Financial Planning and Managing Money UNIT VII – Personal Financial Literacy

Economic Way of Thinking Statistics prove that most teenagers are not properly prepared to make financial decisions. Many adults also struggle with this. The average score earned on a national financial literacy test among young people was 48.3% - a failing grade. This number is down from 10 years ago. The goal of this unit is to improve your basic understanding of financial management for your future.

Basic Rules for Improving Your Financial Life Get a good education Work long, hard, and smart Learn money-management skills Spend less than you could spend Save early and often Invest in common stocks for the long term Gather information before making decisions

Step 1: Set Goals What do you want in the future? House, children, car, etc. Must set short-term and long term goals. Short-term examples: Long-term examples:

Step 2: Plan for Your Future Education is key “The more you learn, the more you earn.” Varying levels of education Dropout High School Diploma Associate’s (2 – year) degree Bachelor’s (4-year) degree Graduate degree (avg. 3 years) Doctorate (PhD) (avg. 2 years) Both of These are on top of a 4 year Bachelor’s degree.

Education and Earning Power Level of Education Median Weekly Income Median Yearly Income Not a high school graduate $451 $23,452 High school graduate $638 $33,176 Some college $719 $37,388 Associate’s degree $768 $39,936 Bachelor’s degree $1,053 $54,756 Master’s degree $1,263 $65,676 Doctoral degree (PhD) $1,551 $80,652 *Statistics from 2011 Bureau of Labor Statistics

Education and Employment Level of Education Unemployment Rate Not a high school graduate 14.1% (1 in 7) High school graduate 9.4% (1 in 11) Some college 8.7% (1 in 12) Associate’s degree 6.8% (1 in 15) Bachelor’s degree 4.9% (1 in 20) Master’s degree 2.4% (1 in 42) Doctoral degree (PhD) 2.5% (1 in 40) *Statistics from 2011Bureau of Labor Statistics “More than 2/3 of the new jobs being created in our economy are in occupations that require some kind of post-secondary education.” ~Sec. of Labor Elaine Chao, May 31, 2006

Step 3: Budget Your Money Budgeting is essential to staying ahead Step 1 : List expenses Step 2 : Record earnings Step 3: Analyze – where can increases/decreases be made Step 4 : Be sure to leave extra Step 5 : Continue monitoring spending and make adjustments as needed