Helping young people learn to think, choose, and make better
economic and financial choices in a global economy
Laura Ewing
President/CEO
1801 Allen Parkway,
Houston, TX 77019
P: 713.655.1650
F: 713.655.1655
laura@economicstexas.org
Cindy Manzano
Director of Smarter Texas
1801 Allen Parkway,
Houston, TX 77019
C: 713.503.5338
F: 713.655.1655
cindy@economicstexas.org
www.economicstexas.org
www.smartertexas.org
1
Financial Fitness For Life
– Spiraled Curriculum
• Kindergarten – Grade 2
• Grades 3 – 5
• Grades 6 – 8
• Grades 9 – 12
2
3
• Free lessons for grades 2-8
– Coming June 2014: Lessons for grades 2-3
funded by
– Lessons for grades 4-6 funded by
– Lessons for grades 7-8 funded by
– www.smartertexas.org under Resource tab
4
The TCEE programs are made possible by the following TCEE partners.
John Anderson
Trout
Foundation
copyDR.
EnviroChem
Services, Inc.
Less B. Fox
RBC Wealth Management
6
Personal Financial Literacy is making
thoughtful, well-informed decisions
about important aspects of finances.
Why do we need it?
Financial Industry Regulatory Authority in 2012:
• 39% of individuals in Texas used a form of non-bank borrowing,
i.e. an auto title loan, pay day loan, pawn shop loan, or other
high interest uneconomical source of debt
• 54% of individuals in Texas broke even or spent more than their
annual income
• 57% of individuals in Texas did not have enough money saved
to cover expenses for three months
• 67% of individuals in Texas scored 60% or less on a financial
knowledge test, which comprised of questions regarding basic
economics and finance concepts encountered in everyday life
Nationwide Financial Capability Study
7
Student Loan Debt
– Average student loan debt
• 2010 – $24,000
• 2011 – $25,250
• 2012 –$33,000
– Total student loan debt:
• 2010 – 850 billion dollars
• 2012 – over 1 trillion dollars
8
2013 Student Loan Debt as Reported by Forbes
– The total outstanding student loan balance is $1.2
trillion.
– Reasons for rising student debt:
• Rising cost of education
• Students with little to no credit history are being approved
for thousands of dollars loan
• Students don’t understand the terms of getting a loan
• Students did not save or plan for the cost of college
– After graduation:
•
•
•
•
•
Loan debt exceeds annual salary
Many can’t find a job
Graduates are delaying buying a home or car
Unable to start a business
Unable to save for the future
9
. . . then why get a higher education?
– The demand for higher education in the job
market is increasing.
– The potential to earn more increases as the level
of education increases.
– The percent of unemployment decreases as
educational attainment increases.
Higher education is still the best investment in your
future.
10
TCEE
Grade 7,
Lesson 2
Personal Budget
11
12
The student is expected to:
 Math
7.13B identify the components of a
personal budget, including income,
planned savings for college, retirement,
and emergencies; taxes; and fixed and
variable expenses and calculate what
percentage each category comprises of
the total budget
13
Vocabulary
Budget
A
tool that helps people
manage their money and plan
for the future.
 A budget is a plan to manage
income and expenses.
14
CREATE A MONTHLY BUDGET
 Step
1: Calculate the monthly net income.
 Step
2: Categorize monthly expenses.
 Step
3: List categories and their total in
budget worksheet.
15
Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay
Deductions:
Federal Income
Tax
Social Security Tax
Medicare Tax
Medical Premium
Total Deductions
Net Income
$1930.00
$289.90
$119.66
$27.99
$100.00
16
Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay
Deductions:
Federal Income
Tax
Social Security Tax
Medicare Tax
Medical Premium
Total Deductions
Net Income
$1930.00
$289.90
$119.66
$27.99
$100.00
$537.55
17
Step 1: Calculate the monthly net income.
Below is Barney’s semi-monthly net income.
Employee:
Barney Smith
Pay Period:
July 2013
Gross Pay
Deductions:
Federal Income
Tax
Social Security Tax
Medicare Tax
Medical Premium
Total Deductions
Net Income
$1930.00
$289.90
$119.66
$27.99
$100.00
$537.55
$1392.45
18
Step 1: Calculate the monthly net income.
Barney’s semi-monthly net income $1392.45.
 What
is his monthly net income?
$2784.0
19
Step 2: Categorize Monthly Expenses.
House payment $900
Electricity $122
Clothes $120
Retirement Savings $150
Car payment $240
Gasoline and car maintenance $170
Entertainment $200
Cell phone $89
Emergency savings $100
Water and gas $52
Restaurants $175
Groceries $275
Car insurance $120
Miscellaneous $71
20
Step 3: List categories and their total in the
budget worksheet.
Monthly Budget Worksheet
Monthly Net Income:
Expenses
Housing:
Food:
Utilities:
Savings:
Transportation:
Other:
Total Expenses:
Cost
Percentage of
Monthly Net
Income
21
Step 3: List categories and their total in
the budget worksheet.
22
Why
is it important to create a
budget based off the net
income rather than gross pay?
23
Theo’s Budget
24
Vocabulary

Fixed expenses are those expenses
that remain the same each month.

Variable expenses are those
expenses that vary from month to
month.
25
BALANCE BETTY’S BUDGET
 Barney’s
girlfriend, Betty, is still in college.
She is determined not to get a loan to
pay for tuition and books. Therefore she
lives at home and works part-time. She
knows that if she can save $300 every
month, she will have enough money to
pay for next semester’s college tuition
and books. Every month Betty spends
more money than she makes. Her father
has been giving her money when she
overspends. He has explained that he will
no longer bail her out.
26
Texas Reality Check
Now it is time for you to take a reality check. Have you
thought about your future? What will your budget look
like? What type of an occupation do you need to afford
this budget? The following simulation will help you
make these decisions.


Go to the following website:
http://www.texasrealitycheck.com
TCEE
Grade 7 Lesson 4
Know Your
Worth
27
28
The student is expected to:
 Math
7.13C: create and organize a
financial assets and liabilities record and
construct a net worth statement
29
Engage
What
does it mean to be
wealthy?
30
31
Net worth is the value of what
you own minus what you owe.
 $30,000
32
33
Activity 7.4-1a
 Work
in pairs.
 Use
the Activity 7.4-1a sheet and the blue
and yellow cards to determine each
families net worth.
 When
you are finished read teachers
notes, step 8-9 on page 3.
34
Chalkboard Splash
What
could Family B do to
increase their net worth?
Determine
if idea is
increasing income or
decreasing debt.
35
Budget or Net Worth?
 Budget
is a tool used day to day to make
sure your expenses don’t exceed your
income.
 To
determine if you are getting out of
debt or if you are increasing your wealth,
one needs to analyze their net worth.
36
Calculate Your Net Worth While
Budgeting to Maintain Perspective by
Eric Ravenscraft


“An increase in net worth meant that I was
unquestionably spending less than what I
earned, which is the key to personal finance
success. An increase in net worth meant that
all of the hard day-to-day choices I was
making were actually adding up to
something big.”
“It was exhilarating. Each time I calculated
that number, I could clearly see the impact
that my choices were having even if they
weren't really evident in my day-to-day life.”
TCEE
Grade 7 Lesson 6
Smart Shopping
37
38
The student is expected to:
 Math
7.13F: analyze and compare
monetary incentives including sales,
rebates and coupons
TCEE
Grade 8 Lesson 1
Saving for My
Future
39
40
The student is expected to:
 Math
8.12C: explain how small amounts of
money invested regularly, including
money saved for college and retirement,
grow over time
 Math 8.12D calculate and compare
simple interest and compound interest
41
Saving for your education is an
investment in yourself.
42
ACTIVITY 8.1-1
Spending and Earning
How I spend my money:
Trade-offs I can make:
Other sources of income:
Total Monthly Savings:
Money to Save
Monthly
43
Bankrate.com
44
Calculating Interest
TCEE
Grade 8
Lesson 2
Borrowing Money
45
46
The student is expected to:
8.12A: solve real‐world problems
comparing how interest rate and loan length
affect the cost of credit
 Math 8.12B: calculate the total cost of repaying
a loan, including credit cards and easy access
loans, under various rates of interest and over
different periods using an online calculator
 Math
47
When Joaquin sat down to negotiate his
auto loan with the dealership, he was
told that he could borrow $15,000 at 6%
interest for 3 years. His payments would
be $456 per month. Joaquin explained
that he could not afford $456 per month
and he wanted a better deal. The car
dealer agreed to give Joaquin a better
deal. He told him that he could bring
down his monthly payments to $289 per
month for 5 years.
Was this a better deal?
48
49
Activity 8.2-1

Decoding Loans with APR
According to Investopedia, “The annual rate
that is charged for borrowing (or made by
investing), expressed as a single percentage
number that represents the actual yearly cost
of funds over the term of a loan. This includes
any fees or additional costs associated with
the transaction.” [Source:
http://www.investopedia.com/terms/a/apr.as
p]
Bottom line: Always ask for the APR when
getting a loan.
50
What is a Payday or Title
Loans?
 Easy
access loans are sometimes
called title loans or payday loans. They
make it “easy” to get a loan. The high
cost is due to the short time period of
the loan and to the fee. When the
interest rate or fee is calculated over
the short time period, the Annual
Percentage Rate (APR) will be huge.
51
How do payday loans work?
A
borrower signs over a personal check for
collateral to get quick cash. The lender, who
advertised 15% interest, agrees not to
deposit the check until payday.
 Let's say you want to borrow $200 until you
get your next paycheck in two weeks.
 Calculate the fee: 15% of $200 is $30.
 You write a check to a payday lender for
$230
 The $30 fee you pay on the loan calculates
to an Annual Percentage Rate (APR) of
391%.
52
Decoding Loans with APR
Common Small
Loan
Easy Access Loan
$1,000
$1,000
12 months
14 days
Interest Rate
7%
n/a
Financial Fee
n/a
$300*
7.22%
782%
$86.63 per month
n/a
Loan Amount
Term
Annual Percentage
Rate
Payment
Total Repayment
*1st 14 day fee is $300, if renewed an additional $300 fee is
required.
53
Decoding Loans with APR
Common Small
Loan
Easy Access Loan
$1,000
$1,000
12 months
14 days
Interest Rate
7%
n/a
Financial Fee
n/a
$300*
7.22%
782%
$86.63 per month
n/a
Loan Amount
Term
Annual Percentage
Rate
Payment
Total Repayment
$1039.56
*1st 14 day fee is $300, if renewed an additional $300 fee is
required.
54
Decoding Loans with APR
Common Small
Loan
Easy Access Loan
$1,000
$1,000
12 months
14 days
Interest Rate
7%
n/a
Financial Fee
n/a
$300*
7.22%
782%
$86.63 per month
n/a
Loan Amount
Term
Annual Percentage
Rate
Payment
Total Repayment
$1039.56
$1300
*1st 14 day fee is $300, if renewed an additional $300 fee is
required.
55
St. Louis Federal Reserve: All
About Credit

Step 1 – Divide the sum of the fees and
finance charges ($300) by the amount
financed. $300 ÷ $1000.00 = .3

Step 2 – Multiply the answer by the number of
days in a year .3 x 365 = 109.5

Step 3 – Divide the answer by the term of the
loan in days. 109.5 ÷ 14 = 7.821

Step 4 – Move the decimal point two places
to the right and add a percent sign. 7.821
becomes 782% (rounded) to state the annual
percentage rate.
56
Online calculator
Go
to bankrate.com
Choose Calculators
Choose AMORIZATION
57
Important Tips
Write
3-4 important tips
about loans that you would
like to share with a family
member.
58
A Student’s Story
59
Assessment Question
 Brandon
has reached his credit card limit of
$5000.00. Since Brandon has a poor credit history,
the annual interest rate on this credit card is 22%.
Using an online calculator, Brandon determined
that if he pays $180.00 per month and does not
make any additional purchases with this card, it
will take him 39 months to pay off the credit card.
Which of the following represents the total interest
Brandon will pay in when his debt is paid off?
A
B
C
D
$858.10
$1100.00
$2020.00
$1544.40
TCEE
Grade 8
Lesson 3
Methods of Payment
60
61
The student is expected to:
 Math
8.12E identify and explain the
advantages and disadvantages of
different payment methods
62
ATM or Debit Card
Online Banking
Credit Card
1: On the 25th of every month, Tamesha
pays her rent by writing the amount on a
small official preprinted note that contains
information about a checking account. She
puts this note in an envelope and drops it
off at the post office.
2: Inga goes to the store to buy groceries.
To pay for the groceries, she slides her card
through a card reader and enters a special
code.
3: On the 30th of every month, Maribel pays
her rent by first driving to bank to make a
withdrawal and then driving to the real
estate agency to make the payment.
Check
4: It’s time for Binh to get the oil changed in
his car. The payment for the oil change
shows up on his monthly bill for the card.
Cash
5: On the 28th of every month, Blake pays
his rent by logging on to the computer. He
goes to his bank’s website and enters his
password for access. Then he types in the
needed information to make the payment.
63
Methods of Payment
Credit Card
A credit card is a small plastic card issued by a financial
company. This card has a magnetic strip on the back. When
the card is swiped through a card reader, the owner of the
card is borrowing money from the financial company to make
the payment. Here’s what happens when the card is swiped:

The amount of the purchase is transferred from the financial
company who issued the credit card to the store’s account.
The owner of the credit card will pay for all purchases
charged to the card soon after the bill or statement arrives.
Purchases using a credit card can also be made on the
Internet. Inputting the credit card information allows the credit
card holder to borrow money from the credit card company to
make the purchase.
64
Visual 8.2-3
65
ACTIVITY 8.3-2
 Read
story.
 Find clues that reveal advantages or
disadvantages about the method of
payment
 Record advantages and disadvantages
in interactive notebook.
 Look for additional clues in Activity 8.3-1
and Visual 8.3-1.
66
Methods of Payment
ATM or Debit Card
An ATM or debit card is a small plastic card
issued by a financial institution. This card has a
magnetic strip on the back. The card is swiped
through a card reader and a Personal
Identification Number (PIN) is entered. This
process will allow for the owner of the card to
make a payment or withdraw funds. The money
is immediately transferred from the owner’s
checking account.
67
Methods of Payment
Online Banking
An electronic payment is a process of using the
Internet to make a payment. This process
requires that the account owner input secure
information via the Internet. Accessing his or her
bank account to make a payment means that
the money will be transferred out of the account
for payment.
Vocabulary
68
Insufficient Funds: This term describes the
circumstance of not having enough money in a
checking account to make a payment or to
withdraw money.
Overdraft Protection: Financial institutions offer an
overdraft protection service. This means that if
there is not enough money in the account, the
bank will authorize the withdrawal, purchase or
electronic payment for a fee.
Overdraft fee: This is a fee charged by the financial
institution for making a purchase against your
checking account in which there is not enough
money in the account to cover the payment.
69
Overdraft Protection
 Scheduled
cell
phone payment in
2 days for $50
 Balance
$60
 Today
 Balance
$40
 Balance
-$10
 Balance
-$40
you
withdraw $20
 Next
day, cell
phone payment is
processed
 Overdraft
fee is $30
70
No Overdraft Protection
 Scheduled
cell
phone payment in
2 days for $50
 Balance
$60
 Today
 Balance
$40
you
withdraw $20
 Next
day, cell
phone payment is
denied due to
insufficient funds
 Possible
consequences:
 Late
fee
 Report
Bureau
to Credit
71
72
Methods of Payment
Cash
73
More about credit cards
 Credit
card companies offer fraud
protection
 Credit card can affect your credit history
74
More about debit cards
 Understand
overdraft protection
 Report unauthorized charges or stolen
card immediately.
75
CHECK FOR UNDERSTANING
 For
which methods of payment is the
consumer using his or her own money?
 For
which method of payment is the
consumer borrowing money?
 What
precautions should a consumer
consider when using a credit card?
 What
precautions should a consumer
consider when using a debit card?
 What
precautions should a consumer
consider when using an online bank?
 What
precautions should a consumer
consider when using cash?