1. Thursday May 5, 2014 Agenda Homework Present Federal Reserve Book Ideas from Books (notes) Introduction to Personal Financial Literacy  What are the three parts of a budget?  Why is savings so important? Create a scenario which shows why having savings is important (3 sentences).

3. I’m going to be out for two reasons

4. My Mom is Graduating! My mom is graduating from Community College on Monday! She started college but then was pregnant with me. She has been working hard to get her education and I need to be there to support her!

5. College Roommate’s Wedding is four hours away

6. Friday’s Assignment 1 st and Foremost: Behave for the Substitute. I will try to leave instructions that if you want to listen to music while you work that you can. Take Notes from the Power Points Complete the Worksheet Come ready for an Open Note Quiz on Monday. Learn something new!

8. Money Money makes it to where we can trade easily. Every dollar used to be worth a certain weight in gold. Now we have “fiat money” Money that only has value because the government says so.

9. What is Money? Money is three things: Medium of Exchange

10. What is Money? Store of Value

11. What is Money Measure of Value?

12. Fiscal Policy  Used by every level of government  Adjusting spending levels and taxes to help the economy.  Higher Taxes=Less Spending

13. Monetary Policy Adjusting the size and rate of growth of the money supply which affects interest rates. The more money in the Economy=lower value=higher inflation

14. Federal Reserve “The Bank’s Bank” Affects the amount of money banks need to keep (More or less loans) Affects Interest Rates Higher Rates=Less Loans

15. 6 Major Jobs of the Fed  Supply the economy with paper money and coins.  Hold bank reserves.  Provide check-clearing services  Supervise member banks  Serve as lender of last resort.  Control the money supply

16. Financial System The main idea is that our system connects savers to borrowers. If you save money, you can then loan it to someone and charge them interest. This is what banks do!

18. What affects your individual financial goals? Education Generally speaking, the higher your level of education the greater your earning potential. Career Path Every career has a different pathway and different opportunities. Income Your income level determines things like retirement, house size, car, etc. Ex: Bill Gates might want to own an island, I want to own a house.

19. Career Path There are two major questions What are your interests? ▫ Example: Mr. Neanover likes government, running, ultimate frisbee, and music. ▫ He dislikes science, babies, science, blood and guts, and sitting still.  What is important to you?  What level of responsibility would you like to have?  What results do you want to have?  Where do you want to work/  What compensation do you desire?  What type of work/life balance do you want?

20. Median Weekly Earnings Based on Education High School Drop Out $471 High School Graduate- $652 Enlisted Military Member-$700 Trade School- $807 Community College Graduate- $785 College Graduate- $1,066 Master’s Degree-$1,300 Doctorate’s Degree- $1,624 Professional Degree $1,735

21. Cost of Degrees Community College- $2439 per year (2 years) Trade School- varies but around the cost of community college State University- $7,136/year (4 years) Out of State Public University- $19,622/year Private University- $22,771/year Master’s degree-$14,825/year (1-2 years) Medical School- $28.685 public, $46,899 private year (4 years) Law School- $20,238 public, $37,446 private (3 years) Ph.D. Program $20,903/ year (5 years)

22. Paying for Education Grants- A sum of money given by an organization for a particular purpose. Scholarships- grants awarded to support a student’s education. Loans- money borrowed and agreed to pay back with interest. Financial Aid- money to support a worthy person or cause Need based (FAFSA- Free Application for Federal Student Aid) Merit- Scholarships awarded for meeting a criteria Work study-school agrees to award you money and in return you work for them.

23. LoanNeed- Based ? Subsi dized ? SponsorBorrowerInterest Rate Direct Subsidized Loan Yes Federal government Student3.4% (fixed) Direct Unsubsidized Loan No Federal government Student6.8% (fixed) PerkinsYes Federal government Student5% (fixed) Parent PLUSNo Federal government Parent7.9% (fixed) Private (Alternative) and State No Banks, colleges, foundations, state agencies Usually student with creditworthy parental cosigner Usually higher than federal rates; variable

24. What is a Budget? A plan for spending and saving money

25. Why Budgets Make Sense Budgets help you: Set priorities Achieve what’s important to you A good budget is: Realistic Ongoing Clear and easy to use

26. Budget Categories Income Gross Net Savings Emergencies Long-Term Retirement Short-Term Expenses Fixed Variable Discretionary

27. Income: Money Earned Gross income: An individual’s income before taxes. Net income: Income after taxes are paid. Taxes can range from 15% to 31%.

28. Expenses Expense: A cost to meet a need or pay a debt Types of expenses Fixed Variable Discretionary

29. Savings: Pay Yourself First  Savings: unspent income  Types  Emergencies: Plan to set aside three months’ living expenses  Long-term: Large ticket items (house, car, college)  Retirement: It’s never to early to start  Short-term: Vacation, clothes, new basketball shoes

30. Start Saving Young! Save $2,000 per year from age 19 – 26 $1,035,148 by age 65 Save $2,000 per year from age 27 – 65 $805,185 by age 65 Time value of money Invest fewer dollars at a younger age but have 25% more

31. Discretionary Expenses A cost determined by personal wants that may be controlled  Movies, videos, Video Games  Sports  Going out to eat  Grooming and clothes  Concerts and plays  Vacations  Others?

32. Ways to Reduce your Grocery Bill Make a shopping list Study grocery ads Buy store-brand products Avoid impulse purchases Learn the basic prices of your favorite foods.

33. Homework  What are the three parts of a budget?  Why is savings so important? Create a scenario which shows why having savings is important (3 sentences).