Personal Finance Economics

1. Personal FinanceEconomics Name_______________________period___________ Nancy K. Ware, Instructor Gainesville High School Read EOCT Guide p.93-112

2. Personal Finance Map of GPS PF1 The student will apply rational decision making to personal spending & saving choices. PF4 The student will evaluate the costs and benefits of using credit. Consumer Savvy Student! PF2 The student will explain that banks & other financial institutions are businesses that channel funds from savers to investors. PF5 The student will describe how insurance & other risk-management strategies protect against financial loss. PF3 The student will explain how changes in monetary & fiscal policy can have an impact on an individual’s spending & saving choices. PF6 The student will describe how the earnings of workers are determined in the marketplace.

3. Vocab Grab Unit 5!! • Pick your vocab word out of the hat • Act – Draw – Speak your unit 5 vocab word • Act: role play, broadcast, TV show, TV interview, Internet pod cast, (you may video yourself using your phone if you don’t want to do it live) • Draw: draw a scenario that depicts your vocab word on the board or on a poster • Speak: Sing, dramatically interpret, make up an poem or a rap about your vocab word

4. Develop Your Background Information! Personal Finance Economics Video Vocab • Compound Interest • Credit • Financial Markets • Human Capital • Insurance • Money Mgmt & Budgeting • Risk and Return • Saving and Investing

5. Personal Finance Standard 1 • SSEPF1 The student will apply rational decision making to personal spending and saving choices. • a. Explain that people respond to positive and negative incentives in predictable ways. • b. Use a rational decision making model to select one option over another. • c. Create a savings or financial investment plan for a future goal.

6. GPS 1 Making Life Decisions Essential Questions VE4 Videos: Money Mgmt & Budgeting What is an incentive? What is a positive incentive and how do people respond to them? What is a negative incentive and how people respond to them? What are the steps in the rational decision making model? How can you save for a future goal in life?

7. PF1 The student will APPLY rational decision making to personal spending and saving choices • Define Rational: • Describe a financial (involving money) situation where you had to make a rational decision. • The Decision Making Process Review • D • L • S • E • M

8. PF1 The student will APPLY rational decision making to personal spending and saving choices • Rational?? - agreeable to reason; reasonable; sensible, having or exercising reason, sound judgment, or good sense • The Decision Making Process • Define the Problem • List the Alternatives • State the Criteria • Evaluate the Alternatives • Make a Rational Decision

9. Rational or Not? You be the Judge • New brakes for your car or new dress for a party? • Eye Doctor appointment or fancy dinner? • Spending all your money every payday or saving at least 10% of your check? • Buying the latest technology gadget phone when your old phone works fine?

10. It’s My Life! Activity GPS 1 & 6 • Plan your life. Sounds weird I know but think about the future and what you want out of life. You don’t get many second chances in life, and you need to decide what direction you want to go in before going at it blindly. See the activity sheet. • Visual aid required for presentation • Don’t forget to get the rubric 

11. PF1a Explain that people respond to positive and negative incentives in predictable ways. What Makes you Tick? • Incentives – list examples of incentives for you. • Incentives – list examples of incentives for a business. • Incentives – list incentives for a government. • Activity: Positive vs. Negative incentive ROLE PLAY with partner. Write out your script here.

12. PF1c Create a savings or a financial investment plan for a future goal Lifework! • Why do you want to save money? • List 3 things you want (short term) and 3 things (long term) that you do not currently have the money to buy but you want to buy it. • What do you need to do to make it happen? How are you going to get it?

13. Personal Finance Standard 2 • SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. • a. Compare services offered by different financial institutions. • b. Explain reasons for the spread between interest charged and interest earned. • c. Give examples of the direct relationship between risk and return. • d. Evaluate a variety of savings and investment options; include stocks, bonds, and mutual funds.

14. 1. What are some services offered by banks, credit unions, and savings and loans?2. Why is the spread between interest charged and interest earned different? 3. What is the relationship between risk and return? 4. What are stocks, bonds, and mutual funds? 5. What is the risk and return associated with each of these financial products? GPS 2 Money & Banking Essential Questions VE4Videos: Risk & Return, Financial Markets

15. PF2 The student will explain that banks and other financial institutions are businesses that channel funds from to savers to investors Video: Money & Banking • If you don’t have the money to buy something of value, where do you get the money? • Where do they get the money? Draw a picture that explains where banks get their money.

16. PF2a Banks & Financial Institutions ScavHunt & Comparison Graphic OrganizerTask: You want to borrow money for a car, college, or a home (pick one). Find an institution in each of the 3 categories with an Ipad & answer the questions.

17. PF2a Banks & Financial Institutions ScavHunt & Comparison Graphic OrganizerTask: You want to borrow money for a car, college, or a home (pick one). Find an institution in each of the 3 categories with an Ipad & answer the questions.

18. PF2b Interest – Are you Interested?? You Should Be! • Deposit your money & you earn__________________________________. • Borrow money & you are charged_________________________________. • Banks are in business to make a _________________________________. • Simple Interest formula: P x R x T • Problem: You decide to take out a loan for school in the amount of $10,000. If you are enrolled in school, the terms of the loan are 7% interest repaid in 3 years after graduating from college. • If you drop out of school, then you have defaulted on your loan, and you must begin repayment the month after leaving school to be repaid in 2 years at 14% interest. • Calculate the amount to be repaid if you do not default AND if you do default on your loan. Compare these numbers. Which would you prefer to pay back? Why?

19. PF2b Interest – Are you Interested?? You Should Be! • Deposit your money & you earn__________________________________. • Borrow money & you are charged_________________________________. • Banks are in business to make a _________________________________. • Simple Interest formula: P x R x T • Problem: You decide to take out a loan for school in the amount of $10,000. If you are enrolled in school, the terms of the loan are 7% interest repaid in 3 years after graduating from college. • If you drop out of school, then you have defaulted on your loan, and you must begin repayment the month after leaving school to be repaid in 2 years at 14% interest. • Calculate the amount to be repaid if you do not default AND if you do default on your loan. Compare these numbers. Which would you prefer to pay back? Why?

20. PF2c What is the Relationship Between Risk and Return? • Define Risk: • Define Return: • Draw RISK & RETURN in the space below “Let’s Make a Deal” ~ A Game of Risk & Return! You will be presented with scenarios that are either high risk or low risk. You have to decide what the return will be (high or low you won’t know until you decide) and then take the chance OR not.

21. PF2c What is the Relationship Between Risk and Return? • Risk: the chance or probability of loss (life, in Economics it’s money) • Return: the opportunity to receive reward (money usually) beyond initial investment Risk Return Risk Return

22. PF2d Evaluate a variety of savings and investment options, including stocks, bonds, mutual funds.

23. PF2d Evaluate a variety of savings and investment options, including stocks, bonds, mutual funds.

24. Notes

25. http://www.youtube.com/watch?v=hashPaU7Dpk&safety_mode=true&persist_safety_mode=1&safe=activehttp://www.youtube.com/watch?v=hashPaU7Dpk&safety_mode=true&persist_safety_mode=1&safe=active

26. Personal Finance Standard 3 • SSEPF3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s spending and saving choices. • a. Give examples of who benefits and who loses from inflation. • b. Define progressive, regressive, and proportional taxes. • c. Explain how an increase in sales tax affects different income groups.

27. GPS 3 Taxes Essential Questions 1. How do changes in monetary and fiscal policy can have an impact on an individual’s spending and saving choices?2. Who benefits and who loses from inflation?3. What are some examples of economic groups that win and lose during inflation?4. What are progressive, regressive, and proportional taxes?5. How does an increase in sales tax affects different income groups?

28. Taxes; a Necessary EVIL! Certainty? In this world nothing is certain but death and taxes. --- Benjamin Franklin

29. PF3 Student will explain how changes in monetary & fiscal policy can have an impact on an individual’s spending and saving choices. • Why save money? 1. R_________________ (ex. 401k) 2. L_________P_________ (ex. House) 3. Create w_____________ 4. L____________E___________(ex. b_____, Insurance p_____________) 5. Large short term e_____________ (ex. C_____, C___________) 6. Your own ideas:

30. PF3 Student will explain how changes in monetary & fiscal policy can have an impact on an individual’s spending and saving choices. • Why save money? • Retirement • Large Purchases (House) • Create Wealth • Large Expenses (baby, Insurance premiums) • Large short term expense (Car, College) http://www.practicalmoneyskills.com/video/#anchorTop

31. PF3 Student will explain how changes in monetary & fiscal policy can have an impact on an individual’s spending and saving choices. Cause Effect on YOU 1. Gov’t Raises Taxes 2. Gov’t Increases Spending 3. Gov’t Lowers Taxes 4. Gov’t Decreases Spending 1. 2. 3. 4. 1. Fed Reserve Increase Reserve Ratio, Discount Rate, Sells Bonds (Securities) • 2. Fed Reserve Decreases Reserve Ratio, Discount Rate, Buys Bonds (Securities) 1. 2.

32. PF3 Student will explain how changes in monetary & fiscal policy can have an impact on an individual’s spending and saving choices. Cause Effect on YOU 1. Gov’t Raises Taxes 2. Gov’t Increases Spending 3. Gov’t Lowers Taxes 4. Gov’t Decreases Spending 1. You have less disposable income 2. You have more disposable income 3.You have more disposable income 4. You have less disposable income 1. Fed Reserve Increase Reserve Ratio, Discount Rate, Sells Bonds (Securities) • 2. Fed Reserve Decreases Reserve Ratio, Discount Rate, Buys Bonds (Securities) 1. Less disposable income & loanable money 2.More money circulates in the economy; more disposable income & loanable funds

33. PF3a Winners & Losers of Inflation? • Define Inflation: • HURTS the elderly ~ WHY? • HURTS the poor ~ WHY? • HURTS wages of labor ~ WHY? • Who benefits?? (hint: think interest rate) Homework: Draw a cartoon of Inflation and who it hurts. Be creative, use color, and make your meaning clear!

34. PF3a Who benefits and Who loses from Inflation? • Inflation: general increase in prices • HURTS the elderly ~ WHY? • HURTS the poor ~ WHY? • HURTS wages of labor ! WHY? • Who benefits?? Homework: Draw a cartoon of Inflation and who it hurts. Be creative, use color, and make your meaning clear!

35. What Happens to Wages When Inflation Creeps Up? Cartoon Interpretation What do the bulls represent? What does the flower represent? What is about to happen in the cartoon?

36. PF3b Define progressive, regressive, and proportional taxes

37. PF3b Define progressive, regressive, and proportional taxes

38. PF3c Explain how an increase in sales tax affects different income groups. • Sales tax in Hall County is _____________. • Sales tax increases to 20%. What happens to demand? • How would that tax influence a $100,000, $50,000 and 25,000 household of 4? • $100,00 • $50,000 • $25,000 • Why do people dislike taxes? (ask your parents!)

39. PF3c Explain how an increase in sales tax affects different income groups. • Sales tax in Hall County is? 7% • Sales tax increases to 20%. What happens to demand? Goes down…way down • How would that tax influence a $100,000, $50,000 and 25,000 household of 4? • $100,000: Would take away some disposable income • $50,000: Would take away probably most if not all disposable income • $25,000: Would take away money needed for necessities • Why do people dislike taxes? More of a worker’s earnings is spent paying tax than making purchases in the economy.

40. PF3c Explain how an increase in sales tax affects different income group.Find the dollar amount in tax owed and the net income ($ after taxes are paid) Which household is hurt the most by the increasing tax?

41. PF3c Explain how an increase in sales tax affects different income group.Find the dollar amount in tax owed and the net income ($ after taxes are paid) Which household is hurt the most by the increasing tax?

42. Personal Finance Standard 4 • SSEPF4 The student will evaluate the costs and benefits of using credit. • a. List factors that affect credit worthiness. • b. Compare interest rates on loans and credit cards from different institutions. • c. Explain the difference between simple and compound interest rates.

43. VE4 Video: Interest & Compound Interest GPS 4 Credit Essential Questions What are the costs and benefits of using credit? What is credit worthiness? What factors affect your credit worthiness? What is a good credit score? What is a “good” interest rate? What is the difference between simple and compound interest?

44. PF4 The student will evaluate the costs and benefits of using credit. • With a partner, list the benefits and the costs of using credit.

45. PF4 The student will evaluate the costs and benefits of using credit. • With a partner, list the benefits and the costs of using credit.

46. PF4 The student will evaluate the costs and benefits of using credit. • With a partner, list the benefits and the costs of using credit.

47. PF4a List the factors that affect credit worthiness & explain what they are. 1. 2. 3. 4. 5.

48. PF4a List the factors that affect credit worthiness & explain what they are & how they affect your ability to get a loan. Explanation • D______toi______ ratio • Job __________ • E__________levelobtained • P__________historyof bills and loans • C________ score

49. PF4a List the factors that affect credit worthiness. • Debt to income ratio • Job history • Education level obtained • Payment history of bills and loans • Credit score

50. PF 4b Compare interest rates on loans and credit cards from different institutions. Indicate if the rate is good, decent, or too high. Which rate is the best from each institution? Why?