+ Review: What are some costs and benefits of increase the minimum wage

+ ECONOMICS Microeconomics: Personal Financial Literacy

Money People use money to obtain their needs and wants Govt. cannot print too much money—loses its value Leads to inflation— increase in prices, decrease in the value of the dollar

Earning Money 1. People work to earn money Pay—depends on type of job, hours worked, educational background, & skill level Every worker must make minimum wage-$8.38 in NJ

+ Minimum Wage Read the minimum wage article Discuss the costs and benefits of raising the minimum wage Write your own opinion on increasing the minimum wage in 4-5 sentences

Earning Money Go to the following website.. Find a career that you are interested in Determine the annual average salary What education is required? What is the job outlook?

Investing Money Investing Bank Accounts Bonds Stocks Retirement Accounts

+ Bank Accounts People invest their money in banks to keep it safe and to make more money Interest—amount paid for the use of borrowed money Compound interest—interest based on principal + interest already earned Money Market—banks making short term investments

+ Interest Brain Pop! cialstudies/economics/interes t/ cialstudies/economics/interes t/

+ Bank Accounts Checking Account—invested money can be withdrawn at any time by writing a check/swiping a credit card Savings Account—invested money can be withdrawn at your bank at any time and earns interest Certificate of Deposit (CDs)—invested money earns a higher rate of interest (must remain in the account for a certain period of time)

+ Certificate of Deposit sounds confusing…

+ Situation… You have $600 to distribute in three bank accounts Checking Account-no interest Savings account-interest and can access by going to the bank (interest=.01%) Certificate of Deposit-high interest, cannot access for 10 years (interest= 5%)

+ Bonds Investors lend the government or companies money for a set period of time so that they can pay for larger projects or expand

+ Bonds Issuer (govt./corporation)—sells bond to the holder (investor) Holder—repaid initial money (when bond matures) + interest Maturity—time it takes for bond to be repaid

+ Types of Bonds 1. Savings Bonds 2. Municipal Bonds 3. Corporate Bonds

+ Savings Bond Bonds issued by the government to the American people Low amount, around $50-$10,000 Pays for public works projects Virtually no risk Earn interest that is paid when the bond is mature Ex: Could be bond for $25 and receive $50 when it is mature due to interest

+ Municipal Bonds State and local governments issue bonds to finance public works projects Paid principal + interest (either at maturity or throughout the ownership of the bond) No income tax Safe investments

+ Corporate Bonds Issued by corporations Moderate risk level Watched over by the Securities and Exchange Commission to prevent fraud

+ KAHOOT QUIZ!

+ Stocks Companies need money to expand and develop new products—form corporations Corporation—company sells shares (units) of stock to investors Stock—ownership in a corporation Stockbrokers—buy and sell stock for investors on stock exchanges (market for stocks) Make commission New York Stock Exchange & NASDAQ—two largest stock exchanges in the world

+ Pick Stocks 1. Performance of a company & its leaders 2. Amount of money you have to invest and are willing to risk 3. Amount of time your money can be tied up 4. Profit you would like to make

+ Stocks (cont.) Profit from stock—sell stock for more than you bought it for or receive dividends (share of the company’s profits) Keep track of the stock market—the “Dow” and the S&P 500 Stock prices change: 1. Based on a company's profits 2. Speculation about a company’s future 3. The status of the economy & the country

Risk vs. Return People invest money in the hopes of making more in the future Different investments carry different amounts of risk (chance of losing money) Risk—linked to return (the profits received from the investment) Low risk = low return/High risk = high return

+ ANALYZING RISK AND RETURN Complete the following handout with your group Do your best to analyze whether an investment is high or low risk and whether it has a high or low return Explain why in the reasoning column

+ LETS REVIEW IT

Retirement Accounts Necessary to plan for retirement early Money you will need in retirement—depends on your health, lifestyle & where you want to live 401(k)—set aside a portion of your salary before taxes are withdrawn Individual Retirement Account (IRA)—individuals invest money for retirement (receive a tax break)

+ Spending Money: Cash vs. Credit/Loans Individuals need to manage and budget their money well before making purchases Best method—pay for an item with cash Don’t have enough cash—could buy an item with credit (make a purchase and pay for it at a later date) Use credit—bank pays for an item up front & sends a bill to the borrower Don’t pay back entire bill at once—charged interest Interest—based on the principal (initial amount borrowed) + interest already charged Bills could spiral out of control—lead to increased debt Failure to pay bills—lose property and given a bad credit rating Bad credit—affects ability to get a future loan & a job