Welcome to the
Personal Management
Merit Badge
Objective of this Presentation: To help
you pass off as many of the requirements
as you can during the next two weeks
BSA Advancement ID#: 11
Source: Boy Scout Requirements, #33215, revised 2004
Day 1 Assignments
Assignment Schedule
• Day 1
1
2a-b
3a-e
4a-c
5a-c
6a-e
Prepare for Day 2
1a
1b(2)
8a-b
2
Day 2
1c
2b
7a-e
8c-d
9a-e
10a-b
Your Previous Assignment:
Requirement 1
 Do the following:
•
•
A. Choose an item that your family might want to
purchase that is considered a major expense.
B. Write a plan that tells how your family would save
money for the purchase identified in requirement 1a.
• Discuss the plan with your family
• Discuss how other family needs must be
considered in this plan
• Bring the plan to the Pow Wow and discuss the
plan with your merit badge counselor
3
Comparison Shopping
Comparison shop for the item.
 Who is selling it for the best
price?
• Call different stores.
• Study ads.
• Look for coupons or sales.
 Consider alternatives:
• Could you buy it used?
• Should you wait for a sale?
 Discuss your shopping strategy
with your counselor.
4
Your Previous Assignment:
Requirement 1 (continued)
• C. Develop a written shopping strategy for the purchase
identified in requirement 1a. Bring this shopping strategy
with you to Day 2
• 1. Determine the quality of the item or service (using
consumer publications or rating systems).
• 2. Comparison shop for the item.
• Find out where you can buy the item for the best
price. (Provide prices from at least two different price
sources.) Call around; study ads. Look for a sale or
discount coupon.
• Consider alternatives. Can you buy the item used?
Should you wait for a sale?
5
Requirement #2a
 This assignment takes 13 weeks—start today
a.
Prepare a budget reflecting your expected income,
expenses, and savings.
• Track your actual income, expenses, and savings for
13 consecutive weeks.
• You may use the forms provided in the merit badge
pamphlet, devise your own, or use a computer
generated version from the website.
• When complete, present the results to your merit
badge counselor.
6
Budgeting (continued)
 What is a Budget?
• It’s the process of making sure your resources are
being used for the things that matter most to
you—your personal goals
• A budget is a star to set your sights by, not a stick
to beat yourself with. It’s an important tool
 While a budget is easy to understand, it takes
discipline to follow.
• It is probably the most important single factor in
helping you to attain your personal goals.
7
Budgeting (continued)
 There are different methods to track expenditures:
• Checks and credit cards
• These expenditures leave a paper trail
• Cash
• Record expenditures in a notebook
• Computer programs, i.e., Quicken, Money or spreadsheets
• These are very useful, especially if tied to bank and credit
card companies
• Generate a monthly record of spending and income
8
Budgeting (continued)
 What is in a budget?
• All cash inflows and outflows
 Income:
• Money coming in, from work, savings, parents
 Expenses:
• Two types
• Fixed
• These are expenses that do not change each month, i.e.
non-discretionary
• Variable
• These are expenses that can change, i.e. discretionary
9
Budgeting: The Old Way
Income
Expenses
Personal Goals
10
Available for
Savings
Budgeting: The Right Way
Income
Pay the
Lord
Pay
Yourself
Expenses
Personal Goals
11
Other
Savings
The Right Way
(continued)
Elder L. Tom Perry affirmed this when he said:
After paying your tithing of 10 percent to the Lord,
you pay yourself a predetermined amount directly
into savings. That leaves you a balance of your
income to budget for taxes, food, clothing, shelter,
transportation, etc. It is amazing to me that so many
people work all of their lives for the grocer, the
landlord, the power company, the automobile
salesman, and the bank, and yet think so little of
their own efforts that they pay themselves nothing.
L. Tom Perry, “Becoming Self-Reliant,” Ensign, Nov. 1991, 64
12
Your Personal Budget
 Prepare a personal budget for
3 months.
 Put money into savings
before spending it on
anything else.
 Keep track of everything you
buy.
 Balance your income
(money you receive) with
your savings and expenses
(things you spend money
on).
 See packet for budget
Budget
Income
Month #1
Plan
Actual
Month #2
Plan
Actual
Month #3
Plan
Actual
Plan
Total
Actual
Month #3
Plan
Actual
Plan
Total
Actual
Mowing Lawns
Chores
Gifts
Allowance
Total
Expenses
Month #1
Plan
Actual
Savings
Food
CD's + movies
Total
Discretionary
13
Month #2
Plan
Actual
2b. Report to Your Counselor
• After the 3 months, share your budget with your
counselor.
• Explain how you determined how much you
saved, what you spent money on, and what was
left over.
• Did you spend more or less than you
budgeted?
14
Assignment 3
 Discuss with your merit badge counselor
FIVE of the following concepts:
•
A. What emotions do you feel when you receive
money?
• What does it make you feel like?
• Does it vary, depending on how much money
you receive?
15
Assignment 3 (continued)
• B. How does the amount of money you have with
you (in your pockets) affect your spending habits?
• If you have money in your pocket, are you more
likely to spend it or save it?
• If you are more likely to spend it, what does this
indicate about money you have in your pockets?
• If you want to save money, should you keep
it with you or not?
16
Assignment 3 (continued)
• C. What are your thoughts when you buy something
new and your thoughts about the same item three
months later? Are they the same?
• What is buyer's remorse?
• Buyer’s remorse is when you buy a product
for a certain reason, and then afterwards
realize that it did not fulfill that reason
• Often we buy things we think will satisfy us, and
then after we have owned it for a while, realize
that it did not fulfill those needs
• How can you guard against buyers remorse?
17
Assignment 3 (continued)
• D. How does hunger affect you when shopping for
food items (snacks, groceries)?
• If you are hungry, will you buy more food?
• Will you buy more junk food?
• If hunger affects what you purchase, should you
eat well before shopping?
18
Assignment 3 (continued)
• E. Share an experience of an item you have
purchased after seeing or hearing advertisements
for it. Did the item work as well as advertised?
• What did you do when it didn’t work as
advertised?
• Should we take things back that don’t work?
• Is that the correct thing to do?
19
Assignment 3 (continued)
• F. What happens when you put money into a
savings account?
• Is it safe?
• What does the bank do with the money?
• What is the difference between interest you earn
and interest you pay?
20
Assignment 3 (continued)
• G. What is charitable giving? Explain its purpose
and your thoughts about it.
• Charitable giving is sharing the things we have
received with others
• God gives to us freely. We should share with
others
21
Assignment 3 (continued)
• H. What you can do to better manage your
money?
• Ideas include:
• Be more careful with your spending
• Plan your spending and live your plan
• Live within your means
• Be smart--Earn interest—don’t pay interest.
22
Requirement 4
 Explain the following to your merit badge counselor:
•
•
A. What is the difference between saving and investing?
Why would you use one over the other?
• Saving: to put money aside, usually in a bank account
for future use
• The return you earn is generally very low but
certain
• Investing: to invest money to make even more money
in the future
• The return is generally higher but uncertain
Generally you save for short-term goals, and invest for
long-term goals
23
Requirement 4 (continued)
• B. What is return on investment?
• Return on investment is the money received
from investing divided by the amount of money
invested.
• What is risk?
• Risk can be many things, but generally
relates to uncertainty. The less certain a
return, generally the higher the risk
24
Requirement 4 (continued)
• C. What is the difference between simple interest
and compound interest? How do these affected the
results of your investment exercise?
• Simple interest is interest on principle only.
• You invest $1,000 for 1 year at 10% interest
and you will have $110 at year end.
• At the end of 10 years you will have $1,100
or $100 interest each year * 10 years + 1,000
principle.
25
Requirement 4 (continued)
• Compound interest is interest on interest.
• You invest $1,000 at 8% interest compounded
monthly will earn 1,083 in 1 year
• In 10 years, your investment will have increased
to $2,220, nearly double the simple interest
method
• Compound interest is a very important part
of investing
26
Requirement 5
 Select five publicly traded stocks from the
business section of the newspaper. Explain to
your merit badge counselor the importance of
the following information for each stock:
•
•
•
Current price
How much the price changed from the previous
day
The 52-week high and the 52-week low prices
27
From the Wall Street Journal
28
Requirement 6
 Pretend you have $1,000 to save, invest, and help
prepare yourself for the future. Explain to your
merit badge counselor the advantages or
disadvantages of saving or investing in each of the
following:
•
•
•
•
•
Common stocks
Mutual funds
Life insurance
A certificate of deposit (CD)
A savings account or U.S. savings bond
29
Requirement 6 (continued)
What are common stocks?
• Stocks are pieces of ownership in a listed company
Advantages
• Higher returns over the long-term
Disadvantages
• Higher risk
30
Requirement 6 (continued)
 What are mutual funds?
• Mutual funds are portfolios of securities (stocks, bonds, or
cash) managed by an investment company
 Advantages
• Professionally run
• Immediate diversification
 Disadvantages
• No control over taxes
• May not outperform benchmarks
31
Requirement 6 (continued)
What is life insurance?
• Life insurance is a contract that will pay money to
your beneficiaries should you die
Advantages
• Life insurance payments are tax-free
• Cash value life insurance grows tax-free
Disadvantages
• Cash value life insurance is very expensive
• You have to die to get paid
32
Requirement 6 (continued)
What are Certificates of Deposit (CDs)?
• CDs are savings accounts held with a financial
institution for a specific time
Advantages
• Returns are higher than savings accounts
• Returns are guaranteed
Disadvantages
• Returns are lower than other instruments
33
Requirement 6 (continued)
What are U.S. Savings bonds?
• U.S. Savings Bonds are bonds issued by the US
government
Advantages
• Returns are higher than general savings accounts
• Returns are tax-free if used for education
Disadvantages
• Returns are lower than other instruments
34
Day 1 Assignments
We should have completed the following
assignments for Day 1:
• Day 1
2a
3a-e
4a-c
5a-c
6a-e
Prepare for Day 2
1a
1b
35
Day 2
1c
2b
7a-e
8a-d
9a-e
10a-b
Preparation for Day 2—
To do this next week
Requirement 1
 Do the following:
•
•
A. Choose an item that your family might want to
purchase that is considered a major expense.
B. Write a plan that tells how your family would save
money for the purchase identified in requirement 1a.
• Discuss the plan with your family
• Discuss how other family needs must be considered in
this plan.
• Be prepared to discuss the plan with your merit badge
counselor when you return
36
Preparation for Day 2 (continued)
 C. Develop a written shopping strategy for the
purchase identified in requirement 1a.
• 1. Determine the quality of the item or service (using
consumer publications or rating systems).
• 2. Comparison shop for the item.
• Find out where you can buy the item for the best price.
(Provide prices from at least two different price
sources.) Call around; study ads. Look for a sale or
discount coupon.
• Consider alternatives. Can you buy the item used?
Should you wait for a sale?
37
Preparation for Day 2 (continued)
Requirement 8
• Demonstrate to your merit badge counselor your
understanding of time management by doing the
following:
• A. Write a "to do" list of tasks or activities, such
as homework assignments, chores, and personal
projects, that must be done in the coming week.
List these in order of importance to you.
• What is a “to do” list?
• Why must you prioritize this list?
38
Preparation for Day 2 (continued)
• B. Make a seven-day calendar or schedule. Put in
your set activities, such as school classes, sports
practices or games, jobs or chores, and/or Scout or
church or club meetings, then plan when you will
do all the tasks from your "to do" list between your
set activities.
• Why is a calendar important?
• Why is planning so important?
• What is meant by the statement:
• “Those who fail to plan, plan to fail.”
39
Preparation for Day 2 (continued)
• C. Follow the one-week schedule you planned.
• Keep a daily diary or journal during each of the seven
days of this week's activities, writing down when you
completed each of the tasks on your "to do" list compared
to when you scheduled them.
• D. Review your "to do" list, one-week schedule, and
diary/journal to understand when your schedule worked and
when it did not work.
• With your merit badge counselor, prepare to discuss what
you learned from this requirement and what you might do
differently the next time when you get together in two
weeks.
40
Additional Information
Investing Tools: the investment hourglass
• It is a way of helping remember that investing is a
means to help us achieve our goals—it is not an
end in itself
• And since our goals are based on our values,
our investments should reflect those values
41
Before you Invest: The Hourglass Top
1. Have your priorities in order and are “square” with the Lord
2. Have adequate life and health insurance
3. Be out of credit card and
consumer debt
4. Know your personal goals, budget,
and have an investment plan
If you can answer these affirmatively,
you are ready to invest!
42
The Hourglass Bottom (continued)
Retirement Assets
Taxable Assets
4. Opportunistic: Individual Stocks and Sector Funds
3. Diversify: Broaden and Deepen your Asset Classes
2. Core: Broad Market Exposure: Core Mutual Funds
1. Basics: Emergency Fund and Food Storage
43