Financial Literacy : Appreciation and Depreciation
Connections Across Grades
Some financial literacy concepts are specific to certain grade levels, while others develop progressively across different grade levels. These concepts include income, expenses, saving and investing, credit and borrowing, financial goals, and budgeting.
The examples below illustrate the progression of these concepts through a consistent context. These examples are detailed with a specific expectation and key mathematical processes.
Interest Rates and Fees
Specific Expectation: F1.4
Mathematical Process: Reasoning and Proving
Choose a bank or financial institution near you and prepare a chart to compare the different accounts available. Compare interest rates and fees to select the account that is most cost effective.
Specific Expectation: F1.5
Mathematical Processes: Reasoning and Proving, and Representing
Fabien claims that it is more important to have a high interest rate for a short period of time rather than a lower interest rate for a longer period. What do you think? Use a visual representation to justify your choice.
Specific Expectation: F1.6
Mathematical Process: Reasoning and Proving
Compare interest rates, annual fees, rewards, or incentives on three credit cards. Make sure you have at least one credit card from a financial institution and one from a chain store. Which of these three cards would you choose and why?
Specific Expectation: F1.2
Mathematical Process: Representing
Collectible items tend to appreciate over time. Using a visual representation, illustrate how the value of a collectible item of your choice changes over time (for example, a sports card, a collectible toy, a particular musical instrument, a painting by a known artist, a specific comic book).
Loans, Borrowings, and Investments
Specific Expectation: F1.5
Mathematical Processes: Connecting, Communicating
In what contexts would you lend, borrow, and donate? Describe these three situations.
Specific Expectation: F1.5
Mathematical Processes: Connecting, Reflecting
Using technology, compare the total cost of a $2000 loan, over a 36-month period, repaid with monthly payments at various interest rates. What do you notice?
Specific Expectation: F1.6
Mathematical Processes: Connecting, Reflecting
Using technology, compare the interest generated if you invest $2000, over a 36-month period, at an interest rate of 2.5% if the interest is simple, compounded annually, or compounded monthly. What do you notice?
Specific Expectation: F1.3
Mathematical Processes: Reasoning and Proving, Reflecting
Using technology, compare the total cost of a $2000 loan, based on:
- different interest rates compounded annually,
- payment frequency (monthly, weekly, every two weeks), and
- loan term (12 months, 24 months, 36 months).
Which parameter has the greatest impact? Justify your choice using the data you've collected.
Financial Targets and Budgets
Specific Expectation: F1.3
Mathematical Process: Connecting
Joshua wants to rent a plot of land to plant a vegetable garden. The rental cost is $500 for the season.
- What methods could he use to raise the necessary money for his project?
- What factors could help or interfere with the completion of his project?
Specific Expectation: F1.3
Mathematical Processes: Connecting, Representing
Joshua wants to rent a plot of land to plant a vegetable garden. He has an initial start-up cost of $600 which will include rent, materials, and resources to get started. He earns money doing various tasks around the house and at his neighbors’ homes. He is responsible for his lunches: he can bring a lunch from home or buy one at the cafeteria.
Propose a budget to Joshua that will enable him to carry out his project in a year's time.
Specific Expectation: F1.3
Mathematical Process: Selecting Tools and Strategies
Joshua wants to rent a plot of land to plant a vegetable garden. He accumulates the money he can and spends it without really paying attention. He's a little discouraged and doesn't know how to reach his financial goal.
Suggest a budget template to help him keep track of his expenses and income to help him realize his goal.
Specific Expectation: F1.3
Mathematical Process: Reasoning and Proving
Joshua rents a plot of land and grows vegetables, which he then sells. He aims to make a profit of at least $2000 per year for five summers to fund a flight course after high school. In the first two summers, Joshua met his goal. However, the third summer was disastrous as insects destroyed half of his crop, resulting in only $875 in profit.
How could he adjust his budget to make up for the loss and still reach his goal in the next two years?
Reflection
- How do the financial backgrounds of students or their families influence their present and future financial decisions? How could these histories be considered to promote better financial literacy?
- What mathematical concepts are essential to explore and understand the questions raised in a financial context?
- How can teaching strategies be more responsive to ensure that all students, regardless of their financial and personal histories, can fully participate in and benefit from financial literacy education?
- How do real-life examples enrich the understanding and application of financial literacy concepts?