Managing Personal Finances. Next Generation Science/Common Core Standards Addressed! CCSS.ELA Literacy.RST.9 ‐ 10.8 Assess the extent to which the reasoning.

• Managing Personal Finances

Next Generation Science/Common Core Standards Addressed!

• CCSS.ELA Literacy.RST.9‐10.8 Assess the extent to which the reasoning and evidence in a text support the author’s claim or a recommendation for solving a scientific or technical problem.

• CCSS.ELA Literacy. RST.11‐12.9 Synthesize information from a range of sources (e.g., texts, experiments, simulations) into a coherent understanding of a process, phenomenon, or concept, resolving conflicting information when possible

Bell Work! STUDENT LEARNING OBJECTIVES

• Conduct budgeting of personal finances.

• Develop financial goals.

• Understand how to use and balance a checking account.

• Compare characteristics of various types of investments.

Terms

• Bonds• Budget• Certificates of deposit• Checking account• Financial planning process• Goal

Terms Continued

• Insured savings account

•Mutual funds

•Overdrafts

• Stocks

•United States savings bonds

Interest Approach•How much money do you spend in a week?

•How do you decide what purchase?

Why is Financial Management important?

• Knowing financial standing

• Setting priorities and needs.

• Planning credit needs.

• Tax planning and reporting

Some disadvantages to personal financial

management.• Initial set-up takes time

• Regular updating required

Budget

• Formal written or unwritten plan

• Includes sources of income and expenses

How do I prepare a Budget

• To prepare a budget one needs to consider sources of income and items purchased.

• A budget categorizes the uses of cash as to whether they are a necessity or a luxury.

Six Steps in Financial Planning

• Gather personal and financial data.

• Establish financial goals and objectives.

• Analyze financial information to identify alternatives to achieve goals and objectives.

• Develop a financial plan.

• Implement the plan.

• Review the plan on a regular basis.

Checking Account

• A checking account is an account in which a user makes deposits and may write checks or use a debit card to be paid from the account.

Advantages of a Checking Account

• Reduces need to carry large quantities of cash.

• May be able to accrue interest while money is in the account.

• Safe way to pay by mail or online.

• Most all businesses accept checks or the use of a debit card.

• Most banks provide online services.

Disadvantages• A checking account may require monthly fees.

• Time is required to balance the checkbook

• There may be minimum balance requirements.

• Stolen or lost checks or debit card can result in loss of money from the account.

• Large charges are levied against overdrafts, when a check is written in an amount greater than the account balance.

• Avoid use of “Pin” numbers to avoid “Hacking”!

• Protect your password used for online banking.

Styles of checkbooks

• Duplicate check-carbon copy remains in the checkbook.

• Stub-information remains in the checkbook.

• Safety paper-a watermark that makes photocopying obvious.

• Desk set-large binder with three checks per page.

Balancing CheckbookNote: Using online services simplifies the

following practices.

• Mark deposits and checks that have cleared the bank.

• Add to the current balance those checks that are written but not cleared.

• Subtract any deposits made but not cleared.

• Subtract any service charges and add any interest.

• Compare the ending balances in the checkbook against the monthly statement.

What types of investments are available?

• Insured savings account

• Savings bonds

• Certificates of deposit

• Bonds

• Mutual funds

• Stocks

Insured Saving Account

• Available through banks, saving and loans associations, and other financial institutions.

• They are insured by a government agency.

• They are considered safe & convenient.

• All savings accounts are insured to a specified limit of $ 250,000,00 by the FDIC.

Certificates of Deposit

• CDs are savings certificates worth a specific amount of money, for a specific amount of time, with a set interest rate.

• Usually pays a higher interest rate than passbook savings accounts and are fairly convenient.

• A penalty is assessed if money is withdrawn prior to the “maturity” date.

US Savings Bonds

• Available through many financial institutions.

• Can be purchased through payroll deductions.

• Involve investing in the federal government by buying bonds with a set maturity date at a price below the face value of the bond.

Bonds

• Bonds are certificates of debt.

• Issued by corporations or government agencies. Bonds promise payments of interest on specific dates.

• Original investment is also paid back at maturity. ( investment plus interest)

• Bonds are long term investment.

Mutual Funds

• Investors pool their money.

• Professional money managers manage the pool of money for the individual investors. Interest is paid to the investor based on the amount invested.

• Quite often the investment is made by payroll deduction.

Stocks• Stocks represent a share of ownership in

a company.

• The value of the stock can increase or decrease based on performance of the company.

Review/Summary

• How would you conduct budgeting of personal finances?

• How are financial goals developed?

• How to use and balance a checking account.

• Compare characteristics of various types of investments.

The End!