Personal Financial Literacy

The setting

A high school senior has been accepted to two programmes in the same field. One costs less and offers a small scholarship; the other costs a great deal more and offers a large one. The larger scholarship leaves the larger debt.

Your role

You are to assume the role of a financial literacy peer adviser.

Your task

The student (judge) wants you to help them work it out. Explain the purposes and importance of credit and what borrowing for study actually commits them to, develop the personal budget each path implies during and after the course, and explain how you would set the financial goals that either choice has to serve.

Performance indicators

• Explain the purposes and importance of credit.
• Develop personal budget.
• Set financial goals.

The judge will ask

1. 1.Which one leaves me better off in ten years?
2. 2.How much debt is too much for this field?

The setting

A young buyer has been offered a car on a long finance agreement. The monthly payment fits what they earn, and they have budgeted for the payment and nothing else.

Your role

You are to assume the role of a financial literacy peer adviser.

Your task

The buyer (judge) wants you to tell them whether this works. Develop the personal budget of actually owning the car rather than merely paying for it, explain the purposes and importance of credit and what a long agreement means for what they will owe against what the car is worth, and explain the forms of financial exchange available and how the choice changes the total.

Performance indicators

• Develop personal budget.
• Explain the purposes and importance of credit.
• Explain forms of financial exchange (cash, credit, debit, electronic funds transfer, etc.).

The judge will ask

1. 1.What does this car actually cost me each month?
2. 2.What is wrong with stretching the agreement out?

The setting

A first-time employee expected to be paid what the job advertised and received noticeably less. They want to know where the difference went and whether any of it can be changed.

Your role

You are to assume the role of a financial literacy peer adviser.

Your task

The employee (judge) wants you to explain the payslip. Describe the sources of income and compensation and what makes up the figure they were quoted, explain the nature of the tax liabilities that come out of it, and develop a personal budget built on take-home pay rather than the advertised number.

Performance indicators

• Describe sources of income and compensation.
• Explain the nature of tax liabilities.
• Develop personal budget.

The judge will ask

1. 1.Which of these deductions can I actually change?
2. 2.How much of this should I be saving?

The setting

A client cannot account for where their money goes. Going through their statements together, you find a long list of small recurring charges, several of which they do not recognise and two of which began as free trials.

Your role

You are to assume the role of a financial literacy peer adviser.

Your task

The client (judge) wants you to help them get on top of it. Develop a personal budget that accounts for recurring charges properly, explain the forms of financial exchange involved and why automatic payments are so easy to lose track of, and explain the need to save and invest what stopping them would free up.

Performance indicators

• Develop personal budget.
• Explain forms of financial exchange (cash, credit, debit, electronic funds transfer, etc.).
• Explain the need to save and invest.

The judge will ask

1. 1.How do I stop this building back up again?
2. 2.Which of these should I actually keep?