Hello, everyone.

My name is Ms. Wyatt and I am so pleased that you could join me here today for our Citizenship lesson.

Welcome to today's lesson on How can we pay for things? From the unit How can we manage money well? By the end of today's lesson, you will be able to explain the main payment types and how to budget effectively.

We have the following keywords that we'll be using throughout our lesson today, and they are debits, credits, budget, and budgeting.

Debit is money taken from a bank account and used for payment.

Credit is money that can be used for payment, but it is borrowed from a lender, so interest might be charged.

Budget is a plan for how to spend money and track income and expenditure.

And budgeting is the process and plan of sticking to a budget.

Some of these words today might be new to you, but please don't worry as I'm here to guide you.

Our lesson on how can we pay for things is broken up into two parts today, with the first part looking at what are the main types of payments we can use and then finishing with how can we budget successfully.

So when you are ready, let's start our lesson on how can we pay for things.

The three main types of payment that you can use are cash, so physical money like coin or notes used to pay for goods or services, debit, which is money taken directly from your bank account, and credit, borrowed money from a lender.

Normally, interest is charged to you on the amount borrowed.

So, there are three main types of payment.

Cash has been used for centuries.

While cash remained the most common payment method for a long time, debit cards started gaining popularity in the 2000s and have become the most popular way to pay in the UK.

While cash use has been declining, it's still popular for certain situations and the Bank of England believed that cash will likely continue to be available for the foreseeable future due to its convenience for some people.

Many people say that they like cash, because it provides a quick and hassle-free payment methods, it's accepted in many places, and it helps in managing budgets.

Let's check our understanding so far then.

Money taken directly from your bank account is called? Is it a, cash, b, credit, or c, debit? What's the money called that is taken from your bank directly? Pause the video and make your decision.

Okay, hopefully, you've made the decision now.

So money directly taken from your bank account is called debit, c, debit.

Well done if we got that correct.

Debit is money you have in a bank account, which you use for payment.

The difference between debit and cash is that debit is electronic.

You might use a debit card to withdraw cash from a cash machine, often called an automated teller machine or an ATM.

You can also use debit to pay directly from your bank account by scanning your banking gap with your smartphone or enter in your details on a website for an online purchase.

Debit is an easy way to pay, reducing the risk of losing cash or having it stolen.

You haven't got that worry then with having cash in your purse or your pocket, okay? You are not gonna easily lose it or have it stolen.

You can also use electronic money wallets for payments.

These include services that store your payment details and use them to make payments directly from your bank account.

A credit card lets you borrow money from your bank to make purchases, which you pay back monthly.

Interest is the extra money you pay when you borrow money.

Sometimes, you might get 0% interest for a short time, but after that, the rate can go up to 30% or more.

This means you'll have to pay back more than what you borrowed.

So you have to pay back what you've borrowed anyway, but with the interest added on top of that that you will have to pay that back as well.

For example, if you borrow 200 pounds at 30% interest, you will end up paying back 260 pounds because of the interest.

Like debit cards, you can use credit cards to pay using your smartphone or online.

Credit is not usually available until you're 18.

Before using credit instead of debit, ask yourself questions like.

Do I really need it? Why do I need it? Can I save for it instead and buy it later? How much am I going to be charged? Think about interest.

Will I be able to pay the money back? Could my circumstances change? Your answers will help you to make a responsible decision when deciding whether to use credit or debit.

So true or false, the interest you are charged on credit cards can be up to 30% or more.

Is that true or is it false? Have a think about that.

Okay, hopefully, we remember that this is actually true.

The interest you are charged on credit cards can be 30%, 0%, 50%.

It can go up, okay? Well done if we got that right.

An example of someone choosing to use a credit card could be Imani needs a bike to get to work and has decided to get it on credit, because she knows she can pay it back in full at the end of the month when she's paid her salary.

She does not have money saved up, but cannot wait until the end of the month as she needs the bike urgently to get to work.

Imani researched bikes and prices, then chose to use her credit card knowing she could pay it back.

Her friend Tara got into debt by not paying her credit card on time and ended up paying much more.

So, Imani avoids that mistake because Imani paid it all off when she knew she could.

Do you think Imani has been financially responsible and used the best option available to her? Do you think she's been financially responsible here? Tara bought an expensive bike on credit without thinking if she could afford the repayments or saving any money for it.

She also didn't need the bike urgently.

She ended up paying nearly double the bike's price over 12 months, because the interest.

By then, her bike was damaged and she'd have to buy a new one.

Do you think Tara has been financially responsible and used the best option available to her? Interested to know what we think about that situation with Tara in comparison to Imani's situation.

Credit card companies often encourage customers to pay back the minimum amount of money each month.

This is not a free offer and will result in you being charged interest.

The only way to not be charged interest is to pay the full amount you owe every month.

Adults sometimes use credit cards to help manage their money, which is part of being financially responsible.

For example, when Izzy's mother applied for a mortgage to buy a house, she needed a good credit rating.

This can be gained from having a good record of paying a credit card back.

This is a reason why lots of adults, including Izzy's mother, will pay on credit, even if they have money in their bank accounts because it helps you have a good credit rating.

So, let's fill in the missing words here.

You can pay with your debit card or blank cash from your account.

You can pay with your blank cards, but you might be charged a lot of money as blank and you must be careful not to get into blank.

So, what do we think our gaps are there and what are the missing words? Let's pause our video and let's have a go at thinking what are the gaps here.

Let's try and fill in these sentences.

Okay, well done, everyone.

So, let's go through it together then.

You can pay with your debit card or withdraw cash from your accounts, which just means takeout.

You can pay with your credit card, but you might be charged a lot of money as interest and you must be careful not to get into debt.

So, we had withdraw, credit, interest, and debt.

Those were our missing words.

Well done if you work that out.

For this task, I would like us to complete the table about the main types of payments we can use.

So we can use cash, we can use debit, and we can use credit.

So with cash, we need to fill out how it's used, when it's used, and why is it used.

The exact same for debit and credit as well.

So, let's pause the video and have a go at completing the table about the main types of payments that we can use.

Good luck and enjoy.

So, let's have a go at giving our answers now.

Our completed table might look a little bit like mine.

So with cash, "How is it used?" Well, we said to pay for goods and services face to face.

We said, "When is it used?" To pay for goods and services immediately.

We said, "Why is it used?" While it's convenient, it's quick and it's accepted everywhere.

For debit, we said, it's how it's used is to pay with a debit card, a smartphone or online.

When is it used to pay? With money already in your bank account.

And why is because it's easy.

It means you don't lose cash or get it stolen.

It's really convenient.

And then, we have credit.

So, how is it used? Well, to pay with a credit card, you have a smartphone or it could be online.

When is it used? When you don't have enough money or you are managing your money in that way.

And why is it used? If you need something, but don't have money in your bank account.

So hopefully, we've managed to have a go at filling in this table about how these different main types of payments are used, when is it used, and why are they used.

Well done and good efforts.

We have now explored what are the main types of payments that we can use and we're now to start to look at how can we budget successfully.

When paying for things, we need to budget and consider affordability to manage our money successfully.

A budget is important as it allows us to track what comes in, which is our income, and what goes out, which is our outgoings or expenditure.

If you have more money going out than coming in, you can get yourself into debt.

Once in debt, it can be very hard to get out of it.

Debt can become like a cycle, because you can end up borrowing more money to pay off charges on the debt rather than paying back the original debt.

And it goes in a cycle.

This is why budgeting is a very important skill to learn and is key to being financially responsible.

So, let's match the words to their definitions.

So we have income, expenditure, and debt.

So, where do we think income goes? Is it money owed, money coming in, money going out? What about expenditure and what about debt? Let's pause the video now.

Let's have a think about this.

Let's try and match the words with their definitions.

Okay, hopefully, we've had enough time now to match the words to their definitions.

So income, we should have match to money coming in.

Expenditure is money going out and debt is the money owed.

So, we had 1 to b, 2 to c, and 3 to a.

Well done if you got that correct.

People organise their budgeting in many different ways.

For example, there are mobile apps that offer free budgeting tools, sync with your smartphone, and send reminders.

You can also set savings goals and track all your income and expenditure.

That's really handy.

Since people use their smartphones often, this has become a popular way to budget.

Budgeting is only successful if you do it properly and stick to your means using just the money you have.

There are other ways to budget, like using jars to allocate funds for specific things.

However, this method requires caution as there's no protection.

If the money gets lost or stolen, it's better suited for smaller purchases you're saving up for.

Additionally, banks offer interest on savings, providing extra security.

Lucas says, "How do you budget, Andeep?" Andeep says, "I have a debit card that is specifically designed for children, so my parents can see what I buy.

I mainly use my money box for budgeting as I save any pound coins I receive and wait until I have enough money to buy something I really want.

When I'm over 18, I'll get a credit card to help improve my credit rating, but I'll make sure to only use it if I can afford what I bought." Other people prefer to use prepaid cards.

These cards are very similar to gift cards.

You add money to the card, which can be used the same way as a debit card.

The payment is deducted from the balance on the card.

This can help you manage money as you cannot spend more than what is on the cards, which is an amount you have set.

So, you can't spend anymore because there's nothing else left on there.

A useful and effective way to budget is through online banking.

This allows you to have access your bank accounts wherever you are, so long as you have a digital device and internet access.

You can check and track your balance and transactions.

You used to have to go to a bank or wait for a monthly statement in the post to be able to do this.

Being able to access your account online makes it easier for you to see income and expenditure and track your money, allowing you to budget successfully.

So before mobile banking and online banking, you had to actually go into a bank or wait for that monthly statement to be sent to you through the post to be able to see, well, I know this is coming in and that is going out, your income and your expenditure.

Some people prefer to use a budgeting tool online or will design their own budget on a computer programme, like an online spreadsheet.

Other people stick to a more traditional budgeting tool, a piece of paper and a pen.

Whichever way people choose to budget, it can only be successful if it is used strictly and strategically.

You need to think about your purchases and spend your money wisely.

So, true or false, budgets are not usually successful even if you stick to them.

Is that true or is that false? What do we think? Hopefully, we know that this is false.

Well, if you stick to a budget, you will be tracking your income and expenditures.

So, it's more than likely it's going to be successful with how you are spending your money.

Well done if we all said false said.

So, this is an example of a successfully balanced budget.

Just take a few minutes to have a look at this.

There's some different headings and there's some different numbers on there.

So Julia is 25 and earns 23,000 a year, which after national insurance and tax, works out at 20,079 pound and 60 pence annually or 1,673 pounds and 31 pence a month.

She aims to save 115 pounds a month.

So here, we can see that her rent is 900 pounds.

Her bills are 200, food, 230, travel, 70 pounds, mobile phone, 20 pounds, entertainment, 80 pounds, clothing, 30 pounds.

Her other things like gym is 25 pounds.

And she manages to save 115 pounds.

So, her total expenditure is 1,670.

So, she's 3 pounds and 31 pence under.

Julia's budget was successful, because she balanced her income and expenses, avoiding overspending.

Julia saved 115 pounds a month totaling 1,380 pounds a year for new clothes and a holiday.

With over 3 pound left, she put it in her piggy bank for emergencies, showing more financial responsibility.

Budgeting is an ongoing process that requires checking and adjusting how you spend money to stay financially stable.

By keeping track of income and expenses, you can make sure you have enough to cover essential costs like bills, while also setting aside money for future needs.

A key part of successful budgeting is spending within your limits and avoiding unnecessary debt, which means prioritising needs over once.

Making smart financial choices, such as using debit or credit cards responsibly and choosing the right payment method for each situation helps maintain control over your finances.

With careful planning and regular reviewing, budgeting allows for better money management and long-term financial security.

So, let's fill in the missing words here.

Julia's budget was successful, because she managed to blank her income and her blank.

What are our two missing words here? What do we think they are? Let's pause the video and have a go at filling in our missing words.

Okay, let's go through it together.

Julia's budget was successful, because she managed to balance her income and her expenditure.

So, she was able to balance how much she was getting in and also balance how much was going out.

Well done if we wrote balance and expenditure as our missing words.

Active citizens often fundraise for charities or specific reasons.

For example, some pupils might fundraise at school by selling cakes.

When you fundraise, financial budgeting is really important and can be the difference between your action being successful or ineffective.

If you want to make a profit, you need to keep a budget to track your income and expenditure.

Jun says, "We had to really keep track of our budget when we did that coffee morning for the elderly in our community.

Do you remember what happens, Sofia?" Sofia says, "Yes, we spent too much of our budget on cakes and not enough on drinks.

It could have been a disaster if the school hadn't stepped in to give us some drinks from the canteen." Jun says, "I think next time we organise an event for charity, we should discuss and plan the budget better so we can end up budgeting successfully." Sofia says, "Definitely, Jun.

I think now we are aware of how important budgeting is, it will be the first thing we sought out next time, so we can become more successful active citizens." So when should you arrange a budget for a fundraising event? Is it beforehand, during, or afterwards? What do we think? Pause the video and make a decision from that list of choices.

Okay, so hopefully, we've all said that you should arrange a budget before a fundraising event.

Well done if we all said beforehand.

During and afterwards, there's no point.

It's not worth it.

You need to do it before to know how much money you are going to be able to budget.

It's not just individuals and small groups that have to budget.

The government has to too.

They have to make sure there is enough money to provide the services that citizens need.

This budget is delivered in a speech given by the Chancellor of the Exchequer.

They are in charge of the budget for the government and the country.

If the budget doesn't balance, the economy suffers and people in power often held accountable for their actions.

Just like we saw Julia carefully considering her money coming in and what she has to spend, the government do this too, by looking at taxes collected from individuals and businesses, public spending on services like healthcare and education, borrowing and national debt management, investments in infrastructure and economic growth, welfare and social support programmes.

So, there's a lot of things to look at when the government has to look at how they consider the money.

So, who delivers the budget for the government? Can you remember the name of that role? What was the role called? So if we said the Chancellor of the Exchequer, we would be correct.

Well done.

Why is it important that the budget balances? Hopefully, we said, "If the budget doesn't balance, the economy suffers and people in power are often held accountable for their actions." For this task, I would like us to read the statements below and tick the appropriate box.

So, we have four statements and we need to work out whether they're correct or incorrect, okay? So, first one says income is money going out and expenditure is money coming in.

Next one says if you have more money going out than coming in, you get profit.

C says, online banking is a tool that can help you to budget successfully.

And d says the government has to produce a budget every year.

So, we need to work out whether it's correct or incorrect, what we think it is.

Once we've done that, tick the appropriate box.

So, pause the video and have a go at this task.

Okay, so your answers should look like mine on the screen.

So for the first one, income is money going out and expenditure is money coming in is incorrect.

So hopefully, we've all ticked, I am sure this is incorrect.

The next one is also incorrect.

If you have more money going out than coming in, you get profit, that's wrong.

Then, we've got c.

Online banking is a tool that can help you to budget successfully.

Hopefully, we've said I am sure this is correct.

And then, the government has to produce a budget every year, they do.

So hopefully, we've ticked as well I am sure this is correct.

Well done if we've done this.

For this task, for the statements that were incorrect, rewrite them to make them correct and add one sentence to explain how they link to successful budgeting.

So, let's try and make these statements correct.

So, we need to rewrite them.

Once we've rewritten them, we need to add a sentence to explain how they link to successful budgeting.

So, pause the video when you're ready to start and have a go.

Okay, so when we needed to rewrite them, hopefully, we said, "Income is money going in and expenditure is money coming out.

These need to be balanced in order to budget successfully." Then for the next one, "If you have more money going out than coming in, you will not make any profit and you can get yourself in debt, which can be like a cycle.

It is important to make sure you do not get yourself in debt by budgeting successfully using credit and debit cards wisely and sticking to your budget." So, well done if you manage to rewrite them and add a sentence to explain how they link to successful budgeting.

Good job, everyone.

We have now come to the end of our lesson on how can we pay for things, and I have summarised this into a few points for us.

There are various ways to make payments, including cash, debit cards, credit cards, and digital payments, each with different advantages for managing money.

A debit card allows direct spending from your bank account, while a credit card lets you borrow money that must be repaid later, often with interest.

A budget is this financial plan that helps track income and expenditure, ensuring that spending stays within limits and saving is prioritised.

Budgeting involves regularly reviewing and adjusting spending habits to avoid debt, manage bills, and prepare for future expenses.

Successful budgeting requires living within your needs, making informed financial decisions, and using different payment methods wisely.

I hope you've enjoyed this lesson and taken a lot from it.

Hopefully, we've managed to learn how we can pay for things in the different ways.

Well done on of all of your efforts today, and I hope to see you in the next one.