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

A high school senior has been accepted into two programmes in the same field. The first is at a public college that costs far less, but offers only a small scholarship. The second is at a private college that costs much more, but offers a large, well-publicised scholarship that the student's family is proud of.

Once the scholarships are taken into account, the private college would still require the student to borrow considerably more. The student is leaning toward the private college because the scholarship feels like the bigger achievement.

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

A young driver has just started a full-time job and has been offered a nearly new car through the dealership's finance scheme. The monthly repayment fits comfortably within their take-home pay, and the loan would run for several years to keep that repayment low.

They have budgeted for the repayment and nothing else. They have not yet looked at the cost of insurance for a new driver, fuel for their daily commute, servicing or registration, and they are keen to sign before the offer ends this weekend.

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

A student has just received the first paycheck from their first job, a part-time role at a local cafe. They had worked out in advance what they expected to receive from their hourly rate and the number of hours they worked, and planned how they would spend it.

The amount that arrived in their account was noticeably less. The payslip lists several deductions they do not recognise, and they are worried they have been underpaid or that there has been a mistake.

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

A client in their early twenties says they earn a reasonable income but never seem to have money left at the end of the month, and cannot understand where it goes. They have no large debts and do not consider themselves big spenders.

Going through three months of bank statements together, you find a long list of small recurring charges: streaming services, apps, a gym they no longer attend, and several free trials that quietly turned into paid subscriptions. They recognise some of the charges but not all of them.

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?