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Copy of Unit 7: Personal Financial Literacy

Chapter 20
by

fran kalusche

on 31 March 2015

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Transcript of Copy of Unit 7: Personal Financial Literacy

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Almost

Everything You Need to Know About Money!

Presenting...
#1 - You have to earn money
How to get a job
Dress nice, get an application, interview
Paychecks are great!
What's the difference between wages & salary?
Deposit your check!
#2 - How do you spend your money?
Monthly Expenses
Rent/Mortgage
Utilities
Cable
Phone
Car payment
Groceries
Medicine
Insurance
Savings
Gas
Childcare
Child support
Budget!
Expenditures < Revenue
Ways to pay
#3 - How to pay for expenses
speaking of debt...
"Good debt"
"Bad debt"
Education
Home
Car
Credit cards
Gambling
& everything else that you can't make $ on
Bouncing a check
How to Build Your Credit Score
Ways to save
Savings
Certificates of deposit
Money Market accounts
Savings bonds
Stocks
Mutual funds
#5 -Protect yourself! Get Insurance
Insurance
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.
Essential Question:
How do financial decisions impact economic stability?
You have to make choices.
After high school...
Further education?
Enter the workforce?
Join the military?
Volunteer?
What is the difference between:
Associate's Degree
Bachelor's Degree
Master's Degree
Doctoral Degree
What about "licensure?"
What's the difference between a job and a career?
Applying for College
http://www.princetonreview.com/colleges-majors.aspx
...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)
vs.
Disposable Personal Income (DPI)
total amount of $ earned or Gross Pay
money earned minus taxes or Net Pay
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
Bankruptcy
owing more money than you can repay
Foreclosure
owing more money than you can repay for your mortgage
#4 - How to save money
Medical Insurance
Premium
- the amount you pay upfront for insurance services

Copay
- the amount you pay when you visit the doctor, pay for medicine, etc.

Deductible
- the amount you pay out of pocket before the insurance company pays
Life Insurance
protects against the risks of medical expenses
protects loved ones from costs assumed after your death
Liability Insurance
protects individuals/businesses from claims caused by injury to people/property
Auto Insurance
Homeowner's Insurance
Renter's Insurance
So, you've decided to save, where do you go?
Bank
How does a bank work?
Credit Union
Why do we care about Personal Financial Literacy (PFL)?
You must be a member to join, but you'll get better deals
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)
Bank account does not have sufficient (enough) funds, so check "bounces"
How do you START building credit?
Warm Up
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?
Warm Up
1. What is Personal Financial Literacy?

2. What does it mean to be financial stable? Is it important to be financially stable? Why or why not?

3. What are your financial goals 5 years from now?

4. What are your financial plans to reach those goals?

5. What will you do after high school?
Peace Corps
Ameri Corps
Senior Corps
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...
Community College
College
University
Tax Brackets
You pay federal taxes...
In the US, we have a
progressive tax
, meaning the more you make, the more you pay!
state taxes...

local taxes...
and payroll taxes.
these are payroll taxes
What is it called when you start your own business?
Entrepreneurship
same amount every payment
amount changes from payment to payment
Social Security
: part of your income taken to pay for gov't' s retirement/disability plan for you

Medicare
: part of your income taken to pay for your gov't healthcare when you're elderly/disabled
Warm Up

What is interest?
How could interest be both a good thing and a bad thing?
Where does money come from?
What could some of the dangers of using cash for your expenses?
What could the benefits of using cash for expenses?
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)
What does this mean?
You invest $$ and in return, earn interest.
**Remember, APR?
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!
$
Travel Insurance
Disability Insurance
Natural Disaster Insurance
Identity theft
Fraudulent Solicitations & Businesses
Online scams
Ponzi schemes
Investment fraud
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
Remember: There is an entire world of educational opportunities out there! Do not be afraid to look outside North Carolina!
Warm-Up?
Is the amount of money you make the same as the amount of money you can spend? Why or why not?
What are the different types of taxes we pay? Which ones are drawn from our paycheck?
What does "filing your taxes" mean?
Where did all my money go?
Pay Stubs 101
Individually
, complete the "Understanding Pay Stubs" worksheet.
You may use a calculator from the bin.
Turn to page 560 in your books and read the "Analyzing Advertising Chart"
Answer Questions 1-2
Unit 7 Vocabulary
consumer
discretionary income
consumerism
disposable income
credit
annual percentage rate (APR)
collateral
bankruptcy
interest
principal
return
stock
dividend
bond
mutual fund

http://www.nytimes.com/interactive/2013/04/15/education/thechoice-2013-acceptance-rates.html/
Protecting Yourself from Advertising

Automated
Transactions
electronic payment (i.e. Online Banking)
What to consider when you are getting a credit card:
1.
APR
: (Annual Percentage Rate) - you want low APR to avoid paying lots of interest
2.
Rewards Programs
: Some companies offer incentives for using your card
3.
Minimum Payments
: How much will you need to budget to pay off your card?
Let's Practice
Mark is a professional athlete, who makes $360,000 per year. He has 12 open accounts. Three of these are mortgages for his houses. A year and a half ago, he had a late payment on one of those mortgages. The others have all 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 two 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.
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 this on time every month. It currently has no balance. He has two collections from medical bills from over two years ago, but they have been paid off.
Jessica is a nurse who makes $60,000 a year. She has six open accounts. One is a mortgage that she has had for two years and always pays it on time. The other five accounts are credit cards that she has had for at least four 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; the others have no balance.
Steve works for the city making $40,000 a year. He has two credit cards. 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 two payments more than 60 days late on the other credit card within the past two 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.
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 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 six years. One of those student loans had a payment that was 30 days late, but all other payments have been on time.
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