F. Financial Literacy · Money and Finances: Moving Money, Sales Tax, Budgets, Credit and Best Value

How Money Moves: Transfers Between People, Businesses and Organizations

F1.1 A1About 40 minutes

Learning goals

I can describe ways money moves between individuals, businesses and organizations.
I can explain how direct deposit, automatic payments, online bill payments and e-transfers work.
I can describe advantages and disadvantages of different ways to move money.
I can choose a sensible and safe way to move money in a real situation.

Words to know

transfer
Moving money from one person or group to another.

individual
One person, like you, a neighbour or a grandparent.

business
A company that sells goods or services to earn money, like a grocery store, a bike shop or a bus company.

organization
A group that works together for a purpose, like a school, a sports club, a food bank charity or a government.

direct deposit
Money that is sent straight into a person's bank account, like a paycheque from work.

automatic payment
A payment that comes out of a bank account by itself on a set date, like a monthly phone bill. It is also called a pre-authorized payment.

e-transfer
Sending money from one bank account to another using a phone or computer and the other person's email address or phone number.

fee
An extra amount charged for a service, like a bank charging money to run an account.

fraud
Tricking someone to steal their money or information.

Remember from Grade 4

In Grade 4 you learned many methods of payment: cash, debit cards, credit cards, gift cards, cheques, online payments and paying with a phone or watch. You learned that money you can't see, like money on a card, is still real money.

In Grade 5 you will look at the whole path money takes. Money doesn't only move from shoppers to stores. It moves between people, businesses and organizations in many different ways, and each way has advantages (good points) and disadvantages (problems).

Let's follow the money

Here is one week for Aunt Sofia, who works at a hospital.

The hospital sends her pay straight into her bank account. She never sees a paper cheque.
Her phone bill comes out of her bank account by itself on the 15th of the month.
She sends her nephew $20 for his birthday by e-transfer.
She gives $25 to a food bank on its website.
She taps her debit card to pay for groceries.

Money moved five times, and Aunt Sofia never touched a single coin or bill! Each of these is a way to transfer money.

Aunt Sofia's week: money comes in once (her pay) and goes out four different ways, and she never touches a coin or a bill.

Who sends money, and who gets it?

Money moves between three kinds of groups:

Individuals: single people, like you, Aunt Sofia or a neighbour.
Businesses: companies that sell goods or services to earn money, like a pizza shop, a bank, a phone company or a hardware store.
Organizations: groups with a purpose, like your school, a hockey league, a charity or a government.

Money can go in both directions. You pay a business when you buy something. A business pays an individual when it pays wages to the people who work there. People pay fees to a sports club. A government sends money to some families.

Money moves in both directions between individuals, businesses and organizations.

Ways to move money, and their good and bad points

Read this table with your grown-up. Talk about which ways your family uses.

Way to move money	Example	Advantages	Disadvantages
Cash	Paying a friend back $5 for a snack.	Easy. No bank account needed. You can see how much you spend.	Can be lost or stolen. Hard to send far away. No record unless you get a receipt.
Cheque	Paying a music teacher.	Can be mailed. Leaves a written record.	Slow: it can take days for the money to move. Fewer places take cheques now.
Debit card	Paying at the grocery store.	Fast. Uses your own money, so you don't owe anyone.	You need enough money in your account. A lost card or shared PIN can let someone else spend your money.
Credit card	Buying a train ticket online.	Buy now and pay later. Works online and in many countries.	If you don't pay the whole bill on time, you pay interest (extra money). Easy to overspend.
E-transfer	Sending birthday money to a cousin.	Fast. Works across Canada with just an email address or phone number.	If you type the wrong email or phone number, the money can go to the wrong person. Scammers sometimes ask for e-transfers.
Direct deposit	An employer paying wages, or a government sending money to a family.	Safe and fast. Money arrives on time, even during a snowstorm.	The person needs a bank account.
Automatic payment	A monthly internet bill.	You never forget to pay, so there are no late charges.	There must be enough money in the account on that date. You still need to check that the amount is right.
Online bill payment	Paying the water bill on a bank's website.	Pay from home, any time. The bank keeps a record.	Needs a computer or phone and internet. You must type the account numbers correctly.
Gift card or prepaid card	A gift for a friend.	Easy gift. You can't spend more than is on the card.	Often only works at one store. If it is lost, the money may be lost too.

Common ways money moves in Canada, with some advantages and disadvantages.

Fees cost money too

Some ways of moving money have a fee. For example, some bank accounts charge a fee each month, and some charge for each e-transfer. Before choosing a way to move money, grown-ups check whether there is a fee.

Worked example

Example 1: Who is paying whom?

For each transfer, say who sends the money and who gets it (individual, business or organization).

Liam's dad's pay is direct-deposited by the store where he works.
Priya pays $85 to the soccer league for spring registration.
A bakery pays the hydro company for electricity.

1. The store is a business. Liam's dad is an individual. So money moves business → individual.
2. Priya is an individual. The soccer league is an organization. So money moves individual → organization.
3. The bakery and the hydro company are both businesses. Money moves business → business.

Business to individual. 2. Individual to organization. 3. Business to business.

Worked example

Example 2: Choose a way to pay

Grandpa lives in Thunder Bay. Ella lives in Ottawa. He wants to send her $30 for her birthday so it arrives today. Which way should he choose: cash in the mail, a cheque in the mail, or an e-transfer?

Cash in the mail is slow and could be lost. Mailing cash is not safe.
A cheque is safer, but the mail takes days, and then the cheque must be deposited.
An e-transfer moves money in minutes. Grandpa needs Ella's parent's email address or phone number, and must type it carefully.

An e-transfer is the best choice, because it is fast. Grandpa must double-check the email or phone number.

Worked example

Example 3: How much moves in a year?

The Martins pay their internet bill of $45 a month by automatic payment. How much money leaves their bank account for internet in one year?

There are 12 months in a year.
Multiply: 12 × $45.
Split it: 10 × $45 = $450 and 2 × $45 = $90.
$450 + $90 = $540.

$540 a year. Automatic payments are easy to forget about, so it helps to add them up!

Keep money safe

Never share a PIN, a password or card numbers, even with a friend.
Real businesses and governments will not ask you to pay with gift card numbers. If anyone asks you to do that, it is a trick (fraud). Tell a grown-up.
Before sending money online, a grown-up checks the name, the amount and the email or phone number twice.
If a message says "Hurry! Send money now!", stop and ask a trusted grown-up.

Math talk

Good money thinkers explain their choices. Try sentences like: "I chose ___ because ___. One problem with it is ___." Listening to someone else's reasons, and changing your mind when they have a good point, is part of being a strong math thinker.

Money riddle

What has a head and a tail but no legs?

A coin! (It's also the only way of moving money in this lesson that can roll under the couch.)

Hands-on activity

Map your family's money

You need: a large sheet of paper, a pencil and markers.

In the middle, draw a circle for your family.
Ask a grown-up: "How does money come in to our family?" (For example, pay by direct deposit.) Draw an arrow in for each one and write the way it moves.
Ask: "What are some ways money goes out?" (For example, rent or a mortgage by automatic payment, groceries by debit card, a donation online.) Draw an arrow out for each one.
Beside each arrow, write I, B or O to show whether the other side is an individual, a business or an organization.
Pick two arrows. Write one advantage and one disadvantage of the way that money moves.

What to look for: at least three arrows in and out, each labelled with a way to move money and I, B or O. Your family does not need to share real amounts. You can make them up.

Your turn

Name four ways money can be transferred.

A town pays the people who plough the snow. Is the town an individual, a business or an organization?

What is direct deposit?

Give one advantage and one disadvantage of paying with cash.

Why might a family choose an automatic payment for its electricity bill?

Noah pays $12 to his friend for a movie ticket using an e-transfer. Who sends, and who gets the money?

A phone bill of $60 a month is paid by automatic payment. How much is paid in 6 months?

More practice: warm-up

Is a grocery store a business or an organization?

Which way to move money uses a person's email address or phone number?

True or false: a debit card uses money that is already in your bank account.

What is a fee?

A stranger online asks you for gift card numbers. What do you do?

More practice: on your own

Sort these: a bus company, a library, Grandma, a dentist's office, a hockey league. Which are individuals, businesses or organizations?

Maria's mom must pay a $40 school trip fee. The school only takes online payments. Can she send cash with Maria? Which way could she pay?

Give one reason a business might pay its workers by direct deposit instead of with cash.

Ari's mom pays a $3 fee each time she sends an e-transfer. She sends 5 e-transfers in a month. How much does she pay in fees?

Kayla says, "Credit cards are free money." Is she right? Explain.

Challenge

Bank account A has a $4 monthly fee and free e-transfers. Bank account B has no monthly fee, but each e-transfer costs $1. Which is cheaper for someone who sends 3 e-transfers a month? Which is cheaper for someone who sends 6?

A charity gets donations of $15 from 24 people by online payment. How much money moves to the charity? Who are the senders and the receiver?

Your family is selling maple syrup at a farmers' market. Name two ways you could let customers pay, and one advantage and one disadvantage of each.

Check your understanding

Quiz

Aunt Sofia's pay goes straight from the hospital into her bank account. What is this called?

Which of these is an organization, not a business?

What is a disadvantage of paying with cash?

What is an advantage of an automatic monthly payment?

A bill of $35 a month is paid by automatic payment. How much is paid in one year?

Someone online says you won a prize and must pay with gift card numbers. What should you do?

For parents and teachers

What your child is learning: the Ontario curriculum (F1.1) asks Grade 5 students to describe several ways money can be transferred among individuals, organizations, and businesses. Grade 4 introduced methods of payment; Grade 5 looks at the whole flow of money (pay coming in by direct deposit, bills going out by automatic payment, e-transfers between people, donations to charities) and asks students to weigh advantages and disadvantages. Explaining and defending a choice is part of the mathematical processes (A1).

Common difficulties:

Thinking only shoppers pay. Point out money moving the other way: wages, refunds, government payments.
Mixing up businesses and organizations. A business sells to earn money; organizations include schools, clubs, charities and governments.
Believing card or online money isn't real. Remind them that every tap or click moves real dollars.

How to help: If you're comfortable, show your child a bank statement or a banking app with the numbers covered, and identify a direct deposit, an automatic payment and a card purchase. Share only what you wish; made-up amounts work just as well. Talk about online safety: never share passwords or PINs, and no real business asks for payment in gift card numbers.