1. Lesson 1:
Earning Potential

2. Objectives:
• Identify how career choice, education and/or training, job related-skills, and economic conditions affect earning potential.
• Define the terms human capital, opportunity cost, and productivity.

3. What is earning potential?
Earning potential is the top salary that you, as an individual, can possibly earn.
Discussion tips:
Have students guess before giving them the answer.

4. What factors can affect earning potential?
• Career choice
• Education and training
• Job-related skills
• Economic conditions
Discussion tips:
Have students share what types of situations affect them making money, before revealing bullet points.
Have students discuss how these particular factors affect earning potential.
Career Choice:
Is it a popular career?
Is it a lucrative career?
Education and training:
Do you have enough education/training for the career?
Can you be hired in the field without having a certain level of education?
Job-related skills:
Do you have the required skills for the job?
Can you function in the role without a specific set of skills?
Economic conditions:
Are companies hiring?
Is the job market flooded with candidates?
If the economy is doing well, how does that affect hiring and pay?
If the economy is doing poorly, how does that affect hiring and pay?

5. Additional Terms:
Human capital – the collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.
Opportunity cost – the money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative.
Discussion tips:
Explain and discuss each of these terms and how they relate to earning potential.
Productivity – the quality, state, or fact of being able to generate, create, enhance, or bring forth goods and services.

6. Lesson 2:
Types of Income

7. Objectives: Identify sources of income.
Identify various forms of income.
Determine how the average wage or salary for different jobs differs by the level of education, job skill, or years of experience.

8. Earned Income Earned income is any income generated by working.
Source of earned income:
Labor
Forms of income:
Discussion tips:
Discuss differences in forms of income, such as wage earners are paid overtime, while salary earners are not.
Commission earners may not get paid at all if working a “straight commission” job.
Discuss how education, training, and experience can affect the different forms of income.
Wage – hourly rate of pay
Salary – yearly rate of pay
Commission – percentage of sales

9. Earned Income
These are three employees of the same company. What types of income are they earning?
Discussion tips:
Have class say aloud, gather in groups, or write down answers.
Have students explain their answers.
Mark:
10% of every sale
Betty:
Regular pay - $10/hr
Overtime - $15/hr
Rita:
$70,000 - annually
Commission
Salary
Wage

10. Portfolio Income
Portfolio income is any income generated by selling an investment at a higher price than you paid for it.
Source of portfolio income:
Investments
Forms of income:
Discussion tips:
Ask students what they know about investing money.
Discuss real estate investments, such as “house flipping”.
Stock Investments
Real Estate
Other Assets

11. Portfolio Income Are the following examples of portfolio income?
Victor’s granny, Wilma, is too elderly to drive. She has asked Victor to help her sell her 1960 Buick Electra Because the car is in excellent condition and is an antique, it is worth $45,000. Wilma paid $15,000.
Yes
Example 2:
Mathis purchased an apartment building, and his mortgage is $15,000 a month. Mathis has tenants who pay $20,000 a month. No
Example 3:
Cecilia purchased stock to build up her investment portfolio. No
Discussion tips:
Have class speak aloud, work in groups, or write down answers.
Discuss answers.

12. Passive Income
Passive income is money you earn from assets you have purchased or created. Passive income is generally recurring income.
Source of passive income:
Assets purchased or created
Forms of income:
Discussion tips:
Discuss what is considered intellectual property.
Rental income
Business income
Creating and selling intellectual property

13. Passive Income Are the following examples of passive income?
Ariel is a pop star and singer/songwriter. Ariel’s latest project has gone platinum. She will receive $.45 for every song that is sold.
Yes
Example 2:
Mathis purchased an apartment building, and his mortgage is $15,000 a month. Mathis has tenants who pay $20,000 a month.
Yes
Discussion tips:
Have students answer aloud, in groups, or on paper.
Discuss answers.

14. Summary: Identify sources of income. Identify various forms of income.
Determine how the average wage or salary for different jobs differs by the level of education, job skill, or years of experience.

15. Module – Managing Money
Visit my website. Under daily assignments, look at the description for class. Click the link in the description.
Click on PERSONAL FINANCIAL LITERACY
Enter the enrollment code (3BUBE) and follow the instructions on the screen.
Once you have logged in, click on Personal Financial Literacy – After clicking on “Earning Potential,” You should complete the Pre-Test.