Introduction to Financial Literacy 1.1

Objectives By the end of this lesson, you will be able to: Define “Financial Literacy” Relate financial literacy to your own life situation Define “Money, Medium of Exchange, Barter System, and Economy” Discuss the current economic state

“Financial…Literacy?!?” Who has a job? Who will have a job at some point? What do you need money for? Is your money supply unlimited?

Why Study Financial Literacy? Do people ever run out of money? What happens then? What is a recession? How does it affect you? How do recessions start?

What Do You Mean Financial Literacy? Well, what does it mean to be “literate”? So, financial literacy, is simply… “having the understanding of how money works”

If I Gave You All One of These…. What would you do with it?

$$$ Money $$$ What is money? What do I mean when I say money is “medium of exchange”? What do I mean when I say money is a “store of value”?

Money is… something used as a medium of exchange. The BEST money fulfills 5 characteristics. 1.) Portability – Has to be easy to move around 2.) Divisibility – Has to be easy to break into smaller amounts 3.) Durability – Has to be physically strong and hold its value 4.) Recognazability – Has to be easily identified by its users 5.) Hard to Forge – Must be difficult to copy illegally

What Was the First Thing Used As Money? Take a guess….

Other, Fun Money Facts Gold coins were used dating back to 600 BCE China invented the first paper money in 806 CE Other items have been used as money:

Money as 2 Categories Commodity Money – something that has inherent value. Gold, Silver, Jewelry, Food, Bullets, Tobacco, Currency backed by Gold Fiat Money – Something that has no other value then being money US Dollars

Why the Barter System Stinks? Barter System – trading g/s for other g/s? Remember the Barter Activity? Problems Include Relative value of g/s Availability of g/s Transport of g/s Double Coincidence of Wants

The Economy What do I mean by “the economy”? Goods and services? Cash flow? GDP, or Gross Domestic Product? What are people who study the economy called?

You Be An Economist Do research. Open up your computer and find articles, facts, and numbers to answer these four questions in a Google Doc. What can you tell me about the economy right now? Why were we in a recession from ? How does a recession end? Was this the only recession in history? When was the last one? Is there a pattern?

Homework: Spending Log Keep track of your spending and income every day for two weeks. Log everything you make (or take), and everything you buy (or otherwise lose). Organize this list by day. At the end of the week, total up your net spending (either positive, or negative)