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Personal Financial Literacy
Transcript of Personal Financial Literacy
Everything You Need to Know About Money!
#1 - You have to earn money
How to get a job
Dress nice, get an application, interview
*Remember, it's not WHAT you know, it's WHO you know!*
Paychecks are great!
What's the difference between wages & salary?
Deposit your check!
#2 - How do you spend your money?
Expenditures < Revenue
Ways to pay
#3 - How to pay for expenses
speaking of debt...
& everything else that you can't make $ on
So why buy a home?
Bouncing a check
How to Build Your Credit Score
Save! Save! Save!
Ways to save
Certificates of deposit
Money Market accounts
Protect your investments!
Beware of fraud!
True or False?
1. Credit cards are accepted as cash by stores.
2. Most credit cards have a credit limit.
3. If I pay my credit card in full by the due date, I will not owe any interest.
4. There is no penalty if I pay my balance after the due date.
5. If I pay the minimum monthly payment, then I won’t owe any interest.
6. My credit report contains information on bills I have not paid.
How do financial decisions impact economic stability?
You have to make choices.
After high school...
Enter the workforce?
Join the military?
What is the difference between:
What about "licensure?"
What's the difference between a job and a career?
Percent of population that is without a job, but actively looking for one
How to apply for college
...and it does not grow on trees
Remember, "you can't always get what you want"
What's the difference between rent & mortgage?
Fixed costs vs. Variable Costs
$ you spend
$ you earn (income)
Personal Income (PI)
Disposable Personal Income (DPI)
total amount of $ earned
(aka Gross Income)
money earned minus taxes
(aka Net Income)
How much do you pay in taxes?
It depends on your tax bracket
Give yourself some "credit"
What's the difference between credit & debit cards?
a score representing your credit worthiness based on your ability to repay a loan
Power of risks & returns
owing more money than you can repay
owing more money than you can repay for your mortgage
#4 - How to save money
- the amount you pay upfront for insurance services
- the amount you pay when you visit the doctor, pay for medicine, etc.
- the amount you pay out of pocket before the insurance company pays
protects against the risks of medical expenses
protects loved ones from costs assumed after your death
protects individuals/businesses from claims caused by injury to people/property
So, you've decided to save, where do you go?
How does a bank work?
Why do we care about Personal Financial Literacy (PFL)?
You must be a member to join, but you'll get better deals
1. How do your educational and career choices influence economic stability?
2. How do your values impact your budget?
3. How does your debt lead to economic stability and instability?
4. How do you plan to achieve short and long term economic stability?
5. How can you protect your investments over time?
1. What did you learn from completing the portfolio on PFL?
2. What do you still have questions about?
3. What suggestions do you have to improve this assignment?
4. What parts of this assignment would you keep for future students?
5. Is there anything you think should be added to this assignment?
Wages - earned by hour
Salary - earned by year
Job - employment simply to earn money, not a long term commitment
Career - long term commitment, usually requires formal education/training
Debit - withdraw from your account immediately
Credit - Credit Card company loans you the money & bills you later (pay on time, or pay later with interest)
The greater the risks, the greater the return!
Bank account does not have sufficient (enough) funds, so check "bounces"
How do you START building credit?
1. After working on your budget yesterday, how do you feel?
2. What sacrifices (if any) did you have to make?
3. How are you going to make ends meet if things get tight?
4. What would change if you had debt?
5. What would change if you did not have children/have children?
6. Is your budget balanced?
7. Is your budget realistic?
8. What have you learned so far?
**How do financial decisions impact financial stability?
1. What is Personal Financial Literacy?
2. What does it mean to be financially stable? Is it important to be financially stable? Why or why not?
3. What are your financial goals?
4. How will you reach your goals?
5. What will you do after high school?
6. What is the average starting salary for a college grad?
gov't pays for you to travel to other parts of the world to serve the underprivileged (promote peace with other countries)
gov't pays for you to travel across the country to serve the underprivileged
Senior citizens (55+) offer guidance and companionship to teens or older adults in need
What's the difference between...
You pay federal taxes...
In the US, we have a
, meaning the more you make, the more you pay!
and payroll taxes.
these are payroll taxes
What is it called when you start your own business?
same amount every payment
amount changes from payment to payment
: part of your income taken to pay for gov't's retirement/disability plan for you
: part of your income taken to pay for your gov't healthcare when you're elderly/disabled
1. What's the difference between debit & credit?
2. What's the difference between good credit & bad credit?
3. If you have bad credit, what can you do to fix it?
4. Explain how a bank works.
5. How can you build wealth?
Are you creditworthy?
If you have debt,
how should you manage it?
*You can check this by getting a personal credit report
Open small credit accounts
Pay off debt
Take out loan
Make payments (i.e. rent)
(Annual Percentage Rate) - You want a low APR to avoid paying a lot of interest
- Some companies offer incentives for using your card
- How much will you need to budget to pay off your card?
What does this mean?
You invest $$ and in return, earn interest.
Would you want a high or low APR on your investments?
Start by looking at loan details:
How long do you have to pay it off?
What is the APR?
How much are your payments?
Stock Market 101
You have $
Companies need investors
(research, product development, etc)
You invest $ in companies
When companies profit...
companies pay you dividends ($)
but, if they lose $... so do you!
Natural Disaster Insurance
Fraudulent Solicitations & Businesses
How do you protect yourself from fraud?
Always read the fine print
Join the "do not call" list
Make sure you agree w/ terms & conditions
Don't disclose personal information
Watch out for hidden fees
If you find out you've been a victim of fraud, what can you do?
File a claim
Report to BBB
Contact NC Attorney General or NC Secretary of State
Alert the news
Answer the following interview questions...
1. Tell me about yourself.
2. What are your top 3 strengths?
3. What is your biggest weakness?
4. Give an example of how you work well with others.
5. When posed with a challenge, how do you react?
1. What is the difference between salary & wage?
2. What is the difference between income & disposable income?
3. How do you get a job?
4. What is the difference between job and career?
5. What is a balanced budget?
6. What is the difference between variable & fixed costs?
**When you're finished, study for your quiz**
** Happy Monday! Get started... you don't want to stay after class because you can't be quiet!**
Look at the To Do List below. Right out YOUR OWN list of what needs to get done today.
1. Add your disposable income to your partner's disposable income
2. Plan your budget on paper together
3. Enter your budget into the spreadsheet
4. Reflect on your budget using the GoogleForm
5. Select a bank & credit card.
6. Figure out your credit card payments
7. Reflect on your credit card payments using the Google Form
1. What did you learn (content wise) from NHD?
2. What did you learn (research wise) from NHD?
3. What did you learn (time management wise) from NHD?
4. How did your group work together? Rate each member of your group (A, B, C, D, F) based on participation/dedication/work and explain.
5. What will you do differently/the same next year for NHD?
1. What is the difference between...
- Debit & Credit
- Bank & Credit Union
- Good credit & Bad credit
- Fixed & Variable Costs
2. Explain credit scores.
3. Explain APR.
4. How do banks work?
5. What are the benefits/disadvantages of owning a home?
automatic, electronic transfer of $
(aka "online banking")
3 Kinds of "Credit"
Credit to your account (deposits)
Credit card ($ loaned to you by credit card company)
Credit score (how worthy you are of a loan)
1. What is the purpose of taxes?
2. Should everyone pay the same amount of taxes?
3. What percent of your income is fair for taxes?
4. How much tax would someone with $30,000 pay if they were taxed 15%? How much $ would they have left?
1. How do you get a job? Career?
2. What is your salary if you make $3,000/month?
3. How much tax would you pay if you had 5% state tax and 10% federal tax?
4. How does education affect your employment?
Study for your quiz - review:
Yesterday's warm up
How to write deposit slips
How to write checks
When getting a Credit Card,
consider the following:
**Remember, you can (& should) pay MORE than the minimum payment to pay your debt off faster if possible.
Mark is a professional athlete, who makes $3,600,000.00 a year. He has 12 open accounts. Three of these are mortgages for his house. A year and a half ago, he had a late payment on one of those mortgages. The others have been paid on time. Four of his open accounts are car leases, which have all been paid on time. The other 5 accounts are credit cards. He made 2 late payments on one of those cards within the past 6 months, but he has paid the others on time. All of the cards carry a balance of more than 50% of the limit.
What is his credit score?
Chris is a computer technician, making $50,000 a year. He only has one credit card that has been open for just over a year. He has paid it on time every month. It currently has no balance. He has 2 collections from medical bills from over 2 years ago, but they have been paid off.
What is his credit score?
Jessica is a nurse who makes $60,000 a year. She has 6 open accounts. One is a mortgage that she has had for 2 years and always pays on time. The other five accounts are credit cards that she has had for at least 4 years. She had one late payment on one of those cards 3 years ago, but otherwise all are paid on time. One of the credit cards has a balance of 10% of the limit, but the others have no balance.
What is her credit score?
Steve works for the city making $40,000 a year. He has 2 credit cards and he has had each one for three years. He made a payment on one of the credit cards more than 60 days late within the past year. That credit card currently has a balance of 80% of its limit. He made 2 payments more than 60 days late on the other credit card within the past 2 years. The second card currently has a balance of 75% of its limit. He used to have a car loan, but he could not afford the payments so he let it get repossessed nine months ago.
What is his credit score?
Yolanda is in pharmaceutical sales, making $70,000 a year. She has five open accounts. One is a mortgage that she has had for five months and pays it on time every month. She also has a car loan that she has paid on time every month for two and a half years. The other three accounts are student loans that she has had for 6 years. One of those student loans had a payment that was 30 days late, but all other payments have been on time.
What is her credit score?