Understanding Credit

Lesson Overview

Lesson Number: 6 of 8
Unit Title: Understanding Needs & Profits
Lesson Duration: 60 minutes
Year Level: Year 5
Subject: Business
Curriculum Area: Social Sciences (including financial capability)
NZ Curriculum Level: Level 3

Lesson Objectives

By the end of this lesson, students will:

• Understand what credit is and how it is used in business.
• Recognise the benefits and risks of using credit.
• Engage in a role-play activity to simulate real-world business credit transactions.

Key Competencies

This lesson integrates the following key competencies from The New Zealand Curriculum:

• Thinking – Students will critically consider the implications of borrowing money.
• Managing Self – They will reflect on responsible financial decision-making.
• Relating to Others – The role-play will involve negotiation and teamwork.
• Participating and Contributing – Engaging in practical business scenarios.

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Lesson Plan

1. Introduction (10 mins)

Hook: "Would you Borrow?" (5 mins)

• Pose the question: "If you wanted to start a lemonade stand but didn’t have enough money, what could you do?"
• Discuss responses, guiding students toward the idea of borrowing money (credit).

Define Credit (5 mins)

• Explain in simple terms: "Credit is when you borrow money and agree to pay it back later, sometimes with extra money called interest."
• Provide examples: Buying a shop on credit, borrowing money to expand a business.

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2. Teacher-Led Explanation (15 mins)

Why Do Businesses Use Credit? (7 mins)

• Businesses may need credit to:
  • Buy equipment.
  • Advertise or grow.
  • Survive when sales are low.
• Discussion Prompt: Would an ice cream shop need credit more in summer or winter? Why?

The Risks of Credit (8 mins)

• Good Credit Use: Buying products or services that will help make more money.
• Bad Credit Use: Borrowing too much and not being able to pay it back.
• Introduce the idea of interest, explaining that borrowing money often comes with an extra cost.

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3. Role-Play Activity — "The Business Loan Game" (25 mins)

Setup (5 mins)

• Divide students into groups of five.
• Assign roles:
  1. Banker – Provides loans.
  2. Shop Owner – Wants to open or expand a business.
  3. Supplier – Sells goods needed for business.
  4. Customer – Buys products or services.
  5. Investor – Considers helping a business grow.
• Give each group play money (tokens or paper notes).

Role-Play (15 mins)

• Round 1: Shop owners take a loan from the banker.
• Round 2: They use the loan to buy supplies and open their "business".
• Round 3: Customers buy from businesses, generating revenue.
• Round 4: Shop owners try to repay their loan to the banker.
• Optional Round: Some customers can not buy anything, leading to businesses struggling to repay loans (to demonstrate risk).

Reflection Discussion (5 mins)

• What happened when businesses borrowed too much?
• What did successful businesses do differently?
• How does this happen in real life?

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4. Wrap-Up & Reflection (10 mins)

Exit Ticket: "One Thing I Learned" (5 mins)

• Each student writes one thing they learned about credit on a sticky note.

Debrief Questions (5 mins)

• Is borrowing always a bad thing?
• Why do banks charge interest?
• What will you remember about credit when you're older?

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Assessment & Differentiation

Assessment Opportunities

✅ Observations – How students engage in discussions and role-play.
✅ Exit Tickets – Checking key takeaways from students' written responses.
✅ Participation in Role-Play – Understanding of credit through collaboration.

Differentiation Strategies

🔹 Advanced Learners – Challenge them with interest rate calculations.
🔹 Support for Struggling Students – Pair with a peer mentor for role-play guidance.
🔹 Visual Learners – Provide a simple diagram showing how credit flows in business.

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Teacher Reflection

• How did students respond to the concept of credit?
• Did the role-play effectively demonstrate the benefits and risks?
• What could be improved for next time?

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Resources Needed

✔ Play money (tokens or printed paper notes).
✔ Role-play instruction cards.
✔ Exit ticket sticky notes or mini whiteboards.

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This lesson provides students with a hands-on, engaging understanding of credit in business, connecting real-world financial literacy skills with their own experiences and futures. 🚀