Personal Management Merit Badge $ Lots of effort, but totally worth it!

Personal Management Merit Badge

$

Lots of effort , but totally worth it!

HANDOUT

• Fill in the blanks.• OR use your own pages.• You may use the words I’ll suggest,

or -• You may use other words you like

better!Brainless

attendance

HANDOUT

• Boxed portions: To be reviewed with your Merit Badge Counselor.

To help you in the future: Keep it! Read again in 5 yrs!

• If I go too fast, stop me.

• Bring this handout back next time:

2nd ____________

• Name ______________________________________• Date of merit badge classes: 1st ____________

*

• AFTER you’ve completed EVERYTHING (ready to discuss)!

p.2, Requirement #1: Do the following:Choose an item that your family might want to purchase that is considered a major expense.

(b) Write a plan that tells how your family would save money for it.

• We can save money by:__________________________________________________________

Item chosen: _______________Approximate cost: ___________

HDTV

Mostly _______ earnings, but each of us could contribute.

$1,000

p.2, Requirement #1 (continued):

(b)1. Discuss the plan with your merit badge counselor.*

*When are you going to discuss this with your merit badge counselor?

• (FHE?)

2. Discuss the plan with your family.

**When are you going to do this?

3. Discuss how other family needs must be considered in this plan.**

p.2, Requirement #1: Do the following:

(c). Develop a written shopping strategy for the purchase:

1. Determine the quality of the item (using consumer publications or rating systems)._______________________________________Google, Yahoo, EBay, Consumer Reports



2. Comparison shop for the item.Find out where you can buy the item for the best price.

Call around

Who you called: What you learned:

____________ ________________

____________ ________________

Gwido’s Pawn Shop Don’t go there!



2. Comparison shop for the item.Find out where you can buy the item for the best price.

Study ads

Where you looked: What you learned:

________________ ____________________

________________ ____________________

Newspaper

www.ebay.com

Sears had a great sale

Including shipping…


• (1)(c)2

Did you find a great sale or a discount coupon? ________ ____________________________________________

Can you buy the item used? ___________________

Should you wait for a sale? ___________________

Maybe, but________

I could, but already found…

Yes

Consider alternatives:

p.3 Prepare a budget reflecting:

Track your actual.

Your expected income (allowance, gifts, wages), Your expected expenses & savings (Outgo).

1st Week INCOME

Expected Actual

Allowance ______ ______

Job ______ ______

Gifts ______ ______

_________ ______ ______

_________ ______ ______

_________ ______ ______

Total in ______ ______

EXPENSES & SAVINGS

Expected Actual

Donations ______ ______

Savings ______ ______

Savings (for… ______ ______

Save to Buy ______ ______

Junk food ______ ______

_________ ______ ______

Total Out ______ ______

INCOME

Expected Actual

Allowance _____

Job _____

Gifts _____

_________ ______ _____

_________ ______ _____

_________ ______ _____

Total in _____

OUTGO

Expected Actual

Donations ______

Savings ______

Savings (for… ______

Save to buy ______

Junk food ______ ______

_________ ______ ______

Total Out ______

$10

$10

$10

$30

$ 3

$ 3

$ 3

$ 3

$30

$422(b). Compare expected income with expected expenses. determine steps to balance:

working more

EXAMPLE

I can increase income by ___________

2. If outgo exceeds income, or decrease expenses by_______________buying less junk

INCOME

Expected Actual

Allowance _____

Job _____

Gifts _____

_________ ______ _____

_________ ______ _____

_________ ______ _____

Total in _____

OUTGO

Expected Actual

Donations ______

Savings ______


Save to buy ______

Junk food ______ ______

_________ ______ ______

Total Out ______

$10

$10

$10

$30

$ 3

$ 3

$ 3

$ 3

$122(b). Compare expected income with expected expenses.

2. If expected income exceeds expected outgo, state how you would use the excess money: I could have some for __________________

Another EXAMPLE

better stuff later.

INCOME

Expected Actual

Allowance _____

Job _____

Gifts _____

_________ ______ _____

_________ ______ _____

_________ ______ _____

Total in _____

OUTGO

Expected Actual

Donations ______

Savings ______


Save to buy ______

Junk food ______ ______

______ ______

Total Out ______

$10

$10

$10

$30

$ 3

$ 3

$ 3

$ 3

$12

$10

$20

$20

$50

$ 5

$ 5

$ 5

$ 5

$20

$40

• What actually happened?

Presents

• This guy should have

EXAMPLE

$10 more now than 1 week ago.

If you finish one week of expected and actual by next class...

(How about putting it on your pillow?)

p.3-7, Req 2a Track your actual income, expenses, and savings for 13 consecutive weeks.

• Income• Source Actual• ___________ _______• ___________ _______• ___________ _______• ___________ _______• ___________ _______• ___________ _______• Total _______

• Expenses• Where Actual• ___________ _______• ___________ _______• ___________ _______• ___________ _______• ___________ _______• ___________ _______• Total _______

• How are you going to remember to do this each day?

• Share this with your merit badge counselor.

p.8 Req. #3 Discuss with your merit badge counselor Five of the following concepts:

a. The emotions you feel when you receive money:

b. How the amount of money you have with you affects your spending habits:

*

If I have lots of money, I tend to spend ______

If I’d stolen the money, I’d feel _____

When I honorably earn money, I feel ______

more.

If I don’t have my money, it is ______ to spend. harderUnless I have a credit card, then it is still easy to spend money I don’t have.

Good

Bad!

I’m usually less __________ about it.

c. Your thoughts when you buy something new:

Your thoughts about the same item 3 months later:

I usually feel ___________________

excited

happy

excited

happy

(c) Explain the concept of:

buyers remorse

Often after buying something people feel _______ sorrow (remorse)

Especially if they ________ $, when it is time to make payments, they feel sorry or have _______ _______.

borrowed

and wish they could undo the _________.purchase

buyer’s remorse

p.8 Req. #3 Discuss with your merit badge counselor Five of the following concepts:

3d. How hunger affects you when shopping for food items:

Did the item work as well as advertised? ___ _______

If I’m hungry, I tend to buy .

3e. Your experience of buying an item after seeing or hearing advertisements for it.

Not always.

Once in awhile it is actually _____ than I expected.Often, the ad makes it sound _____ than it actually is.better

better

more

then, most of it gets ___________________

then into the ___________

3f. Your understanding of what happens when you put money into a savings account:

They pay me _______ for the use of my money.

They can afford to because they charge the borrowers interest at a ______ rate than the rate they pay me.

interest

higher

It goes into the ______________, teller’s drawer

bank’s safe

loaned out or invested or into the ___________bank’s bank

Charitable Giving

3g. Explain its purpose and your thoughts about it:

I think it is a _______ idea to give to a charity or church.

Good charities use money to help the ____ and _____, build buildings for __________ and other __________ purposes.

poor sickworship worthwhile

I can save _____ of my earnings for more important things I’ll need in the future.

I can use my money for ____ worthwhile purposes.

3h. What you can do to better manage your money:

I can use ____ of it for junk.

more

less

more

• usually means: ___ risk way to accumulate money.

• “Saving”

p. 9, Requirement #4. Explain the following to your mb counselor:4a. The difference between saving and investing, including reasons for using one over the other.

low-

*

• My father wanted me to save ever penny I got, I didn’t like that.

Save $100 each month at 5%

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000

Savings $1200 Interest Earned $30

1styear


$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000


5thyear


$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000


10thyear


$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000

Savings $18000 Interest Earned$8730

15thyear

Now earning > $110+ each Now earning > $110+ each monthmonth

p. 9, req 4a

Recommended Savings:

• Save _____% in an Emergency Fund.

Try to never, ever spend this money!

10

• Save enough for your “_____ ______” expenses.

Stuff you know you’ll be spending money on once a year!

for sure

• Save whatever you can just to _____ ______ .buy stuff

Savings Goal:

0%1%2%3%4%5%6%7%8%9%

10%

Emergency For Sure Buy Stuff

p. 9, Requirement #4. Explain the following to your Merit Badge Counselor:4a. The difference between saving and investing, including reasons for using one over the other.

Stocks & Bonds

• “Investing” usually means ______ -risk with a hope of a ______ return.

higherhigher

• Reasons for saving rather than investing: People who save money in a bank or credit union are much ____likely to lose it. And more likely to be able to get it when they ______ ___

p.9, Requirement 4a. Explain the following to your merit badge counselor.

• Reasons for saving: People typically save money for future needs including ____________.emergencies

less

• Banks and credit unions are usually very careful with our $, and our savings are insured by agencies of the U.S. Government: _____ & _______FDIC NCUA

want it

• Reasons for investing rather than saving: Although the risk of loss is higher, and some investments require lots more ______, some investments earn ___ _____ money.

p.9, Requirement 4a. Explain the following to your merit badge counselor.

• Reasons for investing: People invest in hopes of earning __________.more money

lots more

Stocks & Bonds

work

p.9, Requirement 4b. Explain the following to your merit badge counselor.

4b. Explain the concepts of return on investment and risk.

• Return on investment refers to the amount you receive __ _____ of the amount you invested.

in excess

• Risk is a measure of the possibility of suffering harm or ____.loss

0

20

40

60

80

100

120

140

at 5% at 10% at 25%

ReturnInvest

0

20

40

60

80

100

120

at 5% at 10% at 25%

ReturnInvest

• Why would anybody choose 5% when they invest at 25%?

• The greater the rate, the higher the ____.risk

• or: The greater the risk, the higher possible _______ and possible _______.return loss

expected

actual

0

500

1000

1500

2000

2500

3000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

p. 9, Requirement #4c Explain the concepts of simple interest and compound interest.Suppose you bury $1,000, and dig it up 20 years from now

• Instead, suppose you put it in the bank and earn 5% for 20 years

• PRINCIPAL

0

500

1000

1500

2000

2500

3000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

p. 9, Requirement #4c Explain the concepts of simple interest and compound interest.

Simple interest: Interest paid only on the ________ balance.principal

0

500

1000

1500

2000

2500

3000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

p. 9, Requirement #4c Explain the concepts of simple interest and compound interest.

Now, suppose you have them add your interest to your principal balance.

interest.Compound interest: Interest paid on both the principal and previously paid _______

Principal

Compound

Interest

p. 9, Req. #4 Explain how these (simple interest & compound interest) affect the results of your investment exercise (p.12).

If I save or invest $1000 and I spend all the earnings as I get it, I do not get the advantage of _____________.

If I have my earnings added to the investment, I earn interest not only on the ________

but also on the ______ _________

compounding

principal

0

500

1000

1500

2000

2500

3000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

prior earningsAnd, I get compound interest.

and help him decide whether to ___, ___, ____, ____, or _____ a stock.

p. 10, Req. #5 Select 5 publicly traded stocks from the business section of the newspaper.

a. Explain to your merit badge counselor the importance of the following information for each stock:

Current price:

Is important to know how _____ an investor can buy,

much

The current price may be obtained ______, from a ____ ______, or estimated from _________.stock broker

buy sell tradehold avoid

newspaperon-line

p. 10, Req. #5 Explain the importance of:

b. How much the price changed from the previous day:

If it went down a lot, something might be seriously ______ with the company.wrong

It is important to see if the price changed, and how _____, and whether it went __ or ____.much up down

p. 10, Req. #5 Explain the importance of:

c. The 52-week high and the 52-week low prices:

If it went down a lot, something might be seriously ______ with the company, or with the stock market __ _______.

wrong

It is important to see if the price has been about the same, or ______, or _____ than it is now.higher lower

It might be a good time to ___.

But it might be a good time to _____ __.

buy

avoid it

• Knowing this is enough to realize you need to know __ ___ ______!

in general

a lot more

p. 10, Req. # 5 Obtain the business section of your newspaper and obtain the following for 5 stocks:

Date of Newspaper: ________

Name1st stock Close Price Net Change 52-wk high

“Name” “Last” “Chg” “1yrhi”

______________ _________ _________ ___________

Explain: The importance for this stock:

Current price (est: _______) __________________________

Change from previous day: __________________________

The 52-week high: __________________________

9/25/04

DeltaAir 3.26 - .70 15.54

3.00 Low enough to buy a bunchLost 70¢ per share: dangerLost $12.28 p/share: danger

• Usually buy 100 shares at a time.

Should I buy?

• (on 8/28/06: 68¢, then down to $0)

p. 10, Req. # 5 Obtain the business section of your newspaper and obtain the following for 5 stocks:

(I’ve already given you 1)

Date of stock quote: ________

Name 2nd stockClose Price Net Change 52-wk high

“Name” “Last” “Chg” “1yrhi”

______________ _________ _________ ___________

Explain: The importance for this stock:

Current price (est: _______) __________________________

Change from previous day: __________________________

The 52-week high: __________________________

• SATURDAY

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Personal Management Merit Badge $ Lots of effort, but totally worth it!