Money - Sun Sentinel
has been created
to help you
is going on with
economy. It also
is designed to
teach how stocks,
interest rates work.
is the most
In the last year, the United States has faced its biggest financial crisis in more than 70 years.
The prices on the stock market dropped way down, banks and insurance companies faced deep
troubles and the government was forced to step in with billions of dollars in taxpayer’s money to keep
banks and investment firms in business.
If you want to understand what’s been going on, you’d do well to pick up a math book, because
the nation is being challenged by some very big numbers.
Start with $700 billion — or $700,000,000,000 if you write out all the zeroes.
That’s the price tag of a financial rescue fund established by the federal government and the U.S.
Congress to save some of the nation’s biggest financial companies.
These companies made costly mistakes loaning money to people to buy homes that they could not afford. Then the
companies passed along the bad loans to other companies that invested in large packages of loans or sold insurance
to protect investors if the loans could not be repaid. With many of those companies losing huge amounts of money,
the government was forced to use public funds to rescue them so they would not
go broke and cripple the nation’s economy.
The rescue worked for some companies. They were able to stay in business, and even started paying
back the government for loans they got. Others could not be rescued.
By the end of the first year, the U.S. Treasury secretary said the nation would not need all $700 billion
to save the biggest companies. But the program was extended until October 2010 to deal with “significant
challenges” still to come, especially efforts to prevent families from losing their homes to mortgage loans.
So just how big is that number $700,000,000,000? Here are two ways to look at it:
If you divide $700,000,000,000 by the 308,000,000 people who live in the United States today, it comes out to
nearly $2,300 per person — or nearly $9,200 for every family of four. Or if you put a $10 bill on
the table every second of every day for 24 hours a day, it would take more than 2,200 YEARS to count.
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Throughout the school year, the Sun Sentinel NIE program
provides newspapers, both digital and print, to South Florida
schools at no charge. Our goal has been to help teachers
help their students, promote literacy, encourage hands-on
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Can you imagine what it would be
like to live in a world without money?
You would have to trade goods and
services for everything you currently
buy with money — an approach
Your family would barter to pay
for groceries, clothing and other
things you need, as well as for trips
to the doctor and dentist, or service
from the car mechanic.
You might have to barter, too
—emptying wastebaskets or mopping
floors at school to pay for lunch in
the cafeteria. How much wastebasket-emptying would you have
to do to buy a slice of pizza?
And what if the only thing you
could offer the video store in barter
was something the owner didn’t
need — like your old collection
of Garfield books?
That’s the major problem with
bartering: You have to find someone with exactly what you want,
and they have to be willing to take
exactly what you have to offer.
In the movie Jerry McGuire,
Cuba Gooding Jr. and Tom
Cruise got a lot of attention for
the line “Show Me the Money!”
How much do you know about
1) The largest denomination that the U.S. now produces is:
2) The golden-dollar coin pictured:
a) Basketball player Dwyane Wade
b) The world’s richest man, Bill Gates
c) Native American Explorer Sacajawea
d) Pilot Amelia Earhart
3) Whose picture is on the quarter?
a) Richard Nixon
c) Ben Franklin
b) George Washington
d) Abraham Lincoln
Anything can serve as money as long as the people who use it
agree that’s an acceptable and recognized form of payment. Today,
we use paper money, coins and plastic cards to buy goods and services. But throughout history, many other forms of money have been
used, including feathers, stones, beads, shells and precious stones.
Ocean, used large stone disks as money. The
largest ones were up to 12 feet across.
made from white and purple clam shells.
together with reeds, for money as recently
as the 1920s.
The earliest known coins were made during the 7th Century B.C.
in the part of the world now known as Turkey. The Chinese were
the first to discover the convenience of using printed paper documents to represent value — Chinese banknotes were first used in the
early 11th century. In the earliest days of our nation, the colonists
traded with each other using tobacco, shell beads and imported
Spanish “pieces of eight” that were known as dollars. The colonists also issued their own paper money, which they called
“bills.” The first paper U.S. dollars —Continental Currency
bills — weren’t issued until 1775.
4) The words “E Pluribus Unum” on our coins mean:
a) In God We Trust
b) Spend Me Wisely
c) One Out of Many
d) Easy Come, Easy Go
5) If you accidentally rip a dollar bill, you can
trade it in for a whole one as long as you:
a) Have more than one-half of the original bill
b) Know someone at the Treasury Department
c) Have all the pieces of the dollar bill
The Bureau of Engraving and Printing
produces our paper currency. Each day, it
prints about 38 million paper notes in
d) Tape it back together
6) A slang word for dollars is:
d) All of these
7) It’s against the law to:
a) Photocopy U.S. currency
b) Put money in your mouth
c) Fold currency
d) Hide money under your mattress
Answers on Page 15.
8) Dollar bills wear out after:
a) 1 week
b) 13 to 18 months
d) 50 years
9) When worn-out coins are turned
over to the U.S. Mint, they are:
a) Melted and recast as new coins
b) Made into jewelry for members of Congress
c) Given to poor countries as foreign aid
d) Burned and spread over farms as fertilizer
ACTIVITY: NEWS CENTS
Some people believe the
th government should stop
d i new pennies
k allll the
i ti ones outt
of use. They say the penny
isn’t much good for anything,
and it’s a
t have to count pennies. Others say
waste for businesses to
that without the penny,
many prices would simply be
raised to the next higher five-cent level.
What do you th
think? Look at the Letters to the Editor
in today’s Sun Sentinel Digital Edition and read
one to see h
how it’s written. Then write your
own letter arguing whether to keep the
or get rid of it.
The United States
an average of
65 to 80 million
Sunshine State Standards: LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124, LA.126.96.36.199, LA.188.8.131.52
For the U.S. Government, making money means printing dollars and
minting coins. But for ordinary people, making money means earning it
through a job or a special skill.
Here’s a look at how much money people make. Obviously, some
jobs pay more than others. This list, based on information from the
.ATIONAL!SSOCIATIONOF#OLLEGESAND%MPLOYERSSHOWSHOWMUCHCERtain workers are paid in the first year out of college.
Of course, people who have been doing these jobs for longer can make
more money, in some cases a lot more. But generally, the people who
make the most money are athletes and entertainers, since so many people
pay to watch them play or perform or make movies. See if this list of salaries from Forbes magazine makes you want
how much these people made in one year!)
Director George Lucas
TV Host Oprah Winfrey
Actor/Director Mel Gibson
Writer J.K Rowling
Golfer Tiger Woods
Most kids don’t have high-paying, full-time jobs, so many rely
on allowances for spending money and for saving. According
to a recent survey, about half of all kids get an allowance, and
just about everyone has to do chores, whether or not they get an allowance. Here’
s what kids get for weekly allowances, on average:
Kids ages 8-9 get:
Kids ages 10-11 get:
Kids ages 12-13 get:
Here are a few hints: He started a computer
company in his garage. He became head of
the biggest computer company in the world.
So what’s this computer geek have to do
with money? Well, he has more of it than
anyone else in the world.
He’s Bill Gates, founder of Microsoft
Corporation, and he is the richest man in the
world. He’s worth about $50 billion, according to 2009 estimates by the Forbes financial
magazine. That’s a 50 followed
by nine zeroes — $50,000,000,000!
Of course, being the world’s richest man
means you can buy anything you want any
time you want. But it doesn’t mean you have
stacks of bills and piles of coins sitting in a
bank or a closet.
Gates surely has a lot of money in the bank.
He lives in a fancy house, and he gives a lot
of money to charities. But most
of his money is in his company, Microsoft.
And because Microsoft makes a lot of money
by selling its computer programs,
the value of his company keeps going
up and up and up.
If you begin
now, one dollar
and you stayed
up all day and
ACTIVITY: NEWS CENTS
Look in the CLASSIFIEDS section of the Sun Sentinel Digital
Edition. Find the Help Wanted ads,
ads where jobs are listed
according to the alphabet. Research different jobs, compare
the salaries and answer these questions:
Sunshine State Standards: LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124, LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11
It seems to happen to all of us. You had some money that you saved up from
your allowances or that you earned mowing lawns or babysitting your neighbor’s
kids. Then, the next thing you know, most—or all—of your money is gone and you
don’t know where it went.
That’s because your purchases, even the little ones, can add up fast. But you can
do something about it. Come up with a plan for how to spend your money, based on
how much money you have. First decide in which categories you spend money, then
figure out how much you can spend on each category. (Don’t forget to set aside some
of your money for savings!) If you spend too much on one thing, you’ll have to spend
less on another.
By keeping track of everything you buy, you can make better decisions about
whether you really need new wheels for your skateboard or a new pair of boots. Use
the worksheet at right to make your own budget.
Money I have now:
Money I’m getting soon:
Money I’m going to spend on:
Entertainment (Movies, etc.): $___________
Money I’m going to save:
What’s left over:
ACTIVITY: NEWS CENTS
Look through the Help Wanted ads in today’s Sun Sentinel Digit
At random, circle 10 different jobs. What kind of jobs are they? With a pen
or marker, write a G on jobs in which workers produce “goods”—things
people buy—and an S on jobs in which workers provide a service. Add up
jobs as a class. Of which type are there more in the Help Wanted section?
Wh it comes to money, the
d as though
h it should
h ld b
good thing. What’s wrong with money becoming inflated? That means you have
prices are going up. A low inflation rate — maybe 1%
or 2% a year — means prices aren’t going up very fast. A high inflation rate —
maybe 6% or 7% — means prices are going up pretty fast.
If you’re buying stuff, you want low inflation so you can get more things
for your money. Think about it this way: If you have $6 and you want to rent videos
that cost $3 each, you could go home with two of them. But if the price of a
video rental goes up to $4 or $5, you would only have enough money for
To figure out whether prices are going up and
Do you realize that every time you mow a lawn, buy a movie ticket or
by how much, the government sends thousands of people on
save babysitting income, you are participating in the nation’s economy?
a big shopping trip every month. They visit places like malls,
Each year people your age spend more than $50 billion, save billions
supermarkets and computer stores to compare prices on certain
more and earn money by providing services such as
items to their prices the month before.
pet-sitting, snow shoveling or taking out the garbage.
All the comparisons are put into one big report called
So what is the economy? The economy is the total activity of a nation or
region producing and selling goods and services, plus the jobs and wages of
pay close attention to inflation because it can often tell them
people who live there.
whether people will spend more money or less.
The purpose of an economy is to produce the goods and services that
Generally, higher prices mean people won’t buy as much. If
people in a society want. “Goods” are objects people want: candy bars,
people don’t buy as much, stores may go out of business and
CDs, video games or soccer balls. Services are things someone does for
people may lose their jobs. But if prices aren’t rising that fast,
someone else that satisfies a want, such as
people usually spend more money and businesses do better
babysitting, mowing a lawn, cutting hair or cleaning houses.
and hire more workers.
e the Economy
Sunshine State Standards: LA.18.104.22.168, LA.22.214.171.124, LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11
Americans don’t save much money. We make a lot of money, but we spend
nearly every cent of it.
A few years ago, Americans saved about 4% of the money they made from
their jobs, which is a lot lower than people in a lot of other countries. Last year,
we saved almost nothing.
Maybe you think that doesn’t really matter. If people want to spend their
money, they should spend it. Well, the economy can be looked at
as one big circle. Things that happen in one part of the circle can affect other
parts, and so on, and so on.
Think of it this way. If a family has no savings, they may be forced to stop
spending money altogether if something unfortunate happens, such
as one of the family members losing a job.
If enough people get stuck in the same position, families won’t spend as
much money, which means businesses won’t do as well. When businesses
don’t do as well, they may not need as many workers.
A family that has money set aside in savings has a cushion they can use if
they need it.
$50 in the bank.
then uses the
money to pay
It’s a nice feeling going into a bank to make a deposit, knowing
that your money will be safe there, locked up with security guards
at the entrances and video cameras on the walls to make sure
nothing goes wrong.
What most people don’t know is that your money isn’t just
sitting in one of those vaults waiting until you’re ready to come
back and get it. In fact, your money can take quite a journey
without your ever knowing it.
When you put your money in the bank, the bank promises
to give it back when you ask for it, plus interest. But in the
meantime, the bank will probably lend your money—and
the money of a lot of other customers—to other people and
businesses. These people or businesses pay the bank interest on
these loans. A bank makes money by getting back more interest
from the people who borrow than they pay out to
the people who make deposits.
A pretty interesting
trip for $50!
The bakery sends
your money to the
go to the
Saving money doesn’t have to be a hassle. Most
people find out that once they start saving and see
how easy it can be, they wish they started sooner.
Follow these tips to save smarter.
sTHINK ABOUT IT. It’s easy to come
up with a reason to spend your
money, but you might find that
there a lot of good reasons to save,
too. Don’t automatically look for
something to buy as soon as you get
sSET A GOAL. If you want to buy a new
bike by the time summer gets here,
figure out how much the bike will cost
and how much you’ll need to save
every week to be able to afford it.
sMAKE IT FUN. Keep track of how
much you’re putting away and
reward yourself once in a while
for doing a good job.
sSPEND SOME, SAVE SOME. Make a
point of always putting some money
aside when you get your allowance or
you make a couple bucks from a job,
or get some money for a gift.
Today, about 55 million
people own U.S. savings
bonds. When you buy a
savings bond, you are
lending money to the
government so it can pay
its bills. When you cash
in the bond, you get the
amount that was paid for
the bond, plus interest.
When you put your money into the bank, your money earns interest. But
to really understand how much money you might have in the future, you need to
know how the bank figures out the interest it pays you.
If you keep your money in your account it has the chance to grow through
what is known as compounding. That means that your money earns interest
and then that money earns interest, too.
Suppose you put $100 in an account that pays 5% compound interest
once a year. At the end of the year, you get $5, so now you have $105.
At the end of the next year you get 5% interest on the $105 — the new
amount, not the original $100 — which comes out to $5.25. So now you
It’s not such a big deal over a couple years,
but eventually compounding can make a
big difference. Take a look at the following
example of how a $100 investment that earns
5% a year can grow.
A simple savings account does
oes nott pay as much interest as some other types of investment.
As a result, many people put their
th i ““savings”
i ” money into
i t accounts
ll d money market
k t ffunds.
may provide two or even three times as much income as a regular savings account. But there is an
And You Could
important thing to know.
End Up With
Bank savings deposits are insured by the Federal Deposit Insurance Corporation (FDIC)
This Long …
This Much …
for up to $100,000 per depositor. If something should go wrong with your bank, you would
always get your money back (up to $100,000). Money market funds, while offering
higher returns, are not insured. While they are considered a relatively safe investment,
money in a money market fund, however.) Each person has to decide how much risk is worth
taking when deciding whether to open a regular savings or a money market account.
ACTIVITY: NEWS CENTS
Take some interest in interest rates. Look in the YOUR MONEY section
of the Sun Sentinel Digital Edition for a table called “Interest Rates”
or “Money Rates” to find out the interest rate being offered on different types of investments. Remember, different people have different
opinions about interest rates. If you’re borrowing money, you want interest rates to be low so you don’t have to pay back as much. If
you’re lending money—buying a bond, for instance—you want interest rates to be higher so you get more money back.
Sunshine State Standards: LA.18.104.22.168, LA.22.214.171.124
List some investments that are risky
and some investments that aren’t
risky. Research to discover the
answers to the following questions:
What makes one riskier than
another? What can make a riskier
investment safer? What can turn
an investment that isn’t risky into a
ACTIVITY: INVEST IN SOME STOCKS
ACTIVITY: TRY THIS!
— Comedian Jackie Mason
“I have enough money to last
me the rest of my life—unless I buy something.”
Sunshine State Standards: LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, MA.4.A.6.5, MA.4.A.1.1, MA.4.A.1.2, MA.4.A.2.4,
LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124, MA.5.A.6.5, MA.5.A.2.2, LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11,
LA.18.104.22.168, LA.22.214.171.124, LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124
Imagine you’re deciding whether to invest in
the stock of a company. Make a list of qualities
KNOWS THAT SAYING &OR INSTANCE IF YOURE EXERCISING YOU
that you’d like to see in such a company. Then
list some qualities that might scare you off
from investing in a company. Write an essay
explaining why you came to your conclustions.
3O WHAT DID THE STOCK MARKET DO TODAY 9OU MAY BE
You can practice investing before you try the real thing. Pick a few stocks you might be interested
in from the listings in today’s YOUR MONEY SECTION of the Sun Sentinel Digital Edition. Discuss
how the prices are written as a class. You have $5,000 to spend. In the spaces below, write
what stock you are buying, the price you are paying today, and the number of shares. Check
your stock online and record how the prices are doing. Figure out and record the difference in
price from week to week. Depending on how the stock does, you may feel really happy or really
bummed that you didn’t use real money! Put a thumb’s up if you made a profit or thumb’s down
if you lost money next to the date to indicate your results.
Not long ago,
a man paid more
than $3 million for
a baseball. The ball
wasnÒt made of gold
and it didnÒt have
any special powers.
It was the ball that
St. Louis CardinalsÒ
first baseman Mark
McGwire hit over the
fence for his recordsetting 70th home
run in 1998.
The man wanted to
add the record-setting
ball to his collection
of baseball items.
In addition to the coins
the U.S. Mint produces
for general circulation,
it mints coins for coin
collectors. Some of
the most popular ones
produced are the gold
and silver American
Eagle Bullion coins.
Most of us don’t have the kind of money the fan at left spent on his baseball collection. But that doesn’t
stop us from collecting things anyway, whether they’re Beanie Babies, basketball cards, Barbies or bugs.
Many people think of collecting as a way to invest their money. Buy a baseball card of a star today,
and it may be worth 100 times its current value in the future. Or buy an antique, or a work of art, and
you will be able to sell it for more in the future.
It doesn’t always work that way.
Whatever you’re collecting, here are some rules you can follow:
sDON’T EXPECT TO GET RICH
It’s exciting to think that someday your collection
might be worth a lot of money. You may be able
to sell one of your collectibles, but you’ll probably
get a lot less than the amount you read about in a
magazine or heard about on TV.
sCOLLECT SOMETHING THAT
Don’t just start collecting something because
everyone else is collecting it, or because you think
it may be worth a lot some day. Stick with stuff
you like in the first place. Remember, collecting is
supposed to be fun.
Take the time to read about what makes your
collectibles special. Your local library is a great
place to start and the Internet should have
some information, too. You’ll
learn new things and there’s a
better chance that you’ll be
able to spot items that
are rare or unique.
sLEARN MORE ABOUT
Imagine thousands of people going crazy over a bunch of flowers, offering to give up their life savings
to buy just one. Well, it happened, about 400 years ago. The story is a good example of how people can
get caught up in a craze or a fad.
It all started when a teacher brought his collection of tulip
plants from Turkey to Holland. With beautiful, colorful flowers,
tulips quickly became very popular. Many people decided
they just had to have them no matter what they cost.
Look in the Sun Sentinel Digital Edition
As you might have guessed, people eventually began to
classified ads to find out what people
figure out that tulip bulbs weren’t worth the kind of money
collect. The paper will list ads from people
who are offering to buy certain things.
until tulips were worth almost nothing. Many people lost all
Break up into groups of three or four
the money they had.
friends and talk about what you collect.
Write a list of the different things you
collect and why.
Sunshine State Standards: LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124
At one time or another, you have probably heard the news
reports: Interest rates are up. Or interest rates are down.
It seems like a big deal, the way the newscasters treat it.
So what’s up with interest? Interest is a kind of service charge you
pay when you borrow someone else’s money.
The interest rate — the percentage of the loan that you pay
in interest — is usually expressed as an annual rate. In other words,
if you borrow $100 from the bank for a year, and the annual interest
rate is 10%, you’ll owe $10 in interest charges at the end of the year,
in addition to $100 that you borrowed.
Generally speaking, lower interest rates are viewed
as a good thing for the nation’s economy because
they encourage consumers and business to do more
borrowing and spending.
Companies pay interest when they borrow money
to build new factories or start up new
of debts, including mortgages (the loan you
take out to buy a house), credit card debt,
and car loans.
Interest rates become news when the Federal
Reserve System raises or lowers what is known
as the primary credit rate.
The Federal Reserve System, also called the
Fed, is the central bank of the United States. It’s
a kind of watchdog of the nation’s money supply.
The primary credit rate, also known as the
discount rate, is the interest rate that’s charged
when banks borrow money overnight from the
Fed. In December 2009, the primary credit rate
Another interest rate that’s often in the news is
the prime rate, the interest rate that banks charge
their “best” customers. Usually, that means big,
The Fed does not control the prime rate directly, but when there is
a change in the primary credit rate, the prime rate also moves up
or down. As of December 2009, the prime
rate was 3.25%.
Interest rate changes affect everyone. Many banks base
the interest rates they pay customers for savings accounts
to the prime rate. In addition, many car loans, credit cards and
other consumer loans are adjustable rates that are
“tied” to the prime.
On every dollar
dollar, there’s a
seal to the left of George
Washington’s picture that
names the Federal Reserve
Bank that issued the bill.
Examine any dollar bills
in your wallet or purse to
see which cities are listed.
Take a class survey and
chart the results. Graph
your collected data.
second most powerful person in
Who’s the second-most
Bernanke, chairman of the Board of Governors
of the Federal Reserve System.
Bernanke (left) serves as Chairman of the
Federal Open Market Committee, the primary
policy-making body for our monetary system.
The Open Market Committee’s decisions about interest rates affect all other parts of the economy.
The financial world watches Bernanke closely
for clues about whether interest rates are headed
up or down and whether the economy is recovering
or headed for trouble. Even rumors about the health
of the Federal Reserve Chairman have been known
to set off selling by nervous stock market investors.
The Federal Reserve System was established by Congress in 1913 to
stabilize the nation’s financial system. Before then, the finance system
was very dis-organized, and hadn’t worked very well.
The Fed is actually 12 separate banks governed by the seven-member
Board of Governors. The Fed handles the day-to-day banking business
of the U.S. government, but it also carries out many other duties as it...
sTRIESTOBALANCETHEAMOUNTOFMONEYTHATSINCIRCULATIONBYBUYing and selling bonds and other government securities. If the
Fed’s Open Markets Committee decides there is too much money
in circulation, it can raise or lower the amount of money in circulation by changing the interest rate it charges banks to borrow
a portion — usually 10% — of their deposits on hand to cover
unexpected demands from customers for cash.
Treasury Department to print up new bills or mint new coins.
of the quick and accurate transfer of funds in more than 15
billion transactions a year.
ACTIVITY: NEWS CENTS
Look in YOUR MONEY of the Sun Sentinel Digital Edition for the current
discount and prime interest rates. See if you can find listings for home
mortgage rates or credit card rates. Explain how they compare.
Sunshine State Standards:LA.126.96.36.199, LA.188.8.131.52, MA.5.S.7.1, LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124
Are you ready to live in a world where you don’t have to carry cash
around? A world where computers transfer money in and out of your
accounts with the click of a mouse or a few keystrokes? In some ways, it’s
already here. These transactions have become a familiar part of American
sDirect deposit. Many Americans already enjoy the convenience of
having their pay automatically deposited in their bank accounts instead
of receiving a paper paycheck. In January 1999, federal agencies
began paying Social Security, pensions and veterans’
benefits electronically instead of by check.
sATMs and debit cards. Automatic teller machines allow you
to get cash from your bank account almost wherever and whenever you
like. A person can use a debit card to make a purchase in a store or
restaurant. A debit card looks like a credit card, but it’s
different in one important way. With a debit card, the money for
the purchase is transferred immediately —
or the next business day — from the cardholder’s bank account to the store’s account.
As the old saying goes, “You ain’t seen
nothin’ yet!” Someday soon, we could all be
using “smart cards.”
A smart card looks like a credit card, but it has an embedded microprocessor chip that stores monetary value and also keeps a record of
the user’s spending. As you use up the value that’s stored on the card,
you may be able to download additional funds from bank accounts
through a personal computer or a modified bank machine.
Smart cards can be used for purchases from vending machines,
stores or through computers. Imagine not having to go to the trouble of
keying in a credit card number to make purchases on the Internet!
Smart cards have been widely used in Europe and Asia for about a
decade. Americans got their first look at smart cards when they were
offered on a limited basis at the 1996 Summer Olympics in Atlanta
and they have become popular on college campuses. By 2007 there
were more than 35 million smart card users in the United States.
ACTIVITY: SMART CARD DESIGN
sInternet purchases. In the last few
years, millions of Americans have learned
how to shop from their personal computERS0ERHAPSYOURFAMILYHASBOUGHTBOOKS
from online booksellers like Amazon.com or
other goods and services that are available
online. All you have to do is key in your
credit-card number — and hope that there
are adequate security measures to prevent
“cyberthieves” from stealing your credit card
number and going on a spending spree.
Sunshine State Standards:VA.A.1.2, VA.B.1.2,
LA.126.96.36.199, VA.A.1.2, VA.B.1.2, LA.188.8.131.52
Design a smart card.
You can call your smart
card whatever you want.
What kinds of symbols
would you include?
Include explanatory notes
in the space around your
smart card with arrows to
important design elements.
The government used to
produce paper money in
amounts as big as $500,
$1,000, $5,000 and $10,000.
But those denominations
were eliminated in 1969.
They were mostly used
for large transfer payments
between banks, and by
then, banks had more
In recent years online banking and bill-paying have become increasingly popular. By the time you are earning a living and paying bills, you’ll probably be paying all your bills from your computer.
Here’s how it works: Sitting down at your computer after work, you
navigate to your bank’s website, and then type in your password. There, you
may find bills waiting there for you from your electric company, your landlord
and your credit card companies. With a few keystrokes, you authorize your
bank to pay the bills. Then you’re all done with your bill-paying, and you
can spend the rest of your evening relaxing.
More than 60 million people are
now using some form of online
banking in the U.S.
When you were too little to understand,
you may have thought that automatic teller machines
were wonderful, magical inventions that spit out free
cash on demand whenever your parents needed
that ATM cash is really coming out of their
bank account. But do you know how
ATMs, also called 24-hour Tellers, are
electronic terminals that permit you to bank
at almost any time of the day or night. When
you slide an ATM card into an automated
teller machine and enter your personal identification number on the keypad, the machine
sends a message by modem to your bank’s
central computer. The ATM machine transmits
the identification number that’s encoded on
the card’s magnetic strip to the bank. The
computer then permits the ATM to issue cash,
accept deposits or provide information about
account balances. The first ATM was installed
Sunshine State Standards: LA.184.108.40.206, LA.220.127.116.11, LA.18.104.22.168, LA.22.214.171.124
L k iin th
Digital Edition for ads from
banks and other financial
services companies. See
how many mentions of
electronic commerce you
can find. Make a chart to
categorize the different types
of electronic commerce you
Electronic commerce offers some major attractions. It’s faster. It’s also cheaper.
And it’s safer and reliable.
s&!34%2 Who wants to wait for a check to come in the mail, when they can have
the money moved into their bank account electronically?
s#(%!0%2 Banks, which process 60 billion paper checks a year, save 80 cents for
Automated Clearing House Association. The federal government estimates that it
costs 44 cents to mail out a Social Security check, compared with the two cents that it
costs to send out a Social Security monthly payment to the recipient’s bank.
s3!&%2!.$2%,)!",% The federal government sends out millions of benefits checks
every month to Social Security recipients, military veterans and others. Before the
government decided to begin electronic payments, agencies were receiving more
than a million telephone calls a year from people whose benefits checks were lost,
damaged, or just delayed in the mailed.
It sounds almost too good to be true. You walk into
a store with no money in your pocket, just a piece of
plastic with a long number stamped on it. You walk out
with whatever you want.
Well, it is too good to be true.
When you or your parents use a credit card, the credit card company pays for your purchase, then you pay back the credit card
company. But, of course, there’s a catch. The credit card company charges you interest because it is basically lending you money.
For example, if you buy a $50 pair of sneakers using a credit card, you may actually pay back the credit card company $56.50.
And the longer it takes you to repay the “loan,” the more interest adds up.
In most cases, just paying cash would have been a lot cheaper. Credit cards can make shopping more convenient, but they can
be dangerous if you use them too often or if you don’
t keep track of your bills. Keep that in mind the next time you or your parents
decide to “flash some plastic” at the mall.
TO THINK ABOUT
Th llaw says you h
have to be
b 18 to get
your own credit card. But kids as young
as 15 can get their own credit cards,
as long as their parents agree to be
responsible for paying the bills. Do you
think you could handle a credit card?
Write a few paragraphs explaining
why or why not.
As a nation, we love our credit cards. And
that’s not such a good thing, experts say.
Americans owe billions of dollars on credit
cards. Some people use their credit cards to pay
for routine expenses — gasoline for their cars,
groceries, meals out in restaurants —
and then find they owe huge amounts of money
that they can’
t pay back.
Among U.S. households that “carry a balance”
on their credit cards, the average debt is $8,000.
As a nation credit card debt has grown almost
Running up big credit card bills may seem
tempting to some people. Most cards don’t
require you to pay off the full amount every
month. You can pay a small portion of your debt
and then pay interest on what remains unpaid.
But those interest rates can be 18% and higher.
Does it really make sense to take a year to pay
off a dinner in a restaurant?
debt with her credit cards. In an interview with a
news magazine, she said the debt just “sneaked
counseling firm to pay off what she owes.
If you owe a credit card debt of $2,500 with an interest rate of 18%, and you
pay just the minimum payment each month, it could take you 34 years to pay
off the balance, according to the U.S. Public Interest Research Group.
Sunshine State Standards: LA.126.96.36.199, LA.188.8.131.52, LA.184.108.40.206, LA.220.127.116.11
Now that youÒve learned
something about saving,
spending and investing
money, here are some
activities to put your new
know-how to work.
ACTIVITY: YOU HIT THE JACKPOT!
Imagine you have just won $5
000 Write an essay about what you would do
with the money. Whether you’re spending, saving or investing — or doing a
bit of all three — be sure to describe:
1) If you cashed a $1 million check and asked for
payment in $100 bills, how many $100s would
you get back?
2) If you spent just $10 a day, how long would
$1 million last? (How many years is that?)
____________ days, which is _________ years
3) If you won $1 million dollars in the lottery and you had to
pay 38% in federal taxes and 7%
in state taxes, how much would you have left?
$ _________ left for me to spend
4) If you earned $25,000 a year and put every
dollar of it under your mattress, how long would
it take for you to accumulate $1 million?
(And how lumpy would your mattress be?)
page 3; 1a, 2c, 3b, 4c, 5a, 6d, 7a, 8b, 9a
page 15; 1. 10,000
2. 100,000 days, 274 years
3. 380,00 federal, 70,000 state, 550,000
4. 40 years
Sunshine State Standards: LA.18.104.22.168, LA.22.214.171.124
YOU ARE IN THE NEWS
P t d you’ve
j t been
i h t man or woman. Write
a newspaper article about yourself. How did you make your fortune?
What kinds of things do you do with your money to help other lessfortunate people? Do you spend any of your money on any unusual
hobbies or interests that might be mentioned in the article?
The supplement ÏF
ÏFocus on FinanceÐ was
commissioned from Hollister Kids by the
Connecting With the Classroom program
for The Philadelphia Inquirer.
§ 1999. All rights reserved.
The authors were financial writers
Michael!Hernan and Marta!McCave.
The editor was Peter!Landry. Kimberly!
Rogers was the designer.
The Hollister Kids website is www.hollisterkids.com
h TD Bank
i a financial
i l education
i program from
This FREE, one-of-a-kind program helps students in grades K–12 develop strong financial skills, in school and online.
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and resource tools for educators
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individuals test their investment
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on topics like:
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