Personal Finances - Louisiana Department of Education

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DRAFT
PERSONAL FINANCES
Why Study Personal Finance
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To help prepare for your future
To help you make decisions – the decisions you make
now can greatly affect the decisions you have to make
in the future
Choices have consequences (both positive AND
negative)
To have an advantage over others
More & more it will be up YOU to provide for personal
needs

The amount that companies/government, etc. are providing
for retirement & benefits is decreasing.
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Financial Planning
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Follow it
Stick with it
Update it
Like your resume, your financial plan is a lifelong
resource that changes as you change.
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Financial Plan
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Write down what you spend for several weeks
Determine where your money goes
Develop goals (short-term & long-term)
Set a budget
Stay on track AND out of debt
DRAFT
ACTIVITY: Setting Financial Goals
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Set a short-term goal & a long-term goal
Write objectives (ways you will reach each goal)
for each goal
Estimate the cost
Specify a date in which you want to achieve each
goal
Post Your Plan!

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Where you can see it daily
Personal Portfolio
DRAFT
ACTIVITY: Tracking Your Spending
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Keep track of your spending for a week by keeping
receipts in an envelope (or write amounts on the
envelope)
At the end of the week, list your expenses
Examine your spending & write a one-paragraph
summary on how your spending aligns or does not
align with your financial goals/plan
This information will be used to complete the Budget
activity
DRAFT
Income

Gross Pay – the amount of money paid to you before taxes & deductions are taken
out
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Net Pay – money you actually receive after taxes & deductions

Deductions
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Federal & State Income Tax
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Health Insurance
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Social Security & Medicare (for future benefits)
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Retirement

Investments
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Other
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Sample Paycheck

Have checks electronically deposited
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Income
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When you receive a check, pay yourself first
Immediately put a set amount in a Savings Account
This will help you meet your goals
Electronic deposits will assist with this
YOUR financial goals are the most important
expenses you have!
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Income
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Form W-4
A form completed when starting a job so that the
employer can withhold the correct income tax from your
pay
Employees should complete a new Form W-4 each year
and/or when their personal financial situation changes
How to Fill Out a W-4:
http://taxes.about.com/od/preparingyourtaxes/ht/W4.htm
 Form W-4:


http://taxes.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=taxes&cdn
=money&tm=70&gps=361_279_1419_665&f=10&su=p284.9.3
36.ip_p504.1.336.ip_&tt=7&bt=1&bts=1&zu=http%3A//www.ir
s.gov/pub/irs-pdf/fw4.pdf
DRAFT
DRAFT
Income
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Form W-2
Every employer engaged in a trade or business who
pays remuneration for services performed by an
employee must file a Form W-2 for each employee
from whom income, social security or Medicare tax was
withheld
W-2s must be sent to the employee by January 31 of
each year
The W-2 received by the employee is used to file
Federal Income Tax forms
http://taxes.about.com/od/formw2/a/IRSFormW2.htm
DRAFT
Sample W-2 Form

Contains your tax information for one job in one year
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You’ll receive one for each job you worked at during the year
12-2222222
Real World Business
16,680.24
1,728.00
16,680.24
1034.16
16,680.24
241.92
Chicago, IL 60640
000-00-000
D
Irma Money
2301 South Jackson
Chicago, IL 60640
IL
12-2222222
16,680.24
440.40
DRAFT
2000.00
Income

Federal Taxes
 Helps
pay for programs such as highways, law
enforcement, etc.
 Required to file every year
 May get back most taxes paid
 Form 1040-EZ

State Taxes
 Helps
pay for programs sponsored by the state
 Required to file
 May get back taxes paid
DRAFT
ACTIVITY: Completing a Form W-4
 Complete
Form W-4.
 http://taxes.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=tax
es&cdn=money&tm=70&gps=361_279_1419_665&f=10
&su=p284.9.336.ip_p504.1.336.ip_&tt=7&bt=1&bts=1&z
u=http%3A//www.irs.gov/pub/irs-pdf/fw4.pdf
 Turn in for credit.
DRAFT
Employee Benefits & Perks
BENEFITS - Non-wage compensations
provided to employees in addition to
their wages or salary
 Insurance – health, dental, life
 Retirement
 Paid vacation
 Sick leave
 Tuition
 Daycare
 Housing
 Transportation/parking
 Disability income protection
 Profit sharing
 Others
PERKS – benefits of a discretionary
nature
 Transportation/parking
 Meals
 Other
Source:
http://en.wikipedia.org/wiki/Emplo
yee_benefit
DRAFT
Personal Budget
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Fixed Expenses – Needs
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Car – loan/payment, upkeep, gas
Rent or mortgage
Utilities – Electricity, Gas, Water & Sewerage, Phone
Insurance – car, health, rental or homeowner
Food
Clothing & Grooming
School – loans, tuition & books
Savings – short term goals & long-term goals
Unexpected expenses
Donations (community, charity) & Tithing
Flexible Expenses - Wants
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Additional Clothing
Dining out
Social activities
DRAFT
Renting
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Monthly rental fee
Utilities
 Electricity
 Gas
 Phone
 Water
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& Sewerage
Renter’s Insurance
 Can
be as low as $15/month
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Owning
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A good investment
Must save for a down payment
Usually goes up in value
May borrow against the equity built up over the
years
Able to deduct mortgage interest & property taxes
from income taxes
http://financialplan.about.com/od/realestatemortg
ages/a/BuyingaHome.htm
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Transportation
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Car
 Insurance
 Gas
 Maintenance
 Problems
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Bus
 Pay
each time you ride
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Insurance
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A way to protect things you own
Car – in case of accident or injury
Health – medical expenses
Renter’s – for the items you own even though you
are renting
DRAFT
ACTIVITY: Create a Budget
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Prepare a budget using your current financial status
Turn in
http://financialplan.about.com/od/moneyandcolleg
estudents/l/blcollbudget.htm
Use the budget calculator to develop a budget
http://www.bankrate.com/calculators/smartspending/college-student-budget-calculator.aspx
DRAFT
Financial Institutions
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Bank
Credit Union
Federally insured – FDIC (Federal Deposit Insurance
Corporation)
Check policies on:
Fees
 Balance requirements
 Overdraft protection
 Hours of business
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DRAFT
Bank Accounts
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Savings
Checking
 Write
checks
 Use a Debit Card
 May be a monthly fee
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ATM (Automated Teller Machine)
 Access
funds anytime
 ATM card required (keep your PIN safe & secretive)
 Must pay a fee which is automatically taken out of your
account at the time of withdrawal
DRAFT
Saving & Investing
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Savings Account – earn simple or compound interest
Certificates of Deposit (CDs)
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Money Market Account
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need a large amount to begin (~$500)
investing more may provide a higher interest rate
must leave money in CDs for a specified amount of time
can write checks
earns interest
U.S. Savings Bonds
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good way to save for higher education
Must be held for a specified period of time or penalties may be
charged for cashing in early
DRAFT
Investing
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Save early
Even a small amount invested while you are young
makes a tremendous difference later in life
Compounding Interest
 Money
invested makes interest
 The interest then earns interest
 Money accumulates faster than you might think
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It’s better to invest a little when you are young
rather than waiting to invest more when you are
older
DRAFT
Chart Your Course
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Calculate saving/investing $100 per month starting at age 18 for 13 years
at an 8% annual rate (compounding interest)
Calculate the amount you will have at the age of 65 without investing any
other additional amount.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
DRAFT
Investing
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Stocks – ownership in a company
Bonds – loan money
Mutual Funds – money is invested in various ways
There is some risk but may make more money
(reward)
The higher the reward, the higher the risk
DRAFT
Investing & Money Making Ideas
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http://teenmoneycentral.com/2009/07/15/investin
g-for-teens/
http://teenmoneycentral.com/2009/07/15/waysfor-kids-to-make-money/
DRAFT
ACTIVITY: Committing to Saving
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Make a commitment to invest a portion of your
income each month, not matter how little or how
much.
Write the commitment down.
Post it where you can see it every day.
Include it in your personal portfolio.
DRAFT
Loans
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Interest is charged
If you pay more than the required monthly
payment, you will pay the loan off early AND pay
less interest
DRAFT
Credit Cards
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Use for emergencies only
Will help you establish credit
Check the interest rate & yearly fee
Pay the full amount owed EVERY month
Stay away from spending up to your credit limit
Do not skip payments or make late payments – you
will be charged extra fees
You will pay interest on what you owe AND interest
on the interest you previously paid
DRAFT
Receipts
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Keep all receipts
Use checking account, savings account & Debit Card
receipts to balance account
Use credit card receipts to check monthly statements
Using receipts & checking/balancing accounts helps
prevent theft or errors made by the institution

Identity Theft – Example: Sears credit card; over $800
charged on the card over the Internet; checking the receipts
against the statement identified this problem; the credit card
owner was not held liable

Can cause a person’s credit to be ruined
DRAFT
Credit Score
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Everyone has one
The higher the score, the better your rating
The better the score, the easier it is to borrow money at
a lower rate if/when necessary
House
 Car
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3 Major Credit Bureaus
Equifax
 Trans Union
 Experian
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DRAFT
Debt
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Limit your debt
Purchase needs
Save for wants
Have a plan
Avoid late fees, high interest rates
DRAFT
Retirement
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Start saving early
401(k) plan
 Invest
a portion of your income
 Sometimes companies match your contribution
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IRA (Individual Retirement Account)
 Regular
– you do not pay taxes until retirement
 Roth – pay taxes while contributing to it
DRAFT
EVERFI: Online Financial Literacy
Program
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www.everfi.net
10 modules (introduction & 9 lessons)
Obtain your Site Code
Register
Create Class Code(s) & description of the code
 Examples: 2nd Hour EFC, 5th Hour EFC
 Students will use code when they register (they MUST use
the correct code)
Student logins
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REQUIRE them to use their school login (User ID &
Password)
DRAFT
EVERFI: Online Financial Literacy Program
Grading:
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10 points for each module = 90 total points
Must make a 70 or above to be certified
Can give them points for completing the introductory lesson
Set class goal
Provide incentives
Print & post certificates
100% Percenters:
 Signs
for each module
 Students write name on cutout & post under sign when
score 100% by due date
DRAFT
Student Resources
Web sites:
 http://personalfinancetipsforyoungpeople.com/
 http://www.mlive.com/business/annarbor/index.ssf/2009/04/josh_levine_six_principle
s_of.html
 Banks & Credit Unions
 Parents
 Realtors
 Finance Planners
DRAFT
Sources
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http://taxes.about.com/od/preparingyourtaxes/ht/W4.htm
http://www.irs.gov/pub/irs-pdf/iw2w3.pdf
http://taxes.about.com/od/formw2/a/IRSFormW2.htm
www.kellyhs.org/.../Hicks/Information%20Technology/documents//Sample_W2_Form%5B2%
http://EzineArticles.com/?expert=Cynthia_B._Carlton
http://EzineArticles.com/2614052
http://taxes.about.com/od/1040ez/Form_1040_EZ_Instructions.htm
http://financialplan.about.com/od/realestatemortgages/a/BuyingaHome.htm
http://financialplan.about.com/od/moneyandcollegestudents/l/blcollbudget.htm
http://www.bankrate.com/calculators/smart-spending/college-student-budgetcalculator.aspx
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
GoVenture Education IdeaBook. www.goventure.net
DRAFT
Teacher Resources


Request free materials from to access resources such
as the “What Do You Think?” activities & steps to
financial planning
NEFE High School Financial Planning Program.
Greenwood Village, SC: National Endowment for
Financial Education, 2006.
 Free
 Hsfpp.nefe.org
 Click
on Instructors
DRAFT
Additional Teacher Resources

InVEST – tools for personal finance & insurance; fun,
interactive lessons for students
 Teacher
& Student Workbooks
 Lesson plans
 Games
 Rating software
 Guest speakers
 Etc.

www.investprogram.org
DRAFT
Additional Teacher Resources
Financial Literacy: Spend, Save and Track Your
Money. Learning ZoneXpress
(www.learningzoneexpress.com)
Financial Literacy: Manage and Multiply Your Money.
Learning ZoneXpress
(www.learningzoneexpress.com)
DRAFT
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