Personal Money Management Day 1 Africa Personal Money Management Day 1

Personal Money Management Standard: SS7E4 Students explain personal money management choices in terms of income, spending, credit, savings, and investing.

FIRST FIVE Agenda Message: Social Studies GMAS is Wednesday, April 29th. Invest 20-30 minutes a night in studying your Study Guide. Standard SS7E4: Students explain personal money management choices in terms of income, spending, credit, savings, and investing. Essential Question for Monday April 27th :What is the theme for Personal Money Management? Warm-Up: Why do countries need economies? Today We Will: GMAS Review

ANSWERS E.Q. Answer for Monday April 27, 2015: It’s not about how much money you make, it’s all about how much money you keep. Warm-Up: To help them manage distribution of resources

Personal Money Management Income When people go to work, they earn an income. An income is the total of a person’s earnings that they can then decide how to use. Broadly speaking a person only has two choices about what to do with income: spending money now for goods and services or saving for the future.

Personal Money Management Savings Savings are after tax income minus consumption spending, that is, the money you have not spent after buying things you need or want. To help people make decisions about using their limited income a budget can be developed.

Personal Money Management Budget A budget is a; Spending-and-savings plan, Based on estimated income and expenses, For an individual or an organization, Covering a specific time.

Personal Money Management Investing From an individual point of view, savings typically become a form of investing, because the savings is put into a bank account, stock, bond, or mutual fund that pays a rate of return (interest). Investing refers to postponing current consumption or rewards to pursue an activity with expectations of greater benefits in the future.

Personal Money Management Real investment or physical capital investment Real investment or physical capital investment refers to decisions by businesses to purchase equipment and physical plants and the purchase of new homes by consumers. The amount of real investment is critical to economic growth. Financial investment and real investment or connected but they are not the same.

Personal Money Management Credit Credit refers to the ability to borrow money. Some forms of credit commonly used by consumers are car loans, home mortgage loans, and credit cards. Firms also use credit regularly, either by borrowing from a bank or issuing corporate bonds.

Personal Money Management Government also uses credit when it needs to borrow money to finance a budget deficit (e.g., savings bonds, treasury notes). Those who can borrow moderate or large sums of money at a reasonable rate of interest are sometimes said to have good credit, while those who cannot borrow such amounts are said to have bad credit.

Personal Money Management Credit is extremely useful to the economy. Most people would have great difficulty in buying a house if the couldn’t borrow the money. Many people also use credit to further their education. Many firms would be unable to build new factories if they had to save all the money first.

Personal Money Management In addition, short-term credit is often used by people (through credit cards) as a simple and convenient method of paying for purchases. However, excessive borrowing can b a problem for households, firms and government.