Oklahoma’s Personal Financial Literacy Passport ©2008. Oklahoma State Department of Education. All rights reserved.1 Teacher Presentation Series 1

©2008. Oklahoma State Department of Education. All rights reserved.2 Job vs. Career Standard 1.1 “One by one the solid scholars get the degrees, the jobs, the dollars.” W.D. Snodgrass

Down Payment Down Payment Felicia and Phillip are best friends. They have been working together to earn spending money for a few years. Felicia wants to be a teacher and is saving her money to go to college. Phillip sees no reason to go to college. Felicia is disappointed that Phillip does not see the value of education. 3 ©2008. Oklahoma State Department of Education. All rights reserved.

Down Payment Down Payment If they come to you for advice, what would you tell them? 4 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Career A purposeful course of action or purpose in life that generally provides income 5 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Earned Income Money received for work performed; may include salary, wages, tips, professional fees, commissions, etc. 6 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Human Capital The health, education, experience, training, skills and values of people. Also known as human resources. 7 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Human Capital Investment Investment of time, effort and resources in education and training—to increase one’s own knowledge, skills, health, etc., or to develop those assets in others 8 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Income Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest, and dividends 9 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Job A piece of work usually done on order at an agreed-upon rate. Also a paid position of regular employment 10 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Labor The quantity and quality of human effort available to produce goods and services 11 ©2008. Oklahoma State Department of Education. All rights reserved.

What are your plans after high school? 12 ©2008. Oklahoma State Department of Education. All rights reserved. Building Interest

What jobs or careers have you considered? 13 ©2008. Oklahoma State Department of Education. All rights reserved. Building Interest

Are you aware of what that job or profession pays and what requirements are needed to be employed? 14 ©2008. Oklahoma State Department of Education. All rights reserved. Building Interest

Job vs. Career Job Allows a person to go to work and draw a paycheck. May not offer fulfillment or long- term satisfaction. Tends to be temporary. Provides just the basics -- cash and an activity. 15 ©2008. Oklahoma State Department of Education. All rights reserved.

What type of employment do you consider a job? ©2008. Oklahoma State Department of Education. All rights reserved.16

Job vs. Career Career Offers a profession or vocation that becomes your life’s work. Provides more than a paycheck. Allows for advancement and professional growth. Creates greater satisfaction and fulfillment. 17 ©2008. Oklahoma State Department of Education. All rights reserved.

What type of employment do you consider a career? ©2008. Oklahoma State Department of Education. All rights reserved.18

Job vs. Career Job or Career Which do you want? Why? 19 ©2008. Oklahoma State Department of Education. All rights reserved.

Does Education Matter? Average Annual Income 2004 Educational LevelMale Female Less than 9th grade$22,070 $14,008 High school 9th to 12th grade (no diploma)$22,795 $13,519 High school graduate$34,050 $21,923 College Some college, no degree$37,561 $22,896 Associate degree$44,130 $29,208 Bachelor's degree$63,753 $38,766 Master's degree$84,017 $50,547 Professional degree$137,050 $70,812 Doctorate degree$104,848 $68,191 Bachelor's degree or more (total)$75,719 $43, ©2008. Oklahoma State Department of Education. All rights reserved.

Does Education Matter? Yes! Higher levels of education tend to mean higher levels of income! Why? 21 ©2008. Oklahoma State Department of Education. All rights reserved.

Males HS Diploma$34,050Bachelor’s Degree $63,753 Bachelor’s Degree$63,753Bachelor’s Plus Average $75,719 Difference ©2008. Oklahoma State Department of Education. All rights reserved.22

Females HS Diploma$21,923Bachelor’s Degree $38,766 Bachelor’s Degree$38,766Bachelor’s Plus Average $48,853 Difference ©2008. Oklahoma State Department of Education. All rights reserved.23

Costs and Benefits of Education What are some of the “costs” of staying in school? 24 ©2008. Oklahoma State Department of Education. All rights reserved.

Costs and Benefits of Education What are some of the “benefits” of staying in school? 25 ©2008. Oklahoma State Department of Education. All rights reserved.

Costs and Benefits of Education Do the “benefits” outweigh the “costs”? 26 ©2008. Oklahoma State Department of Education. All rights reserved.

Human Capital What is human capital? The health, education, experience, training, skills, and values of people. Also known as human resources. 27 ©2008. Oklahoma State Department of Education. All rights reserved.

Investing in YOUR Human Capital Education is one way to invest in your human capital. What are some other options? 28 ©2008. Oklahoma State Department of Education. All rights reserved.

Review Review Job and career choices impact your future. Building human capital increases your earning potential. Staying in school increases your human capital. Other skills, experiences, and resources can improve your human capital and your earnings. 29 ©2008. Oklahoma State Department of Education. All rights reserved.

Few choices will be more important than your ability to earn an income. 30 ©2008. Oklahoma State Department of Education. All rights reserved. Paid in Full

While many successful entrepreneurs have never gone to college, most of them do have a college education. Felicia sees education as an investment in herself, and the basis for building a successful career. Phillip should consider taking business courses or getting a degree in business to help him learn more about owning and operating a business. 31 ©2008. Oklahoma State Department of Education. All rights reserved. Paid in Full

Reality Check See my web site – under Financial Literacy Links ©2008. Oklahoma State Department of Education. All rights reserved.32

Resume – together as a class Interview Questions – answer individually ©2008. Oklahoma State Department of Education. All rights reserved.33

©2008. Oklahoma State Department of Education. All rights reserved.34 Income and Taxes Standard 1.2 “Nothing is certain except death and taxes.” Benjamin Franklin

Down Payment Down Payment Murphy just got his first job at the Stop and Shop Grocery as a sacker where he will earn $8 an hour for working up to 35 hours a week during the summer, and 20 hours a week during the school year. Mom said he could get a motorcycle if he could find a job to make the payments. 35 ©2008. Oklahoma State Department of Education. All rights reserved.

Down Payment Down Payment Murphy has it all figured out. 35 hours a week at $8 an hour is $280 (35x$8=$280). Wow. That is $1,120 a month ($280x4=$1,120). Mom will be proud! What is wrong with Murphy’s reasoning? 36 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Deductions Anything subtracted from your gross income 37 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Exemptions Legal allowances that reduce the amount of income taxes subtracted from your gross income 38 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary FICA Federal Insurance Contributions Act 39 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Gross Income Wages or salary before deductions for taxes and other purposes 40 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Medicare Federal government program, financed by deductions from wages, that pays for certain health care expenses for older citizens 41 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Net Income Commonly called “take home pay”; it is your income after all deductions and exemptions 42 ©2008. Oklahoma State Department of Education. All rights reserved.

Vocabulary Vocabulary Social Security A federal government program that provides retirement, survivor’s, and disability benefits, funded by a tax on income, which appears on workers’ pay stubs as a deduction labeled FICA (for Federal Insurance Contributions Act, the enabling legislation) 43 ©2008. Oklahoma State Department of Education. All rights reserved.

Payroll Deductions Several deductions are subtracted from a paycheck. Gross income is total pay before deductions. Net income is take-home pay after deductions. Some deductions are required; others are optional. 44 ©2008. Oklahoma State Department of Education. All rights reserved.

Payroll Deductions Deductions include: Insurance Taxes Uniforms Meals Retirement Union Dues Other 45 ©2008. Oklahoma State Department of Education. All rights reserved.

Payroll Taxes FICA Federal Insurance Contributions Act o Social Security o Medicare Federal Income Tax Tax rates vary based on income State Income Tax Tax rates vary from state to state 46 ©2008. Oklahoma State Department of Education. All rights reserved.

Review Review Payroll deductions are subtracted from a person’s paycheck. Deductions, such as taxes and FICA, are required by law; other deductions are optional. State tax rates vary from state to state, but FICA and federal income tax rates are the same anywhere in the U.S. 47 ©2008. Oklahoma State Department of Education. All rights reserved.

What is the difference between gross and net pay? 48 ©2008. Oklahoma State Department of Education. All rights reserved. Review Review

What are some of the different kinds of payroll deductions? Which are required? Which are optional? 49 ©2008. Oklahoma State Department of Education. All rights reserved. Review Review

What is FICA? 50 ©2008. Oklahoma State Department of Education. All rights reserved. Review Review

Will Murphy really take home $1,120 a month? 51 ©2008. Oklahoma State Department of Education. All rights reserved. Paid in Full

End of Chapter Work With a partner complete ◦ Income and Taxes Review Lesson 1.2 ◦ Paycheck Deductions – Activity ◦ Complete and turn in. ©2008. Oklahoma State Department of Education. All rights reserved.52

©2008. Oklahoma State Department of Education. All rights reserved.53 Goal Setting Standard 1.3 Without goals, and plans to reach them, you are like a ship that has set sail with no destination. Fitzhugh Dodson

What if this was you? What if this was you? Paris is concerned. Her parents own a business in town where she works every day. There is only one problem: Paris does not want to take over the family business. Paris feels trapped. Her dreams and dreams her parents have for her are very different. What should Paris do? 54 ©2008. Oklahoma State Department of Education. All rights reserved.

Goal A statement about what a person wants to be, do, or have, accomplished by taking certain steps; provides direction to a plan of action ©2008. Oklahoma State Department of Education. All rights reserved. 55 Vocabulary

Goal Setting The process used to determine what an individual wants to be, do, or have (i.e., what a person wants to accomplish) ©2008. Oklahoma State Department of Education. All rights reserved. 56 Vocabulary

What is the difference between a dream and a goal? How can you turn dreams into goals? Why set goals? 57 ©2008. Oklahoma State Department of Education. All rights reserved. Building Interest

Short-term Goals Goals that can be reached in a few months. 58 ©2008. Oklahoma State Department of Education. All rights reserved.

Short-term Goals Have little meaning or purpose unless they are leading to some kind of long-term objective 59 ©2008. Oklahoma State Department of Education. All rights reserved.

Medium-term Goals Goals that can be reached in one to three years. 60 ©2008. Oklahoma State Department of Education. All rights reserved.

Long-term Goals Goals that can be reached in more than three years. 61 ©2008. Oklahoma State Department of Education. All rights reserved.

Goal Setting Rules Be specific. Write down goals. Post goals. Make them YOUR goals. Stay focused. Believe in yourself. See roadblocks as opportunities. 62 ©2008. Oklahoma State Department of Education. All rights reserved.

Goal Setting Rules Forgive yourself. Celebrate success. Take care of yourself. Review your goals. Set short-term and medium-terms goals to help meet your long-term goals. 63 ©2008. Oklahoma State Department of Education. All rights reserved.

64 ©2008. Oklahoma State Department of Education. All rights reserved. Review Knowing how to set personal goals will help someone to establish a plan of action to reach their dreams.

Practice Let’s work in small groups to set short-term, medium-term, and long-term goals Complete Lesson 1.3 Review within your group. (On #1, give at least 3 reasons.) 65 ©2008. Oklahoma State Department of Education. All rights reserved.

66 Managing Your Income Standard 1.4 “Failing to plan is planning to fail!” Unknown

Is this you? Is this you? Mickey wants to get his own apartment. Mickey is convinced he can make it on his own with his part-time job. Donald has already found a place to live. What can Mickey do to prove to his parents that he can make it on his own? 67 ©2008. Oklahoma State Department of Education. All rights reserved.

Budget A plan for managing money, dividing up expected income and expenses among spending and saving options based on personal goals during a given time period 68 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Expenses The costs of goods and services, including those that are fixed (such as rent and auto loan payments) and those that are variable (such as food, clothing, and entertainment). 69 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Financial Goal Desired results from one’s efforts to achieve personal economic satisfaction 70 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Fixed Expenses Expenditures that are the same from week to week or month to month, such as mortgage or rent payments and car payments 71 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Fixed Income Income that are the same from week to week or month to month. Usually refers to income from pensions or bonds 72 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Income Money earned from investments and employment 73 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Variable Expenses Expenditures that change from week to week or month to month—for food, clothing, recreation and entertainment, for example 74 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Variable Income Income that varies from week to week or month to month 75 ©2008. Oklahoma State Department of Education. All rights reserved. Vocabulary

Budget What is a budget? Is simply a monthly spending plan 76 ©2008. Oklahoma State Department of Education. All rights reserved.

Budget Why do you need a budget? Puts you in control of your income Guides you toward our personal dreams Promotes smart spending habits 77 ©2008. Oklahoma State Department of Education. All rights reserved.

Budget How do you set up a budget? Start by writing down everything you spend for one month – EVERYTHING Write down your fixed and variable income Write down your fixed and variable expenses 78 ©2008. Oklahoma State Department of Education. All rights reserved.

Fixed vs. Variable Expenses Fixed is the same for an extended period of time. Variable changes from month to month. 79 ©2008. Oklahoma State Department of Education. All rights reserved.

When setting your budget, be sure to include deposits to your savings account as a FIXED expense. 80 ©2008. Oklahoma State Department of Education. All rights reserved. Fixed vs. Variable Expenses

Salary could be a fixed income if you receive a monthly or bi-monthly salary. 81 ©2008. Oklahoma State Department of Education. All rights reserved. What are examples of fixed incomes?

What are examples of variable incomes? Hourly salary Commission Tips Self-employed 82 ©2008. Oklahoma State Department of Education. All rights reserved.

What are examples of fixed expenses? Lease or house payment Cell phone contracts 83 ©2008. Oklahoma State Department of Education. All rights reserved.

What are examples of variable expenses? Utilities Gasoline Clothes Food Entertainment 84 ©2008. Oklahoma State Department of Education. All rights reserved.

A budget is THE most important tool to manage financial resources and meet personal goals. Budgets should be flexible to meet your needs. Budgets should be reviewed annually. 85 ©2008. Oklahoma State Department of Education. All rights reserved. Review

86 ©2008. Oklahoma State Department of Education. All rights reserved. Review Mickey needs to make a budget that shows how much he earns and how much he can afford to spend to help show his parents his plan to be responsible with his money.

Budget Practice ©2008. Oklahoma State Department of Education. All rights reserved. 87