SUBJECT
Money, Real-World Math

4-5

DURATION
20 Mins

UNIT PLAN
Number Smarts!

# Spending Smarts

Number Smarts!

OBJECTIVE
Students will:

• Understand benefits and costs to consider when making a spending decision
• Understand the basic concept of credit
• Use addition, subtraction, multiplication, and division (with whole numbers, fractions, decimals and/or percents, mixed numbers) to solve real-world math problems that will help them understand the process of making spending decisions and the concept of credit

MATERIALS
Chart paper or chalkboard, marker or chalk, Student Magazine Pages 6-7: Spending Smarts (PDF), pencils

REPRODUCIBLES

DIRECTIONS
Warm-up:

Discuss with students: Who has ever made a decision about spending money? What did you consider when you made your decision? What do you think it means when a clerk at a store says, "Would you like to pay with cash or credit?" What is a credit card? Write student answers on the board or on chart paper.

Activity:

1. Remind students that making a purchase requires making a decision. In this activity, they'll explore some of the steps to go through when deciding how to spend money. Students will find out the differences between paying with cash and paying with credit.
2. First, explain that when people pay with cash, they pay up front for an item. If they pay with a credit card, they are taking out a loan and promising to pay it back.
3. Call on volunteers for each step of the following decision-making process:
• Student 1-Identify the Problem: "I would like to buy a book for \$10. I'm not sure whether I should pay with cash or credit."
• Student 2-List the Choices: "You can pay \$10 cash and take the book today. Or you can pay with credit, paying nothing today and take the book, but promise to pay the money back in 30 days."
• Student 3-What Is Your Goal?: "The goal is to buy the book today for \$10."
• Student 4-Evaluate Your Choices: "Think about the pros and cons. With cash, you can pay now, take the book now, and owe nothing more, ever. With credit, you don't have to pay any money now and can take the book today. In 30 days, you'll have the option to pay back the \$10, or pay as little as \$5 and owe the rest later, with an additional fee called interest."
• Do the Math: Lead students through the math behind these two choices as shown in this chart:
• Student 5-Make a Decision: "Based on the pros and cons of the two choices, what decision should be made? Remember the original goal."

Wrap-up:

Discuss with students: What are the pros and cons of paying with cash versus credit? What are possible additional costs when one pays with credit? Why does someone have to be careful when he or she has a credit card?

LESSON EXTENSION
Have students scan newspapers, magazines, and flyers for advertisements that include prices, such as ads for computers, video games, or grocery-store items. Examine ads in class and comparison shop.

Language Arts Extension:

Expository: Writing Situation: When you make a decision about what to buy, you need to think about pros and cons. Directions for Writing: Think about a time when you purchased something. What were the pros and cons you thought about when you made your decision?

Narrative: Writing Situation: People often have an option of paying for something with credit. Directions for Writing: Think about the pros and cons of cash versus credit. Now write a story about something real or imaginary that involves using credit cards.

ASSIGNMENTS
Have students read Student Magazine Pages 6-7: Spending Smarts (PDF), in class or at home, and complete the problems on page 7.

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