Per$onal Financial Literacy 101 7th Grade Social Studies Harold E. Winkler Middle School

What is Financial Literacy? Financial Literacy – the ability to understand how money works in the world. How someone makes it, manages it, and invests it. Financial Literacy leads to better decisions about money and more money in the long-run.

What is a Budget? Budgeting Money Budget – a written record of income and expenses in a specific time period. Budgets usually run on a monthly basis. Income – the money you bring home from your job, chores, or other form of payment. Expenses – the money you spend on goods and services. Expenses are divided into 2 categories: Fixed Expenses – expenses that cost the same amount every month. Examples = mortgage payment, car insurance, cable bill, etc. Variable Expenses – expenses that change every month. Examples = entertainment, dining out, gasoline, etc.

Video 1 – Creating a Budget Video 2 – Sticking to a Budget When watching each video, write down one “take away” or something that stuck with you. We will share them as a class. Video 1 – Creating a Budget Video 2 – Sticking to a Budget

Savings vs. Checking Account? Bank Accounts Savings Account – a safe place to put your money to gain interest. Savings accounts can be opened with a parent signature and $100.00. THIS ONE IS FOR YOU NOW!! Checking Account – an account where you can access your money quickly. A checking account is usually connected to a debit card that can be swiped for every day purchases.

We will share them as a class. Video 2 – Tips for Saving on Every Day Purchases Video 1 – How to Save for Big Purchases When watching each video, write down one “take away” or something that stuck with you. We will share them as a class.

Suze Orman – The Financial Success Guru Needs v. Wants Suze Orman – The Financial Success Guru Can I Afford It?? – callers ask if they have enough money to buy a big purchase. Let’s take a look at a 11 year old caller…will he be approved? Video 1 – 11 Year old Calls In Video 2 – Will He be Approved? Video 3 – The Year of Denied!

Credit v. Debit Cards Credit Cards: Debit Cards Used as a form of “pay later” payment option. Benefits: Helps build credit history. Builds financial management skills. Provides emergency protection. Makes big purchases more convenient. Debit Cards Used as a form of “pay now” payment option. Benefits: Convenient way to pay for “every day purchases. No cash needed. Can not spend more than you have. Credit v. Debit Cards

CREDIT CARD TIPS Limit yourself to one card. Make your payments on time, and try to pay more than the minimum amount. Begin with and keep a low credit limit — one you can easily pay off (try $250 or $500). Know your credit limit and NEVER go over. If you can eat it, wear it, or drink it, don’t charge it! Think before you charge. Can I pay this off next month? Slide 22: Presenter: Finally, here are some important credit card tips you might want to consider: (click and read the each bullet point as it appears)

HOW LONG WOULD IT TAKE TO PAY OFF IF…? Your credit card balance is $2,500. You pay the $50 minimum monthly payment each month. The interest rate is 20%. You don’t charge anything else to this card. Slide 17: Presenter: (click and read each bullet point as it appears)

109 months or 9 Years + 1 month! (yes, that’s right) Slide 18: Presenter: (click and read text box) This is an illustration of the power of compounding being used against you.

What’s a Credit Score? Credit Score – a number assigned to a person that indicates to lenders their ability to repay a loan. Why is your credit score important?: Shows banks and other lenders of money that you can be trusted to pay your loan back. Easier to get loans for college, cars, and homes. Lower interest rates on your credit cards and loans. Employers also check credit scores of potential employees before hiring. What is a “good” credit score?: 700 or above is considered a good credit score.

Click for Credit Score Explained

Student Loans & Other Loans: - a loan taken out by a student to pay for educational expenses such as college tuition, books and materials, and college housing. Mortgage: a loan to finance the purchase of a home. can be 15 or 30 years long. has a fixed interest rate.

Student Loan Repayments * Interest rate of 5.6%, over a 10 year repayment period LOAN AMOUNT: MONTHLY PAYMENT: INTEREST PAID: TOTAL PAYMENTS: $10,000 $110.68 $3,283 $13,282 $15,000 $163.53 $4,624 $19,624 $19,000 $207.14 $5,857 $24,857 $27,000 $294.36 $8,323 $35,323 $30,000 $327.07 $9,247 $39,247 $35,000 $381.58 $10,789 $45,789 $40,000 $436.09 $12,330 $52,330 Slide 27: Presenter: Here is a “sample” Stafford Loan Repayment Chart so that you can see approximately what your monthly payment amount would be based on various loan amounts. In addition, we have provided the total interest paid on the loan as well as the total of all payments paid over the repayment period. (click and read repayment table figures)

A LITTLE SAVINGS ADD UP… ITEM: ANNUAL COST: ALTERNATIVE: One Cup of coffee daily at a Coffee shop ($3/day) $1,095 Gourmet coffee brewed at home $176 One CD weekly ($12.99/wk) $ 675 Download individual songs you like ($1) $375 Pizza delivery once a week ($10/wk) $ 520 Gourmet frozen pizza at the grocery ($5) $260 Eating lunch out 5 days a week ($5/day) $1,250 Bring your lunch to work 5 days a week ($1.50 per lunch) Slide 5: Presenter: (text box will appear automatically when slide transitions)When looking at your expenses, there are thousands of little ways you can reduce spending without much compromise as you can see from this slide. Total Annual Savings = $2,354!