Bell Ringer

An English teacher asked her 8th grade class to write an essay on what they would

do if they had a million dollars.Larry handed in a blank sheet of paper."Larry!" yelled the teacher, "you've done

absolutely nothing. Why?""Because if I had a million dollars, that's

exactly what I would do!"

MANAGING MONEY

10.01 Identify sources of income and types of

spending.

You’ve all heard the phrase “Money doesn’t grow on trees…”

Well, where does it grow? In your bank account money earns interest and grows. You can invest and your money will grow. You can make a budget and save and watch your money grow.

Money is a material resource

Budgets can help you achieve short and long term goals.

Budget Example

Income is the amount brought home.

Expenses are the amount spent.

Earning an Income

Hourly Wage – Amount of money earned per hour of work. Can vary based on number of hours worked.

Salary – Set amount of money paid for a specific amount of time. Does not vary based on hours worked.

Hourly Wage OvertimeIf someone works more than 40 hours a

week or holidays, they can earn OVERTIME which is usually their normal hourly rate plus 50%.

So if they normally make $6.50 an hour, they would make $9.75 an hour overtime pay.

Paycheck Deductions

Deduction means to reduce.

Money is taken from the amount you earn to pay taxes and for benefits like insurance.

Gross Income vs. Net Income

Total amount of money before deductions is your gross income.

Total amount of money after deductions is your net income (take home pay).

Deductions

Federal and State Income Taxes – Government’s main source of income and is used to provide services, programs, and

facilities to citizens.

Social Security Taxes – (FICA) Provides for retired, disabled, and widowed.

Basics of Budgeting

Establish financial goals.

Determine sources of income

Estimate expenses

Compare income and expenses

Write budget and keep records

Evaluate budget

Key Vocabulary – Define these:

BudgetHourly WageSalaryFringe Benefits

Gross IncomeNet IncomeFixed ExpenseFlexible

Expense

“Budget Busters”

Give yourself five points if you have a budget. Give yourself five points if you have a checkbook. Deduct a point if you have ever bounced a check. Deduct a point if you bought something this week without

comparison shopping. Give yourself a pint if you bought a store brand, rather than a name

brand item this week. Give yourself five points if you have a savings account. Give yourself five points if you added any money to your savings

account this week. Give yourself five points if you pay your own car insurance (or part

of it) Deduct five points if you routinely carry more than $10.00 in your

purse or wallet. Give yourself five points if you have a method of recording what you

spend.

10.02 Factors that influence spending

Teen Living

A. Advertising Is a paid public message communicated through various

media that promotes the sale of goods and services.

Causes people to impulse buy (buy without thought)

Manufactures know their ad worked if you buy their product.

Ads are to convince you to buy something.

Ads with celebrities : Celebrities don’t do anything for free!! They are PAID to be in the ad!

Jingles and Slogans

Are to make you remember the product.

Let’s see how much YOU remember!Have it your way

Taste the rainbowEat FreshThink outside the bunIs it in you?Every kiss begins with KayRaising the barWhere you at?Live in your world, play in oursYou can do it, we can help

B. Purchasing practices

Decide where to shop, when to buy, and what to buy.

Comparison shopping means comparing products and prices in different stores before buying.

Have you ever impulse bought?

Impulse buying can be prevented by following a shopping list.

Advertisers are sneaky! They use cartoon characters to convince youngsters and celebs for older people and teens.

Deciding WHAT to buy:

Judge quality – Not just price! Judge the quality. Sometimes lower price is still good quality!

Suitability – Know what product you need before you go shopping for it.

Use and Care – Read labels. Would you want to buy a whole wardrobe of dry clean only?

Warrantees – written promise a product will perform as stated. Full vs. Limited

Here’s the pages:

Fraud 515Identity Theft 514

D. Consumer rights and responsibilities

1. Right to be informed – 515

2. Right to redress/recourse – 518

3. Right to safety – 517

4. Right to choose/selection - 516

5. Right to Performance – 516

6. Fraud – 515

7. Identity Theft - 514

Check Writing

All About Checks

Check Writing

Checks include the following information:

Check Writing

DATE: Include the month, day and year you are writing the check.

Check Writing

PAYEE: Write the name of the person or business on the line, “Pay to the order of.”

Check Writing

AMOUNT IN NUMBERS: Write the amount of the check in numbers.

Check Writing

AMOUNT IN WORDS: Write the amount of the check in words.

Check Writing

SIGNATURE: Sign all checks the way you sign the signature card.

Check Writing

MEMO: Use the memo area to note the reason for the check.

Check Writing

ROUTING NUMBERS: The nine-digit string of numbers used to identify your bank to process the transaction

Check Writing

ACCOUNT NUMBER: The number used to identify your unique account within the bank.

Check Writing

CHECK NUMBER: The number used to identify a specific check within the sequence of the register. It usually includes 3 or 4 digits.

Check Writing

TRANSIT NUMBER: Used to list checks for deposit.

Check Writing

How to Write Checks: You should fill out the following 6 items.

Check Writing

DATE: Include the month, day and year you are writing the check.

09/15 06

Check Writing

PAYEE: Write the name of the person or business on the line, “Pay to the order of.”

09/15 06

Athletic Shoe Company

Check Writing

AMOUNT IN NUMBERS: Write the amount of the check in numbers.

09/15 06

Athletic Shoe Company 55.63

Check Writing

AMOUNT IN WORDS: Write the amount in words. Start at the left, write any cents as a fraction, and draw a line in the extra space.

09/15 06

Athletic Shoe Company 55.63Fifty-Five and 63/100 ----------------------------------------------

Check Writing

SIGNATURE: Sign all checks the way you sign the signature card.

09/15 06

Athletic Shoe Company 55.63Fifty-Five and 63/100 ----------------------------------------------

George Washington Doe

Check Writing

MEMO: Use the memo area to note the reason for the check.

09/15 06

Athletic Shoe Company 55.63Fifty-Five and 63/100 ----------------------------------------------

George Washington Doe

Running Shoes

Writing a Personal CheckWriting a Personal Check

Check Writing

Check Register: Don’t forget to balance your checkbook by filling out the check register.

Check Writing

12 Rules About Checking

12 Rules About Checking

1) Only write checks when you have enough money in your account.

2) Write checks legibly.

3) Write the check amount as far to the left as possible.

4) Always use a pen to write checks.

12 Rules About Checking

5) Don’t erase mistakes on a check.

6) Don’t sign blank checks.

7) Use restrictive endorsements.

8) Print the right date on a check.

12 Rules About Checking

9) Always keep checks in a safe place.

10) Destroy voided or unused checks and deposit slips.

11) Record every transaction in the checkbook register.

12) Keep a running balance in the checkbook register.

Check Writing

How to Cash a Check

How to Cash a Check

BLANK ENDORSEMENT: Sign your name the same way it is written on the front of the check.

George W. Doe

How to Cash a Check

SPECIAL ENDORSEMENT: Do this when you want to give someone else the money. Write “pay to the order of” and that person’s name. Then sign it. Now that person is the only one that can cash the check.

William J. Doe

Pay to the order of

George W. Doe

How to Cash a Check

RESTRICTIVE: When you want your check to be very safe, like when you send it by mail to your bank, use this type of endorsement. Then , it can only be deposited into your account.

George W. Doe

For Deposit Only

Credit Cards 101

Did You Know

$ The percentage of undergraduate students carrying at least 1 credit card has risen 24% since 1998

$ 92% of college students have a credit card by their sophomore year

$ Almost half (47%) of all college students carry four or more credit cards

$ 21% of undergrads owed between $3000 & $7000 on their credit card – a 61% increase from 2000

Source: Nellie Mae, April 2002. Undergraduate Students & Credit Cards, pp. 1 & 2

What are Credit Cards?

Pre-approved credit which can be used for the purchase of items now and

payment of them later.

Are Debit Cards a type ofCredit Card?

NO!

Debit=Credit

Debit cards allow payment and purchase

to happen simultaneously

Debit Cards are:$ Not the same as

credit cards$ Not a form of

credit at all$ Directly linked to

your bank account.

Why Use a Credit Card?

$ Proper use can help establish good credit rating

$ Conveniently accepted across United States and abroad

$ Emergency buying power$ Additional form of identification$ Record of purchases on bill statement$ Often required to hold a reservation

Why Not Use a Credit Card?

$ Improper use can damage credit rating$ Higher risk for impulsive buying and overspending$ Debt trap when used unwisely$ Expensive way to borrow due to high interest

rates$ Less to spend in the future due to paying off

purchases from past$ Possible hidden fees & surcharges$ Privacy is an increasing concern$ Identity theft easier

Types of Credit Cards

Cards where purchases can be made Cards where purchases can be made in many locationsin many locations

$ Bank Credit Cards¢ Card issued by financial institution

$ Retail Credit Cards¢ Credit and card issued by particular

retailer (Old Navy, The Bon, Home Depot, Shell Oil)

Obtaining a Credit Card

$ Comparison shop when choosing the right card

$ Know the facts¢ Terms and conditions of credit card accounts

differ¢ Be aware of “hidden” costs of card(s)

$ Federal Truth in Lending Act¢ Requires card issuer to display the cost of

credit card¢ Schumer Box: easy to read box format

A Schumer Box you May Expect To See

Annual Percentage Rate for purchases and balance transfers*

2.99% APR (.00819% daily periodic rate) on purchases and balance transfers until the first day of the billing cycle that includes the six (6) month anniversary date of the opening of your account. In the absence of the introductory rate, 12.99% APR(.03559% daily periodic rate) on purchases and balance transfers.**

Grace period for repayment of the balance for purchases

You will have a minimum of 25 days without a finance charge on new purchases if the total New Balance is paid in full each month by the statement closing date.

Method of computing the balance used in calculating finance charges for purchases

Average daily balance (including new purchases)

Annual fee $25

Minimum finance charge For each Billing Period that your Account is subject to a finance charge, a minimum total Finance Charge of $0.50 will be imposed.

Miscellaneous fees Cash advance fee: 2.5% of amount of the cash advance, but not less than $2.50.Late payment fee: $25 Over-the-credit-limit fee: $25 Returned check fee: $25

$ Annual Percentage Rate (APR): interest rate charged for amount borrowed in terms of percentage per year

$ Grace Period: amount of time allowed before finance charges (interest or cost of credit) are applied

Annual

Percentage Rate for

Purchases

 Grace Period

for Purchase

s

Minimum Finance Charges

Balance

Calculation

Method for

Purchases

 Annual

FeesTransaction Fees for Cash Advances

 Late

Payment Fees

 

19.9% 

 

Not less than

25 days 

$.50 when a finance charge at a periodic

rate is charged

Average daily

balance method

(including new

purchases)

  

$20 per year

 2% with a minimum fee of $3

 

$29

A Schumer Box and Credit Card Terms Explained

$ Minimum Finance Charge: minimum amount charged for card use

$ Balance Calculation Method: method used to determine balance including finance charges

Annual

Percentage Rate for

Purchases

 Grace Period

for Purchase

s

Minimum Finance Charges

Balance

Calculation

Method for

Purchases

 Annual

FeesTransaction Fees for Cash Advances

 Late

Payment Fees

 

19.9% 

 

Not less than

25 days 

$.50 when a finance

charge at a periodic

rate is charged

Average daily

balance method

(including new

purchases)

  

$20 per year

 2% with a minimum fee of $3

 

$29

A Schumer Box and Credit Card Terms Explained

$ Annual Fees: yearly charge for credit card ownership

$ Cash Advance Transaction Fees: cash withdrawal fees

$ Late Payment Fees: penalty fee for payments not made by the due date

Annual

Percentage Rate for

Purchases

 Grace Period

for Purchase

s

Minimum Finance Charges

Balance

Calculation

Method for

Purchases

 Annual

FeesTransaction Fees for Cash Advances

 Late

Payment Fees

 

19.9% 

 

Not less than

25 days 

$.50 when a finance charge at a periodic

rate is charged

Average daily

balance method

(including new

purchases)

  

$20 per year

 2% with a

minimum fee of $3

 

$29

A Schumer Box and Credit Card Terms Explained

Opening a Credit Account

1. Applicant completes a credit application2. Lender conducts a credit investigation3. Applicant is given a credit rating4. Lender accepts or denies the credit request5. If accepted, applicant evaluates the credit

card details (USE THE SCHUMER BOX!)6. Applicant accepts or refuses credit terms

Understanding the Bill

$ Minimum Payment Due: minimum amount to be paid ¢ If this amount is paid and a balance is left on

the account, additional finance charges will be included in the following month’s balance

$ Past Due Amount: the previous amount due which was not paid before the due date

$ Due Date: the day by which the company requires a payment to be made

$ New Balance: the total amount owed on a credit card

Understanding the Bill (continued)

$ Credit Line: the maximum amount of charges allowed to an account

$ Finance Charge: charges assessed for credit card use

Sign card with signature and “Please See ID”

Do not leave cards lying aroundClose unused accounts in writing and by

phone, then cut up the cardDo not give out account number unless

making purchasesKeep a list of all cards, account

numbers, and phone numbers separate from cards

Report lost or stolen cards promptly

Safety Tips