BudgetBudget

How to budget your money?How to budget your money?

“Budget Busters”

Give yourself five points if you have a budget. Give yourself five points if you have a checkbook. Deduct a point if you have ever bounced a check. Deduct a point if you bought something this week without comparison

shopping. Give yourself a point if you bought a store brand, rather than a name

brand item this week. Give yourself five points if you have a savings account. Give yourself five points if you added any money to your savings

account this week. Give yourself five points if you pay your own car insurance (or part of it) Deduct five points if you routinely carry more than $10.00 in your purse

or wallet. Give yourself five points if you have a method of recording what you

spend.

““Some Money Facts”Some Money Facts”

$ The average person spends money three $ The average person spends money three times a day.times a day.

$ A movie with popcorn and a soft drink can $ A movie with popcorn and a soft drink can easily cost $20easily cost $20

$ Just one soft drink a day for .99c adds up to $ Just one soft drink a day for .99c adds up to $361.35 in a year$361.35 in a year

$ Just one Tall Latte = ????$ Just one Tall Latte = ???? $ What’s the biggest expense item for $ What’s the biggest expense item for

teenagers? FOOD!teenagers? FOOD!

October 5, 2011October 5, 2011

►Early Work: Do you follow a budget? Early Work: Do you follow a budget? ►ScheduleSchedule

Finance Notes and ReviewFinance Notes and Review ActivityActivity

Target: To understand the importance of Target: To understand the importance of living on a budget and saving money! living on a budget and saving money!

Discussion:Discussion:

What is a Budget? What is a Budget? Why do you have a budget?Why do you have a budget?

Money Matters:Money Matters:

How many times a day do you spend money?How many times a day do you spend money? The average person spends money 3 times a The average person spends money 3 times a

day.day. Money brings happiness – Money problems Money brings happiness – Money problems

bring unhappinessbring unhappiness Money problems stay with you for the rest of Money problems stay with you for the rest of

your life.your life. Top reason for divorce is financial. Finances Top reason for divorce is financial. Finances

affects everything else in your life.affects everything else in your life.

Recent StatsRecent Stats

Nearly 94,000 people under 25 filed for bankruptcyNearly 94,000 people under 25 filed for bankruptcy Average in the US is 1 in 69 file for bankruptcy Average in the US is 1 in 69 file for bankruptcy Rise in 18-25 year olds moving back in with parentsRise in 18-25 year olds moving back in with parents College students have $3,000 in credit card debtCollege students have $3,000 in credit card debt

10% owe $10,000 or more in credit card debt10% owe $10,000 or more in credit card debt Chapter 7 bankruptcy – no payment necessaryChapter 7 bankruptcy – no payment necessary Chapter 13 bankruptcy – set up payment plan to pay Chapter 13 bankruptcy – set up payment plan to pay

backback

Activity:Activity: All students stand up. If you cannot go without All students stand up. If you cannot go without

spending money on the item they need to sit down.spending money on the item they need to sit down.For the rest of your life you cannot spend money For the rest of your life you cannot spend money on…. on….

Opening day for moviesOpening day for movies Manicure/pedicureManicure/pedicure Golfing/club membershipsGolfing/club memberships Hairstyles that have expensive Hairstyles that have expensive

treatments (color, perms, etc.) treatments (color, perms, etc.) Data PlanData Plan Cell phonesCell phones Going out to dinner 3x a weekGoing out to dinner 3x a week Vacations in high seasonsVacations in high seasons Name brand clothesName brand clothes

Teens Today – Spend and Influence Teens Today – Spend and Influence $172 billion annually ($105 of own $172 billion annually ($105 of own money, $48 of family money)money, $48 of family money)

Average of $104 per weekAverage of $104 per week Without a monthly check most families Without a monthly check most families

would last 1 to 2 mos.would last 1 to 2 mos.

October 6, 2011October 6, 2011

Early Work: What is one way you can Early Work: What is one way you can reduce your spending? reduce your spending?

ScheduleSchedule Continue Finance Notes Continue Finance Notes VocabularyVocabulary

Target: To understand the importance of living Target: To understand the importance of living on a budget and saving money! on a budget and saving money!

Personal SavingsPersonal Savings

Does not include 401 K, retirement, etc. Does not include 401 K, retirement, etc. Emergency, unplanned bills. If you don’t Emergency, unplanned bills. If you don’t

a lot of people turn to their retirement a lot of people turn to their retirement which is penalized and taxed heavily and which is penalized and taxed heavily and you end up owing more money. you end up owing more money.

We always come up with a good reason We always come up with a good reason not to save.not to save.

87% of retires are retiring with $10,000 or less87% of retires are retiring with $10,000 or less Wealth is not what you spend but your net worth Wealth is not what you spend but your net worth

or accumulative wealth, what you have.or accumulative wealth, what you have. 80% of millionaires have accumulated slow and 80% of millionaires have accumulated slow and

steadysteady What is the portrait of a millionaire?What is the portrait of a millionaire?

Live in same city/town for over 20 yearsLive in same city/town for over 20 yearsLive below their meansLive below their meansMarried 1 time and still marriedMarried 1 time and still marriedUsually owns a chain of stores or similarUsually owns a chain of stores or similar

At age 20 if you save $200.00 a month at 10% At age 20 if you save $200.00 a month at 10% interest you will be a millionaire by the age of 55.interest you will be a millionaire by the age of 55.

Ways to improve your Ways to improve your financesfinances

What is more effective? What is more effective?

Make more moneyMake more money Cut your expensesCut your expenses ““Wait and win the Wait and win the

lottery” systemlottery” system Have a budgetHave a budget

What is included in a What is included in a budget for a family in a budget for a family in a given month? given month?

The typical family spend their money?The typical family spend their money?

HousingHousing 14%14% RecreationRecreation 7%7%

Food Food 22%22% Medical/DentalMedical/Dental 8%8%

ClothingClothing 10%10% TransportationTransportation 14%14%

PersonalPersonal 2%2% Utilities, HomeUtilities, Home

OtherOther 9%9% Improvements 14%Improvements 14%

Budgeting Terms-Define Budgeting Terms-Define Using your own Paper: Define the followingUsing your own Paper: Define the following

BudgetingBudgeting money money

management management gross income gross income net incomenet income bank accountsbank accounts Incidentals Incidentals

joint bank account joint bank account separate bank separate bank

accountaccount fixed fixed expensesexpenses flexible expensesflexible expenses

Change

Chapter oneChapter one

Green Book! Green Book! Page 3Page 3 Read as a group. Read as a group. WorksheetWorksheet

Write a summary after each main pointWrite a summary after each main point TermsTerms

Independent Living Independent Living 10/10/1110/10/11

Early Work: How much money can you Early Work: How much money can you save by cutting out Latte’s for a year? save by cutting out Latte’s for a year?

ScheduleSchedule Chapter oneChapter one Millionaire GameMillionaire Game Economic Way of thinkingEconomic Way of thinking

Target:Target: Understand our economic roles Understand our economic roles

The Millionaire Game The Millionaire Game Financial Fitness for Life Lesson 1Financial Fitness for Life Lesson 1

Groups of 2 or 3Groups of 2 or 3 Cards T F MillionaireCards T F Millionaire Must come to a consensus on all votingMust come to a consensus on all voting One person is designated to hold up all cardsOne person is designated to hold up all cards 5 Points for each correct answer5 Points for each correct answer Loss of 5 points for each incorrect answerLoss of 5 points for each incorrect answer May use the Millionaire card for only 5/15 May use the Millionaire card for only 5/15

questionsquestions Score as we goScore as we go Team with the most points earns 10 leadership Team with the most points earns 10 leadership

points, 2points, 2ndnd Place earns 5 points Place earns 5 points

The Millionaire GameThe Millionaire Game

1.1. Most Millionaires are college graduates. Most Millionaires are college graduates. 2.2. Most millionaires work fewer than 40 hours a weekMost millionaires work fewer than 40 hours a week3.3. More than half of all millionaires never received More than half of all millionaires never received

money from a trust fund or estatemoney from a trust fund or estate4.4. More millionaires have American Express Gold Cards More millionaires have American Express Gold Cards

than sears cards. than sears cards. 5.5. More millionaires drive Fords than CadillacsMore millionaires drive Fords than Cadillacs6.6. Most millionaires work in glamorous jobs, such as Most millionaires work in glamorous jobs, such as

sports, entertainment, or high tech.sports, entertainment, or high tech.

• 7.7. Most millionaires work for big Fortune 500 Most millionaires work for big Fortune 500 companies. companies.

8.8. Many poor people become millionaires by Many poor people become millionaires by winning the lotterywinning the lottery

9.9. College graduates earn about 65 percent College graduates earn about 65 percent more than high school graduates earn. more than high school graduates earn.

10.10. If an average 18 year old high school If an average 18 year old high school graduate spends as much as an average graduate spends as much as an average high school dropout until both are 67 years high school dropout until both are 67 years old, but the high school graduate invests the old, but the high school graduate invests the difference in his or her earnings at eight difference in his or her earnings at eight percent annual interest, the high school percent annual interest, the high school graduate would have $5,500,000.graduate would have $5,500,000.

11.11. Day traders usually beat the stock market and many Day traders usually beat the stock market and many of them become millionaires.of them become millionaires.

12.12. If you want to be a millionaire, avoid the risky stock If you want to be a millionaire, avoid the risky stock marketmarket

13.13. At age 18, you decide not to smoke and save $1.50 At age 18, you decide not to smoke and save $1.50 a day. You invest the $1.50 a day at 8% annual a day. You invest the $1.50 a day at 8% annual interest until you are 67. At age 67, your savings interest until you are 67. At age 67, your savings from not smoking are almost $300,000from not smoking are almost $300,000

14.14. If you save $2000 a year from age 22 to age 65 at If you save $2000 a year from age 22 to age 65 at 8% annual interest, your savings will be over 8% annual interest, your savings will be over $700,000 at age 65.$700,000 at age 65.

15.15. Single People are more often millionaires than Single People are more often millionaires than married people.married people.

October 11, 2011October 11, 2011

Early Work: What have you learned so far Early Work: What have you learned so far about being a Millionaire? about being a Millionaire?

ScheduleScheduleEconomic Way of ThinkingEconomic Way of Thinking

Cost of Spending and SavingCost of Spending and Saving

Target: Understand what it takes to plan Target: Understand what it takes to plan for a financial future.for a financial future.

Rules for Improving Your Rules for Improving Your Financial LifeFinancial Life

1.1. Get a good educationGet a good education

2.2. Work long, hard, and smartWork long, hard, and smart

3.3. Learn money-management skillsLearn money-management skills

4.4. Spend less than you could spendSpend less than you could spend

5.5. Save early and oftenSave early and often

6.6. Invest in common stocks for the long termInvest in common stocks for the long term

7.7. Gather information before making decisionsGather information before making decisions

A Mystery of two FamiliesA Mystery of two Families

Read the Story and the Handy Dandy Read the Story and the Handy Dandy GuideGuide

Answer the questions on the last pageAnswer the questions on the last page Discuss as a class. Discuss as a class.

The Economic Way of The Economic Way of Thinking (As a class)Thinking (As a class)

1.1. What is an opportunity cost? What is an opportunity cost? 2.2. Why is opportunity cost important when you Why is opportunity cost important when you

make a choice? make a choice? 3.3. Why do people want to be wealthy? Why do people want to be wealthy? 4.4. What difference does it make if the U.S. is What difference does it make if the U.S. is

viewed as a land of victims or a land of viewed as a land of victims or a land of opportunities? opportunities?

5.5. What is the incentive for saving? What is the incentive for saving? 6.6. Why are the Robinsons wealthier than the Why are the Robinsons wealthier than the

Meltons? Meltons?

•The Cost of Spending & The Cost of Spending & SavingSaving

Read the student letterRead the student letter1.1. Why do people save and invest? Why do people save and invest? 2.2. When is the best time to begin investing? When is the best time to begin investing? 3.3. Why do savings grow so quickly? Why do savings grow so quickly? 4.4. Why do saving and investing help the overall Why do saving and investing help the overall

economy? economy? 5.5. What is the relationship between investment What is the relationship between investment

risk and reward? risk and reward? 6.6. What does it mean to diversify investments? What does it mean to diversify investments?

10/12/1110/12/11Early Work: What is opportunity cost? Early Work: What is opportunity cost? ScheduleSchedule

Spending and SavingSpending and Saving Review “The Good Life” PosterReview “The Good Life” Poster

Target: Understand the importance of Saving Target: Understand the importance of Saving and Investingand Investing

Read 8.1 Read 8.1 The Opportunity Cost and Benefit of Spending The Opportunity Cost and Benefit of Spending and Savingand Saving

1.1. What are the benefit and the opportunity cost of What are the benefit and the opportunity cost of spending your income today? spending your income today?

2.2. What are the benefit and the opportunity cost of What are the benefit and the opportunity cost of saving some of your income? saving some of your income?

Read 8.2 Read 8.2 A Tale of Two SaversA Tale of Two Savers

1.1. Will Ana or Shawn have more money at the end of Will Ana or Shawn have more money at the end of his or her 65th Year (Raise Hands) his or her 65th Year (Raise Hands)

Examine the Table Examine the Table The growth of Ana’s and Shawn’s The growth of Ana’s and Shawn’s Savings. Savings.

Good Life PosterGood Life Poster

Words, pictures, drawings to represent Words, pictures, drawings to represent your good idea of THE GOOD LIFE your good idea of THE GOOD LIFE

10-15 items (3 points)10-15 items (3 points) NO White Showing (1 point)NO White Showing (1 point)

Worksheet: Front Back, All items (2 points Worksheet: Front Back, All items (2 points each side, 4 points total)each side, 4 points total)

October 13, 2011October 13, 2011

Early Work: What is the Rule of 72?Early Work: What is the Rule of 72?

ScheduleScheduleCreate “Good Life” PosterCreate “Good Life” PosterFill out worksheet chart and questions. Fill out worksheet chart and questions.

Target: Understand that living the good life does Target: Understand that living the good life does not always mean high cost items. not always mean high cost items.

Good Life PosterGood Life Poster

Words, pictures, drawings to represent Words, pictures, drawings to represent your good idea of THE GOOD LIFE your good idea of THE GOOD LIFE

10-15 items (3 points)10-15 items (3 points) NO White Showing (1 point)NO White Showing (1 point)

Worksheet: Front Back, All items (2 points Worksheet: Front Back, All items (2 points each side, 4 points total)each side, 4 points total)

Oct 14, 2011Oct 14, 2011

Early Work: What is the relationship Early Work: What is the relationship between risk and return? between risk and return?

ScheduleSchedule Finish saving and investingFinish saving and investing Rule of 72Rule of 72

Target: Understand the importance of Target: Understand the importance of investing early! investing early!

•The growth of Ana’s and The growth of Ana’s and Shawn’s Savings.Shawn’s Savings.

1.1. How much money had Ana put into savings by age How much money had Ana put into savings by age 65? 65?

2.2. How much money had Shawn put into Savings by How much money had Shawn put into Savings by age 65? age 65?

3.3. How much Savings (total wealth) did Ana have at the How much Savings (total wealth) did Ana have at the end of her 65th year? end of her 65th year?

4.4. How much Savings (total wealth) did Shawn have at How much Savings (total wealth) did Shawn have at the end of his 65th yearthe end of his 65th year

5.5. In money terms, what are the opportunity cost and In money terms, what are the opportunity cost and benefit for Ana? benefit for Ana?

6.6. In money terms, what are the opportunity In money terms, what are the opportunity cost and benefit for Shawn? cost and benefit for Shawn?

7.7. What is an important as the amount What is an important as the amount saved and amount of time? Why? saved and amount of time? Why?

8.8. What are the incentives for saving early?What are the incentives for saving early?9.9. What might be an opportunity cost for What might be an opportunity cost for

saving early? saving early? 10.10. What conclusions can you draw from this What conclusions can you draw from this

activity? activity? 11.11. Why did Ana have so much more money Why did Ana have so much more money

even though she saved less? even though she saved less?

Watch VideoWatch Video

The Rule of 72 for Compound InterestThe Rule of 72 for Compound Interest

Why it Pays to SaveWhy it Pays to Save

Read 8.3 Why it pays to save early and Read 8.3 Why it pays to save early and often.often.

Complete chart using rule of 72Complete chart using rule of 72 Answer Questions. Answer Questions.

the rule of 72the rule of 72

teens – lesson 12 - slide 12-H

How many years will it take to double my How many years will it take to double my money?money?

72 DIVIDED by INTEREST RATE 72 DIVIDED by INTEREST RATE

= = YEARS TO DOUBLE A YEARS TO DOUBLE A SUM OF MONEYSUM OF MONEY

At what interest rate will my money double in a At what interest rate will my money double in a set number of years?set number of years?

72 DIVIDED by YEARS TO DOUBLE72 DIVIDED by YEARS TO DOUBLE

== INTEREST RATE REQUIRED INTEREST RATE REQUIRED

Rule of 72Rule of 72

Tells you how long it takes your money to Tells you how long it takes your money to double in Valuedouble in Value

1.1. Divide 72 by an interest rate to Divide 72 by an interest rate to determine the number of years it will determine the number of years it will take to doubletake to double

2.2. You can figure out the interest rate you You can figure out the interest rate you need to earn to double your money. For need to earn to double your money. For example with 8 years to invest your example with 8 years to invest your money will double if you earn 9%. money will double if you earn 9%.

Exercise 8.3 AnswersExercise 8.3 AnswersRule of 72Rule of 72

Investment Investment Interest or rate Interest or rate of returnof return

Years to Years to double double

Passbook Passbook savingssavings

3%3% 24 years24 years

Money Money MarketsMarkets

6%6% 12 Years12 Years

U.S. Treasury U.S. Treasury BondBond

7%7% 10.2 Years10.2 Years

Stock MarketStock Market 12%12% 6 Years6 Years

October 18October 18

Early WorkEarly Work

ScheduleSchedule Investment options Investment options