1. Welcome to Personal Financial Literacy Workshop!
Please complete the registration form on page 2.

2. Director of Smarter Texas 1801 Allen Parkway Houston, TX 77019
Helping young people learn to think, choose, and make better
economic and financial choices in a global economy
Cindy Manzano
Director of Smarter Texas
1801 Allen Parkway
Houston, TX 77019 C: F:

3. Agenda What is personal financial literacy and why do we need it?
Grade 7 – Personal Budget
Grade 7 – Know Your Worth
Grade 8 – Saving for My Future
Grade 8 – Borrowing Money
How to access resources

4. Personal Financial Literacy is making thoughtful, well-informed decisions about important aspects of finances.
Financial literacy: making thoughtful, well-informed decisions about important aspects of personal finance, including earning income, spending, saving, borrowing, investing, sharing, and managing money.
Financial irresponsibility spans all economic levels. Financial literacy is not just a problem with poverty. Professionals have disconnect between professional careers and their finances. Financial advisors tell me that they have clients who graduate with a doctor’s degree and $250,000 student loan debt and turn around and purchase a $400,000 house. These people will work all their lives trying to get out of debt.
Why do we need it?

5. Nationwide Financial Capability Study
39% of individuals in Texas used a form of non-bank borrowing, i.e. an auto title loan, pay day loan, pawn shop loan, or other high interest uneconomical source of debt
54% of individuals in Texas broke even or spent more than their annual income
57% of individuals in Texas did not have enough money saved to cover expenses for three months
67% of individuals in Texas scored 60% or less on a financial knowledge test, which comprised of questions regarding basic economics and finance concepts encountered in everyday life
living paycheck to paycheck and living beyond their means

6. 2013 Student Loan Debt as Reported by Forbes
The total outstanding student loan balance is $1.2 trillion.
Reasons for rising student debt:
Rising cost of education
Students with little to no credit history are being approved for thousands of dollars loan
Students don’t understand the terms of getting a loan
Students did not save or plan for the cost of college
After graduation:
Loan debt exceeds annual salary
Many can’t find a job
Graduates are delaying buying a home or car
Unable to start a business
Unable to save for the future
Of this $1.2 trillion in student debt, about $1 trillion is in federal student loans.  This figure does not tell the full story, however, as the $1.2 trillion does not include funds students must divert away from retirement savings, parent borrowing, or credit card debt.  The size of the average student loan in 2005 was $17,233. By 2012 the average U.S. student loan debt climbed to $27,253–a 58% increase in just seven years, according to FICO.
There are several reasons for the rising student debt problem. The rising cost of education is certainly one of them, but the relationship between lender and student borrower is particularly troubling.
Students without much of a credit score or credit history are being approved for thousands of dollars in loans by lenders who are betting they’ll be able to pay it back after getting a college degree.
The wake-up call occurs after graduation when many students realize their loan debt exceeds any annual salary they’re able to earn–if they can find a job, that is. Graduating from college ends up feeling like more of a burden which is why one-third of millennials say they would have been better off working, instead of going to college and paying tuition.
The student loan problem may have greater repercussions for the economy than the housing problem did. Student borrowers are delaying major life decisions, like buying a home or car, as a result of their student loans. The rate of home ownership is 36% less among those currently repaying student debt, according to research from ProgressNow.
What’s more, unlike other debt, most student loan debt can’t be forgiven in bankruptcy.
Some regulators are starting to pay attention. The Consumer Financial Protection Bureau says it’s received over 30,000 complaints and comments about how student loans are affecting consumers. CFPB Director Richard Cordray compared the student loan environment to the “broken mortgage market before the crisis” and said his agency is watching it closely.
“The burden of student debt is jeopardizing the ability of young Americans to buy homes, start small businesses, and save for the future,” he said in a statement last month.

7. . . . then why get a higher education?
The demand for higher education in the job market is increasing.
The potential to earn more increases as the level of education increases.
The percent of unemployment decreases as educational attainment increases.
Higher education is still the best investment in your future.

9. TCEE Grade 7, Lesson 2
Personal Budget

10. The student is expected to:
Math 7.13B identify the components of a personal budget, including income, planned savings for college, retirement, and emergencies; taxes; and fixed and variable expenses and calculate what percentage each category comprises of the total budget

11. Vocabulary
Budget
A tool that helps people manage their money and plan for the future.
A budget is a plan to manage income and expenses.

12. CREATE A MONTHLY BUDGET
Step 1: Calculate the monthly net income.
Step 2: Categorize monthly expenses.
Step 3: List categories and their total in budget worksheet.

13. Group Discussion for Activity 7.2-1
What skills and knowledge must the student have prior to working Activity7.2-1?
Why is it important to create a budget based off the net income rather than gross pay?
What connection does the student need to make to taxes?
What are the important takeaways from this lesson?

14. Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay $
Deductions:
Federal Income Tax
$289.90
Social Security Tax
$119.66
Medicare Tax
$27.99
Medical Premium
$100.00
Total Deductions
Net Income

15. Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay $
Deductions:
Federal Income Tax
$289.90
Social Security Tax
$119.66
Medicare Tax
$27.99
Medical Premium
$100.00
Total Deductions
$537.55
Net Income

16. Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay $
Deductions:
Federal Income Tax
$289.90
Social Security Tax
$119.66
Medicare Tax
$27.99
Medical Premium
$100.00
Total Deductions
$537.55
Net Income $

17. Step 1: Calculate the monthly net income.
Barney’s semi-monthly net income $
What is his monthly net income?
$2784.0

18. Step 2: Categorize Monthly Expenses.
House payment $900
Electricity $122
Clothes $120
Retirement Savings $150
Car payment $240
Gasoline and car maintenance $170
Entertainment $200
Cell phone $89
Emergency savings $100
Water and gas $52
Restaurants $175
Groceries $275
Car insurance $120
Miscellaneous $71

19. Step 3: List categories and their total in the budget worksheet.
Monthly Budget Worksheet
Monthly Net Income:
Expenses
Cost
Percentage of Monthly Net Income
Housing:
Food:
Utilities:
Savings:
Transportation:
Other:
Total Expenses:

20. Step 3: List categories and their total in the budget worksheet.

21. Theo’s Budget

22. Vocabulary
Fixed expenses are those expenses that remain the same each month.
Variable expenses are those expenses that vary from month to month.

23. BALANCE BETTY’S BUDGET
Wilma’s friend, Betty, is still in college. She is determined not to get a loan to pay for tuition and books. Therefore, she lives at home and works part-time. She knows that if she can save $300 every month, she will have enough money to pay for next semester’s college tuition and books. Every month Betty spends more money than she makes. Her father has been giving her money when she overspends. He has explained that he will no longer bail her out.

24. BALANCE BETTY’S BUDGET
Wilma has agreed to help Betty balance her budget. First, Wilma asked her to gather all of her receipts for the month of August and enter the cost in the budget worksheet below.

25. Texas Reality Check
Now it is time for you to take a reality check. Have you thought about your future? What will your budget look like? What type of an occupation do you need to afford this budget? The following simulation will help you make these decisions.
Go to the following website:

26. TCEE Grade 7 Lesson 4
Know Your Worth

27. The student is expected to:
Math 7.13C: create and organize a financial assets and liabilities record and construct a net worth statement

28. Engage
What does it mean to be wealthy?

31. Net worth is the value of what you own minus what you owe.
 $30,000
You purchased this car for $40,000. Due to depreciation, it is now worth $35,000. You still owe $30,000. What is your net worth if this is your only asset and liability?

32. Activity 7.4-1a Work in pairs.
Use the Activity 7.4-1a sheet and the blue and yellow cards to determine each families net worth.

34. Check for Understanding
What would cause a person to have a negative net worth?
What would cause a family to have a positive net worth?
Why is it important to have a positive net worth?
Other than net worth, what other criteria might a financial institution consider before lending money?

35. Chalkboard Splash
What could Family B do to increase their net worth?

36. Budget or Net Worth?
Budget is a tool used day to day to make sure your expenses don’t exceed your income.
To determine if you are getting out of debt or if you are increasing your wealth, one needs to analyze their net worth.
Explain that it is important to families or individuals to regularly check their net worth. This will help them determine if they are spending too much and or if there is enough savings for the future or emergencies. What is the difference between a budget and net worth? Budget is a tool used day to day to make sure your expenses don’t exceed your income. Tracking your spending and making decisions about where your money goes is paramount to saving it. However, to determine if you are getting out of debt or if you are increasing your wealth, one needs to analyze their net worth.

37. Calculate Your Net Worth While Budgeting to Maintain Perspective by Eric Ravenscraft
“An increase in net worth meant that I was unquestionably spending less than what I earned, which is the key to personal finance success. An increase in net worth meant that all of the hard day-to-day choices I was making were actually adding up to something big.”
“It was exhilarating. Each time I calculated that number, I could clearly see the impact that my choices were having even if they weren't really evident in my day-to-day life.”
WHAT YOUR NET WORTH SHOULD BE
According to Thomas J. Stanley, author of "The Millionaire Mind" and "The Millionaire Next Door," a good way to determine what your net worth is to multiply your age by your annual income (all sources) and then divide by 10. So, for example, if you are 30 years old and earn $50,000 a year, you should have a net worth of $150,000. If you are 40 years old and earn $100,000 a year, you should have a net worth of $400,000.

39. Closing
Many people try to reach the American Dream by purchasing everything they want. What are the consequences for buying everything you want?
Assign the students to write a letter explaining how assets and liabilities are used to create a net worth statement. Include the reason why a family should know their net worth and steps a family could take to change their net worth value.

40. TCEE Grade 8 Lesson 1
Saving for My Future

41. The student is expected to:
Math 8.12C: explain how small amounts of money invested regularly, including money saved for college and retirement, grow over time
Math 8.12D calculate and compare simple interest and compound interest

42. Saving for your education is an investment in yourself.

43. ACTIVITY 8.1-1 Spending and Earning Money to Save Monthly
How I spend my money:
Trade-offs I can make:
Other sources of income:   
Total Monthly Savings:

44. Calculating Interest
Simple interest chooses to receive interest rather than deposit it.

45. STAAR Reference Chart

46. Beginning Balance for New Cycle
Simple Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance $0
$100 5% $5
Total

47. Beginning Balance for New Cycle
Simple Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance $0
$100 5% $5
 $100
Total

48. Beginning Balance for New Cycle
Simple Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance $0
$100 5% $5
$100 
$200
Total

49. Beginning Balance for New Cycle
Simple Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance $0
$100 5% $5
 $100
$200
$10
Total

50. Beginning Balance for New Cycle
Simple Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance $0
$100 5% $5
 $100
$200
$10
 $200
Total

51. Beginning Balance for New Cycle
Compound Interest 1 2 3 4 5 6 7
Deposit Cycle
Beginning Balance for New Cycle
Deposited Amount
New Balance
(2) + (3)
Rate of Interest
Interest Earned
(4) x (5)
Ending Balance
(4) + (6) $0
$100 5% $5
$105
Total

52. Bankrate.com

53. TCEE Grade 8 Lesson 2
Borrowing Money

54. The student is expected to:
Math 8.12A: solve real‐world problems comparing how interest rate and loan length affect the cost of credit
Math 8.12B: calculate the total cost of repaying a loan, including credit cards and easy access loans, under various rates of interest and over different periods using an online calculator

55. When Joaquin sat down to negotiate his auto loan with the dealership, he was told that he could borrow $15,000 at 6% interest for 3 years. His payments would be $456 per month. Joaquin explained that he could not afford $456 per month and he wanted a better deal. The car dealer agreed to give Joaquin a better deal. He told him that he could bring down his monthly payments to $289 per month for 5 years.
Was this a better deal?

56. $456 x 36 months = $16,416
$289 x 60 months = $17,340
Was this a better deal?

58. Activity 8.2-1 Decoding Loans with APR
According to Investopedia, “The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.” [Source:
Bottom line: Always ask for the APR when getting a loan.

59. What is a Payday or Title Loans?
Easy access loans are sometimes called title loans or payday loans. They make it “easy” to get a loan. The high cost is due to the short time period of the loan and to the fee. When the interest rate or fee is calculated over the short time period, the Annual Percentage Rate (APR) will be huge.

60. Decoding Loans with APR
Common Small Loan
Easy Access Loan
Loan Amount
$1,000
Term
12 months
14 days
Interest Rate 7%
n/a
Financial Fee
$300*
Annual Percentage Rate
7.22%
Payment
$86.63 per month
Total Repayment
*1st 14 day fee is $300, if renewed an additional $300 fee is required.

61. Decoding Loans with APR
Common Small Loan
Easy Access Loan
Loan Amount
$1,000
Term
12 months
14 days
Interest Rate 7%
n/a
Financial Fee
$300*
Annual Percentage Rate
7.22%
782%
Payment
$86.63 per month
Total Repayment
*1st 14 day fee is $300, if renewed an additional $300 fee is required.

62. Decoding Loans with APR
Common Small Loan
Easy Access Loan
Loan Amount
$1,000
Term
12 months
14 days
Interest Rate 7%
n/a
Financial Fee
$300*
Annual Percentage Rate
7.22%
782%
Payment
$86.63 per month
Total Repayment  $
*1st 14 day fee is $300, if renewed an additional $300 fee is required.

63. Decoding Loans with APR
Common Small Loan
Easy Access Loan
Loan Amount
$1,000
Term
12 months
14 days
Interest Rate 7%
n/a
Financial Fee
$300*
Annual Percentage Rate
7.22%
782%
Payment
$86.63 per month
Total Repayment  $
$1300
*1st 14 day fee is $300, if renewed an additional $300 fee is required.

64. Calculating Easy Access Loans
For easy access loan APR calculations go to:
Or Google: Payday loan APR calculator

65. How to calculate APR for payday loans?
Find the percent of the loan that represents the fee.
$300/$1000 = .3 = 30%
Determine how many 2 week periods are in a year.
52/2 = 26
Multiply this value by the percent.
26 x .3 = 7.8
Convert to a percent.
780%

66. Online Financial Calculators
Many bank and credit union websites
EZ Financial Calculator app
- Payday loan APR calculator

67. Important Tips
Write 3-4 important tips about loans that you would like to share with a family member.

68. A Student’s Story
Predict how long it would take to pay off $7000 at 17.42% interest if the card holder made no additional purchases and paid $300 per month? How much more is this than the original debt? How can this person reduce her total repayment? Let’s say she can pay $450 per month if she cancels her cable for television. How much do you think she could save?

69. Assessment Question
Brandon has reached his credit card limit of $ Since Brandon has a poor credit history, the annual interest rate on this credit card is 22%. Using an online calculator, Brandon determined that if he pays $ per month and does not make any additional purchases with this card, it will take him 39 months to pay off the credit card. Which of the following represents the total interest Brandon will pay in when his debt is paid off?
A $858.10
B $
C $
D $

70. A Proven Tool that Increases the Learning in the Classroom

71. Stock Market Game ™ InvestWrite
Teams of 2 to 5 students
Grades 4 to 12
Cost: $10 a team
10 week Student Session

72. Personal Financial Literacy Challenge
Middle and High School
Fall and spring online challenges will determine state finalist candidates
“State Play-Offs” in Austin with cash awards for two top teams
HS national finals at Fed in St. Louis
Bellaire HS Houston 2nd in nation 2012

73. The TCEE programs are made possible by the following TCEE partners.
EnviroChem
Services, Inc.
John Anderson
Trout Foundation
Less B. Fox
RBC Wealth Management
copyDR.