Lesson video

Hi, and welcome to today's Citizenship lesson.

I'm Mrs. Barry, and I'll be your teacher today.

We are beginning a series of lessons about how can we manage money well? We're going to start with lesson one of six.

Thinking about what is the best way to look after money? Now hopefully, you've got yourself in a quiet place and you've turned off any apps or notifications that might pop up and distract you.

And we can have a look at what we need for today's lesson.

So we need to ensure we've got our brain which hopefully is already with you.

Something to write with such as a pen or a pencil and some paper or something else to write on.

When you are ready to begin our lesson, we can make a start.

We're going to be looking at a variety of different things to consider this question.

What is the best way to look after money? And we're going to start off with why do we have money? What is its purpose? We can have a look at a little bit of the history of money and how it's been used.

We're going to consider different types of bank accounts and we're going to have a look at ethical banking and investments and how they might help us to look after our money.

And it's really important we consider within citizenship, our financial responsibility and the responsibility of others as well.

So we'll use that as we go through to today's lesson.

We'll do some activities to make sure you've understood it all.

And we, hopefully we'll have an enjoyable lesson.

We're starting this lesson by looking at why we have money? And money in terms of coins and notes, that you might be familiar with has not always existed.

The principles of value and worth have though.

So the idea that something is worth more than something else will be, concept that an item holds value of some kind.

So it's worth something to someone has been an age old tradition that has lasted over a long period of time.

And historically people would trade goods instead of using money to pay for them.

So trade, is where you exchange, you swap essentially.

And so you might think I've got an apple but I don't really like apples and I'd rather have a banana.

So you could swap that as an equal value item potentially because they're both fruit but you might think actually I've got chocolate and chocolate is worth more to me.

So you'd want more fruit for that chocolate.

And they're just a couple of little examples to help you understand what trade is.

Money allows us to do three main things.

So like I've just explained, it allows the exchange of goods and services and goods are simply items like pens or clothes or as I was talking about a moment ago, fruit, chocolate and services.

And services are slightly different because these are actions by people.

So for example, doctors provide a medical service, hairdressers provide a service to do your hair.

And so you could potentially exchange goods for services services for goods, goods for goods or services for services, but a lot simpler would be to use money.

And that's why we're looking at money in this instance.

A second point here that money allows us to do is it allows us to give value to goods and services.

So it allows us to measure how much something is worth in comparison to something else.

And then thirdly, it maintains worth or value.

So allows you to save.

So if you have a pound coin and you put it into a bank account or a money pot, then that one pound will always be worth something.

So it maintained, it continues to have worth or value.

And that's what money allows us to do.

Allows us to juggle the idea that things have a value and have worth.

And as I said over time, we've always had a system in which we can make trade for different items. And so why do we have money? Well, because we've developed a sophisticated system to be able to measure value and worth, and to trade goods in the sense of money.

You don't have to have your banana and your apple swap you instead can have money to pay for your banana or your apple.

And here you can see a timeline of how it's changed.

And the image there on the top left is a cowry shell.

And after the concept of simple trade between two items or goods and services, they used cowry shells.

That was the first recorded method of having items that were valued by something else.

So a number of cowry shells would be used to pay for Something.

Those then changed into metal cowry shells.

So you didn't have to go and find them on the beach.

You had a metal version of it.

And then it turns into coins around 600 BC.

And they were first used in Turkey and they were gold and silver.

Now, many years later, paper money was introduced now we see for paper money to exist paper had to exist and that's why it took so long.

And then we have got the first evidence of a banking system in Italy in the 1400.

It wasn't until 1861 that England links money to gold.

And it's called a "Gold standard." And a "Gold standard" means that everything is valued in terms of its value in the metal of gold.

Gold is really heavy and inconvenient.

So you don't actually carry gold around with you.

We have these coins, which are to the value of some of them and I'll talk about that more in a moment.

Now there are first credit cards in 1950 which means that you could use plastic to pay for items and potentially have borrowed that money rather than having it up front.

And then in 2011 you might be aware that we have phone wallets.

So cards are linked to your phone and you may have seen it, you may have used it yourself potentially your phone instead of a card or money because it links to your phone, your accounts all link up to that.

Now with all this, we have to bear in mind our financial responsibility.

And financial responsibility is the process of managing money and other assets with value in the best interest of who's involved.

So it might be that you are financially responsible for yourself.

That's personal financial responsibility.

It might be for your business.

So you might be looking after the money for a business.

It could be for the whole country and the government has financial responsibility for our country.

It might be your whole family.

So there's lots of different ways in which you might be financially responsible.

When we look at money in citizenship we have to bear that in mind because that's why we're looking at it.

We're looking at it to ensure we can manage our money well and we know what to do with it.

And this means that it's used well and you know what you're doing with it and why.

So this financial responsibility expand outwards from ourselves to our local and global communities and back again.

And you can see from the image here that we've spoken about personal businesses and government responsibility finance.

I said to you we would come back and talk about the "Gold standard." And I said, gold would be quite heavy to carry around.

I don't want you just to think about, have you ever looked at a bank note really closely because under where it says bank of England at the top of that 10 pound note, it says, "I promise to pay the bearer on demand the sum of." So essentially rather than you carrying around the equivalent gold value of whatever it is you're trying to buy, whether it be goods or services you carry around notes or coins which it relates to, because it would be very very inconvenient to carry around gold bars.

For our first task this lesson, thinking about what can you do with your money, and to think about the purpose of money.

And to be able to do that, we need to think about how we get it and what we can use it for.

And so I'd like you in two columns to write ideas about where you get your money from and what you could use it for.

You can head over to the worksheet and there is a worksheet ready for you to do this or you could draw this out yourself.

That's absolutely fine.

So pause the video, write down your ideas and when you're ready, press play and we can have to think about what you've written.

So well done.

Hopefully you've given that a good thought and you can see on the screen now, some of the ideas that I came up with and you might have more than this and that's up to you fine just to be a basic understanding of these areas these are the ideas I came up with.

So how do we get money? We might be gifted money, you might get money for your birthday for example, you might do chores around the house or you could potentially have a small part-time job and work for it or when you're older, a full-time job or a part-time job and you could get pocket money or paid employment to get that money.

You could borrow money.

So you might ask for money in advance and pay it back later.

So you might ask or can I borrow some money to go to the cinema? And then you might say, I will pay back later.

And that would be borrowing.

And what can we use money for? So you could use the money for goods and services like we've spoken about earlier.

So it might be as simple as popping down the shop and buying some clothes, they would be goods.

You might use it for saving up.

So these are savings when you keep the money to put it all together and buy something bigger or you might invest.

So you might make an investment of which you're looking for a return or a profit.

And we're going to go through that a bit later.

So well done.

If you came up with some of those potentially you've come up with a few more, but these are the main answers for this.

We're going to move on to task two because we've spoken about how can we use our money well or manage our money well, and in today's society most people use a bank account.

And there are lots of different types of bank accounts, which are available.

And what I'd like you to do is spend some time thinking about what bank accounts you know of.

And so you can have it, head over to the worksheet and there is an empty grid for you to fill in the definitions next to the type of bank account so pause the video now and when you have completed that task press play and we'll have a look.

So here we go.

Hopefully you were able to have a good go at identifying what each of those accounts are and I'm just going to run through them now.

They're, color-coordinated on the screen but I will walk you through them.

So a current account is for day-to-day money and payments can be made into the account and from the account.

And they might have an optional extra feature such as an overdraft.

Savings account is for money you want to keep and potentially earn some extra money for keeping it, and that amount will vary depending on what savings account you have.

You might be able to get a package account which are current accounts that might charge us more fee extra benefits, such as insurance.

So it might offer mobile phone insurance as an additional extra that you pay for.

You might look at a student or graduate account and those are slightly different to current accounts because they function, but they function in the same way.

They often have extra benefits.

They might have interest free overdraft.

So while you're a student at university, for example they might offer you three years free interest overdraft for you to be able to use.

And then when you finish being a student they might start charging you on that draught.

And we'll talk about things like interest later on.

And then there's a jam-jar account which is known as a budgeting or rent account.

And that lets you divide your money into different jars to help you budget.

So you put your money in saying, for example I want to put 50 pounds towards shopping, 200 pounds towards my rent.

And that helps you spit up your money so that you can manage it better.

So well done if you got some of those or if you've got all of them that's really super, but well done for giving it a go.

Now, when we look at these different banks this is not just one we can choose, there are often many and I want us to spend a little bit of time thinking about ethical banking because we have a choice when we bank and it links back to that concept of financial responsibility.

You are responsible for your goods, your money and it's up to you, how you use it.

Part of responsibility is thinking about the impact you might have with your money and the term ethics, so when we talk about ethical banking the term ethics is about moral principles and it's how you decide what's right and what is wrong.

And you might choose to be really conscious about your money and where, how it's being used.

So you might want it to be put towards something really positive that impacts others or the world positively instead of something negatively.

And so that's what we're looking at when we talk about ethical banking.

So we have to make a choice based on our needs and our morals and ethics are your moral principles, which guide your decisions.

It's our responsibility to consider this.

And so what we do with our money and how we use it can have an impact on those around us and the environment in which we live.

So something for you to think about is there something new you'd like? What is it? It might be if you have lacking in ideas, a new mobile phone.

What would you do with your old one? What is needed to make your new mobile? Do you really need it? And what impact might your new purchase have on others? And this is the sort of process you go through with ethical banking or thinking about how you spend your money.

We can develop this thought point a bit further and ask a few more questions in relation to that original idea.

When we think about getting rid of something old and replacing it, sometimes we don't really need to, we do it because we want to, rather than as an actual need.

Your mobile phone might work perfectly well, it's just that you really want the newest or latest model.

And it's interesting to know, we actually throw away our own body weight in rubbish every two months and that has a massive contribution to climate change.

So when we talk about what's right or wrong we need to consider our impact, our responsibility in the world around us.

Another consideration in there is who is making that mobile phone for you? Is it child or slave labour? Have you looked into the company you want to spend your money with? And if he knew that happening, would you still buy it? Yes it might be the latest model and everyone's really keen on it but is it right to use your money in that way? And then thirdly there, what principles does this company you're buying from have? Do they invest ethically? Now, any business who run successfully will make a profit which means they have more money than they put into their business.

And that profit will therefore be used not only to pay their employees, but to invest in other areas perhaps research for their goods or services.

But is that investment ethical? Are they making money in a ethical way? And so your money in your pocket might seem like a small thing, but the impact it can have is quite big.

And you've got to make key considerations about how you spend your money, where you spend it and what you do with it.

And that's what we're looking at.

We're looking at how we can manage our money well.

So ethical banking relates to how banks use the money they have available to them.

Ethical banks will invest in areas which are socially or morally good.

For example, they would not invest in areas dealing in weapons as this would be seen as morally bad.

The Co-operative was the first and is still one of the few ethical banks in England.

Islamic current accounts are open to all and are most commonly ethical as they do not invest in alcohol or tobacco due to their religious beliefs.

So you can shop around with banking, you can have a look at different banks and what they do and make choices as a result of what you find.

And it might be that you go with a high street bank or it might be that you go with a smaller bank that not many people have heard of.

You need to make that choice for yourself and be financially responsible for your own money.

Now in task three, what I'd like you to do is to consider these four different banks and choose one of them and justify to yourself why you choose it.

And justification is you giving a reason why you think that is the best option for you.

There's four options here, we've got a small bank for option one.

Its profits are invested in environmentally friendly energy.

They have an interest rate of 0.

5%.

Now an interest rate is how much they are going to give you back for the money that you have in that account.

Benefits here, they've got a free overdraft but there is a three pound a month fee.

Option two, is a building society and a building society works slightly differently to your average high street bank.

So building society has shareholders that look after and manage that bank instead of it being a profit organisation.

So with this one, now there's no evidence of investing in negative areas, they have an interest rate of 1%.

The benefits are overdraft available at a fee and you get a free piggy bank when you open an account.

Option three is a Global bank.

So their profits are invested in fossil fuels that's things like coal and oil.

Their interest rate is 2.

5%.

And the benefits here is that there is an overdraft available at a fee.

Option four, is a Religious Bank.

The profits goes into community projects.

There is no interest rate on that one.

So you're not going to gain any money from putting money in there.

But the benefit here is that instead of an interest rate a profit rate is offered but it's not guaranteed amount and can change.

So they basically say that you can have X amount of money as a result of bringing yours in, if all things go well, but it might not do so you might not get that money.

So pause the video, have a look and justify which account you would choose and when you're ready, press play, and we'll continue with the lesson.

Now, hopefully you've had some time to think about those four accounts and choose one for you.

And it doesn't matter which one you've chosen.

What really is essential is that you are starting to think about where your money goes and that what you're going to do to look after it and manage it well.

Now, one of the last things we're going to look at this lesson, is investments.

And an investment is where you put money into something looking to gain a return, which is more money.

And there are lots of different ways you can invest money but you're not guaranteed to make money by investing.

And there's always risks involved.

And I've got three examples of the key investments that are made in the United Kingdom at the moment.

So you've got bonds, shares and capital.

Now bonds are investment bonds where you invest a sum of money into a company or an insurance policy.

And the most famous bonds that we have in the United Kingdom are premium bonds.

And these are secured by the UK treasury.

And that's the organisation that looks after all of the money, in the United Kingdom.

And you don't gain money on the amount that are entered into a prize draw for cash prizes each month.

So you could have 10 premium bonds.

And if your name gets picked out of the hat, so to speak then you would get your cash prize as a result of your premium bumping pick.

So it's not guaranteed and they can use your money that you invest to invest in other things and make money.

Shares, some companies sell parts of their business and the value of the share can change daily and depends on how well they're doing.

So if a company is profiting and doing really well then the share price will go up.

So you could make money on your share.

If the company's not doing very well and the share price can go down and you might end up losing money.

And then the third example I've got here of investing is capital.

And an example of capital is property investment.

So you put your money into something significant and you might wait for the property to increase in value or you could rent the property out as an additional income.

So by buying a house, you can rent it and make some money on the property that way or you could wait for the house prices to go up and then you would gain what is called equity in that property and that's an additional amount to what you own.

So task four, we're going to think about this concept of spending, saving or investing.

We've talked about putting your money in a bank account, using a current account for example, we've talked about savings and how that works and we've also looked quickly at different investments.

And I want you to imagine that you have received 200 pounds for your birthday.

How do you spend that? I've got four options for you here.

I'll quickly run you through them.

And then you can pause the video and have a think about what you would spend your money on.

So you've got the Blue Bank Savings Offer, which is a new savings offer of 5% annual interest on money in one year, 10 pound interest on 200 pounds.

So over a year you would have 210 pounds rather than 200.

You've got premium bonds which we spoke about when we talked about investments.

So it's 25 pounds for 25 bonds and you're entered into a prize draw monthly, you've got a one in 24,500 chance of getting 25 pounds back each month.

So you may or may not get something from that, you don't know.

Gaming Console, so you might just go out and spend 190 pounds of your money on a refurbished gaming console.

It's in great condition, but has been used before.

Or you might just have a piggy bank at home and put your money in there.

So I wonder how you would spend it pause the video, have a think and when you're ready, we can continue.

The key takeaway point here really is to think about your money, think about what you want to use it for where it goes, and also have a think about the bigger impact you could have remembering that financial responsibility you have making sure your money and anything you have with value is used in the best interest of whoever's involved, whether it be for yourself, other people, a business, or potentially if you were in a powerful position, the whole country.

So, well done for completing today's lesson looking at what is the best way to look after our money? We had a look at the very beginning about why we have money and we've considered the history of money going from those cowry shells all the way to modern finance, using the internet for example, to make purchases.

We've had a look at different bank accounts and where we can put our money in thinking about credit, debit, and cash and the different uses and functionality of those.

We've had a think about ethical banking.

So when we choose our banking methods what impacts that might have on other areas and where's best to keep our money thinking about also investments and investing our money to ensure that we look after it in the longterm.

We've considered as well as we've gone through our financial responsibility and also how that connects to the responsibility of the government and businesses for example, in the way the money works around all these different areas.

So well done for completing today's lesson.

I hope you enjoyed it.

And make sure that if you've done anything particularly interesting that you want to share, that you do that with Oak National and so you can ask your parent or carer to share your work on Instagram, Facebook or Twitter tagging @OakNational and #LearnwithOak.

And there's one last thing that I need you to do before you finish up.

And that is to complete the exit quiz.

I've really enjoyed working with you today and I look forward to doing another lesson with you soon.