Lesson 2: forms of payment

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If the educational level of the participants is such that this banking section is non-value added, make it a critical skills development session using the added exercises.
This could also include bookkeeping terms (need to add) and a lesson on journal entries in lieu of checking account stuff. There are powerpoint slides that support bookkeeping.
"Our economy is the result of millions of decisions we all make every day

about producing, earning, saving, investing, and spending."

Dwight D. Eisenhower
I. Literacy Objective: The students will be able to demonstrate proper procedures for writing checks, reading bank statements, and balancing a checking account. They will be able to identify banking services and explain the advantages and disadvantages to using checks, money orders, and cash as modes of payment.
II. Materials for Lesson:

Slideshow slides 1-7: 12 Biblical principles for managing money

"Sample Deposit Slip" - handout

"Sample Checks" - handout

"Sample Check Register" - handout

"Sample Bank Statement" - handout

"Balancing Your Checking Account" - handout

"Merchants Find New RX For Bouncing Checks" - handout
III.Suggested Readings:

Real Life Decision Making by Betsy Feist Scholastic, Inc.
IV.Additional Activities:

"The Forgotten Five Hundred" - optional handout

"The Girl and the Money-Lender" - optional handout
**Computer Lab opportunity: Allow for computer lab time to work on budgets.
V. Notes to Instructor: You might choose to make transparencies or have a student draw some of these handouts on the blackboard rather than making photocopies in order to cut back on cost and paper. There are seven activities listed in the Learning Activity. Choose the ones appropriate for your class. Use plenty of examples. Obtaining brochures on checking and savings accounts from various banks and financial institutions in your community would also be helpful.
Students may need practice in reading and writing money amounts in numerals and in words. Give them opportunities to practice writing numbers and spelling out dollars and cents the way they would on a check or withdrawal slip. Put examples on the board and then ask for volunteer students to call out different amounts for more practice.
Journal Entry: How do you usually pay your bills? How did you choose this form of payment?
Review: Discuss the home assignment and each family's response to the family budget proposals.
For most of us, the way we pay our bills is habitual. This does not necessarily mean it is the most efficient or effective way to make payments. Discuss different payment methods utilizing the following questions:

1. What form of payment do you use to pay your bills?

2. Why do you use that form of payment?

3. What are all the options for paying bills?

4. What are checking accounts and how do they work?

5. What are money orders and how do they work?

6. What services do banks offer?
Record student responses on the chalkboard or overhead projector.


Identify all the ways the students pay their bills, including checks, money orders (also called cashier's checks), and cash. Make a list of the class suggestions on some advantages and disadvantages for each one. For example:


Advantages of checks:

a. Checks are safer than carrying around lots of money.

b. Checks save time because you can mail them to pay bills.

c. Canceled checks are proof that a bill has been paid.

d. Checks help the budget by showing spending habits.
Advantages of debit cards:

a. Debit cards are safer than carrying around lots of money.

b. You cannot spend more than what is in your account.

c. Electronic online banking statements lists each transaction and where it was spent.

d. If it is stolen, you can call immediately and cancel the card.

e. If it is a VISA, or major named card, you have leverage with the seller for returns.


a. If a checking account requires a minimum balance, extra money must be kept in the account.

b. Checking accounts can be "overdrawn" resulting in fines or service charges for "bounced" checks.

c. Records must be maintained for keeping track of the checks written.

d. Identification and approval are usually needed for cashing checks or using checks to

pay for merchandise.

e. Checks can be stolen and the bank does not carry insurance to reimburse you for

falsified checks.


Advantages of money orders:

a. Money orders may cost less than checks, depending on the number of checks written and the cost of checking services.

b. Money orders are safe to send in the mail because the "payee" and the "amount" are written on them.

c. Receipts are given with money orders.

a. If you have to purchase many money orders, they are expensive.

b. You have to go to the bank, post office, or a store to buy them.

Advantages of cash:

a. Cash is tangible and you know exactly how much you have.

b. Everybody accepts cash and no identification is required.

c. No fees are charged from a bank or store for cash transactions.
Disadvantages of cash:

a. Cash can be easily stolen.

b. Cash should not be mailed so you have to go to the company or store to pay a bill.

c. You need to get a receipt for payments made with cash or there is no proof that you paid a bill.
Opening a checking account usually involves the following steps. Write the steps on the board and discuss each one.

1. Choose a bank
Discuss reasons for choosing one bank over another, such as hours, location, services, fees.
2. Go to the bank in person.
Look for "New Accounts". Speak with the representative.

3. Decide what kind of account you want. Services and fees will vary. Three kinds of accounts are commonly offered:

a. Requires a fee for each check you write

Example: 25 checks x $ .15 per check = $3.75 fee per month
b. Requires a monthly service charge

Example: A monthly service charge of $8.50 is withdrawn from the account every month.
How many checks does a person have to write a month to make this more economical than paying $.15 per check? ($8.50 $ .15 per check = 56 checks) this is not usually true now
c. Certain types of accounts require a minimum balance and pays interest on the amount in the account.

Example: There is a $3.00 "maintenance fee" per month and a $.30 "transaction fee" per check if the balance in the account falls below $500 any day of the period.
4. Fill out and sign a signature card. Usually the bank representative asks for information regarding the names and addresses for each person authorized to use the account and types it on a signature card, and then asks for the signatures. The bank will use the signatures on this card to compare with signatures on the checks they receive for withdrawal on the account, as a safeguard against forgeries.
5. Deposit some money to open the account.
6. Order your personal checks. Banks have different kinds of checks; some are very plain and some are very decorative. Some are free and some cost. Whichever kind you choose, they will be printed with your name, address, and account number. The bank will give you checks to use until your printed checks arrive. Be sure to check them for accuracy.


Discuss and practice depositing money into an account using the Sample Deposit Slip.
To put money into your checking account, you must fill out a deposit slip. Preprinted deposit slips come with your personal checks and are usually found at the back of the checkbook. They have the customer's name, address, and account number printed on them. Blank deposit slips are also available at the bank. These have to be filled out with your name, address, and account number.

To deposit cash, list the amount in currency and in coin. Then total the amount of the deposit.
To deposit checks, write the bank number of each check, then the amount. Total the amounts.
To get cash from the checks, write the amount of cash you want in the place for "Less Cash Received". Subtract that amount from the total to calculate the amount of the deposit.
Discuss endorsing checks for deposit. Checks must be signed with an authorized signature on the back of the check. Sign your name exactly as it is written on the front of the check. To be safe, add your account number under your name. If the check is being deposited and no cash is being received, write For Deposit Only.
Distribute the Sample Checks and review the information preprinted on personal checks and the information needed to write personal checks.

Dolores. J. Paine 2525

1983 West Wind Ave. 555-7643

Paris, TX 78903 ___________________19__________


ORDER OF________________________________________________________$___________

Progress Avenue

Opportunity, TX 77765
FOR_______________________ ________________________________________
112902080 18 0000555 1

Information preprinted on personal checks

1. Name, address, and phone number of the person(s) who opened the account. It is a "single" account if one person opened the account; it is a "joint" account if two people opened it,
2. Check number (2525) - in sequential order for easy identification.

3. The American Bankers Association number ( 16-287/1122) - appears in fraction form in the upper right corner of each check. The top half of the fraction (16-287) identifies the location and district of the bank from which the check is drawn. The number on the bottom half of the fraction (1122) helps in routing the check to the specific area and bank on which it is drawn.
4. The name and address of the bank who holds the account (FORWARD BANK, Progress Avenue, Opportunity, TX).
5. The MICR number (112902080) helps the bank keep track of the checks.
6 The account number (18 0000555 1) belongs only to Dolores J. Paine. Each account has its own number.
Information for writing personal checks

1. The first item to be filled in is the date when the check is written. The month and the date go in the first space, and the year goes in after the "19_____".

Common forms of writing dates are:

A. Month first (June 10, 1994)

Months can be abbreviated (Jan. 10, 1994)

B.. Day first (10 June, 1994)

C. Numerical forms for months, usually month-day-year (6-10-94)
2. Written in the space after "Pay To The Order Of" is the name of the person or company to whom the check is being written. This is the "payee".
3. The amount of dollars and cents being paid is written in numeric form in the space after the "$____". The amount should be neatly and clearly written, placed as close as possible to the dollar sign, with the dollars and cents very easy to read. The cents need to be written as a fraction by either expressing the cent amount over 100 (65/100) or by inserting a decimal point between the dollar and cent amounts (.65).
4. The amount is also written a second time. This time the amount of dollars is written in words and the amount of cents is written in numbers. This information is written on the line with the word "dollars" preprinted at the end. The word "and" is handwritten to separate dollar amounts from cents; it replaces the decimal point. The number of cents is written over 100 (12/100).
To prevent anyone from being able to add to the amount, erase, or change anything on the check, always begin writing at the far left of the line, leaving no space between words, and draw a line from the cents to the word "dollars". Be sure to use a pen or typewriter.
5. Checks must have a signature from the person(s) authorized to write checks on the account. Banks have copies of authorized signatures on the signature cards which are on file to prevent forgeries.
6. A memo line is provided at the bottom left of each check for writing the "purpose" of the check. The line does not have to be filled in; it is provided for the account holder's convenience. The lines are useful for writing the loan or account number when paying bills or for writing a personal memo to yourself to help you remember what the check was for.
Use a check facsimile transparency or a check drawn on the board while discussing the information presented above. Provide situations for check writing practice, such as "Ann bought groceries at HEB on Tuesday. The cost was $116.89. Write a check to cover the amount." Have students volunteer other check writing scenarios.
Discuss what to do if you make a mistake while writing a check.

If the mistake is in the date, correct it and initial it.

If the mistake is on the payee's name or in the amount, write VOID across the check and make out a new one.
Ask the students to write responses to the following questions:

1. Why is the amount of the check written in two different ways?

2. Why should you draw a line to fill in the blank after the dollar amount in words?

3. Why should your signature always be the same?

4. What are the reasons for writing on the check what it is for?

5. What should you do if you make a mistake when writing a check?

It is very important to know how much money you have in your checking account. You must keep accurate records of the checks you write. Each time you write a check, record it in your register, which is provided by the bank along with your checks. Then subtract the amount of the check from the balance. Record the new balance. Using the Sample Check Register, discuss and practice making appropriate entries:
1. Number of the check used.

2. The date the check was written.

3. Person or company receiving the check.

4. The amount of the check.

5. The beginning balance.

6. The current balance.
The check register is also used for recording deposits.
Ask the students to write a response to the question "Why is it important to keep an accurate record of the checks you write?"

Banks mail bank statements at the end of the month to its checking account customers. The statement allows the customers to compare the bank's records with their records and check registers. Using the Sample Bank Statement, identify and discuss the following information:
1. The closing date, beginning balance, checking account number, and ending balance.
2. The checks that have been cashed including the check number, date paid, and the amount.
3. Most banks list the checks in order. An asterisk or star (*) indicates that a check is missing or is out of sequence. This helps the customer identify outstanding checks that have not been processed through the bank.
4. The date and amount of any service charges and automatic withdrawals.
5. The date and amount of each deposit.


Read and discuss "Balancing Your Checking Account" handout.
Make a list of all of the ideas that you and the students have about what could be wrong when things don't balance. Ideas can include these from Checking Account by Daniel Finn:

* The bank made a mistake. It can happen...not often, but banks do make mistakes.
* You made a math mistake in your register.
* You didn't record a check, deposit, service charge, automatic withdrawal, or ATM action.
* You wrote down the wrong amount in your register.
* You didn't notice an outstanding check or deposit that the bank had not received by the end of the month.
Self-paced Activities
Activity 1: Ask these students to roleplay (or write in dialog form) situations common to customers and bank personnel, such as calling and asking if a check has cleared, or going into the bank to cash a check.
Activity 2: Ask these students to summarize the differences between a checking account, money orders, and paying by cash to a person new to this country.

Activity 3: Some people spend hundreds of dollars a month on lottery tickets. What do you think of this? Would you spend that much money on lottery tickets? Do you buy a few now and then? Why or why not?
Some banks offer certain services to get your business. Others charge for the same services. It pays to shop for your bank just as you would for any major purchase such as a car or washing machine. Finding the right bank, savings and loan, or credit union means figuring out your own needs first.
Ask students to make a list of how many checks they will need to write each month. (Examples: rent, utilities, groceries, car payments, insurance) Knowing this will help them judge how complex or simple an account they need.
Discuss each of the different types of checking accounts:
PLAN A: Basic Checking Account

- An opening deposit of $25 is required.

- This account does not earn interest.

- There is no minimum balance requirement.

- There is a $3.00 service fee.

- The first 8 checks are free, then a 30 cent charge for each additional check.

- Unlimited Automatic Teller Machine (ATM) transactions.
PLAN B: Personal Checking Account

- An opening deposit of $100 is required.

- This account does not earn interest.

- There is no minimum balance.

- There is an $8.50 service fee.

- All checks are free.

- Unlimited ATM transactions.
PLAN C: Interest Checking Account

- An opening deposit of $100 is required.

- Simple interest is accrued daily and credited monthly.

- There is a $3.00 service fee.

- All checks are free unless the balance in the account falls below $500 any day of the period, then there is a 30 cent charge per check.

- Unlimited ATM transaction.
Ask the students to choose the plan that would meet their needs and write the reasons for their choice.
In addition to checking accounts, banks offer other services, such as overdraft protection, savings accounts, investment accounts, safe deposit boxes, loans, direct deposit, automatic withdrawals, bank by mail, charge cards, and foreign money exchange. Discuss any of these that are of interest to your students.
In addition to checking account service fees, banks charge for other services also. Discuss these examples:

Account reconcilement - $15.00 per hour

Account print-out - $3.00

Branch telephone account inquiry - $2.00

Check cashing (non-customer) - $5.00 per check

Check printing charges - $10.00 per 200 checks

Money orders - $3.00

Non-sufficient funds - $20.00 per item

Notary services - $5.00

Return of deposited checks - $3.00

Stop payment order - $20.00 per item

Travelers checks - 1% of amount

Wire transfers - $10.00
Discuss how all federally insured financial institutions are required to display a federal deposit insurance (FDIC) sign at each teller's window or station. This means your deposits will be protected up to $1,000,000.
Self-paced Activities
Activity 1: Ask these students to list the advantages and disadvantages to using ATMs and to going to a bank for the same services.
Activity 2: Ask these students to write the steps to buying and sending a mail order to pay a bill.
Activity 3: Ask these students to list all of the services they require from a bank.
Read and discuss the handout titled "Merchants Find New RX For Bouncing Checks".
Pre-reading: * What are "bad" checks?

* Who pays for bounced checks?

* What are possible consequences for writing "bad" checks?

* What can merchants do about bad checks?

* Write the numbers that represent $1.5 billion. ($100,500,000,000.00)

* How can a merchant be guaranteed that a check is good?
Post-reading: * Ask the students to write a response to "This article said that..."

* Has anyone had experience with check-guaranteeing services?

* Did you have any difficulty understanding the ideas or words used in this article? If so, explain what you believe caused the difficulty. Explain what you did to overcome the difficulty.
Words you might want to review:
Balance, Canceled check, Authorized, Service charge, Deposit, Outstanding check

Endorse, Interest, Minimum balance, Bank statement, Withdrawal, Overdraft,

ATM (automated teller machine)
Ask the students to identify at least one bank or credit union that would be convenient for them to get to. Ask them to find out what hours they are open, what types of services they provide, and what fees they charge.
1. Ask the students to respond in writing to the following:

1. Describe what you learned about mathematics today.

2. Of the math I've done lately, I'm most confident about__________________________________________________.

3. What I still don't understand is__________________________.
2. Read and discuss "The Forgotten Five Hundred". Ask the students to write a response to the question "How did Sara know where to call about the money?"
The author's reply is:

She called the Volunteer Readers for the Blind. Blind people often tell dollar bills apart by folding each denomination in a special way.
Ask comprehension questions, such as:

What motivates the characters in the story?

Would you have done the same thing as each character in the story did?

What is your reaction to the story?

What is the "moral" of the story?

Why is this story called a "mystery"?

What was the "mystery" in the story?

How was the "mystery" solved?

What other "mysteries" are you familiar with? Detectives?

What are the components of a good mystery?

What do good detectives do?

What steps can people take to solve the "mystery" of credit or the "mystery" of paying income taxes?

3. Polya (1962) defined problem solving as " finding a way out of a difficulty, a way around an obstacle, attaining an aim that was not immediately understandable." Review the following steps to problem solving:

* Recognize the problem
* Define and label the problem
* Analyze the cause
* Explore alternative solutions
* Make a decision
* Create and follow an action plan
Then read the "The Girl and the Money-Lender"

aloud in class. Ask the students to use the steps discussed above to solve the problem. (SOLUTION: The girl can reach in the bag, then due to her nervousness, "accidently" drop the pebble on the "pebble-strewn path" before anyone has a chance to see it. Then say "Oh clumsy me! We'll have to look in the bag to see what color of pebble is left. And then we'll know which color of pebble I dropped, because it will be the opposite."
Review the problem-solving steps.
Brainstorming Activity 1 – Night and Day

Busy people need routines and shortcuts to make it through the day. If we had to consciously think about the steps involved in making a cup of tea, we’d have exhausting our thinking energy before we’d even left the house in the morning. Routine thinking may save time and energy, but seriously hampers creative brainstorming, so use this exercise to challenge traditional thoughts and encourage creativity.

Make a list of common words e.g. night, smart, heavy, quick, apple. Get your team to list the first opposite meaning word that springs to mind e.g. day, stupid, light, slow, pear. This will flush out the obvious, routine words. Challenge your team to come up with at least 3 further opposite words for each word e.g.

Night = day,sun,white,awake, …..
Smart = stupid, scruffy, shabby, in-elegant, clumsy, gawky

You’ll find some similar meaning words creep into your list – that’s fine as these can spark further opposite meaning words. Remember ideas breed ideas and to keep critical, analytical thinking in check. Limit the time spent on this activity to 10-15 minutes, to keep it fresh and focused.

Now it’s time to introduce the “real” brainstorming activity. Write your problem statement clearly and simply, and let those creative minds go to work on generating new and non-routine ideas to solve the problem

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