Welcome to the
Personal Management
Merit Badge Day 2
Objective of this Presentation: To help
you pass off as many of the requirements
as you can during the Pow Wow
Requirement are from 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
Day 2
1c
2b
7a-e
8c-d
9a-e
10a-b
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.
Your Previous Assignment:
Requirement 8
Requirement 8
• Demonstrate to your merit badge counselor your
understanding of time management by doing the
following over this next week:
• 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?
Your Previous Assignment:
Requirement 8 (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.”
Your Previous Assignment:
Requirement 8 (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.
• Now discuss what you learned from this requirement
and what you might do differently the next time.
Requirement 2 – To be completed in 13
weeks with your Counselor
•
A. Prepare a budget reflecting your expected
income (allowance, gifts, wages), expenses, and
savings.
•
•
Track your actual income, expenses, and savings for
13 consecutive weeks
B. Compare expected income with expected expenses.
• If expenses exceed income, determine steps to
balance your budget.
• If income exceeds expenses, state how you would use
the excess money (new goal, savings).
Requirement 7
 7. Explain the following:
•
•
What is a loan?
• A loan is an agreement to borrow money and to repay
a specific amount of money (principle and interest)
each period. It is also called credit
What is interest?
• Interest is rent paid to borrow money. You should
earn interest and not pay it. Someone said:
• Interest: them’s that understands it, earn it; and
thems that don’t, pay it
Requirement 7 (continued)
 How does the annual percentage rate (APR) measure
the true cost of a loan?
• The APR reflects the true percentage rate of a loan. It takes
into account various fees and other costs over a year. The
APR is always higher than the simple interest rate on a
loan.
• Before you borrow:
• Ask what the total cost of the loan will be in dollars and
cents.
• Find out the amount of all fees – they add up quickly.
• Don’t always choose the loan with the lowest payment.
A lower payment may mean a longer repayment period
and you will pay more in total interest charges.
Requirement 7 (continued)
• B. What are the different ways to borrow money?
• Money can be borrowed many different ways. From
cheapest to more expensive, it is:
• Loans from family and parents
• Loans from Credit Unions and S&Ls
• Loans from banks
• Credit cards
• In-store financing
• Payday lenders
• Generally, the worse your credit the more you will pay to
get a loan
Requirement 7 (continued)
• C. Explain the differences between a charge card,
debit card, and credit card
• What are the costs and pitfalls of using these financial
tools?
• They are expensive and charge very high interest
rates (>20%)
• They obligate future earnings to payments
• They encourage consumption, not saving
• Why it is unwise to make only the minimum payment on
your credit card?
• Companies want you to pay only the minimum
balance as it will take you years to pay off the card
and they will charge thousands in interest costs
Requirement 7 (continued)
What is a Charge card?
• A charge card is a credit card typically is restricted
to purchases from a particular company, like a
department store or a gasoline company.
• Most charge cards are like a credit card in that
you don’t have to pay off all of your charges, or
your entire balance, at one time.
Requirement 7 (continued)
What is a Debit card?
• A debit card is a credit card that works like a
check. The amount is electronically deducted
(debited) from your checking account and paid
into the store’s bank account.
What is a Credit card?
• A credit card is a card issued by a bank and can be
used to pay for any product as long as the seller
accepts the card.
Requirement 7 (continued)
 D. What are credit reports and how does personal
responsibility affect your credit report?
• Credit reports are reports of information collected by credit
bureaus from subscribers, creditors, public court records,
and the consumer
 Why are credit reports important?
• Credit reports help financial institutions determine if you
will likely pay back a loan. If your credit report is good,
there is a much higher likelihood that you will pay back a
loan and hence, more likely a financial institution will lend
you money
Requirement 7 (continued)
• E. What are some ways to eliminate debt?
• The best is don’t go into debt in the first place
• Pay off your highest cost debt first
• Pay more than the minimum amount—as much
as you can
• Consider plastic surgery (cutting up your credit
cards) if you can’t stop using your cards
Requirement 9
 Prepare a written project plan demonstrating the
steps below, including the desired outcome. This is a
project on paper, not a real-life project.
•
Examples:
• Planning a camping trip
• Developing a community service project or a school or
religious event
• Creating an annual patrol plan with additional
activities not already included in the troop annual plan
• Other ideas that may be interesting to you
Requirement 9 (continued)
• Discuss your written project plan with your merit badge
counselor.
• A. Define the project. What is your goal?
• B. Develop a timeline for your project that shows the
steps you must take from beginning to completion.
• C. Describe your project.
• D. Develop a list of resources. Identify how these
resources will help you achieve your goal.
• E. If necessary, develop a budget for your project.
Requirement 10
 Do the following:
•
Choose a career you might want to enter after
high school or college graduation.
• Research the limitations of your anticipated
career and discuss with your merit badge
counselor what you have learned about
qualifications such as education, skills, and
experience.
Step 1
Choose a realistic job based on your age and
skills (fast-food restaurant, movie theatre, yard
work)
Determine how many hours you would work
per week
Determine how much you would make per
hour
Step 2
Make a list of all basic monthly living
expenses: food, clothes, rent, transportation,
telephone, etc.
Ask family or friends, or call sources for help.
Step 3
Compare projected income with projected
expenses
• Would you have enough income to live on?
• Any left for fun? Savings?
Step 4
If expenses are higher than income, could you
reduce expenses or work more hours?
• Could you get a higher paying job?
• What skills would you need to get a higher paying
job?
• Can education help you get those skills?
Discuss your final plan with your
Counselor to pass this requirement off
GOOD LUCK SCOUTS!!!
Optional Material on Investing
Following is optional material that may be
helpful if you have additional time.
Material on Investing
Unlike savings in a bank account, investing
implies there is a risk.
• There is no guarantee that you will get your money
back, or that you will earn a higher return.
• Because of these greater risks, investors have a
chance to earn higher returns (increase in value)
than they would from a savings account, especially
over a long period of time.
Investing (continued)
 The Two Basic Methods of Investing
Financial Investments take two basic forms owned investments or loaned investments.
That is, you are either a lender or an owner.
Investing: Owned Investments
 An owned investment
Common types of owned
means you actually own
investments are:
part or all of a company,
Stock in companies
real estate, or other asset
Mutual Fund shares
(an asset is an item of
Real Estate
value)
A personal business
 You own the asset just
Gold, silver, or diamonds
as you own a bike or
Stamps, paintings,
your family owns a car
or baseball cards
Investing: Loaned Investment
 A loaned investment means
you loan money to someone
in return for its promise to
repay the principal (the
amount you loaned) plus
interest
 Notice this investment is
risky because there is only a
promise to repay the money,
not a guarantee
Common types of loaned
investments are:
Money market funds
Certificates of deposits
U.S. government bonds
Corporate and
municipal bonds
Annuities
Investing (continued)
 The Payoff?
• What’s the payoff for doing all this saving and investing?
Why not spend all the money now?
• The reason is that saving and investing can do
something special that earning money from a job cannot
do - the money itself can earn money!
• Compound interest can earn interest on interest!
Investing (continued)
 How do you measure Investment Performance?
• The three typical measures of investment performance are
yield, profit and total return.
 1. Yield – an investment’s yield is what the investment
pays you directly in income – this might be in the form
of interest (bonds), dividends (stock) or rental income
(real estate)
 2. Profit – the money made from selling an investment
for more money than you paid for it – perhaps you paid
$10 for a baseball card and sold it for $15, the $5 you
made on the sale if your profit
Investing (continued)
 3. Total Return – the combination of an investment’s
income and its increase or decrease in value since
purchased – this tells the investor how much the
investment actually made in dollars over the entire
time the investor owned the asset
Investing (continued)
Common Types of Investments
To help you understand investments, let’s
review some of the basic features of some
common types of investments
Investing (continued)
Bank Savings Account
• A savings account is not unlike a piggy bank you might
have kept at home. It is where you save money for a rainy
day or for one of your goals. It is smart to have a savings
once you begin earning or receiving money.
• There are many benefits to keeping your money at a bank
rather than at home. A few of these reasons are:
Money kept at a bank is insured by the federal
government against loss or theft
A fire or other natural disaster could destroy your money
at home
The bank will pay you money, called interest, on the
money you deposit in a savings account
Investing (continued)
Certificates of Deposit
• Certificates of deposit, sometimes called time
deposits, are issued by banks and are loaned
investments.
• The investor lends the bank a specific amount
of money for a specified period of time at a
specific interest rate.
• In general, the longer the period of time, the
higher the interest rate.
Investing (continued)
U.S. Savings Bond
• You might already own a U.S. Savings Bond. These make
popular gifts for families, grandparents, or others to buy for
children.
• Basically, savings bonds are a loan to the federal
government.
• The government agrees to repay the bondholder the
amount invested, with interest, after a set period of time.
• Governments or companies issue bonds to raise money
for certain projects, such as building roads or factories,
or for general purposes.
Investing (continued)
Shares of Stock
• Buying stock is an owned investment, you pay for stock in a
company and own a portion of the company.
• There are probably thousands of other people who also own
stock in the company, so your ownership in the company is
equal to the percentage of stock you own.
• It is easy to invest in stocks, even for a teenager,
although you must be at least age 18 or set up a special
custodial account with your parents or guardian.
• Since stocks are one of the most risky investments, you
must be careful when buying stocks.
Investing (continued)
Shares in a Mutual Fund
• Mutual funds are a good way to diversify your investments.
• A mutual fund is a company that receives money from
investors and then invests that money in stocks, bonds, and
other types of assets.
• Any interest, dividends, or profits the fund earns are
passed back to the investors, according to the number of
shares they own, minus a small percentage that funds
keep to pay its operating expenses and earn a profit.
• A mutual fund is able to reduce risk because, by pooling
money from shareholders, it can invest in many
different types of investments.
Investing (continued)
Real Estate
• Real estate is an owned investment
• Common types of owned real estate include land, homes,
farms, and office buildings
• A good way to purchase real estate without all the
problems associated with owing property is to purchase
a REIT, a real estate investment trust, which is like a
mutual fund of investment properties
Managing Risk
 How do you manage risk in your life?
1. Avoid it. To avoid the potential risks of driving a car, for
example, you might take the bus.
2. Reduce it. Taking a driver’s education course and
wearing a seat belt reduce the chances of serious injury
from an accident.
3. Retain it. You pay out of your own pocket for any loss or
damage. If you have an old car, you can eliminate
collision insurance, and pay to have the car repaired if in
an accident. People usually do this with less expensive
items.
5 Ways to Manage Risk
4. Transfer it. When people can’t avoid, reduce, or
pay for financial loss themselves, they can transfer
the financial risk to someone else. This is typically
done through the use of insurance product.
5. Share it. When people own a business, they might
want to limit the amount they could lose if the
business failed. They might do this by taking on a
partner or turning into a corporation.
Types of Insurance
1. Automobile insurance. Auto insurance generally
will pay for damage to your car and to other cars
involved if the accident is your fault. Insurance also
usually covers medical payments if you or others
are injured. Once you can legally drive it is the law
to have automobile insurance.
2. Property insurance. Renter’s insurance pays for
the replacement of personal possessions damaged or
destroyed in, or stolen from, an apartment or rented
home. Once you rent and eventually own a home it
is good to have property insurance.
Types of Insurance (continued)
3.
4.
Medical insurance. Medical Care is expensive. Health
insurance can cover most of the cost, especially major bills
that could be financially devastating to an individual or a
family. People of all ages are at risk of becoming ill or
injured. It would be good to have medical insurance to pay
for these unexpected costs.
Disability insurance. If you’re disabled by an accident or
illness, you might not be able to continue working, and your
income would stop. Disability insurance would replace most,
but not all, of the income you would lose if you were unable
to work.
Types of Insurance (continued)
5. Liability insurance. Personal responsibility-being
responsible for yourself- carries some risk with it.
For example, if you don’t shovel the snow from
your sidewalk and someone slips on it, that person
might sue you for the medicals costs of his or her
injuries. Liability insurance pays for those costs if
you are found to be legally responsible.
6. Life Insurance. Life insurance pays a specific sum
of money to selected people (beneficiaries) when
the person who is insured dies.
Types of Insurance (continued)
 Term Life Insurance.
• You buy coverage for only a certain term, or
period of time. If you renew the insurance at the
end of that time, you pay higher annual premiums
because you are older and chances are higher that
you may die. Although, term is the least expensive
type of life insurance.
Types of Insurance (continued)
Permanent Life Insurance.
• It is just like term insurance, but part of the
annual premium is invested in a “cash
value” account where the money can grow
free of current taxes. The annual premiums
initially are more expensive than the
premiums of term insurance, however, the
premiums may be guaranteed never to go up
for as long as you live.