1. Personal Finance for Life
On the Road to Financial Success
Personal Finance for Life
We’re going to focus on a number of the fundamentals of personal finance that will help you successfully manage your money during your teen years and throughout your life.
What we hope to achieve – is to provide some rules and tools to make you a wise money manager.
HANDOUT – Hand out “A Quiz on Credit.” Have the audience take the quiz. Then handout the “Answers.” Review the quiz with the focus on the percentage of students who got the questions correct indicated by the score on the answer sheet. Use this discussion as the basis of the need to be a smart consumer of personal finance and compliment them for taking the first step by attending the workshop.

2. Setting Goals Characteristics of goals Time-frame
Specific, measurable, reasonable and realistic
Time-frame
Short-, medium-, long-term
Examples for your life stage
Save “x” dollars for a car
Get a summer job
Design a budget
QUESTION - Why set goals?
ANSWER -
To take action toward a dream (buying a car, saving for college)
To alleviate a concern (repaying debt)
Characteristics of goals
Specific (How much? How long?)
Measurable (How will I know when I get there?)
Reasonable and realistic (It fits within my budget)
EXERCISE – Review the “Setting Goals” worksheet in Appendix A of the booklet. Ask the group to write a short, medium, or long term goal using the characteristics of goals. Then ask someone to share his/her goal. Write it on the white board/flipchart and ask the group to critique it. Does it have all of the characteristics of a goal?

3. Create a Budget - Income
Scholarships
Gifts
Loans
Allowance
My job or business
Odd jobs
Once your goals are set, your budget will be the plan to help you achieve those goals.
DISCUSSION – Asses the knowledge base of the audience by asking what they know about budgets. Do their parents have a budget?
REVIEW the parts of the budget:
Income is money in or inflow
Expenses are money out or outflow
EXERCISE – Go to “My Budget” in Appendix B of the Booklet and create a budget. This may be the first time the attendee creates a budget. Some attendees might not have any income (allowance, odd jobs, gifts). The attendees income might just be money that their parents have given them when they wanted to buy something. So, focus on what they spend money on and have them log those types of expenses in the expense area.
HANDOUT – For the older students in the group, you can hand out the “Your Spending Profile,” which is a useful tool for the student to begin understanding their money personality.

4. Create a Budget - Expenses
Money I owe
Savings
College savings
Giving
Gifts
Transportation
Food
Clothing
Personal care
School supplies
Telephone
Recreation
Vacations

5. Checking Accounts & Electronic Money
Safety
Proof of payment
Convenience
Establish credit
ATM cards
Debit cards
EXERCISE – Bring a sample check, ATM card and Debit card from your financial institution and pass them around the room. Review the sections of a check and how a check is filled out. Explain the features of ATM and Debit cards.

6. Saving & Investing Emergency savings Start early Bonds Stocks
Mutual funds
Strategies
Make savings a part of your budget.
Get the attendees excited about saving money and show them the beauty of interest – that is, free money that is given to them for keeping their savings at the financial institution.
Explain the steps of savings – start with cash savings, then move onto bonds and eventually stocks and mutual funds. Most attendees will understand savings accounts and some will have an idea about bonds because they may have seen a EE Bond before. Kids use products every day that are made by companies that they know – Nike, Microsoft, Coca-Cola. You can introduce stocks as simply as owning a piece of a company and use companies they are familiar with to support your example.

7. Recipe to be a Millionaire
Work four summers, start at age 16
Save income in a Roth IRA account
Invest in a simple, low-cost stock portfolio
Simmer slowly for 47 years
Serve un-garnished (and untaxed) at age 67
QUESTION – How many of you want to be a millionaire?
ANSWER – Everyone will raise their hand. Get the students excited about saving by sharing with them the recipe to be a millionaire.
You can share the details of the recipe as needed. Here are the details:
Save $2,000 each summer during your high school years and save no more thereafter
Invest the money in a common stock Roth IRA that earns 10.7% average compound rate
By age 30, that $8,000, is worth $25,917
By age 40, $71,625
By age 50, $197,943
By age 60, $547,037
By age 67, $1,114,423

8. The World of Credit Benefits of credit So many choices
Shopping for credit
Applying for credit
The C’s of credit
Establishing credit
The cost of credit
Using credit wisely
Protecting your credit history
Your credit report
Your credit score
Define what credit is – buying now and paying later
EXERCISE – Bring a sample loan application and pass it around the room.
DISCUSSION – Discuss the types of questions included and not included in the application.
Why does the application ask you to list your current employer and if you’re in a job for a short time?
Why do loan applications not ask for information such as your religion?
REVIEW – All of the credit topics in the booklet.
EXERCISE – Bring a credit card statement and pass it around. As an option, show the attendees how finance charges are calculated.
EXERCISE – Bring a sample credit report and pass it around. Introduction of these “show and tell” items will probably be the first time attendees see them.

9. Cost of Making the Minimum Payment
Item
Price
APR
Interest Paid
How Much You Really Pay for the Item
Total Years to Pay Off TV
$500
18%
$439
$939 8
Computer
$1,000
$1,899
$2,899 19
Furniture
$2,500
$6,281
$8,781 34
This chart is a real eye opener to students. It hits home the concept of paying interest on buying items now and paying for them later.
This is a good opportunity to contrast earning interest on a savings account to paying interest on a credit card.
QUESTION – Would you rather have your financial institution pay you interest on your savings or would you rather pay interest on a credit card?
ANSWER – The answer is obvious, but it reinforces an important concept that saving money is a great deal.

10. Benefit of Making More Than the Minimum Payment
Original Balance
APR
Monthly Payments
Total Number of Monthly Payments
Total Years to Pay Off
Total of Pmts
$2,500
18%
Min Pmt
404 34
$8,781
+$50 94 8
$4,698
+$100 32 3
$3,163
Even if you can’t pay cash for everything, making more than the minimum payment on credit purchases will save you a lot of interest payments in the long run.

11. Be Credit Wise Over 75% of college students have credit cards
Over 30% of college students have 4 or more credit cards
3 out of 5 students with credit cards maxed them out in their freshman year
Over 60% of college students don’t have a budget
Share these statistics with students to show that many kids who get credit cards for the first time don’t know how to use them wisely. Encourage the attendees to learn, learn and learn some more so they use their credit wisely.

12. Me and My Car New or used? Buy or lease? The other costs
Registration
License plates
Insurance
Maintaining the car
REVIEW – the pros and cons of buying new vs. used and buying vs. leasing. Some of the attendees might already have some experience in this area and can add some valuable input.

13. It’s Off to Work You Go How much will you make? Taxes
Gross vs. net income
Entrepreneurial spirit
Teens can use research activities such as Salary Comparisons, Take Home Pay Estimates, calling apartment complexes or comparing rents in an apartment guide to learn what they are likely to be able to afford. Teens often overestimate income and underestimate expenses, so this is a good way to show them the reality of the numbers.
EXERCISE – Hand out the “How Much Charts” worksheet. Ask the student to fill out each chart. Take one at a time.
On the “How Much Will You Earn?” chart, the student fills out the $ Per Year – Your Estimate column. Prior to the workshop, find out what the starting salary for a Lawyer, Teacher, and Architect are in your area. After the student completes their part, you share what the starting salary’s are and what the income would be after 10 years for each job.
DISCUSSION – Discuss their expectation with reality
On the “How Much Will You Take Home?” chart, ask the student to fill out the first column – Estimated Take-Home. Then discuss taxes that are deducted to identify what the Actual Take-Home would be for each of those jobs.
On the “How Much Does It Cost?” chart, ask the student to complete the Estimated Cost for the listed expenses. Prior to the workshop, find out what the going rates are for these expenses in your area. Then share those costs with the students during the workshop.

14. Leaving the Nest Pay bills Open checking acct Balance checkbook
Stop payment on a check
Re-order checks
Read a lease
Buy insurance
Order electric service
Register to vote
Get a passport
Apply for student aid
Get a credit report
Invest
Do a tax return
There are some important life skills that every kid needs to know before leaving home.
EXERCISE – Have the attendees go to “Appendix C – Life Skills 101” in the booklet and complete the list.
DISCUSSION – Ask the attendees if there are any other items that need to be added to the list. Take a survey to see how many of the items the attendees already know how to do.

15. On the Road to Financial Success