Learn
to
SAVE
Earn!
SPEND
DONATE
Through the Ken Money course we aim to increase the social and financial responsibility of children. The program aims to help children develop the ability to make wise decisions from a financial perspective and also to develop autonomy and a healthy financial future.
Course objectives: By the end of the course children will: - understand what money is, how it is earned, how it is used; - know the main functions of money: save, spend, invest, donate; - understand that resources and revenues are limited, hence people need to make choices; - understand the cost of making a choice: „You cannot have your cake and eat it too!” Specific objectives account: -
-
understand why it is important to save: • how savings are necessary to serve future needs; • how to use the „cost of opportunity” concept in order to compare the advantages and disadvantages of saving and to make decisions related to savings; • how interest can represent a saving incentive; • how inflation can affect savings; understand what a bank is and its role; know how to make a savings plan, how to set up an objective and how to make decisions regarding money.
The program is developed by Ken Academy (www.kenacademy.org) through a special partnership with the Transilvania Bank (www.bancatransilvania.ro).
KEN ACADEMY Telephone: +40 21 206 7713 E-mail: office@kenacademy.org Carmen Iorgulescu – Program Coordinator Mobile: +40723 600 341 E-mail: carmen.iorgulescu@kenacademy.org BANCA TRANSILVANIA Ana Maria Marin –Senior Marketing Specialist Mobile: +40741 095 120 E-mail: anamaria.marin@bancatransilvania.ro
All intelectual property rights over the course belong to KEN INSTITUTE Association.
As you get older you want to have your own money, more and more, right? Most children depend on their parents when it comes to financial support. However, at some point, many parents prefer to give them a small sum, an allowance, and let them manage their own expenses. Do you already have your own money? Of course you know that the money you have, must be first earned and then spent. But do you know that you can "grow" the value of the money you have? That's a challenge! And here is an even bigger challenge: to share your money with other people in need, so they are helped! Sounds like fun, right? It's never too early to learn how to manage your money and how to put some aside. I invite you to discover the fascinating world of money and how to organise it through the Ken Money class.
History of money Money has a long history and developed over thousands of years (6000 years), in various forms–gold, dolphin teeth, various animals, wool, amber, beads, shells, eggs, feathers, and that's just to mention a few. In the old days, before money existed, people exchanged various things that had a certain value. That was called bartering. For example, a hunter could exchange the skins of animals with grain from a farmer; a fisherman or a hunter could give decorative shells in exchange for a polished stone to be used for an ax. People who had excess products exchanged them with other goods that they didn't produce but others did. As our society grew and evolved, so did our needs for more sophisticated forms of money. And so money, as we know it today (paper and coins) appeared as a form through which exchange became easier.
What is money? Money is more than a piece of paper or coins. Money is an unit of calculation, a measurement of value. This means you can assign a certain value to a currency and that currency will be universally accepted by all, regardless of what country that person is from.
Money = universal exchange tool, with a clear value, recognized by everyone
How do I earn money? Money is important in life. We need it to pay for things that are necessary in our day to day lives, such as food, water and housing, but also to buy the things we WANT, things that we believe will bring us joy (ice cream, toys, holidays, special clothes etc). Generally, depending on one's age, money comes from: › a salary, as an employee of a company; › a profit or gain from a business, when an entrepreneur succeeds in his company; › an allowance (received from parents or perhaps a state allocation); › scholarships (a scholarship is like a salary students may get for studying well); And then there is the surprise-money category: - your birthday money; - an inheritance; - unexpected gifts; - winning the lottery Certainly money will go in and out of your pockets during your lifetime. Usually if it enters into your pocket, it means you've earned it. If you succeed in keeping more money in your pocket rather than letting it flow out of your pocket, you may be rich one day. If not, you will definitely encounter problems along the way! Nobody can make decisions in your place - it is all up to you! The more you know, the better your decisions shall be! The more you understand, the better you will control your money! And the sooner you understand more about money, the better it will be for you!
Forms of money Money today is found in various forms. It can be the strumming coins in your pockets, but also the bills in your wallet. Lastly there are the credit cards - and that's also money, right? Countries use different currencies, each having a certain value recognised by everyone, for example: Romania
LEU
Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, Portugal, Holland, Slovacia, Slovenia, Spain
EURO
USA
AMERICAN DOLAR
England
POUND
Japan
YEN
South Africa
RAND
Russia
RUBLA
Indonesia
RUPIA
Israel
SHEKEL
Mexico
PESO
Functions of money Now that we know what money is, it is equally important to know what you can do with it! Money must be used wisely. What can you do with money? You can use it in four different ways: 1. spend; 2. save; 3. donate; 4. invest. Each of these actions brings different results. Are you the kind of person who spends more or do you like to put money aside? People are very different and unique, from the way they look or the things that interest them, to how they spend or save their money. If you're more of a person who likes to spend all the time, maybe you cannot understand those who are wiser and seem to always have cash available when you're broke.
What's your type: 'Frugal Saver' or 'Big Spender'? Frugal Saver
Big Spender
Carefully consider what you NEED and what you WANT.
Money “flies�.
You keep money and it simply adds up.
Always spending.
You can buy something more expensive when you want to.
You feel strong in front of peers, because you have the "power of money".
You give up a little pleasure today, to save for tomorrow and to buy something bigger later.
When you run out money, you are shattered.
You can give up buying luxury things.
You do not have any money set aside for emergencies.
The more money you save, the better you feel.
You're always out of money and you constantly need to borrow.
You like thinking how you can multiply your money.
You cannot buy things of greater value because you never have any savedup.
I. SAVING For many people, saving is almost as easy as spending. Saving means not buying now and putting money aside to spend later. Saving a portion of the money earned can help you buy something bigger, maybe something more expensive or perhaps to pay for something more important and necessary. "You can't have your cake and eat it too,”right? or "You cannot study for a math test and play on the play-station, at the same time”, right? Why? Because resources, including time, are limited. If you spend all your money today it means you will not have money for the things you will want tomorrow. You always have to make choices between the things you can do with a certain (limited) amount of money. The alternative and most valued (preferred) choice that you have to give up when you choose another option is called the opportunity cost. For example, in your pocket you have only 5 lei and that is the cost for each of the following: 1. buying a gift for a friend whose birthday is tomorrow; 2. buying a movie ticket; 3. buying a chocolate; 4. buying a toy. What will you do? You can't buy them all; remember you only have 5 lei! You have to choose! Let's say it's relatively easy for you to give up the chocolate and the toy, but you really want to go to a movie and you really want to buy a gift for your friend whose birthday is tomorrow. If you choose to buy the gift for your friend, the opportunity cost is your movie ticket. Is it good to save all the money we earn? It is NOT good to save all the money because: - money must circulate to help the economy; - it is important to satisfy some of our desires (they bring us joy ); - money devalues (i.e. loses value ) when it is unused. If saving means hiding all your money under the mattress and leaving it there, you may discover that, in time, the value has decreased when you finally decide to take it out of the hideout.
Aunt Betty's story An old lady who barely made a living, after passing away, left everyone stunned, leaving a legacy of several millions. No one had any idea that, over the years, she had saved her money putting it under her mattress. It must have been the most inflated mattress in the world! We marvel at how thrifty she was and why she preferred to live in poverty? We wonder what was more ridiculous, the fact that she kept her money under a mattress or that she left her inheritance to her puppy?
INFLATION How many times have you heard people say "Oh, the price of this box of cookies has gone up again!" or "A month ago with 4 lei I could buy a chocolate, but today, no, it's too expensive!” In time almost all prices rise. This means that in 10 years, with 5 lei you will not be able to buy as many things as today. You'll need more money. This general increase in prices is called inflation.
II. SPENDING We all like to spend money buying things that we need or that we want. Need refers to those things that we can't really live without: housing, food, water, clothing, etc. But pay attention to your wish list! Desires are things that we THINK we cannot live without - things like ice cream, video games, brand-name clothing, etc. We are constantly bombarded with advertisements everywhere - in stores, on the street, on television that lead us to believe that we need everything we see. Can we buy everything we want? No, because money does not grow on trees and it is NOT an inexhaustible resource. Money is limited! Therefore, spending money involves some responsibility. You can only spend the money you have. If you pay attention to how you spend, everything is okay. If you spend more than you earn you may run into trouble. Spending money is important for both you and society. It is important for money to circulate so that companies function and are able to pay employees wages, which later buy things they need or want!
III.DONATION We hear about poverty every day, about hunger in the world (countries in Africa and South East Asia). It is possible to change this, if each one of us takes a tiny part of social responsibility. Each of us can do something, no matter how little and in the end it counts! Helping other people with money is an action that you want to do, not because you need to or your parents ask you to. Helping people that you know need help desperately, changes lives. Those few coins in the charity box at church or in the boxes devoted to causes like Save the Children means that someone, somewhere, will be helped by you! There are various campaigns, direct or indirect, that help: SOS, Doctors without Borders, Save the Dolphins, buying baby diapers to support hospitals, buying a specific brand of mineral water from a company that has vowed to equip maternity sections in Romanian hospitals, etc. I challenge you to give up one of your desires in order to help others, "1 leu per month can change a life" and it's true! You can donate money or you can choose to donate things (clothes, toys, books) that are still in good condition. Donations, helping others, must become something permanent, something that you regularly offer ... a lifestyle.
Rubina success story Rubina was one of the sponsored children in the "Save the Children" program, which began in 1981 in Bangladesh. At the age of 7, she received her first letter from her sponsor. Rubina was very excited to find out she had a friend, whom she never met, who was interested in her and her future. In Bangladesh, girls typically have less access to education and thus, fewer opportunities for making choices in life. However, thanks to her sponsor, she was able to participate in educational, cultural and athletic activities. Over time, she won many awards and graduated from high school, then college and finally, she became a teacher, working for one of the "Save the Children� partners.
IV. INVESTMENT Investing is a form of saving and multiplying your money, but with a higher risk. If you own a big sum of money, you can buy shares (stocks) from one of your favourite companies, one you trust and you know is successful. If the company goes well, those actions will bring you some extra money. Of course, for smart investments it is best to consult with a financial advisor. For now, I invite you to save; it is the first step you need to learn to do.
How can we save? You can start by getting into the habit of saving little by little and using a piggy bank in order to collect a larger amount that is required to buy something more significant. Over time, people have used many ways to save, for example: the piggy bank, a wallet, the mattress, socks, jars, parents' safety deposit boxes.
The story of the "Piggy bank" Most kids have a piggy bank. But why a "pig"? Why not a "rhino" or a "rooster"? Are pigs better than other animals at saving money? Many years ago, people had kitchen clay pots and jars called “pigs”. Whenever they wanted to keep something, they kept it in this type of pot, for safety reasons. Because the containers were made of pink-orange clay, round shaped and with a wide mouth and as they filled they were referred to being or becoming "fat" as pigs, hence the nickname pigs. Of course, a smart entrepreneur came along and launched the idea of “a piggy bank”. And so was born the piggy bank!
When you make a decision it is best to establish the criteria that will guide you. When you think about where to keep your savings, I propose you to take the following criteria into account: 1. Safety - which is safer, without any danger, to hold my money? 2. Interest - where can you multiply your money? 3. Access - how to get to it faster? 4. Out money - how can you continually monitor traffic into your account, ex. How much money have I made? How much have I spent? What was my interest? 5. Cash flow - how can I help society work well?
Alternatives for saving money 1.
Piggy bank
Michael decided to keep his savings in a glass piggy bank. Each day, Michael introduced his pocket money and change into the piggy bank; he watched how his savings were "growing" and he always had cash when needed. Truth be told, it was a little difficult to remove the coins from the piggy bank when he wanted the money and had to be careful not to break the piggy bank because it was made of glass. Another important aspect is that he kept his piggy bank hidden in the closet because he did not trust his little sister.
2.
Parents
Joanne did not believe she had the discipline needed to save her money, so she asked her parents to keep a part of her allowance and part of the money she received as gifts. She trusted her parents to keep her money/savings. Whenever she wanted money to buy something, she had to ask her parents to give it to her. She always had to tell them what she wanted to do with the money, what she wanted to buy, why she wanted to buy it, etc. Sometimes, her parents didn't agree with Joanne's expense plans.
3.
Bank
Cristina found that when she held her savings in the bank, in a savings account, the bank was paying her an interest to help her multiply the money. She could also take out money from her account whenever she wanted. In order to check on the status of her money without going to the bank, Cristina got a BT24 Internet Banking. Thus, she could see all the time the evolution of the money. Also the existence of a security guard in the bank made Christina feel that her savings are safe. She also likes the monthly bank statements she receives from the bank; it helps her keep track of her savings and withdrawals and it makes her feel like a grown-up!
Table of analysis in decision making Name: ………………………….
Age: ……….
Saving Locations
Piggy bank / Jar
Parents
Bank
-
+
+
Safety
-
-
+
Interest
+
-
-
Access to money
-
-
+
Evidence of money
-
-
+
Circulation of money
1+
1+
4+
Scrooge's treasure Wealth is meaningless if you do not use it! There was once a rich man who loved gold to such an extent that he buried it under a big rock to keep it safe. Someone then said that along with the treasure he had also buried his soul, because all day he could only worry, thinking about the gold. He went to the place where he buried his gold so often that, by seeing him always prowling about, a grumpy old gravedigger suspected where he had buried the gold. And of course, the gravedigger hinted correctly. So, one day, he dug and took the gold away. Returning to the hiding place, the stingy rich man didn't find his gold, but only a pit and a stone. He went crazy and started crying and gritting his teeth, in vain. A stranger asked him why he was upset. "Gold does not come easy. It's better to keep it and not play with it. It is better to bury it", said Scrooge. "Then why are you upset? If you have not used it before, put the stone back: it will serve you equally as did the gold", the stranger said.
Total points
Evaluation Criteria
Best practice: 1. Allow money to circulate (your money is actually used by other people who go to the bank to borrow money to make their businesses run); 2. Gain by multiplying your money (via interest); 3. Your money must be safe (protected from loss and theft); 4. Know the exact amount that you have saved.
The only place to do all of the above is the BANK. Bank = a place where people bring money for savings and from where they can borrow money when needed. The bank puts money in circulation, it invests in various businesses and earns a profit. This is returning to you as INTEREST to the money you save. Thus, the bank rewards you for saving your money with the bank. Interest = the money the bank gives you as a bonus for saving with them.
Savings Plan Why and what to save for? It is important that saving makes sense and is made for a specific purpose (goal). Namely, it is good to save for something you want to get in the future, but don't have enough money for right now. Remember: resources are scarce; money does not grow on trees or walls (ATMs) so it is important to know how to make a choice You must give up something now in order to get something else in the future! What are the things that you desire (now and in the future)? You can decide to buy something in a few months (ex: a more expensive winter vacation, ski equipment, etc.) and this means a short-term goal. Or, the older you get and become an adult, you can save more than 1 year to buy something like a car, a college education, a house, etc. This means long-term goal. It is important to clearly establish your saving target. This will help you to know: 1. How much time you have available to raise money. 2. How much money you need to save. 3. When temptation knocks and you're having trouble resisting (a toy that you'll probably get bored within an hour), you can always return to your goal's image so that you are reminded of why you are making the effort to save. To ensure that you succeed in reaching your goal it's important you develop a saving plan and watch it constantly.
MY SAVINGS PLAN c.I want to have it by:
Age: …………
continues on the next page
4. The time I have available to save is …… ……… weeks / months starting today.(example: 4 weeks).
2. Write a sentence or two explaining why you wish to have this product/ service: ………………………………………………………………………………………………………………………………………………………. ………………………………………………………………………………………………………………………………………………………. 3. The price of this product is ……………………………………………………………………………………………………………..
b. Draw it:
a. Write a saving target:............................................................................................................................
1. I want to save for :
Name: ...................................................
Example: 1. I wish for a bird Lego. 2. I wish it to complete the Chima series. 3. The Lego I wish costs 50 lei. 4. I want to buy it in 4 weeks. 5. Right now I have in my piggy bank 10 lei. 6. For buying this Lego I need to save 40 lei (50 lei – 10 lei) 7. This means I need to save 10 lei / week (40 lei / 4 weeks) 8. My weekly income is 8 lei. What can I do to increase my income? Posible solutions: I can ask my parents and close relatives to help them and receive a sum of money: walk the dog, take care of their hamster while they are on holiday, clean the hole house etc. Or I can make different objects (bracelets, paintings etc) that I can later sell.
Now I have a savings plan!
8. Do I have a high enough income to be able to save the amount that I need? If not, how can I get or earn more money?
(the amount I have to save / the time I have available = sum / week or month I need to save)
7. To achieve my goal, I have to save_______________ lei per week /month for __________weeks/months.
(how much the desired object costs – the amount I have already saved = the amount I must still save)
6. I still need ....................................................... l ei to be able to buy the wanted product/service.
5. For the moment I have …………lei saved already (example:10 lei)
Tips for Parents Have you ever been in a conversation with your child and stating that you do not have money for something and the child's reply is given: "why don't you just use the credit card?” Surely all parents have had to deal with phrases like: "I want this!", "Why don't you buy me that?", "All my friends have it. I want it too!”. I'm sure these words sound familiar. Money is a resource that children will work with their entire life, so the faster they learn about what it is and how it can be effectively managed by them, the better it will be. So was born the Ken Money project. The program aims to help children develop the ability to make wise decisions from a financial perspective and also to develop autonomy and a healthy financial future. Your role as a parent is essential in developing the child 's financial responsibility and to help them to learn, in everyday life, the skills related to the main aspects of money: (1) income , (2) saving, ( 3 ) spending, (4) donation . Help them understand that “money doesn't grow on trees", it is not an inexhaustible resource and that we have to make intelligent decisions regarding money management. Here are some ideas on how you can help your child to understand the functions of money: •
Set a monthly "allowance" - Having pocket money is good for children. It encourages them to be independent and helps them understand the value of money. Kids learn to make decisions about whether to spend all the money at once or to save some in order to be able to buy something special later;
•
Perhaps increase the amount with each passing birthday;
•
If the child is big enough to help in household chores, you can determine whether an additional sum will be earned as the child becomes more involved;
•
Be firm! If you have set some rules stick to them even if sometimes the temptation to give up may arise. Children know all too well what is right, so don't feel pressured into giving more money and don't buy other things if the limits have been reached;
•
Help kids establish a short-term goal (less than a year) for which to save money for (ex.to buy a video game or a Lego set);
•
If the child is over 12 years old, help him define a long-term savings goal (ex. to raise money for new ski equipment next year);
•
Encourage and support your child to open a bank account. Bank accounts help us organize better, we are more aware and interested. Transilvania Bank has an excellent savings product for children: KIDCONT;
•
Let kids make decisions, familiarizing themselves with the concept of "opportunity cost" (the value of the thing that has been sacrificed when making a choice).
Thank you for helping your child develop financial responsibility!
DICTIONARY allowance
an amount of money collected regularly
bank
a place where people deposit money and withdraw it as often as they wish
barter
exchange of things that had a certain value
borrowing money from someone
getting money that will have to be returned later
budget
the amount of money estimated to be paid or received
to donate
to help other people with money or other goods
income
an amount of money that people receive for their work. Income can be obtained from cash gifts, interest, investments, scholarships, allowance.
to invest
buying shares in a company (is a form of saving with a higher risk)
inflation
general increase of prices
interest
amount of money you receive when you save money at the bank or that you need to pay when you borrow money
lending money to someone
giving someone money or goods
money
an universal exchange tool with a clear value, recognized by all
objective/target
a specific result that a person wants to achieve in a certain time with certain resources available
opportunity cost
the alternative, most valued (preferred), choice that you sacrifice when you choose the other option
price
amount of money you pay when you buy something
saving
putting your money in a safe place and not spending it
savings plan
defining the steps you need to take to know and how much money you have to save to reach your target
spending
to pay money in exchange for goods or services
All intelectual property rights over the course belong to KEN INSTITUTE Association.
ascinating! f is y e n o m f o ld wor For the kids, the e captivating h t t u o b a e r o m r cove Help your kid dis eneurship. world of entrepr e and he is s r u o c y e n o M n e ded the K If your kid atten demy organizes a a c A n e K , e r o m r eager to discove “Marketing and d e ll a c , s id k o t course dedicated business�. n w o r u o y g in ll e S e til 30.03.2014 with th un e m co u yo if nt discou the Ken Money class. of r be m nu n io at ic identif a Kid Cont account at en op u yo if nt ou sc di of January 2014. st 31 e th til un nk Ba Transilvania
10%
20%
The Ken Money program is offered to kids by Transilvania Bank- the bank of Entrepreneurial People and kids with initiative, in a partnership with Ken Academythe most complex entrepreneurship educational program for children in Romania.