Mike Raymer Program Manager I nvestor E ducation Financial Fitness for Life and

Mike RaymerProgram Manager

Investor EducationFinancial Fitness for Life

and

Georgia Council on Economic Education w w w . g c e e . o r g

The Mission

To help teachers teach those students, K-12, in the public and independent schools of

Georgia


The Vision

• Productive Workers• Informed Consumers• Involved Citizens• Prudent Savers• Wise Investors• Sound lifelong decision makers in a

globally interdependent world

Students leaving school prepared for their roles as:


The Problem of Economic and Financial Literacy…


Saving is a very fine thing. Especially when your parents do it for you.

--Sir Winston Churchill


About 8 of 10 Americans are comfortable with the level of financial planning they are currently doing.

Source: Federal Reserve Bank, St. Louis


34% have not begun to prepare for 34% have not begun to prepare for retirement. retirement.

23% save nothing for long term goals.23% save nothing for long term goals.

25% do not know how much they are 25% do not know how much they are saving.saving.


On average, Americans expect to On average, Americans expect to retire at age 61 and live to 83.retire at age 61 and live to 83.


Overall levels of economic Overall levels of economic understanding are low. understanding are low. (Average score of 23.85 out of 40 in recent national tests.)(Average score of 23.85 out of 40 in recent national tests.)

Many young people and their teachers Many young people and their teachers hold stereotypes about the wealthy.hold stereotypes about the wealthy.


(Failed to plan for his financial future)



Personal Bankruptcies

Bankruptcy Rates, 2009

Georgia Bankruptcy Rates by County, 2009

Personal Bankruptcy Filings, 2009

State Rate (# of households in state per bankruptcy)

% Change (over 2008)

1 – Nevada 35.2 61%

2 – Tennessee 48.5 15%

3 – Georgia 50.3 22%

4 – Alabama 56.7 20%

5 – Indiana 57.2 22%

6 – Utah 62.0 57%

7 – Michigan 62.5 26%

8 – California 66.0 59%

9 – Ohio 70.5 22%

10 – Illinois 71.9 32%



Foreclosure Rates are Way Up

Georgia is 6th in the Nation

National Foreclosure Rates, 2009

Mortgage Delinquency Rate

Mortgage Delinquency Rates



Consumer Debt



Credit Card Use



Credit Card Use in Atlanta

• Average Atlanta – 3 open credit cards (down from 4 in 2007), but total balance on cards is higher

• Across 20 metro areas – – Atlanta is #1 with avg balance at $6,753– In 2007 it was $7,114– Credit Scores in Georgia below the

national average


• Credit card companies have been marketing aggressively to young people.

• 11.1 % of teens have a credit card.(JA, 2005)

High School Students and Credit Cards


• College students report having an average of 4.6 credit cards. Half have four or more.

• Seniors graduate with more than $4,100 in credit card debt, up from $2,900 in 2004.

• Only 17% said they regularly paid off all the cards each month.

• The remaining 82% carried balances and incurred finance charges each month.

• 84% said they need more education on financial management topics.

College Students and Credit Cards (Sallie Mae, 2009)


Unbanked Households (Federal Reserve Bank of Chicago)

• About 10 million households are unbanked.

• Over 57% of unbanked households are minority households.


What Does It Mean to be “Unbanked?”


Where Do the Unbanked Go For Financial Services?


Unemployment

http://abcnews.go.com/Business/fullpage?id=9549471


So What Can We Do About All of This?

Option #1


Option #2


Financial Fitness for LifeTable of Contents

Theme 1Theme 1 Why There is No Why There is No

Such Thing as a Such Thing as a Free Lunch?Free Lunch?

1. How to Really Be a 1. How to Really Be a MillionaireMillionaire

2. An Economic Way 2. An Economic Way of Thinkingof Thinking

3. Decision-Making3. Decision-Making

Theme 2Theme 2 Why Education Pays Off:Why Education Pays Off: Learn SomethingLearn Something4. Job Application Process4. Job Application Process5. Making a Job5. Making a Job6. Why Some Jobs Pay 6. Why Some Jobs Pay More than OthersMore than Others7. Uncle Sam Takes a Bite7. Uncle Sam Takes a Bite



Theme 3Theme 3 Getting to the End of the Getting to the End of the

RainbowRainbow8. What’s the Cost of 8. What’s the Cost of

Spending and Saving?*Spending and Saving?*9. There is No Free Lunch in 9. There is No Free Lunch in

InvestingInvesting10. Investment Bingo10. Investment Bingo



Theme 4 Spending and Saving are

Serious Business11. What is Credit?12. Making Credit Choices13. Applying for Credit14. All About Interest15. Shopping for a Credit

Card

16. Shopping for a 16. Shopping for a MortgageMortgage17. Shopping for an 17. Shopping for an Auto LoanAuto Loan18. Consumer 18. Consumer Credit ProtectionCredit Protection19. Scams and 19. Scams and SchemesSchemes



Theme 5 Get a Plan: Get a Grip

on Life20. Managing Your

Money21. Banking Basics22. The Good News

About Insurance


Lesson Components

1. Fitness Focus Lesson Description Objectives Time Required

2. Equipment Visuals Student Exercises

3. Workout3. Workout Warm Up (Purpose)Warm Up (Purpose) Exercise (Instruction)Exercise (Instruction) Cool Down (Closure)Cool Down (Closure)

4. Parent 4. Parent ConnectionConnection


How to Really Be a Millionaire

(lesson 1)


The Millionaire Game

1. Most millionaires are college graduates. T2. A majority of millionaires work fewer than

40 hours a week. F 3. More than half of all millionaires never

received money from a trust fund or estate. T

4. More millionaires have American Express Gold Cards than Sears credit cards. F

5. More millionaires drive Fords than Cadillacs. T


The Millionaire Game6. Most millionaires work in glamorous jobs such as

sports, entertainment, or high tech. F7. Most millionaires work for big Fortune 500

companies. F8. Many poor people become millionaires by

winning the lottery. F


The Millionaire Game

9. College graduates earn about 65% more than high school graduates. T

10. If an average 18-year-old high school graduate spends as much …his or her earnings at 8% annual interest, the high school graduate would have $5,500,000. T

11. Day traders usually beat the stock market and many become millionaires. F


Rules for Improving Your Financial Life

• Get a good education

• Work long, hard, and smart

• Learn money-management skills

• Live below your means

• Buy a home (you can afford)

•Save early and oftenSave early and often•Invest in commonInvest in common stocks for thestocks for the long term long term •Gather information Gather information before making before making decisionsdecisions•Get married and stayGet married and stay marriedmarried



Begins- January 31, 2011

Ends- April 8, 2011


The Basics

Stock-An ownership share, or shares of ownership, in a corporation.


Can You Buy Stock in

or


Key Terms

Common Stock A security that represents ownership

in a corporation. Common stockholders are on the bottom of the priority ladder for ownership structure.


Preferred Stock A class of ownership in a corporation that

has a higher claim on the assets and earnings than common stock.

Preferred stock generally has a dividend

that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.


Buying on the Margin Borrowed money that is used to

purchase securities. This practice is referred to as "buying on margin".


The Different Markets

New York Stock Exchange The oldest stock exchange in the

United States, founded in 1792 and stocks are still traded on the floor. Traditionally for large corporations with large volumes of shares.


NASDAQ An electronic marketplace enabling

buyers and sellers to get together via computer to trade stocks. Traditionally high-tech firms that are very active. Created in 1971.


American Stock Exchange (AMEX)

Located in New York, handles about 10% of all securities exchange. Has mostly small-cap stocks, exchange-traded funds and derivatives.


Teaching “Stuff”

• $7.00 per team fee• No fee if you are a Title 1 school • No fee for any school in Atlanta City,

Decatur City, Fulton County, DeKalb County

• Teams of 3-5 students (suggested)


National Rules

• $100,000 to Invest for 10 Weeks– NYSE– AMEX– NASDAQ

• Must Purchase Minimum of 100 Shares• Minimum Share Price of $5• 4 pm Closing Price (not real-time)


National Rules

Hardest thing to do?Get teams to spend the $100,000!• 2% Interest Earned on Unspent Cash• 2% Transaction Fee (all transactions)• 7% Interest Charged on Margin Loans


Georgia 3x3x3 Rules• Must purchase a stock before end of

third week• Must purchase at least three stocks• Must hold three stocks for 3 weeks



• Grading• Rankings released once a week• Do not liquidate portfolio on the last day• Awards by region and state – luncheon for all

winners in May



Student- “What stock should I buy?”

Me- “If I knew the answer to that I would not be in this classroom with you. I would be living here and paying someone to count my money.”



How to Win• Select stock kids are

familiar with; NIKE• Buy at $100/share• 1000 shares with

$100,000• Price rises to

$102/share• Account increases

by $2,000

• Select stock with a lot of volatility; XYZ

• Buy at $10/share• 10,000 shares with

with 100,000• Price rises to

$12/share• Account increases

by $20,000


SMG

• Buy ↑ Sell [Long position]

• Short Sell ↓ Short Cover[Short position]

Short Selling



Your friend loans you this-


You immediately turn around and sell the thing for $200.00.

(the $200.00 goes in your pocket)


What do you owe your friend at this point?



Next week you see that iPhone’s are on sale at the

Electronica Barn for $150.00


You buy your friend a new iPhone for $150.00. She gets her phone back and you just

made $50.00!


Your broker loans you this-


You immediately turn around and sell it for $50.00.

(the $50.00 goes in your pocket)


What do you owe your broker at this point?



You expect the CDC to announce that Coke causes cancer…

• bacon• car battery

…so you wait.


Instead, the CDC announces that Coke cures cancer!

What happens to the price of Coke stock?


The Risk of Short Selling?

If the price of the stock goes up before you return the stock

to your broker, you will loose money.


Questions?



• Teams of 3-5 (recommend friends)• Buying on the margin• Interest on money before the game starts• Do not liquidate portfolio on the last day• Awards by region and state – luncheon

for all winners in May


Questions?


How to Play-www.gcee.orgwww.gcee.org



SIA_80_A26

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www.finance.google.com


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Mike Raymer Program Manager I nvestor E ducation Financial Fitness for Life and