Financial Literacy for High School Students. Project Overview What do you spend your money on? Future Budget Scenario Checking Account vs. Savings Account.

Financial Literacy for High School Students

Project Overview

• What do you spend your money on?

• Future Budget Scenario

• Checking Account vs. Savings

Account

• Credit Cards and Credit Scores

• “Who Wants to be a Millionaire?”

• Careers in Accounting and Finance

What do you spend your money on?• First Step: Think about what you currently spend

money on..o Food?

o Movies?

o Clothing?

o Transportation & Gasoline?

o Entertainment?

• Wait… How do you pay for those expenses?

• Traveling through time: What additional expenses

will you have to pay when you are an adult?

Future Budget Scenario

• Average Starting Salaries:o High School Graduate: $28,000 yearly

• (Monthly = $2,333) • (After Tax = $1,820)

o Two-Year Degree (Some College): $30,000 yearly

• (Monthly = $2500)• (After Tax = $1,950)

o Bachelor’s Degree (College) or More: $45,500 yearly

• (Monthly = $3,790)• (After Tax = $2,956)

o More expenses when you are grown-up!

Guess how much each expense will cost!

• How much should you spend (dollar amount) per

month on each of these categories?o Savings? ____

o Housing? ____

o Food? ____

o Clothing? ____

o Transportation? ____

o Entertainment? ____

Actual Amount for Expenses by SalariesHigh School Graduate: $1,820

Two-Year Degree:$1,950

Bachelor’s Degree:$2,956

Savings (5%) $91.00 $97.50 $147.80

Housing (27%) $491.40 $526.50 $798.12

Food (11%) $200.20 $214.50 $325.16

Clothing (4%) $72.80 $78.00 $118.24

Transportation(11%)

$200.20 $214.50 $325.16

Entertainment(7%)

$127.40 $136.50 $206.92

Total Expenses

$1,183.00 $1,267.50 $1,921.40

How much money would you have left?

• What other expenses will you have? o Utilities (Gas, Water, A/C)

o Medical

o Insurance

o School

o Vacations

o Invest?

High School Graduate:

Two-Year Degree:

Bachelor’s Degree:

After-Tax Income:

$1,820.00 $1,950.00 $2,956.00

Less: Expenses (1,813.00) (1267.50) (1,921.40)

Money Left $17.00 $682.50 $1,034.60

Checking vs. Savings Accounts

Checking Account

• Daily Use

• Few or no restrictions on number of withdrawals

• Debit Card

Savings Account

• Saving Purposes – Infrequent Use

• Limited number of withdrawals per month

• Pays higher interest rate than checking account

What about Credit Cards?

• What is a credit card?o Pay with Credit

o Use for expensive purchases

• Pay Monthly Billo Minimum Amount vs. Pay-in-Full

• Dangers of Credit Cards

Credit Scores

• Similar to a Report Cardo Generally, scores range from 300-800

• Credit monitored by an Agencyo Grades are monitored by school, teachers, and parents

• The Importance of a Credit Scoreo Cars, homes, loans, job applications, etc.

• Bad Credit = Consequences

Who Wants to be a Millionaire?

• Think back to the budgeting scenario.. If you took $1,000 and invested

it, what would happen?

• If you waited for 50 years, you could be a millionaire!!!! (Or at very

least a hundred-thousand-aire!))

• How??? Compounding Interest and Smart Investing!o What is compounding interest?

• Return Rateso Historical Average Return on the Stock Market = 11%

o Aggressive Approach (Good Investing) = 15%

Path to Becoming a Millionaire!

Year Total Amount: Avg. Market Rate Return = 11%

Total Amount:Aggressive Approach/ Return = 15%

0 $1,000.00 $1,000.00

1 $1,100.00 $1,150.00

2 $1,232,00 $1,322,50

10 $2,839.4 $4,045.56

20 $8,062.3 $16,366.54

35 $38,574.85 $133,175.52

50 $184,564.83 $1,083,657.44

Tips to Long Term Investing

• Understand Options and Returnso Bank Accounts

o Stocks

o Other Opportunities

• Be Patient!o Don’t track daily, weekly, monthly changes

o Some years you might lose money, don’t worry!

• Invest Earlier = More Money = Retire Earlier!

Careers in Accounting

• Certified Public Accountanto Audit

o Tax

• Corporate Accountanto Chief Financial Officer (CFO)

• Forensic Accountant

• Internal Audit

• Consultant/Advisor

Careers in Finance

• Banking

• Corporate Financing

• Financial Planningo Help others manage money and plan for savings/retirement

• Venture Capitalisto Fund new businesses with high growth potential

Summary

• Plan Weekly, Monthly, and Yearly Budgetso Understand personal finances first before going on a shopping

spree!

• Difference between Checking and Savings Accounts

• Credit Cards are NOT a necessity

• Importance of a Credit Score

• Invest Early! o Be patient!

• Maybe consider a career in Accounting and Finance!

Sources

• The Motely Foolo http://www.fool.com/teens/teens01.htm

• Junior Achievemento http://www.myja.org/programs/saveusa/ja_$ave_USA_middle_school_educators_2

009.

pdf

• Michigan Counseling Association o http://www.michigancounselingassociation.com/uploads/2/6/3/4/2634297/

budget__financial_education.pdf

• PEW Researcho http://www.pewsocialtrends.org

/2014/02/11/the-rising-cost-of-not-going-to-college/