PDF Page 2.2.3 STATEMENT OF FINANCIAL POSITION - Personal Finance

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2.2.3

STATEMENT OF FINANCIAL POSITION

Advanced Level

takechargetoday.arizona.edu

RECOMMENDED GRADE

LEVELS

EACH LESSON PLAN IS DESIGNED AND CONTINUALLY EVALUATED

��BY EDUCATORS, FOR EDUCATORS.�� THANK YOU TO THE

AVERAGE TIME TO COMPLETE

FOLLOWING EDUCATORS FOR DEVELOPING COMPONENTS OF

THIS LESSON PLAN.

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10�\12

Anticipatory Set & Facilitation:

75 minutes

Conclusion/Assessment Options:

10�\60 minutes

Time does not include optional items.

NATIONAL STANDARDS

The curriculum is aligned to the following national

standards:

? National Standards for Financial Literacy

? American Association of Family and Consumer

Sciences

? Council for Economic Education

? National Business Education

? National Jump$tart

? Common Core English Language Arts

?

?

?

Tracey Newman, Family and Consumer Sciences

Educator, Ste. Genevieve, Missouri

Michelle Keech, Business Educator, Tremont,

Illinois

Shelly Stanton, Business Educator, Billings,

Montana

Kathie Beck, Family and Consumer Sciences

Educator, Holland, Michigan

LESSON PLAN OBJECTIVES

Upon completion of this lesson, participants will be able to:

? Describe the importance of net worth

? Compare the difference between income and net

worth

? Explain why a Statement of Financial Position is an

important financial planning tool

? Create a Statement of Financial Position

MATERIALS

MATERIALS PROVIDED

IN THIS LESSON PLAN

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Statement of Financial Position Word

Grid 2.2.3.A1

Tori��s Statement of Financial Position

2.2.3.A2

Net Worth Knowledge 2.2.3.A3

Cody��s Statement of Financial Position

2.2.3.A4

Chuck and Wendy��s Statement of

Financial Position 2.2.3.A5

Ed and Mary��s Statement of Financial

Position 2.2.3.A6

Financial Position Throughout the Life

Cycle 2.2.3.A7

My Statement of Financial Position

MATERIALS SPECIFIC TO THIS LESSON PLAN

BUT AVAILABLE AS A SEPARATE DOWNLOAD

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Statement of Financial Position

Answer Key 2.2.3.C1

Statement of Financial Position

Excel Template 2.2.3.E3

Statement of Financial Position

PowerPoint Presentation 2.2.3.G1

Managing Your Money Unit

Multiple Choice Test Bank 2.2.0.M1

& C1

MATERIALS TO ACQUIRE SEPARATELY

DEPENDING ON OPTIONS TAUGHT

?

None

Material List Continued on Page 2

? Take Charge Today �C August 2013 �C Statement of Financial Position

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.2.3

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2.2.3.A8

Statement of Financial Position

Vocabulary List 2.2.3.E1

Statement of Financial Position

Template 2.2.3.E2

Statement of Financial Position

Information Sheet 2.2.3.F1

Statement of Financial Position Note

Taking Guide 2.2.3.L1

RESOURCES

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EXTERNAL RESOURCES

External resources referenced in this lesson plan:

Kelley Blue Book:

TAKE CHARGE TODAY RESOURCES

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Similar lesson plan at a different level:

None available

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Optional lesson plan resources:

Card Sort Active Learning Tool 3.0.9

Technology Integration Options Active Learning Tool

3.0.50

Income and Expense Statement Lesson Plan 2.2.4

Spending Plans Lesson Plan 2.2.5

Setting Financial Goals Lesson Plan 2.1.4

Vocabulary Reinforcement Activities Active Learning

Tool 3.0.36

CONTENT

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EDUCATOR MATERIALS

Materials to support educators when preparing to

teach this lesson plan are available on the Take

Charge Today website.

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PARTICIPANT READING

Statement of Financial Position Information Sheet

2.2.3.F1

OPTIONAL INSTRUCTION

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This lesson is designed to be taught as a stand�\alone lesson. However, background content knowledge from the

following lesson plans is directly related to this lesson and may be helpful for participants.

Setting Financial Goals Lesson Plan 2.1.4

Income and Expense Statement Lesson Plan 2.2.4

Spending Plans Lesson Plan 2.2.5

LESSON FACILITATION

PREPARE

Visual indicators to help prepare the lesson

VOCABULARY ACTIVITY

INSTRUCT

Instructions to conduct the lesson facilitation

CUSTOMIZE

Potential modifications to lesson facilitation

Word Grid

Approximate time: 10 minutes prior to instruction and 10 minutes at the end

Materials to prepare for the vocabulary activity:

? Take Charge Today �C August 2013 �C Statement of Financial Position

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

Page | 3

2.2.3

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1 Statement of Financial Position Word Grid 2.2.3.A1 per participant

Before instruction:

1. Provide each participant with one copy of the Statement of Financial Position

Word Grid 2.2.3.A1.

2. Complete the directions for ��Before the lesson.�� An example is provided.

After instruction:

3. After the lesson is complete, reinforce learning gained by completing the

directions for ��After the lesson.��

Use the quiz me cards

activity from the

Vocabulary

Reinforcement Activities

Active Learning Tool

3.0.36 for the three

spending lessons:

Statement of Financial

Position 2.2.3, Income

and Expense Statement

2.2.4 and Spending

Plans 2.2.5.

ANTICIPATORY SET

Who is wealthier?

Approximate time: 2 minutes

Materials to prepare:

? Statement of Financial Position PowerPoint Presentation 2.2.3.G1

? Technology Integration Options Active Learning Tool 3.0.50 for reference

1. Present the Statement of Financial Position PowerPoint Presentation 2.2.3.G1.

2. On slide 2, ask participants to vote on who they think is wealthier, Ian or

Mitchell.

3. If desired, add up the votes to compare the results at the end of instruction.

This could be completed in a variety of ways:

a. Have participants raise their hands to cast their vote.

b. Use software on an interactive whiteboard or a classroom response

system.

c. Use a polling or brainstorming/discussion website. Refer to the

Technology Integration Options Active Learning Tool 3.0.50 guide for

specific websites.

4. Tell participants that they will learn more about wealth, net worth, and income

throughout the lesson.

Discussion questions

are indicated by a

question mark icon

throughout the

PowerPoint.

RECOMMENDED FACILITATION

Approximate time: 70 minutes

Materials to prepare:

? 1 Statement of Financial Position Note Taking Guide 2.2.3.L1 per participant

? 1 Tori��s Statement of Financial Position 2.2.3.A2 per participant

1. Pass out one Statement of Financial Position Note Taking Guide 2.2.3.L1 to each

participant.

a. If the note taking guide is not used, consider providing each participant

with a copy of Tori��s Statement of Financial Position 2.2.3.A2 to

reference throughout the presentation.

Have participants

highlight each section

of the Statement of

Financial Position as it is

discussed.

Part 1: What is Net Worth?

2. Slide 3: Net Worth = Wealth

a. Net worth is the objective measure of financial wealth.

? Take Charge Today �C August 2013 �C Statement of Financial Position

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

Page | 4

2.2.3

3. Slide 4: Net Worth vs. Income

a. Income is money received like wages from working for pay, whereas net

worth will depend on how a person manages their income.

b. A person can have a high income and low net worth or vice versa. If a

person spends all money earned and does not save any money, they

may have low net worth (no matter how high their income may be).

Part 2: The Statement of Financial Position

4. Slide 5: How do you determine what your net worth is?

a. Net worth is calculated using the Statement of Financial Position.

b. The Statement of Financial Position is similar to a net worth statement

or balance sheet. It is similar to a balance sheet made for businesses but

is designed for individuals, families, and/or households.

5. Slide 6: Three components

a. Make sure participants find each section on the statement in front of

them (either the note taking guide or sample Statement of Financial

Position).

Part 3: Assets

6. Slide 7: What is an asset?

a. Ask participants if they know what an asset is and then discuss the

definition.

7. Slide 8: Monetary Assets

a. Assets are divided into three categories on the Statement of Financial

Position.

b. Discuss monetary assets and find that section on the Statement of

Financial Position.

c. Give the examples provided and then ask participants to brainstorm

other examples of monetary assets such as money owed to you by

others.

8. Slide 9: Tangible Assets

a. Discuss tangible assets and find that section on the Statement of

Financial Position.

b. Give the examples provided and then ask participants to brainstorm

other examples of tangible assets. Other examples may include jewelry,

sporting goods, clothing, furniture, boats, and campers.

9. Slide 10: How do you determine the value of tangible assets?

a. The market value of tangible assets is what is recorded on the

Statement of Financial Position.

b. Discuss various ways you can find the market value of tangible assets

and use the example provided to illustrate how the market value is

recorded on the statement.

i. Kelley Blue Book is an example of a website that will estimate

the value of an automobile.

ii. The local newspaper classifieds is a great location to determine

what similar items are selling for.

10. Slide 11: Investment Assets

a. Discuss investment assets and find that section on the Statement of

Financial Position.

? Take Charge Today �C August 2013 �C Statement of Financial Position

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

Page | 5

2.2.3

b. Give the examples provided and then ask participants to brainstorm

other examples of investment assets. Other examples include bonds,

mutual funds, and the value of investment real estate.

Part 4: Liabilities

11. Slide 12: What are liabilities?

a. Ask participants what they think liabilities are and discuss the definition.

b. Give the examples provided and then ask participants to brainstorm

other examples of liabilities. Other examples include a personal loan, a

loan for other items such as a camper or boat, and money owed to

others such as a family member.

12. Slide 13: What is recorded in the liabilities section?

a. When recording the amount for each liability, you should record what

you would pay if you were to pay the loan off in full today.

b. For example, let��s say you have an automobile loan that if you were to

pay today in full you would owe $5,490. If you were to continue making

payments of $180 which include interest you will pay $6,300 total.

Because a Statement of Financial Position is based on a specific date,

you would record what you owe today which is $5,490.

13. Slide 14: Liabilities vs. Expenses

a. Bills needing to be paid are not liabilities. You are paying for the use of

an item, not paying back money owed.

b. Refer back to the example on slide 13 to explain that the $5,490 owed

on the automobile loan is the liability and the $180 monthly payment is

the expense.

Part 5: Net Worth

14. Slide 15: Calculating Net Worth

a. Refer to the bottom line of the Statement of Financial Position that

indicates: net worth = total assets �C total liabilities.

15. Slide 16: Net Worth �C Your Personal Financial Thermometer

a. Net worth is like your personal financial thermometer, because it

provides a number that can measure your ��financial temperature.��

16. Slide 17: How can you increase net worth?

a. If you want to increase your net worth you can increase your assets,

decrease your liabilities, or complete a combination of both.

b. In order to increase assets or decrease liabilities you will want to make

changes regarding how you manage your money.

17. Slide 18: Money Management Tools

a. In addition to the Statement of Financial Position, there are two other

money management tools that will help you manage your money: the

Income and Expense Statement and the Spending Plan.

b. These three money management tools work together to help you

objectively evaluate your past, present, and future financial decisions to

work towards reaching the net worth level desired.

18. Slide 19: Your present self impacts your future self

a. Remind participants to keep their future in mind when making financial

decisions. Think about how financial decisions will affect future net

worth.

? Take Charge Today �C August 2013 �C Statement of Financial Position

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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