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Financial Education For School Children PDF
Financial Education For School Children PDF
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LEARNING
Session1
MoneyMatters:Theyreallymatter!
ActivityI
RaviandMohanarestudentsofclass10th ofABCPublicSchool.Onedaybothofthemwentintoanargument
aboutwhoiswealthier?Theargumentpeakedupandtheystartedtomentionthethingswhichthey
possessed.
Ravistartedfirstandmentionedfollowingarethethingsavailablewithhim:
CycleworthRs.2250.
WatchworthRs.475.
BooksworthRs.1250.
ACricketbatofworthRs.345.HeborrowedtheracquetfromRajeshforsometime.
5WonderlandcomicseachworthRs.35each.Outofthefivecomics,hehadborrowedtwofromArjun.
ThingsavailablewithMohanareasfollows:
BooksworthRs.750.
BasketballworthRs.650.
AMobileworthRs.1000
HeborrowedtwogamesCDfromChandanworthRs.100each.
AvideogameworthRs.1250.
AtennisracquetworthRs.1000.HehaslenttheracquettoPankajforfewdays.
WealthisdeterminedbyNet
worth
Bothofthemknowthethingsavailablewiththem
andtheirrespectiveprices.Buttheydontknowhow
toprovewhoswealthier.Canyouhelpbothofthem
toknowwhoiswealthier?
Networth=Assets
Liabilities
Asset:Somethingyouown
Liability:Somethingyouowe
LEARNING
ACTIVITYII:
Letsenhanceour understandingofassetsandliabilitiesfurther:
TheinformationfurnishedbelowisofMr.PawarYouneedtocalculatethenetworthofMr.Pawarbyidentifying
theitemsasassetsorliabilities:
SpeakingMoneywise:You
areworthyourNetworth
ITEM
Amount(Rs.)
AMOUNT(Rs.)
Asset
ASSET
LIABILITY
Savingsbankaccountbalance
55,000
Sharesoflistedcompanies
60,000
Car
3,25,000
House
25,00,000
Furniture
12,500
AirConditioner
14,000
Microwave
10,500
Laptop
22,000
GoldJewelry
75,000
LifeInsuranceSurrenderValue
85,000
CarLoanOutstanding
2,00,100
HomeLoanOutstanding
12,00,000
Moneylendtoafriend
15,000
Paymenttomaidnotpaid
1,500
TotalAssets
TotalLiabilities
Networth=TotalAssetsTotalLiabilities
NetworthofMr.PawarisRs.
LEARNING
Planning:TheMantraofSuccess!
WeallhaveGoalsinlife:
IwanttobuyacricketBat
Iwanttogotopicnic
Iwanttobuyacycle
Iwanttogetadmissionin ABCCollege
Haveyoueverwonderedwhymanyofourgoalsaredelayedorworsenotfulfilled?Well,simplybecauseweare
wishfulaboutourgoalsandwehavenodefinitePLANtoachievethesecherishedgoals.
ThestartingpointtoachieveanyGoalistohaveaplanforit.Onceyouhaveaplan,itisnomoreavaguegoal,it
becomesaSMARTGoal.
SMART
LetsseethedifferencebetweenwhatisSmartandwhatisnot:
LEARNING
ActivityIII:
Belowarethegoalsofsomesmartkidslikeyou.NowyourtaskistoplanaSMARTgoalforeachoneofthemso
thattheycanachievetheirgoals:
1)
Name:MiteshJain
Age:15years
School:ModernPublicSchool
Passion:Playfootball
Dream:Wantstobuyafootball.
SMARTgoal:
2) Name:AnkitaSingh
Age:14years
School:LaxmibaiPublicSchool
Passion:LearnCricket
Dream:BuyaCricketbat
SMARTgoal:
ING
SuccessWise:Toclimbtheladderofsuccessyouneedto
have
SuccessWise:Toclimbthe
SMARTGoals!
ladderofsuccessyouneed
tohaveSMARTGoals!
Session2
Win
Win
Budgeting:Prioritizingtheneeds!
Win
Win
AlltheWay
ActivityIV:
Mr.andMrs.Singhhavefollowingfamilydemandstomeet:
1. Purchaseashawl(asitiswinter)forMr.Singhsmotherasapresentonherbirthday
2. EldersonSahilisdemandingaCycletocommute
3. YoungersonRohandemandingalatestVideogame
4. GiftforthemarriageofacommonfriendMr.singhhastoattend.Giftcanbeagoldset.
5. Thecouplealsowantstheirhousetobedecoratedbyaninteriordecorator.
Discuss the demands and prioritize them on the basis of importance and urgency. Thentakerequired
action:
Winwith
prioritization
Urgent
NotUrgent
Important
I.Urgentandimportantaswell
Action:Needtodonow
II.Importantbutnoturgent
Action:Plantodoitlater
NotImportant
III.Urgentbutnotimportant IV.Nethierurgentnorimportant
Action:Doitifcashflowsallow
Action:Ignore
Demand
Urgent
Important
ShawlforMr.Singhsmother
SahilsCycle
Rohansnewvideogame
Y
N
N
Y
Y
N
Marriagegiftforcommon
friend
Housedecoration
Action
BUY
PLANFORLATER
DONTBUY
BUYA LESSEXPENSIVE
GIFTTOTHEEXTENT
CASHFLOWSPERMIT
IGNORE
Remember
Needsarebasicnecessitiesonecannotwishaway.Forexampleinsummerfanbecomesaneed.
Ontheotherhandwantsmakeyourlifecomfortable.Anairconditionermakeslifemorecomfortablein
summer.
LEARNING
ActivityV:Writedownvariousneedsandwantsofyourfamilyandsuggestactionasperprioritization
Demand
Urgent
Important
Action
Budgeting:LetsfirstlearnfewtermsaboutBudgeting
CashflowStatement:
Arecordofyourincomeandexpenses.
Budget:
income
Aplanforbalancingofincomeandexpendituresoraprojectionofones
andexpenditure.
NecessityofBudget:
Optimizesavings
TrafficsignalforvehiclecalledSpending.
Saveaccuratelyforaparticularshort/longtermgoal.
Effectivelyallotfundstovariousareasofexpenditureinadvance.
BudgetSurplusorDeficit:
Projectedincome>ProjectedExpenditure=Budgetsurplus
Projectedincome<ProjectedExpenditure=Budgetdeficit
PostponingSatisfaction:
Let go something now for something better/bigger in the future. Eg: giving
uptheideatobuyvideogamenowtopurchaseabicycleinthefuture.
InstantSatisfaction:
Instantly buy something when you want it. Eg: Purchase a video game
instantlywhenyouwantit.
OpportunityCost:
Knowledgeofbudgeting
LEARNING
ActivityVI:PlanyourBudget
Himanshuisa15yearoldboyandhestaysinHyderabadwithhisfamily.Hisfamilyconsistsofhisfather,his
motherandsisterPriya.
HimanshugetsRs.1500asamonthlyallowancefromhisparents.OutofRs.1500hehastopayRs.600as
schoolbusfees.HehastopayRs.200forYogaclassesandRs.300forcanteen.Outoftheremainingamount
heusesRs.200fortherechargevoucherforhismobile.Heisanavidfanofcomicsandhencehespends
Rs.150(4to5comics)oncomics.Restofthemoneyhespendsonstationaryand/oricecream.
HissisterPriyaalwaysgiveshimabirthdaypresentbuthenevergaveanythingtoheronherbirthday.But
thisyearhehasdecidedtogiveherasurprisegift.Priyasbirthdayisafter2months.Butasofnowhehasno
savingswithhimandhedidntwanttoborrowextramoneyfromhisparentsforthepurpose.Hedidntwant
toborrowmoneyfromafriendashisparentswouldgetangryiftheycometoknowaboutit.
HewantstogiveadresstohissisterwhichcostsRs.600whichheunabletofindanywaytogetmoneytobuy
it.CanyouhelpHimanshutoattainhisgoal???
WhatshouldbeHimanshusSMARTgoal?
Analyzetheneeds/wantsofHimanshu:
Description
Amount
Need
Want
PlanningandreworkingonHimanshusbudget:
Note:
Income:Moneyearnedfromvarioussources
Expenditure:Moneythatisspendforneedandwants
Cashflowstatement:Recordofincomeandexpenditure
8
LEARNING
ActivityVII
Jai is a 14 year old boy who resides in Pune with his family. His family consists of four members, his
father,mother, younger sister and himself. One day he along with his younger sisterDisha decided to
go for a familytrip to Manali. When he discussed their desire to his parents, they liked the idea but
kept itinthebackseatasthereweresomeurgentneedsthatweresupposedtobefulfilledintheyear.
Understanding the problem of his parents, he decided to save money from household expenses and
planthetripwiththesavings.Hediscussedthisstrategywithhisparentsandtheywereveryhappyand
appreciatedthisaptdecisionoftheirwiseson.Theyalso promised to spare Rs.15000 for the trip. Rest
was dependent on the savings. The plan for the trip was 6months from now. Jai enquired about the
expenses of the tripand came to know that total trip will costapproximately Rs.30000. He collected
the details of monthly expenditure offamily in a chart along with theadditionaldetailswhichareas
follows:
EveryS u n d a y ,f a m i l y g o e s f o r a n o u t i n g . Theyw a t c h m o v i e i n t h e t h e a t r e w h i c h
c o s t s them Rs.150/person.
AftermovietheygoforalongdrivewhichcoststhemRs.300/Sunday.Dinnerinarestaurant
whichcoststhemRs.550/Sunday.
HisfatheruseshiscartocommutetohisofficewhichcoststhemRs.150/day.Hisfatheralso
possessesa
BikewhichwhenusedtocommutetoofficewillcostthemRs.50/day.Heworks22daysa
month.
AreaofExpenditure
Medical&emergency
Reserve
Electricitybill
Phonebill
Movie&Popcornat
Multiplex
Dinneratarestaurant
Longdriveexpenses
Grocery
Fathersdieselcharges
Misc
Total
ExpectedSaving
TotalSaving
Current
Expenditure/month
Proposed
saving
Scopeforcurbing
Savingsin6
months
2500
1000
1800
5500
800
LEARNING
LEARNING
Activity:VIII
Prepareyourfamilysmonthlybudget&findoutmonthlysurplus/deficit
AreaofExpenditure
CurrentExpenditure/month
9
TotalExpenses
AreaofIncome
CurrentIncome/month
TotalIncome
IncomeExpenses=Surplus/Deficit=
______________________
10
LEARNING
Session3
Investments
Keepyourmoneysafeandmakeitwork!!!
Onceuponatimeatabank:
Ankushwenttoabankalongwithhisfather
Banker:(toAnkush),Sondoyouhaveapiggybank?
Ankush:YesSir, anditisalmostfullandIplantobuyanotherone.
Banker:whydon'tyouputthemoneyinthebank?
Ankush:IhaveRs.150withme,butwhyshouldIgiveittoyourBank?Willyoureturnmymoney?
Banker:WhatifIsay,InotonlywillreturnmoneybutgiveyouadditionalRs10attheendoftheyear
Ankush:Iwouldletyouknowafteraskingmyfather.
AnkushiswonderingWhywouldthebankerreturnRs.160ifheisgivingonlyRs.150?
WhatisthisextraRs.10thatBankerisofferingtoAnkush?
Threepillarsof Investment!
Ankushlaterathomeaskshisfather,whythebankerofferedhimextra10Rupees.Fatherreplieditscalled
return
Oninvestmentandinthiscaseitisnamedasinterest.Therearethreeaspectstoinvestmentyoumustknow:
Safety:Ifyoulend100rupeestosomeone,willhegiveitbacktoyoui.e.isyourcapital(Rs.100)safe?
Liquidity:Willyougetyourmoneybackifyouneeditimmediately?
10
11
LEARNING
Activity:IX
RealBankVs.PiggyBank:Letscomparethemon3crucialfeatures:
PiggyBank
Safety
Liquidity
Growth
RealBank
Writedownatleastthreedifferentavenuesofinvestmentyoucanthinkof:
1.
2.
3.
Banking:
ButwhatisaBank?
Bank is an institution where people park their surplus money (Deposit) and earn some return called
interest. At the same time people who need money can borrow from bank for a cost (again
interest).Therefore bank is an institution involved in the business of borrowing and lending money. It
charges higher rates of interest while lending and pays lesser interest to depositors. The difference
betweenlendingandborrowingrateiscalleditsNetinterestmargin(NIM)
ForanycountrybanksplayavitalroleforthefinancialneedsofIndividualsandcompanies,enablingsmooth
Economicactivity
TypesofbankAccounts:
Savings Account: It is useful for depositing your surplus money and withdrawing money needed for
expenses.Oneneedstokeepaminimumbalanceusually.Bankspaylowestinterestrateonthemoneykept
inthisaccount.
Termdepositaccountorfixeddepositamount:Asthenamesuggestsinthisaccountmoneyisdeposited
forafixed andpredetermined term.One deposits money which is not required immediately in this account.
Interestrateishigherthansavingsaccount.
Activity:X
1. WhatisATM?
2. Whatisacheque?
3. WhatisaDemanddraft?
4. ebanking?
12
LEARNING
Session4
INVESTMENTMANTRAS
1. Timevalueofmoney
Sunny:
StartsinvestingRs.100everyyearfromtheageof15
Attheageof25,shestopsinvesting
HedoesNOTwithdrawasinglepennyfromthismoney
Bobby:
StartsinvestingRs.400everyyearfromtheageof25.
Hecontinuestoinvestthesameamounttilltheageof35.HedoesNOTwithdrawasingle
pennyfromthismoney.
Given:Bothearn15%perannumreturnontheirinvestment.
Whodoyouthinkwillhaveaccumulatedmorewealthattheageof35?
Whatdidyouunderstandfromtheabove?
2. Whatistheeighthwonderoftheworld?
Thek i n g founditaveryeasyreward.Buttillthe64thsquare,themanhadmanaged
togather18,446,744,073,709,551,615ashrafis!!!!Thekinghadgiventhemanhiswordsohehadto
sticktoit.Soevenafterhavingemptiedhisentiretreasury,hecouldnotpaythemansfullreward.
13
LEARNING
Thestoryunderlinestheconceptof
Whatdidyouunderstandfromthis?
3. Howmanyyearsaregoodenough!Whatrateisgoodenough?
ThetablebelowshowsyouhowasingleinvestmentofRs.500willgrowatvariousratesofinterest.
Years
1
5
10
15
25
5%
525
638
814
1039
1693
10%
550
805
1297
2089
5417
15%
575
1006
2023
4069
16459
20%
600
1244
3096
7704
47698
Canyouinterprettheabovetable?
4. Neverevergiveup!
Harsha and Varsha, twins, decide to invest Rs. 3000 every year when they are 25 years old. Harsha just
gaveupattheageof30whereasVarshacontinuedtoinvestregularly. Afewyearslater,Harshadecided
to make up for all those years so she investeda lump sum of Rs. 20,000 when she turned 35 andagain
investedRs.25,000attheageof42.Thusbytheageof45,bothHarshaandVarshahadinvestedRs.63000
each.Assumingagrowthrateof15%,HarshahadRs.4lakhwhereasVarshahadRs.3.8lakh.
WhydidVarshalose?
14
LEARNING
5. Themagicofnumber72!
StateBankofferedaninterestrateof8%ondeposits.Mr.Patilwantsto
knowwhenhismoneywoulddouble.CanyouhelpMr.Patil?
Simply divide72 by th e givenrate i.e. 72/8 = 9 years.Italso worksforfinding out rate earnedwhen
money isdoubledingivenyears.
TheRuleof72:
6. SkatingAway!!!!!
Leenais15andhasjustpassedherclassXexam.Shehasbeenattendingskatingclassregularlyforlast2years
and she is recognized as one of the best in the group. Recently she heard from her master that INLINE
Skates arebecoming popular, winning the competition in INLINE Skates can get her admitted to one of the
best colleges 3years later under sport quota.Since then she has been obsessed with the idea of getting
an inline skates andpracticewithit.LeenagoestothestoresellingthebestSkatesinthecityandfindsout
thattheequipmentwouldcostherRs.40,000!
Heartbroken, she goes to her skating teacher and tells him about the inline skates. Her teacher is a young
andtalentedskaterhimself.HelistenscarefullytoLeena.
Teacher:Whatisthetroublethen?
Leena:Sir,areyoumakingfunofme?HowcanIaffordthat?
Teacher: Leena you play really well for your age but I suggest you continue playing the normal skates for
45
Years.Wecanthenconsiderinlineskates.
Leena: Sir I know I dont need it right now but I would like to have it at least next 5 years so that I can
participateinthecompetition.Butthepriceissohigh;thereisnowayIwillbeabletoaffordtheequipment
even after 78 years. After all, I am going to be studying all along. I wont be earning. Right now I save
about 400 rupees permonth but this paltry sumcan never get me that skates. The teacher smiled with a
glint in his eyes. He said,LeenapleasedontthinkthatIammakingfunofyoursituation.Notatall.Infact
you took me 10 years back intimewhenImadeasimilardecisiontobuymyownskateswhenIwasmerely
14!
15
LEARNING
Leena got a little excited. She said, Really sir, did you succeed? You must have really pinched yourself to
savesoMuchmoney!
Teacher:Youseethatskates,thatstheonethatIboughtwhenIwasexactly21!
Leena:Howdidyoumanagesuchanamazingfeat?
Teacher: Just regular saving and investment. I did not had to sacrifice much either. I just saved and
invested asmallamount regularly and did not stop till I got what I wanted. I also started saving about 150
rupees everymonthforthelasttwoyearsinhighschool andthensavedmoreandmore asIgrewupand
earnedalittlebitofmoney.
Leena:DoyouthinkIwillbeabletobuytheskatestoo,onmyown...thatisIdontwanttobothermydad.
Teacher:Ofcourseyouwillbeableto!Getapenandpaperandletsmakeyouaplan!!
Amount
permonth
Rs.200
Rs.300
Rs.400
Total
Periodof
Investment
8years
6years
5years
Principal
Amount
19,200
21,600
24,000
Possiblerate
ofInterest
10%
9%
8%
Final
Amount
7.TheInflationTermite:Beware!
Atwhatpricedidyoubuyyourschoolbaglasttime?Willyougetitforthesamepricetoday?Theansweris
probably no. This means the price of things keep on increasing. This phenomenon of price rise is called
Inflation.
Now let us assume, the price of your school bag was Rs.200 last year and it costs Rs.210 this year, the
inflationratethereforeis5%(=10/200*100=5%).NowifyouhadsavedRs.200lastyearandexpectedtobuy
thebagthisyearwithyoursavingyouwouldbeshortofRs.10.Therefore,itveryimportantthataresavings
areinvestedataratewhichishigherthaninflation.
Forexample,ifyouhaveinvestedRs.100attherateof10%andtheinflationis5%,thenyouhaveactually
earned only 5%. (10% 5% = 5%). This 5% is your real rate of return and 10% is called as nominal rate of
return.
Activity:XI
SmartGuideforyourfamilyActivity:
9 Identifythesourcesofincome
9 Findoutifthereisasurplusordeficit
9 BuildCashflowstatementandplanforbudget
9 Calculatesavingsthatcanbeinvestedforreturns
9 ShowbenefitsofInvestments
16
LEARNING
Session5
StockMarket
Canyouidentifythesebuildings?
NationalStockExchange andBombayStockExchange.TheoldeststockmarketinAsia,BSEstandsforBombay
StockExchangeandthelargeststockexchangeinIndiaandthethirdlargestintheworldintermsofvolumeof
transactions, NSE stands for National Stock Exchange, both are Mumbaibased stock exchanges. Though a
numberofotherexchangesexist,NSEandBSEarethetwomostsignificantstockexchangesinIndia,andare
responsibleforthevastmajorityofsharetransactions.
WhatisaStockExchange?
Astockexchangeisanorganizationconstitutedforthepurposeofassistingandcarryingoutbuying,selling
orotherwisedealinginsecurities.
Whataresecurities?
Securitiesarefinancialinstrumentsandincludeinstrumentssuchasshares,bonds,debenturesofacompany
or body corporate or a government. Thus, a stock exchange provides a trading platform, where buyers and
sellerscanmeettotransactinsecurities.Astockexchangecouldbearegionalstockexchangewhoseareaof
operation/jurisdictionislimitedtoaregionoranationalexchangepermittedtohavenationwidetrading.
EARNING
17
AboutSEBI
Thefunctionofthesecuritiesmarketistoallowcompaniestoraisecapitalfrompublic(primarymarket)and
to enable trading in the shares of public companies (secondary market). Securities and Exchange Board of
India(SEBI)isabodysetupbytheParliamentin1992toprotectinvestors,andtoregulateanddevelopcapital
market.Itstartedoperationsin1988throughanorderofGovernmentofIndia.ItisheadquarteredinMumbai
withregionalofficesinDelhi,Kolkata,ChennaiandAhmedabad.
Companieswhowanttoraisecapital(money)frompublichavetodisclosetheirfulldetailsasperrulesmade
bySEBI.Subsequently,thesecompaniesarerequiredtopublishinformationperiodicallyforthebenefitofthe
investors.Incaseoftakeoverofacompany,therulesmadebySEBIhavetobefollowedsothattheinterest
ofshareholdersofthecompanyisprotected.
Buying and selling of shares takes place in the stock exchanges through stock brokers. These entities can
functiononlyiftheyhaveSEBIlicense.TheyarealsorequiredtofollowruleslaiddownbySEBI,toprotectthe
investors.SimilarlySEBIalsoregulatesotherparticipantsinthecapitalmarketslike,subbrokers,depositories,
depositoryparticipants,portfoliomanagers,merchantbankers,sharetransferagentsetc.
Mutualfundscollectmoneyfrompublicundervariousschemesandinvestinthemarketonbehalfofinvestors
and are also governed by rules formulated by SEBI. Mutual Funds have to disclose details of the scheme,
where they will invest money, the fees charged from the investor etc. They also have to make periodic
disclosuresforthebenefitofinvestorsasmandatedbySEBI
SEBI also educates investors, facilitatesredressalof their grievances and protects them by introducing
consumerfriendlydisclosurenormsfromtimetotime.
Formoreinformationpleasevisitwww.sebi.gov.in
18
School children
college students
Middle income group
Executives
Retirement planning
Home makers
Self help group
OR
Any of the following topics of securities markets namely;
1.
2.
3.
4.
5.
6.
7.
8.
9.
19