Spending money is easy to do, but managing your money to meet your financial goals can be difficult without the skills and knowledge required of a good consumer. In this unit you will learn how to use your money wisely and how to protect yourself from the dangers associated with spending.
1) Financial Goals
 Financial Planning Vocabulary
4
13
2) Budgeting
3) Spending
4) Protecting Yourself
 Creating a Budget 8 - 9 30


Checks and Register
Dangers of Credit Cards
 Protecting Yourself Mini Report
14 – 17
19
21
40
40
60
CS U5 Consumer Skills pp 1 5/28/09

As you know from previous units, setting goals is a great way to plan for the future. Money is a necessity for life and having goals for your money is a great way to ensure your stability. This section will give you some tips for financial planning and help you understand some of the terminology regarding finances.
Assignments
 Financial Planning Vocabulary Assignment
CS U5 Consumer Skills pp 2 5/28/09

Each year many Americans struggle to manage their money in a way that keeps them out of debt, yet gives them a satisfying life. Staying out of debt is something you can do if you set financial goals and stick to them. Financial goals are goals you set that regarding money or goals that require money. Some examples include:



Saving money for a car or home
Saving money for college or other training
Paying off a debt (credit card, car payment)


Having a back up savings account for emergencies
Earning a certain amount of money
Notice that each type of goal either directly relates to money or requires money to be accomplished.
Setting financial goals is similar to setting any other goal. You should be able to accomplish it in a given amount of time and it should match your values. Setting a goal to be a millionaire by the time you get out of college is not a realistic goal for most people. A more appropriate goal might be to exit college with out any debt, or to pay off your college debt by the time you are a certain age.
Setting a goal of having $10,000 saved by the time you are 20 is a lofty goal, but saying that you will put away $100 a month is more realistic.
Sometimes it is difficult to know what is realistic due to your lack of experience as a consumer.
For example, you may not know that in order to buy a home, a mortgage lender usually requires a down payment of 5 to 15%. That means if you want to buy a $200,000 house, you will have pay
$10,000 to $30,000 up front to make the purchase. In order to create reasonable financial goals, you will need to do some research, which should include talking to adults who you know have a good idea of how money works.
As your circumstances change, you may need to modify your goals. Let’s say you get a job right out of high school that pays more than you expected. You could change your financial goals to reflect the higher income you are earning. Or perhaps you decide you would like to take a trip to
Japan because of an interesting presentation at your school. Your financial goals may change as your interests and values change.
Exercise
Take a few minutes and write some financial goals you would like to accomplish in the next few years. As a high school student, it may have to do with saving for a car and insurance or earning a certain amount of money in the next year. Keep these goals in a safe place where you can update them if you need to.
CS U5 Consumer Skills pp 3 5/28/09

Name:
Date:
Define the following terms that have to do with financial planning. Some words have many definitions. Be sure to write the definition that concerns money and financial planning.
Financial –
Deposit –
Withdraw –
Expense –
Gross Income -
Net Income –
Deduction –
Balance –
Consumer –
Credit –
Overdraft –
Interest –
Identity Theft –
CS U5 Consumer Skills pp 4 5/28/09

Creating and following a budget is a good way to stay out of debt and to reach your financial goals.
In this section you will learn what a budget is and how to create and use one.
Assignments
 Creating a Budget Assignment
CS U5 Consumer Skills pp 5 5/28/09

Creating and maintaining a budget is an important money management skill. A budget is a way to keep track of how much you are earning and how much you are spending. It allows you to keep track of your spending so that you do not spend more than you have. There are many ways to keep a budget. Some people use computer software and some just write it out on a piece of paper.
To create a budget you need to know how much you earn (income) a month and what your monthly expenses are.
– The money you earn from a job, investments, etc. To be safe, you should only count money that you are guaranteed to earn. For this reason, you should not include gift money or other unpredictable earnings into your budget.
– These are the things you have to pay for on a regular basis. Food, housing
(rent or mortgage), gas and car payments are on most people’s budgets. There are 2 types of expenses, those you NEED to survive and those you WANT to have. See the chart of needs versus wants below.
(Essential Expenses)
Food
Clothes
Transportation (car, bus, bike)
House or apartment
Electricity
Water
Natural Gas (cooking/heating)
Phone
(non essential expenses)
Ice Cream
Nice Car
New Ipod
New Rims
MP3 downloads
College Education
Computer
Savings
Some expenses may be hard to classify as wants or needs. An example would be a college education. Some people would consider it necessary for their future while others may not need it for their chosen career. You will have to decide what is most important to you considering your goals and values.
Once you have determined your income and expenses you are ready to create a budget.
1.
Start by listing the expenses you have to pay for (your NEEDS) and how much those cost.
2.
Subtract those expenses from your income. The remaining money is discretional. That means you can spend it on your wants!
3.
List your wants in order of importance and distribute your remaining money to those items.
Don’t plan on spending more than you earn!
See the example budget on the following page!
CS U5 Consumer Skills pp 6 5/28/09

Tanya graduated high school and is attending a community college to earn her welding certificate.
She works full time during the day as a waitress at a local restaurant and takes classes in the evenings. She also does small landscaping jobs on the weekends for extra cash. She earns around
$1300 (take home pay after taxes) a month at the restaurant and $100 a month from landscaping.
She has the following expenses each month:
Rent
Electric Bill
Water Bill
Gas Bill
Cell Phone
Car Payment
Cable
$475
$30
$15
$25
$45
$150
$45
Gas
Insurance
Food
Clothes
Classes
Books
Savings
$60
$75
$200
$50
$100
$20
$50
Here is her budget
Restaurant 1300
Landscaping Job
TOTAL
Rent
100
1400
475
Cable TV 45
Electricity
Water Bill
30
15
College Classes
College Books
100
20
Gas Bill
Cell Phone Bill
25
45
Savings Account
Eating Out
50
30
Car Payment 150 Out with Friends 20
Gas 60 TOTAL 265
Car Insurance 75
Clothes 50
Groceries 200
TOTAL 1125
Tanya earns 1400 a month and she has 1390 budgeted. If she sticks to her budget, she will not run out of money and she will be able to meet her financial goals. Notice she has budgeted $50 per month in savings so she has back up money for emergencies.
CS U5 Consumer Skills pp 7 5/28/09

Objective
To be able to create and use a budget.
Resources
 Information provided in this section
 Internet Resources
 Adults who keep a budget
Directions
On the following page is financial information for Cameron. Cameron is your friend and he has asked you to help him create a budget so he can stop going into debt. Look over his information and do the following activities.
1.
Separate out the information Cameron gave you into Income, Necessary Expenses and
Nonessential Expenses.
2.
Determine an amount that should be budgeted for each area of spending
3.
Consider Cameron’s financial goals and determine if he should include any other categories into his budget
4.
From the lists you made, create a budget similar in format to the one shown on the Sample
Budget sheet in this section. Be sure to separate income necessary expenses and non essential expenses clearly.
5.
On the back of the budget or on a separate piece of paper, make a few financial suggestions to Cameron. You may suggest ways he can spend differently, save money or use the budget you created for him.
Place your name, date and class on the budget and submit it to your instructor. Only turn in the budget and the suggestions for Cameron.
CS U5 Consumer Skills pp 8 5/28/09

This is the information Cameron gave you
CS U5 Consumer Skills pp 9 5/28/09

As a consumer, you will always have to purchase the things you need. There are many different ways to pay and all are useful for certain situations. For example, to pay bills by mail, you have to write a check and to purchase items over the internet, you need a credit card. In this section you will explore two common methods of payment, and the pros and cons associated with each.
Assignments
 Writing Checks and Keeping a Register Assignment
 Dangers of Credit Cards Assignment
CS U5 Consumer Skills pp 10 5/28/09

Using checks and debit cards are a very common way to pay for things. Most businesses you purchase from will accept cash, and credit cards and some will accept checks. Some businesses such as electric companies and gas companies will require you to pay by check. No matter how you pay for most things you buy, it is a good idea to have a checking account.
A checking account is an account you open at a bank or credit union. You deposit money into the account and write checks or use a debit card to pay for things. When you make a purchase, the money is automatically withdrawn from your account. Banks offer a variety of checking accounts that have different terms and conditions. Before you open an account you will want to research the different options to determine which will work best for your needs.
There are two main reasons to have a checking account. First, it is necessary to pay for some bills using a check. Most bills you pay will only accept a check through the mail or, if you are paying your bill on line, you will be required to give the company your checking account information to make the withdrawal. Second, You money is safe in a checking account. Cash is easy to lose or have stolen, and it is not a good idea to always have hundreds of dollars in your purse or wallet. If your money is in a checking account it cannot be physically stolen. If you lose your checkbook, and someone tries to write a check, they can be traced and you may be able to recover your funds.
Also, many checking accounts are free.
The number one danger of having a checking account is going overdraft. That just means you spend more than you have. Banks and businesses will charge fees for every check you write over your account balance. If you open a checking account it is very important to keep track of how much money you have in it at all times. Most check books have a record book where you can write your deposits and withdrawals so that you always know your account balance. Another drawback of checking is that you have to purchase checks. If you write very few checks, this will not be a major expense. Lastly, you need to be aware of any fees your bank charges including annual fees, debit card fees, ATM fees and others. This would all be discussed when you go to the bank to open an account.
CS U5 Consumer Skills pp 11 5/28/09

In order to successfully keep and use a checking account you must be able to write checks and keep a check register.
Writing a Check
Below is a sample check. Each area of the check is lettered and described below. http://portfolio.educ.kent.edu/cuvaj/Apps/parts_of_a_check.htm
, May 26, 2009
I
J
G
H
D
E
F
B
C
Letter
A
Section
Check Number
ABA Number
Personal Information
Date
Payee
Numeric Amount
Written Amount
Signature
Account Number
Memo
Description
Every check you write will have a different number for tracking
A way banks track checks
Your name, address and phone number
You must fill in the date on each check you write
Person or company who you are paying
The amount you are paying written as a number
The amount you are paying written in words. Cents are typically written as a fraction of 100. Notice that a line is drawn to take up any blank space to prevent someone from writing more in that space
You must sign every check you write
The account number and routing number for your account
Category of payment. This is optional but recommended
CS U5 Consumer Skills pp 12 5/28/09

Keeping a Register
A check register is a running total of deposits and withdrawals from your account. If your register is up to date you will know how much money is in your account. Each time you deposit money into your account, write a check, use a debit card or schedule an automatic payment from your account, you will write the transaction into your register. You will then add or subtract the amount of the transaction from the previous account balance, giving you a new balance.
For each transaction there is a check number (I f a check was written), the transaction date, payee and description, amount of deposit or payment and new balance. It may seem like a lot of information to keep track of. Keeping an accurate register will ensure that you always know how much is in your account at any given time.
CS U5 Consumer Skills pp 13 5/28/09

Objective
To demonstrate your ability to accurately write checks and keep a register.
Resources
 Information provided in this section
 Reliable internet sources
Directions
You are to write several checks for your friend Carlos to show him the correct way to write a check.
You will then update his register with the transactions you made. Here are the checks you will need to write:
A payment to ACME Electricity on March 3, 2009 for $45.85
A payment to Chili’s restaurant on March 4, 2009 for $15.40
A payment to Farmers Insurance on March 7, 2009 for $115.00
A payment to Safeway on March 13, 2009 for $176.32
A payment to DirecTV on March 20, 2009 for $60.00
A payment to Verizon Wireless on March 24, 2009 for $70.00
Carlos deposited his paycheck from AutoZone on March 2 in the amount of $1595.45
Use this information to write the six checks and update the register being sure to write a total after each deposit or withdrawal. When you have written all 6 checks and updated the register with the information, submit the 3 pages to your instructor.
CS U5 Consumer Skills pp 14 5/28/09

Name:
Date:
CS U5 Consumer Skills pp 15 5/28/09

CS U5 Consumer Skills pp 16 5/28/09

Name:
Date:
Number Date
Description of Transaction
12/20/04 Previous balance
Debit (-) Credit (+) Balance
$425.45
CS U5 Consumer Skills pp 17 5/28/09

The term credit means that someone is allowing you to borrow money. A credit card is an account you open with a credit company that allow you to spend up to a certain amount without having to deposit money into that account. At the end of each billing cycle (once a month) you are required to pay a portion of what you spent. If you do not pay the full amount that you spent the company will charge you interest on the money you did not pay back. This is usually between 5 to 25%. You will be charged interest on that amount until you have paid it back.
Credit cards are convenient; you just slide the plastic and sign the slip and you are done. No need to keep a checkbook or cash in your pocket. Credit card companies offer incentives such as a 1% cash back on your purchases or frequent flyer miles that often entice consumers, but the interest fees you will pay are usually a lot more than the incentives! A good rule of thumb for credit cards is only spend what you can pay back in full each month ! And if you have a hard time controlling your spending, DON’T get a card!! Look at the example below for how dangerous credit cards can be.
Tessa can only afford to pay $200 a month towards her credit card. Her interest rate is 18%. She loves to buy new clothes and often spends $100 more than she can afford each month. Watch what happens to her credit balance after one year!
Month
Jan
Feb
Mar
April
May
June
July
Aug
Sep
Oct
Credit Charges Paid to Card Interest
300
300
300
300
300
300
300
300
300
300
200
200
200
200
200
200
200
200
200
200
0
$ 1.50
$ 3.02
$ 4.57
$ 6.14
$ 7.73
$ 9.34
$ 10.98
$ 12.65
$ 14.34
Balance
$ 100
$ 101.50
$ 204.52
$ 309.09
$ 415.23
$ 522.96
$ 632.30
$ 743.28
$ 855.93
$ 970.27
Nov
Dec
300
300
200
200
$ 16.05
$ 17.79
$1,086.33
$1,204.12
After one year of leaving $100 extra a month on her card she has been charged $104 in interest! It is very important to understand how credit works and to stay away from the dangers of misusing credit!
CS U5 Consumer Skills pp 18 5/28/09

Objective
Be able to explain the dangers of a credit card and how to avoid getting into financial trouble
Resources
 Information provided in this unit
 Internet sources
 Adults who use credit cards
Directions
For this assignment you will create an informative power point presentation or informational brochure discussing the dangers of credit cards and how to avoid them. You should research common problems people have when using credit cards. Explain the dangers and how they can become a problem. For each danger, present several solutions to avoid getting into trouble!
CS U5 Consumer Skills pp 19 5/28/09

Being a consumer in today’s world requires one to constantly be on the look out for scams, fraud, and identity theft. Victims of these crimes often go through long periods of financial hardship to recover what they lost. There are many specific actions you can take to protect yourself from these financial burdens.
Assignments
 Consumer Protection Mini Report
CS U5 Consumer Skills pp 20 5/28/09

Objective
To know and understand the ways people will try to take advantage of you through identity theft and scams and to know how to avoid these problems.
Resources
 Federal Trade Commission web site: www.ftc.gov
Directions
Go to the Federal Trade Commission web site and click on the Consumer Protection tab at the top of the page. There you will find many articles and links to resources on identity theft and scams. Read through the information and prepare a mini report on your findings. Your report should include the following information:

What is identity theft?

How do people steal your identity?

What can happen if your identity is stolen?

What are some things you can do to protect yourself?

What is a scam – give at least 2 examples?

How can you avoid being taken by a scam?
Your report should be written in paragraph form using a word processor. Use correct grammar, spelling and punctuation. You should write a minimum of 500 words. Be sure to write the entire report in your own words and include a bibliography page that documents the sources you used for the report.
Include your name, date and class on the report and submit it to your instructor.
CS U5 Consumer Skills pp 21 5/28/09