Presentation on theme: "Financial Literacy for High School Students. Project Overview What do you spend your money on? Future Budget Scenario Checking Account vs. Savings Account."— Presentation transcript:
Project Overview What do you spend your money on? Future Budget Scenario Checking Account vs. Savings Account Credit Cards and Credit Scores “Who Wants to be a Millionaire?” Careers in Accounting and Finance
What do you spend your money on? First Step: Think about what you currently spend money on.. o Food? o Movies? o Clothing? o Transportation & Gasoline? o Entertainment? Wait… How do you pay for those expenses? Traveling through time: What additional expenses will you have to pay when you are an adult?
Future Budget Scenario Average Starting Salaries: o High School Graduate: $28,000 yearly (Monthly = $2,333) (After Tax = $1,820) o Two-Year Degree (Some College): $30,000 yearly (Monthly = $2500) (After Tax = $1,950) o Bachelor’s Degree (College) or More: $45,500 yearly (Monthly = $3,790) (After Tax = $2,956) o More expenses when you are grown-up!
Guess how much each expense will cost! How much should you spend (dollar amount) per month on each of these categories? o Savings? ____ o Housing? ____ o Food? ____ o Clothing? ____ o Transportation? ____ o Entertainment? ____
Actual Amount for Expenses by Salaries High School Graduate: $1,820 Two-Year Degree: $1,950 Bachelor’s Degree: $2,956 Savings (5%)$91.00$97.50$147.80 Housing (27%)$491.40$526.50$798.12 Food (11%)$200.20$214.50$325.16 Clothing (4%)$72.80$78.00$118.24 Transportation(11 %) $200.20$214.50$325.16 Entertainment (7%) $127.40$136.50$206.92 Total Expenses$1,183.00$1,267.50$1,921.40
How much money would you have left? What other expenses will you have? o Utilities (Gas, Water, A/C) o Medical o Insurance o School o Vacations o Invest? High School Graduate: Two-Year Degree: Bachelor’s Degree: After-Tax Income:$1,820.00$1,950.00$2,956.00 Less: Expenses(1,813.00)(1267.50)(1,921.40) Money Left$17.00$682.50$1,034.60
Checking vs. Savings Accounts Checking Account Daily Use Few or no restrictions on number of withdrawals Debit Card Savings Account Saving Purposes – Infrequent Use Limited number of withdrawals per month Pays higher interest rate than checking account
What about Credit Cards? What is a credit card? o Pay with Credit o Use for expensive purchases Pay Monthly Bill o Minimum Amount vs. Pay-in-Full Dangers of Credit Cards
Credit Scores Similar to a Report Card o Generally, scores range from 300-800 Credit monitored by an Agency o Grades are monitored by school, teachers, and parents The Importance of a Credit Score o Cars, homes, loans, job applications, etc. Bad Credit = Consequences
Who Wants to be a Millionaire? Think back to the budgeting scenario.. If you took $1,000 and invested it, what would happen? If you waited for 50 years, you could be a millionaire!!!! (Or at very least a hundred-thousand-aire!)) How??? Compounding Interest and Smart Investing! o What is compounding interest? Return Rates o Historical Average Return on the Stock Market = 11% o Aggressive Approach (Good Investing) = 15%
Path to Becoming a Millionaire! YearTotal Amount: Avg. Market Rate Return = 11% Total Amount: Aggressive Approach/ Return = 15% 0$1,000.00 1$1,100.00$1,150.00 2$1,232,00$1,322,50 10$2,839.4$4,045.56 20$8,062.3$16,366.54 35$38,574.85$133,175.52 50$184,564.83$1,083,657.44
Tips to Long Term Investing Understand Options and Returns o Bank Accounts o Stocks o Other Opportunities Be Patient! o Don’t track daily, weekly, monthly changes o Some years you might lose money, don’t worry! Invest Earlier = More Money = Retire Earlier!
Careers in Accounting Certified Public Accountant o Audit o Tax Corporate Accountant o Chief Financial Officer (CFO) Forensic Accountant Internal Audit Consultant/Advisor
Careers in Finance Banking Corporate Financing Financial Planning o Help others manage money and plan for savings/retirement Venture Capitalist o Fund new businesses with high growth potential
Summary Plan Weekly, Monthly, and Yearly Budgets o Understand personal finances first before going on a shopping spree! Difference between Checking and Savings Accounts Credit Cards are NOT a necessity Importance of a Credit Score Invest Early! o Be patient! Maybe consider a career in Accounting and Finance!
Sources The Motely Fool o http://www.fool.com/teens/teens01.htm http://www.fool.com/teens/teens01.htm Junior Achievement o http://www.myja.org/programs/saveusa/ja_$ave_USA_middle_school_educators_20 09.pdf http://www.myja.org/programs/saveusa/ja_$ave_USA_middle_school_educators_20 09.pdf Michigan Counseling Association o http://www.michigancounselingassociation.com/uploads/2/6/3/4/2634297/budget__f inancial_education.pdf PEW Research o http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/ http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/