never put money into without understanding it. Enter it.

Talk about it. Who gets rich from a scheme, and how? What question would a student ask before putting money into anything?

The usual misunderstanding. Students believe the person telling them is the one who loses if it fails. The arithmetic shows who loses.

Unit 2: Out on your own

Lesson 7: The real monthly cost of a first apartment

Objective. Add the extras to the rent and name what a month costs with the door closed.

The lesson, in the student's words. Rent is the big number on the listing, and it is never the whole number. Electricity, internet, renters insurance, and the things a kitchen needs all land in the same month, and together they usually add about a quarter on top of the rent. The number that matters is what a month costs with the door closed and the lights on. That is the figure a paycheck has to cover, and the one most people learn the hard way.

The practice number. What is the monthly rent on a place you could picture living in? In class mode a practice figure is offered; the student may keep it or type another.

The check. If the extras add about a quarter on top, what does a month cost all in?

The answer, for the teacher. Rent times 1.25: a practice rent of $900 becomes about $1,125 a month. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find move in day. Open a listing you could picture and find the deposit it asks for. Enter the deposit.

Talk about it. Which extras are the same every month and which swing? What happens to the figure with a roommate?

The usual misunderstanding. Students plan from the rent. The lesson exists to move planning to the month.

Lesson 8: Taxes, the W-4, and the April settle up

Objective. Say what the W-4 does and what the April return settles.

The lesson, in the student's words. When you start a job you fill out a form called a W-4, and it tells your employer how much to hold back from each check for federal income tax. Hold back too little and April brings a bill; too much and April brings a refund, which is your own money coming back late. Neither one is winning or losing. The return you file in April is the settle up between what was held back and what the year actually owed.

The practice number. What is your yearly pay, roughly, before anything comes out? In class mode a practice figure is offered; the student may keep it or type another.

The check. If about 8 percent of that is held back for federal income tax over the year, how many dollars is that?

The answer, for the teacher. About 8 percent of pay: $24,000 becomes about $1,920 over the year. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Find the line. On one pay stub, find the line for federal income tax withheld and enter what came out of that one check.

Talk about it. Is a big refund good news? Whose money was it all year?

The usual misunderstanding. Students believe a refund is a gift. The arithmetic shows it is their own money returned late.

Lesson 9: The first car by the numbers

Objective. Name the four prices of a car and estimate what the loan adds.

The lesson, in the student's words. A car has four prices: what it costs to buy, what the loan adds, what insurance costs every month, and what gas and repairs cost over the year. The listing shows the first one. The other three are where the money goes. A car that costs $8,000 to buy can cost $15,000 to own over four years, and nobody who sold it was lying. They were only answering the question that was asked.

The practice number. What is the price of a car you could picture buying? In class mode a practice figure is offered; the student may keep it or type another.

The check. A four year loan at 9 percent adds about a fifth of the price in interest over its life. About how much interest is that on yours?

The answer, for the teacher. A fifth of the price: $8,000 becomes about $1,600 in interest over four years. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Get one quote. Ask an insurer what a month of insurance would cost for that car with you as the driver. Enter the monthly figure.

Talk about it. Which of the four prices does an ad show? Which one surprises people most?

The usual misunderstanding. Students compare cars by the sticker. The lesson compares them by the year.

Lesson 10: The sticker price and the net price

Objective. Tell the sticker price from the net price and compute four years of each.

The lesson, in the student's words. Every school has two prices. The sticker price is the one on the website. The net price is what a family actually pays after grants and scholarships, and for most students it is a different number, sometimes by half. Every school in the country is required to have a net price calculator on its website. Fifteen minutes with it turns a scary number into a real one.

The practice number. What is the yearly sticker price of a school or program you could picture attending? In class mode a practice figure is offered; the student may keep it or type another.

The check. Four years at that sticker price, if nothing changed, would come to how much?

The answer, for the teacher. Four times the sticker: $12,000 becomes $48,000 before grants. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Run the calculator. Find that school's net price calculator and run it with practice numbers. Enter the grants and scholarships it showed for one year.

Talk about it. Why would two students at the same school pay different amounts? Where does the difference come from?

The usual misunderstanding. Students rule schools in or out by the sticker. The calculator is the lesson.

Lesson 11: What insurance is for

Objective. Say what insurance is for, what a deductible is, and compute the insurer's share.

The lesson, in the student's words. Insurance is a trade: you pay a small amount every month so that someone else pays a large amount if a certain bad thing happens. The deductible is the first part of that large amount that is still yours to pay. It is for the things that would break you, not the things that would annoy you. A cracked phone screen is what a cushion is for. A hospital stay is what insurance is for.

The practice number. What is the deductible on any insurance you or your family has? A guess is fine. In class mode a practice figure is offered; the student may keep it or type another.

The check. Something covered costs $2,000 to fix. After your deductible, how much does the insurer pay?

The answer, for the teacher. The cost less the deductible: $2,000 less $500 is $1,500 from the insurer. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Name the big one. Write down one thing in your life that would cost more than your cushion if it went wrong.

Talk about it. What is the difference between a thing that would annoy you and a thing that would break you? Which does a cushion cover?

The usual misunderstanding. Students think insurance is for everything that goes wrong. The lesson sorts the big from the small.

Lesson 12: Your credit record and who reads it

Objective. Describe what a credit record holds, who reads it, and compute how much of a limit is in use.

The lesson, in the student's words. A credit record is a file about how you have handled borrowed money: whether bills were paid on time, how much of a card's limit is in use, how long the accounts have been open. A score is a number made from that file. Lenders, landlords, and some employers read it before they ever meet you. It is free to read your own, once a year from each of the three companies that keep one, and most people never look.

The practice number. What is the limit on a credit card you have or could picture having? In class mode a practice figure is offered; the student may keep it or type another.

The check. Using $50 of that limit in a month is what percent of the limit?

The answer, for the teacher. $50 of a $500 limit is 10 percent. The page accepts an answer within a few percent and shows the arithmetic after the second try.

The mission. Read your own file. Go to the free official site for credit reports and open one of yours, or a parent's with them beside you. Enter how many accounts it lists.

Talk about it. Who reads the file a student has never seen? What is free to do about it once a year?

The usual misunderstanding. Students think the score is the record. The record is the sentences; the score is a summary of them.