1. MONEY & PERSONAL FINANCE
UNIT #4
MONEY
&
PERSONAL FINANCE

2. WHAT IS MONEY?????
Money is anything that serves as a medium of exchange, a measure of value and a store of value.
Functions of Money:
Medium of Exchange-
universally accepted as a payment for goods and services
2. Measure of Value-
expresses worth in terms that most people understand
3. Store of Value-
purchasing power can be saved until needed.

3. Characteristics of money:
Portable-
easily transferred from one person to another
2. Durable-
can be handled without breaking
3. Divisible-
divisible into smaller units so you can use only as much as needed.
4. Limited Availability-
availability must be limited so value does not decrease

4. Vocabulary
Cost of Attendance (COA): A student’s cost of attendance at a postsecondary institution includes: tuition and fees; room and board expanses while attending school; allowances for books and supplies; transportation; loan fees for federal student loans and other miscellaneous expanses.
Financial Aid:
Money to help pay for college
Scholarships:
Cash grant for academic promise 
Grant:
Cash given for need, rather than for academic record
Loan:
Cash that must be repaid after graduation
Work-study:
Job provided by the college to help earn part of expenses

5. Understanding Financial Aid and Scholarships
Free Application for Federal Student Aid
Guidance Office

6. Basic Investment Strategies
Risk-Return Relationship:
- What is your level of risk? Make decisions about your investments based on your comfort with risk.
2. Investment Objectives:
- Why are you investing? If it is for retirement maybe a 401K vs. saving for a vacation
3. Simplicity:
- Stick to investments that you can understand
4. Consistency
- Invest consistently over long periods of time.

7. Investment Options
CDs
Saving Bonds
Stocks

8. Investment Options
Mutual Funds
Savings Accounts

9. Inflation a rise in the general levels of prices
Inflation is defined as:
a rise in the general levels of prices
YOUR PURCHASING POWER GOES DOWN!!
Inflation is measured by:
price level – the relative magnitude of prices at one time
Then What is Deflation?
decrease in general price level (Great Depression)

10. Types of Inflation Demand-pull Inflation- Cost-push Inflation-
Excessive business or consumer demand
Cost-push Inflation-
Wage demands of labor push prices up
Stagflation-
High inflation coupled high unemployment

11. Causes of Inflation
Demand-Pull Theory: Excessive demand drives up prices
Federal Government deficit spending
Rising input costs (labor) drive up costs of products
Unexpected increase in non-labor inputs (oil)
Excessive monetary growth (money supply increases faster than Real GDP)

12. Effects of Inflation
Dollar buys less because purchasing power of dollar decreases as prices rise (dollar loses value)
Causes changes in spending habits
Take advantage of high price level
Ex: Buy a condo now to sell later
Who does inflation impact the most?
People on fixed income (retired)

13. Let’s review two basic economic ideas. 1
Let’s review two basic economic ideas! 1. What are the economic goals of a country? 2. What does the PPF graph below tell us about a country’s production possibility? 3. What goals are shown in this PPF model?

14. Gross Domestic Product (GDP) Why is it important to know a country’s GDP?
The total amount of all final goods & services produced within a country’s national border within a year.
United States 2012 GDP=
$15.70 Trillion
1. It is the primary indicators used to gauge the health of a country's economy.
2. It represents the total dollar value of all goods and services produced over a specific time period

15. Gross National Product (GNP)
The total value of income earned by residents of a country regardless of where the income came from.
Gross National Product (GNP)
United States 2012 GNP= $16.3 Trillion Growth rate= 1.3%

16. GDP or GNP? Which measurement is a better indicator of how a country is doing financially?
Because it is one of the key measures of a country’s “progress”

17. All visuals taken from Google images