Personal Finance James B. Wilcox RESOURCES PROVIDED BY: THE UNIVERSITY OF SOUTHERN MISSISSIPPI CENTER FOR ECONOMIC AND ENTREPRENEURSHIP EDUCATION, MISSISSIPPI.

PersonalFinance

James B. Wilcox

RESOURCES PROVIDED BY:

THE UNIVERSITY OF SOUTHERN MISSISSIPPICENTER FOR ECONOMIC AND ENTREPRENEURSHIP EDUCATION,

MISSISSIPPI STATE UNIVERSITY, VIRTUAL ECONOMICS,NATIONAL COUNCIL ON ECONOMIC EDUCATION, THE MOODY’S FOUNDATION

Who Earns More Money?

Who Earns More? Round 1

• Bartender (Nevada)

• Taxi Driver(New York)

Bartender or Taxi Driver?

A. BartenderB. Taxi Driver

Who Earns More?

• Bartender (Nevada)$20,430


$26,800

Job DutiesBartender: Mixes and serves alcoholic andnonalcoholic drinks to patrons of bar,following standard recipes: Mixesingredients, such as liquor, soda,water, sugar, and bitters, to preparecocktails and other drinks. Serveswine and draught or bottled beer.Collects money for drinks served.Orders or requisitions liquors andsupplies. Arranges bottles andglasses to make attractive display.May slice and pit fruit for garnishingdrinks. May prepare appetizers, suchas pickles, cheese, and cold meats. Maytend service bar and be designatedService Bartender.

Taxi Driver:Drives taxicab to transport passengers forfee: Picks up passengers in response toradio or telephone relayed request forservice. Collects fee recorded on taximeterbased on mileage or time factor andrecords transaction on log. Reports byradio or telephone to TAXICAB STARTERon completion of trip. May drive limousineor custom-built sedan to pick up anddischarge airport passengers arriving orleaving on scheduled flights and beDesignated Chauffeur, Airport Limousine.

Job Requirements

Bartender-Bartending school

-32 hours of training-Many states require

bartenders to be certified in Serve Safe Alcohol program.

-May require other certification.

Taxi Driver-Regular automobile

driver’s license-May need a taxi driver

license, aka “hack” license

-May require 80 hours of classroom instruction


• Miner(West Virginia)


$26,800

Miner or Taxi Driver?

A. MinerB. Taxi Driver

Who Earns More?


$30,680


$26,800

Miner Job DutiesMines ore, coal, or rock in underground mine, performing any combination of following tasks in areas where high production equipment is limited by economic factors or natural formations: Cuts channel under working face to facilitate blasting, using pick, or by operating cutting machine. Operates mounted or unmounted power drill to bore blasting holes in working face. Charges and shoots (sets off) explosives or air charges to blast down materials. Shovels shattered materials into mine cars or onto conveyor. Installs timbering, roof bolts, or cribs, to support walls and roof. Lays track to accommodate mine cars or track-mounted equipment. May mine rock in coal mine at contract price per ton or footage of advance and be designated Rock Contractor (mine & quarry). May mine ore, coal, or rock, using pick and shovel, and be designated Miner, Pick (mine & quarry). When digging passageways between rooms, may be designated Entry Miner (mine & quarry). May do development work, such as opening up new passageways, air vents, auxiliary tunnels, rooms, and shafts to facilitate mining, and be designated Drift Miner (mine & quarry); Raise Miner (mine & quarry); Shaft Sinker (mine & quarry); Stope Miner (mine & quarry); Tunnel Miner (mine & quarry).



$30,680

• Police Officer(New Mexico)

Miner or Police Officer?

A. MinerB. Police Officer

Who Earns More?


$30,680


$36,120

Police Officer DutiesPatrols assigned beat on foot, on motorcycle, in patrol car, or on horseback to control traffic, prevent crime or disturbance of peace, and arrest violators: Familiarizes self with beat and with persons living in area. Notes suspicious persons and establishments and reports to superior officer. Reports hazards. Disperses unruly crowds at public gatherings. Renders first aid at accidents, and investigates causes and results of accident. Directs and reroutes traffic around fire or other disruption. Inspects public establishments requiring licenses to ensure compliance with rules and regulations. Warns or arrests persons violating animal ordinances. Issues tickets to traffic violators. Registers at police call boxes at specified interval or time. Writes and files daily activity report with superior officer. May drive patrol wagon or police ambulance. May notify public works department of location of abandoned vehicles to tow away. May accompany parking meter personnel to protect money collected. May be designated according to assigned duty as Airport Safety And Security Officer; Dance-Hall Inspector Traffic Police Officer; or according to equipment used as Ambulance Driver; Motorcycle Police Officer; Mounted Police Officer. May be designated: Emergency-Detail Driver; Patrol Driver; Pool-Hall Inspector;

Radio Police Officer; Show Inspector.

Police Officer Job RequirementsMust be able to pass a pre-employment physical and drug screen. Must be a US Citizen. Must have a valid New Mexico driver’s license or be able to obtain one.

Must be able to pass a pre-employment physical and drug screen.Education: High School Diploma or G.E.D. equivalent.

Experience:Prior Law Enforcement preferred (Up to one or more years of experience).Knowledge:Requires work level knowledge, skills, and abilities related to a broad

range of either complex or technical functions or apprentice level knowledge of a single function area or work specialization.

Certificates/Licenses:Must complete the State Accredited Basic Academy within first year.

Recertification:Will certify under Certified Officer when recertification requirements are needed.

Use of Tools/Equipment:Vehicle, baton, chemical sprays, handgun, shotgun, radar, computers, radio, handcuffs, breathalyzer, first aid equipment, telephone, tasers and AED machines.


• Truck Driver – OTR(Indiana)


$36,120

Truck Driver or Police Officer?

A. Truck DriverB. Police Officer

Who Earns More?

• Truck Driver – OTR(Indiana)$36,940


$36,120

Truck Driver Job DutiesDrives truck with capacity of more than 3 tons, to transport materials toand from specified destinations: Drives truck to destination, applyingknowledge of commercial driving regulations and area roads. Prepares receipts for load picked up. Collects payment for goods delivered andfor delivery charges. May maintain truck log, according to state andfederal regulations. May maintain telephone or radio contact withsupervisor to receive delivery instructions. May load and unload truck.May inspect truck equipment and supplies, such as tires, lights, brakes,gas, oil, and water. May perform emergency roadside repairs, such as changing tires, installing light bulbs, tire chains, and sparkplugs. May position blocks and tie rope around items to secure cargoduring transit.

Truck Driver Job Requirements

-Commercial Driver’s license (CDL) (Federal Law)-U.S. DOT regulations: 21 years old, pass physical once

a year, at least 20/40 eyesight (with glasses), good hearing, cannot be colorblind, have epilepsy, have diabetes, or high blood pressure, cannot take controlled substances, no felony charges, DUIs, and speak and read English well enough to read road signs


• Truck Driver(Indiana)$36,940

• Electrical Repairer(Kansas)

Truck Driver or Electrical Repairer?

A. Truck DriverB. Electrical Repairer

Electrical Repairer Job DutiesInstalls and repairs electrical systems, apparatus, and electrical and electronic components of industrial machinery and equipment, following electrical code, manuals, schematic diagrams, blueprints, and other specifications, using handtools, power tools, and electrical and electronic test equipment: Installs power supply wiring and conduit for newly installed machines and equipment, such as robots, conveyors, and programmable controllers, following electrical code and blueprints, using handtools and voltage tester. Connects power supply wires to machines and equipment, and connects cables and wires between machines and equipment, following manuals, schematic diagrams, and blueprints, using handtools and test equipment. Diagnoses malfunctioning apparatus, such as transformers, motors, and lighting fixtures, using test equipment, and replaces damaged or broken wires and cables, using handtools. Tests malfunctioning machinery, using test equipment, and discusses malfunction with other maintenance workers,

Electrical Repairer Job Requirements

-Knowledge of electrical equipment necessary.-May require degree from vocational technical

school (1 to 2 years of training).-Good eyesight, color perception.-May need to be certified.

Who Earns More?

• Truck Driver(Indiana)$36,940

• Electrical Repairer(Kansas)$57,930


• Funeral Director(Florida)


Funeral Director or Electrical Repairer?

A. Funeral DirectorB. Electrical Repairer

Who Earns More?

• Funeral Director(Florida)$48,440


Funeral Home Job Duties

Undertaker. Arranges and directs funeral services: Coordinates activities ofworkers to remove body to mortuary for embalming. Interviews family or otherauthorized person to arrange details, such as preparation of obituary notice, selection of urn or casket, determination of location and time of cremation orburial, selection of pallbearers, procurement of official for religious rites, andtransportation of mourners. Plans placement of casket in parlor or chapel andadjusts lights, fixtures, and floral displays. Directs pallbearers in placement andremoval of casket from hearse. Closes casket and leads funeral cortege to church or burial site. Directs preparations and shipment of body for out-of-stateburial. May prepare body for interment.

Funeral Home Director Job Requirements

-Must be licensed: 21 years old, 2 years of formal education including mortuary science, serve one year apprenticeship, pass qualifying exam. To embalm requires its own license.

-College programs in Mortuary Science include: anatomy, pathology, restorative art, business management, grief counseling, business law, and ethics


• Faller(Washington)


Faller or Electrical Repairer?

A. FallerB. Electrical Repairer

Who Earns More?


$64,110

• Electrical repairer(Kansas)$57,930

Job Duties

Fells timber trees, applying knowledge of tree characteristics and cutting techniques toControl direction of fall and minimize tree damage: Appraises tree for characteristics,suchas twists, rot, and heavy limb growth, and gauges amount and direction of lean, using axas plumb bob. Determines position, direction, and depth of cuts to be made andplacement of wedges or jacks. Clears brush and debris from work area and escaperoute,and cuts saplings and other trees from falling path, using ax and chain saw. Scorescutting lines with ax, saws undercut along scored lines with chain saw, and knocks slabsfrom cuts with ax. Saws back-cuts, leaving sufficient sound wood to controldirection of fall. Inserts jack or drives wedges behind saw to prevent binding of saw andstart tree falling. Stops saw engine as tree tips, pulls cutting bar from cut, and runs topredetermined location to avoid injury from falling limbs and flying debris. May work onpiecework basis and be designated Busheler (logging). May cut trees into log lengths[BUCKER (logging)]. Fallers of small timber (generally under 18 inches in diameter) areclassified as FALLER (logging) II.

Faller Job Requirements

-Generally, there are no educational requirements for forest worker jobs.

-On-the-job training from the logging company-State logging or forestry associations provide training

sessions for fallers, lead to certification.-Generally advance from occupations involving

primarily manual labor to those involving the operation of expensive, sometimes complicated logging equipment.



$64,110

• Sales Engineer(Illinois)

Faller or Sales Engineer?

A. FallerB. Sales Engineer

Who Earns More?


$64,110

• Sales Engineer(Illinois)$73,120

Sales Engineer Job Duties

Sells electronic products and systems and provides technical services to clients, performing other duties

Sales Engineer Job Requirements

-A bachelor’s degree in engineering is typically required.

-A business, chemistry, or other science degree may be acceptable.

-May have work experience in an engineering specialty.

-May need training in sales.


• Fashion Designer(New York)


Fashion Designer or Sales Engineer?

A. Fashion DesignerB. Sales Engineer

Who Earns More?


$73,390


Fashion Designer Job DutiesDesigns men's, women's, and children's clothing and accessories: Analyzes fashion trends andpredictions, confers with sales and management executives, compares leather, fabrics, and other apparel materials, and integrates findings with personal interests, tastes, and knowledge of design to create new designs for clothing, shoes, handbags, and other accessories. Sketches rough and detailed drawings of apparel and writes specifications describing factors, such as color scheme, construction, and type of material to be used. Confers with and coordinates activities of workers who draw and cut patterns and construct garments to fabricate sample garment. Examines sample garment on and off model and modifies design as necessary to achieve desired effect. May draw pattern for sample, using sewing equipment. May arrange for showing of sample garments at sales meetings or fashion shows. May attend fashion and fabric shows to observe new fashions and materials. May be identified according to specific group designed for, such as men, women, or children or areas of specialization, such as sportswear, coats, dresses, suits, lingerie, or swimwear. May design custom garments for clients and be designated Custom Garment Designer (retail trade). May conduct research and design authentic period, country, or social class costumes to be worn by film, television, concert, stage, and other performers and be designated Costume Designer. May design, fabricate,repair, and sell leather articles and be designated Leather Crafter (leather prod.). May design, copy, or modify clothing accessories and be designated according to article designed as Handbag Designer (leather prod.); Hat Designer (hat & cap); or Shoe Designer (boot & shoe).

Fashion Designer Job Requirements

-2 year or 4 year degree-knowledgeable about fabrics, textiles,

ornamentation, fashion trends, eye for color and detail, sketching ability, good portfolio.

-Coursework may include: anatomy, mathematics, CAD, textiles, pattern making, sewing and tailoring and fashion history.



$73,390

• Psychiatrist(Mississippi)

Fashion Designer or Psychiatrist?

A. Fashion DesignerB. Psychiatrist

Who Earns More?


$73,390


$136,610

Psychiatrist Job DutiesDiagnoses and treats patients with mental, emotional, and behavioral disorders: Organizes data concerning patient's family, medical history, and onset of symptoms obtained from patient, relatives, and other sources, such as nurse, and social worker. Examines patient to determine general physical condition, following standard medical procedures. Orders laboratory and other special diagnostic tests and evaluates data obtained. Determines nature and extent of mental disorder, and formulates treatment program. Treats or directs treatment of patient, utilizing variety of psychotherapeutic methods and medications.

Psychiatrist Job Requirements

-4 year undergraduate degree-4 years of medical school-3-8 years of internship and residency-Must be licensed – pass exam-May be board certified-Course work includes: anatomy, physics,

biology, mathematics, organic chemistry, pathology, pharmacology, medical ethics


• Secretary of State Hillary Clinton


$136,610

Secretary of State or Psychiatrist?

A. Secretary of StateB. Psychiatrist

Who Earns More?

• Secretary of StateHillary Clinton

$186,600


$136,610

Secretary of State Job Duties

The Secretary of State is responsible for theoverall direction, coordination, and supervision of U.S. foreign relations and for the interdepartmental activities of the U.S. Government abroad. The Secretary is the first-ranking member of the Cabinet, is a member of the National Security Council, and is in charge of the operations of the Department, including the Foreign Service.

Secretary of State Job Requirements

-Nominated by the President-Confirmed or rejected by the United States

Senate by a majority vote.


• Secretary of StateHillary Clinton

$186,600

• Anesthesiologist(Kentucky)

Secretary of State or Anesthesiologist

A. Secretary of StateB. Anesthesiologist

Who Earns More?

• Secretary of State Hillary Clinton

$186,600

• Anesthesiologist(Kentucky)$197,000

http://en.wikipedia.org/wiki/Image:Condoleezza_Rice.jpg

Anesthesiologist Job DutiesAdministers anesthetics to render patients insensible to pain during surgical, obstetrical, and other medical procedures: Examines patient to determine degree of surgical risk, and type of anesthetic and sedation to administer, and discusses findings with medical practitioner concerned with case. Positions patient on operating table and administers local, intravenous, spinal, caudal, or other anesthetic according to prescribed medical standards. Institutes remedial measures to counteract adverse reactions or complications. Records type and amount of anesthetic and sedation administered and condition of patient before, during, and after anesthesia. May instruct medical students and other personnel in characteristics and methods of administering various types of anesthetics, signs and symptoms of reactions and complications, and emergency measures to employ.

Anesthesiologist Job Requirements

-4 year undergraduate degree-4 years of medical school-3-8 years of internship and residency-Must be licensed – pass exam-May be board certified-Course work includes: anatomy, physics,

biology, mathematics, organic chemistry, pathology, pharmacology, medical ethics

Hillary Clinton

- B.A. Wellesley College- J.D. Yale Law School- Professor – School of Law at the University of

Arkansas- Lawyer – Rose Lawfirm- First lady of Arkansas - First lady of the United States- United States Senator (New York)- Secretary of State

Who Earns More: Bonus Round

• LeBron JamesProBasketball player

• Angelina JolieActress

LeBron James or Angelina Jolie?

A. LeBron JamesB. Angelina Jolie

Who Earns More: Bonus Round

• LeBron JamesPro Basketball player

$27,000,000

• Angelina JolieActress

$27,000,000

LeBron JamesHigh School-Attended St. Vincent – St. Mary High School, Akron, Ohio-”Mr. Basketball” Ohio 3 times-USA Today All-USA First Team-Gatorade National Boys’ Basketball Player of the yearNBA Basketball-First overall pick in the NBA draft by the Cleveland Cavaliers-All Rookie First Team 2004-6 time NBA All-Star (2005-2010)-3 time first team All-NBA (2006, 2008, 2009)-2009 NBA MVP

Angelina Jolie

-Father is actor Jon Voight, Mother was actress Marcheline Betrand.

-Studied at the Lee Strasberg Theatre Institute at 11.-Began modeling at 16.-Won Oscar for Best Supporting Actress in Girl,

Interruputed-Won 3 Golden Globes, 2 SAG awards-Goodwill Ambassador for the U.N. High Commissioner

for Refugees (UNHCR)

S

D

How do these incomes relate to Supply and Demand?

Why Don’t People Save?

Lesson 15

The Risky Behavior Mystery• People usually know what is good for

them, but they often act as if they don’t know.

• Some people:– Drive too fast.– Fail to take medications.– Go surfing!

• Why would people do things that don’t seem to be in their interest?

Lesson 15 Visual 1Why Don’t People Do What They Should Do?

QuestionNumber of Yes Responses

How many of you know that smoking is unhealthy?

How many of you know people--even people your age--who smoke?

How many of you know that eating foods that are high in transfats, such as packaged cookies, margarine and peanut butter, isn’t healthy?

How many of you know people who eat foods that are high in transfats?

How many of you know that regular exercise provides many health benefits?

How many of you know people who don’t exercise regularly?

Perhaps the answer lies in identifying the costs and benefits.

• Costs: All the things that have to be given up when a choice is made.

• Benefits: Gains or favorable outcomes that make people more satisfied when a choice is made.

An analogy

• Saving is like smoking, diet and exercise.

What are the benefits of a eating a healthy diet and exercising regularly?

• Feel better• Look better• Reduce your risk of heart disease• Reduce your risk of cancer• Boost your life expectancy

Do the benefits of diet and exercise occur now or in the future?

• Although people may start to feel better right away, most of the benefits occur in the future.

If people choose a healthful diet and exercise regularly,

are they guaranteed these benefits?

• No. • Some people may still get heart disease or

cancer, no matter what they eat or how well they exercise.

• Also, a person engaged in a diet-and-exercise program could die prematurely from any number of causes other than heart disease or cancer.

What are the costs of choosing a healthful diet and exercising regularly?

• Possibilities include:– Giving up food that tastes really good.– Paying dues for membership at a fitness club.– Spending time on exercise that you could spend in

other ways--napping, reading, gardening, watching television, playing video games.

Saving• Saving is income not spent on

consumption or taxes.• Most people know that starting

to save money at an early age and saving regularly are good habits that lead to financial well being.

• Yet many people fail to save early and regularly.

• Why?

What are the benefits of saving?

• Ability to attain your goals for the future.• A feeling of security and satisfaction.

What are the costs of saving?

• Things you could obtain now if you weren’t saving.

When do the benefits of saving occur?

• In the future.

When do the costs of saving occur?

• In the present.

Psychology – cookie experiment

Instant vs. Delayed gratification

Cookie Experiment• “Training in self-control has been useful in

helping children interact more effectively with their peers and perform higher quality schoolwork. These children also report higher self-esteem”

• Longer self-imposed delay of gratification durations in childhood have been linked to later social, cognitive, and academic competence. – Children with longer delay of gratification durations at

age four were found better able to plan, think ahead, use reason, and cope with stress in adolescence, and they had higher SAT scores in high school.

The Costs and Benefits of Saving• The costs of saving are

immediate and certain.– People have to give up things

they could buy now.• The benefits of saving occur in

the future and are uncertain.– Events might prevent people

from reaping the benefits of saving.

Opportunity Cost and Incentives• Considering the opportunity cost

of spending might change how people analyze the costs and benefits of saving.

• Setting goals is an important factor related to saving.

• Goals act as incentives to save.• Interest provides another

incentive to save.

Opportunity Cost and Incentives

• What are some things for which you would like to save?

Setting Savings Goals

Short-Term Savings Goals

(One year or less)

Medium-Term Savings Goals

(One to five years)

Long-Term Savings Goals (Over five years)

Review

• What is saving?• How is failing to save like failing

to eat right and exercise?• What are incentives to save?• What are short-term, medium-

term and long-term saving goals?

Credit Cards

Legal DisclaimerThe information contained in this presentation is provided for informational and educational purposes only, and should not be construed as financial or legal advice on any matter. The University of Southern Mississippi, Mississippi Council on Economic Education, Southern Miss Center for Economic and Entrepreneurship Education disclaim all liability in respect to actions taken or not taken based on any or all the content presented here. Before acting on any information or material obtained through this presentation, we strongly recommend you to seek advice from a personal financial advisor or professional legal counsel, as appropriate.

Sound Advice

• 1. Charge only what you KNOW you can afford to repay

• 2.You pay more when you use your credit card and keep a revolving balance b/c you pay interest on your outstanding balance

• 3. Pay your credit card bill in full each month. If you can’t pay in full, ALWAYS pay more than the minimum monthly payment

• 4. Don’t spend over your credit limit and wind up paying special fees

Sound Advice

• 5. Pay your bills on time– If not you will have late fees, higher APR, lower

credit score• 6. Learn how to protect your credit rating, it is

your “financial report card”• 7. Never use one credit card to pay another

(i.e., take out a cash advance on one card to pay another

• 8. Only have one credit card

Definition of Credit

• Credit is a system of doing business where you promise to pay at a later date for goods and services received today

• Credit cards function as a loan– Using a credit cards means that you are borrowing

money from the issuer– The charges are unsecured loans that must be

repaid

Card Types• Credit Card

– A credit card allows you make purchases for which you are billed later.

• Most allow you to carry a balance from one billing cycle to the next with interest.

• Typically include a minimum payment each billing period.

– A Charge Card is a special type of Credit Card• The balance on a charge card account is payable in full when

the statement is received.• The balance cannot be rolled over from one billing to the

next.

– Debit Cards are not Credit Cards. • Debt cards allow payment and purchase to happen

simultaneously.

It’s a Fact

• The U.S. has the lowest personal savings rate of any major industrialized nation.– 40% of Americans say they live beyond their means– Current debt-to-income ratio is 135%

• Americans have record credit-card debt – $874 billion in U.S. credit card debt as of Nov 2009

• Source: www.federalreserve.gov/releases/G19/Current/

• The US has recently seen an over 50% increase in bankruptcies among people under age 25– Fastest growing age range for bankruptcies

College Student Credit Card Statistics

• Over 75% of college students admit to having made mistakes with their money when they arrived on campus– Biggest mistakes were overspending on food,

entertainment, and credit card purchases.

• University Administrators state that they loose more students due to credit card debt than they do to academic failure– Drop-Out Rates

• Academic Failure – 6%• Debt / Financial Pressure – 8.5%

Budgeting

• We can all benefit from having a clear understanding of financial needs/wants and spending habits.

• Create a realistic budget gives a personal plan for spending a saving money, gives a sense of comfort and guidance

• Take the time to use the guide on page 2

College Student Credit Card Statistics

How Does this Happen?

• College Students are a Privileged Class– College students are able to obtain credit cards without a

prior credit history, employment, or a parent’s co-signature.

– Credit card companies are betting on the student’s future earnings potential.

Why You Should Use Credit Cards?

• Creates Opportunities– Imposes self-discipline– Proper use helps establish a good credit rating

• Beneficial for a future house or car purchase• Free line of credit if you pay your balance monthly

• Convenience and Security– Accepted across United States and abroad

• Often required to hold a reservation– Emergency buying power– Additional form of identification– Record of purchases on bill statement

Handout 4.2

A Schumer Box

• The Schumer Box was introduced by Senator Chuck Schumer to make it easier to compare credit card offers.

19.99%

A Schumer Box

Annual Fees

• An issuer may charge an annual fee for the privilege of using their card.

• There are many without such a fee• If your current card has one and you are a

good customer, your issuer will likely waive it if you ask them

Interest Rates

• Every credit card has at least 4 different interest rates depending on the types of transactions– Purchase– Balance transfer– Cash advance– Default

19.99%

A Schumer Box

A Schumer Box

19.99%

A Schumer Box

APR

• Annual Percentage Rate– The monthly interest on unpaid credit card balances– The higher the APR, the more money is paid in interest

• Look for a card with a low APR!

• APRs can be fixed or variable– Variable APR is based on a published index, like the “prime

rate” plus a few percentage points– Can change without written notice– Fixed APRs can be changed with 15 days written notice

U.S. Prime Rate

Grace Period

• Grace period– If the balance is not paid off each month, interest

is applied to new purchases when they are made– If the balance is paid off monthly, a grace period is

allowed before interest is charged = Free Credit

• No grace Period– Regardless of the previous month’s balance,

interest is applied to new purchases as they are made

19.99%

A Schumer Box

Balance Calculation Methods

• “Average Daily Balance”– You pay interest on the average balance owed

during the billing cycle– Creditor figures the balance in your account on

each day and then adds together these amounts and divides by the number of days in the billing cycle

• See the handout and answer the questions

Example• Assume that you received this credit card with a

credit limit of $2,000. – Assume that you bought a LG 32” LCD HDTV/DVD

Combo at Best Buy as shown below for $1,049 (Ignore sales tax and $49 HDMI cables).

– How long will it take to pay off at the minimum payment of $35 per month?

• Time = 41.86 Months• Time = 3.49 Years

– What was the total amount paid?• Total = $1,465.36

– TV = $1,049.00– Interest = $416.36 (39.69%)

• Any late payments would add $39.00+ in interest.

1 Year Warranty

Balance Calculation Methods

• “Adjusted Balance”– You pay interest on the opening balance after subtracting

the payment or returns

• “Previous Balance Method”– Interest is only paid on the previous (opening) balance,

regardless of payments made during the month.

• “Two-cycle Average Daily Balance”– The interest is paid on the current balance as well as the

previous month’s balance, this leads to double finance charges

– A zero-balance must be held for two months in order to avoid charges

– This method should be avoided by consumers!

Cash Advances

• Cash advances are cash loans one can get with a credit card

• Expensive—only use in a true emergency– Usually requires an up front fee plus 3% of the

advance or a minimum fee– Higher APR– No grace period– Don’t always get to pay it off entirely if you have

revolving credit

Convenience Checks

• Pre-printed checks linked to a credit card account that are mailed to one’s home

• Act like cash advances• Shred them before you put them in the trash!

Default Rates

• A default rate has a high APR• Most issuers apply a default rate if one:

– Makes a late payment– Misses a payment– Exceeds a credit limit– Bounces a payment check

• Some default rates escalate according to the number of payments missed

Balance Transfers• Issuers try to get new customers by offering low

introductory rates to individuals who transfer their balance from another card to theirs

• Find out..– Is there a fee?– How long does the “teaser rate” apply?– What is the APR that will replace the teaser rate?– Does the teaser rate apply to both the transferred balance

and new purchases?– Choose a balance transfer offer only when there is no fee,

has a long-term APR that applies to both the transferred balance and new purchases

Late Fees

• If a payment is received after the due date, a late fee will be added to your bill

• Fees often escalate depending on the amount of the outstanding balance

• Typically range from $15 to $39• Negatively affects your credit rating b/c the

late payment is reported to the three major credit reporting agencies– After one or two late payments

Over-Credit Limit Fees

• Issuers will allow an individual to spend over their credit limit but a fee will be assessed every month until the balance is brought below the credit limit

• $29 to $39 or a tiered fee depending on the balance

• Default APR may be applied and it might be reported to the credit agencies

Bounced Check Fees

• If the check you write to pay off your credit card bounces, you will likely pay a fee of $29 to $39

• Default APR maybe applied and credit reporting agencies advised

Currency Conversion Fees

• 3% to convert currency on foreign purchases

Pay by Phone Fee

• Some issuers charge $10-$15 to make a payment by phone

How to Wisely Choose and Responsibly Use

a Credit Card

Knowing is Half the Battle!• Understanding how credit cards work will help you

use them effectively. Credit cards can either be– Short-term high interest loan (“Revolvers”), or– Short-term interest-free loans (Convenience Users)

• “Revolvers”– Keep a balance on their account and pay interest on all

their purchases– Low APR is most important

• Convenience Users– Pay balances off in full each month– Long grace period is most important– Most cost effective

Pay More than the MMP!

• Assuming discontinued use of the card, a MMP based on 1% of the outstanding balance plus accrued monthly interest or payment of $20 whichever is greater, and timely payments

• How long and what is the payoff for the following?– $1000 debt, 18% APR, MMP– $1000 debt, 18% APR, MMP + $10

Look for…

• A low APR• No annual fee• A long grace period (at least 20 days)• Average Daily Balance Method• Low Penalty Fees

Using a Credit Card Properly • Limit yourself to only one card until you know you can trust your manage

it properly• Student loans should be used for tuition, not credit cards• Wants do not equal needs

– “Can I do without this purchase?”• Credit cards do not change our socioeconomic status

– Buy only what you can afford to repay each month• Always pay off the entire balance….on time

– If you cannot pay the entire balance in a month, stop using the card until it is paid off

• Make sure you pay more than the minimum balance• Pay more than the MMP asap, don’t wait for the due date• Manage a credit card account like a checking account• Avoid cash advances, convenience checks, and going over your limit• Don’t skip payments…even if your bank says you can• Keep a low credit limit…even if your bank says you can have more• Record all expenses and keep receipts

– Check credit statement for errors • Notify issuers of change of address

Handling Disputes• Two Types of Disputes:

– In the case of any unauthorized use:• Liability Limited to $50 • Notify Bank ASAP – Phone and Written Notice

– In the case of a billing error…• Notify Bank Within 60 Days• Include Form on Back of Bank Statement and a Letter • Letter and Form must include

– Name and Account Number– Dollar Amount Involved– Reason for Dispute– Any Other Clarifying Information

• Secure Your Cards– Sign card with Signature and “Please See ID”– Do not leave cards lying around– Do not give out account number unless making

purchase with a reputable source

• Report Lost or Stolen Cards Promptly – Keep a list of account numbers and bank phone

numbers in a safe place separate from cards

• Close unused accounts by phone, then in writing, and then cut up the card– Note: Closing a card may hurt your credit score

Credit Card Safety Tips

Always a Solution• If you have an overwhelming debt, it is better to deal

with the problem rather than deny it• Do not skip a payment• Pay down higher APRs first• Stop using the card• Call the issuer and tell them the problem• If they offer a more manageable payment plan, get it in

writing• Increase your monthly income and reduce monthly

expenses• Contact the National Foundation for Credit Counseling

800-388-2227 or www.nfcc.org to enter a debt consolidation program

http://www.nfcc.org/

Credit Reports and

Credit Scores

Credit Reports • Financial report card reflecting the extent of an

individual’s credit and payment history– Negative information can stay on for 7 years while bankruptcies

remain for 10 years– Lenders buy the reports to determine whether they will grant

an individual credit and at what rate• Three U.S. Credit Reporting Agencies

– Equifax, Experian, and Trans-Union

• Can be obtained for free– Once per year and after denial of credit– 877-322-8228 or www.annualcreditreport.com

Credit Scores• Numeric value obtained from a credit report

– Defines you by a single number– Quick Screening Mechanism for Lenders

• Low Credit Score = No Credit or High Interest Rates– Many employers check credit reports– Most common scoring system is Fair Isaac Corporation (FICO)

• Scores range from 300-850• National Average = 678• Payment history: 35% • Total amount owed: 30%• Length of credit history: 15%• New credit: 10%• Types of credit: 10%

FICO Scores by Age Group

http://blog.mariah.com/wp-content/uploads/2007/11/avg-score-by-age.gif

Your Credit Reflects You

The Impact of Credit Scores

http://www.myfico.com/?lid=logo&lpos=top_image

Consequences of Irresponsible

Credit Card Use

Irresponsible Credit Card Usage Leads to…

• Denial of credit• High APR b/c of the higher risk• Universal Default Clause

– Allows an issuer to increase an individual’s APR if they fail to make a payment to another lender

• Difficulty renting an apartment• Denied employment• Denied financial aid• Higher automobile insurance premiums• High security deposits, e.g., Cell phone, gas,

electronic

Make Good Choices!

• Students should clearly understand that while credit cards are a great financial tool, they are also a big responsibility, which require maturity, consistency and sound financial management skills so that they can enjoy the benefits of credit while avoiding the pitfalls.

Identity Theft

Identity Theft

• Occurs when an impostor steals personal information such as a social security card, driver’s license, bank account or credit card number in order to impersonate someone else

• The information is then used to obtain credit, merchandize, and services using the victim’s identity

Signs

• A credit card or statement for an account that was not requested

• A missing statement– Unauthorized change of address

• Unauthorized changes on the credit card statement

• Denied credit for no apparent reason• Debt collectors call and write regarding

purchases you did not initiate

Avoiding Identity Theft and Other Financial Trouble

• Guard your Social Security Number and other personal information– Shred old documents and credit card offers– Do not carry unnecessary documents/cards– Do not mail payments from home

• Monitor your Credit Report– Remove your name from the marketing lists of the three major

credit reporting agencies– Subscribe to a credit monitoring service– Avoid business with or loans to friends / family

• Never cosign a loan for anyone

Avoiding Identity Theft and Other Financial Trouble

• Become familiar with the billing cycles and when statements should arrive in the mail

• Don’t leave mail in the mailbox and use the Post Office for outgoing mail

• Use creative passwords—avoid the last 4 digits of your SSN or your mom’s maiden name

• Only make on-line purchases if the website is secure and protected by an encryption system

• Place virus protection software on your computer

If you are a victim of identity theft

• Contact the three major credit-reporting agencies and ask them to place a “fraud alert” on your file

• Order a free credit report from each of the agencies and review the reports

• Contact the fraud departments for creditors• Close the accounts and follow up in writing• File a police report and ask for a hard copy• Federal Trade Commission maintains an identity theft

clearinghouse that provides information for victims– 877-IDTHEFT or www.consumer.gov/idtheft

Auto Insurance: Coverage Types

Time to Pick a Car and Get on the Road

Closest to the MSRP(Manufacturer’s Suggested Retail Price)

Without going over – wins!

2005 Honda Civic LX

• Automatic Transmission

• Dual Zone Air Conditioner

• Keyless Entry• Auto Lock Brakes

The MSRP is

$16,975

2005 Mitsubishi Spyder GT

• Automatic, 4-Spd w/Overdrive & Sportronic

• V6, 3.0 Liter • Leather Interior

The MSRP is

$28,944

2005 Hummer H2 SUV

• 7-Spoke Aluminum • Automatic, 4-Spd HD• Leather Surfaced

Heated Bucket Seats• V8, 6.0 Liter Engine

The MSRP is

$53,280

Are You Ready to Drive?

• Ask yourself…– Do I have a license?– Is my car registered?– Am I covered by auto insurance?

Why do I need auto insurance

• It’s the law!

• There are risks you can’t afford to take • What happens if…

– You’re involved in a crash that causes property damage?– You hurt yourself or someone else?– Your car is damaged when you’re not driving it?

(by weather, vandalism or a hit-and-run)– Your car is stolen?– Your car breaks down and needs to be towed?

Automobile Insurance: The Basics

What is the likelihood you will be in an automobile accident?

There are more than 12 million motor vehicle accidents annually

The typical driver will have a near automobile accident one or two times per month

The typical driver will be in a collision of some type on average of every 6 years

Crashes are the leading cause of death for ages 3-33


Even a minor accident can result in thousands of dollars in damages

•Damage to your car

•Damage to other cars involved

•Medical Bills

•Lost wages

•Pain and suffering

•Prosecution

•Legal Fees

•Fines


If you are in an accident how do you pay for it?

Bank Account?

Parents?

Rich Uncle?

Best Friend?

Insurance?


What is Automobile Insurance?

An auto insurance policy is a contract between you and an insurance company.

You pay a premium, and in exchange, the insurance company promises to pay for specific car-related financial losses during the term of the policy.


Are you a risk to the insurance company?

To keep premiums as low as possible to the insured, a screening process is completed before an insurance contract is completed


What is the insurance company looking for?

Some vehicles, and some drivers, carry more risk than others

•Low risks will be charged a lower premium

•High risks will be charged a higher premium


What determines your premium?

Age

Gender

Vehicle Type

Driving Record

Geographic Location

Types of Automobile Insurance Coverages

Three Questions

1. What are third-party coverages?

2. What are first-party injury coverages?

3. What are first-party property coverages?

What are third-party coverages?

Bodily Injury Liability

People costs (medical expenses, lost wages, pain and suffering)

Property Damage Liability

Things (other cars and property)

Both are types of coverage required by law in most states


What are first-party injury coverages?

Medical Payments (MedPay)

Covers medical and funeral expenses resulting from accidents with your vehicle

Personal Injury Protection (PIP)

Extends MedPay to include lost wages

Uninsured Motorists

Covers expenses if the at fault driver does not have coverage

Underinsured Motorists

Covers expenses when the at fault driver does not have enough coverage


What are first-party property coverages?

Comprehensive

Compensates you for physical damage to your car, including theft, vandalism, natural disasters

Collision

Pays for damage to your vehicle in case of collision

Both Coverages require you to pay a deductible


What is a Deductible?

This is the amount per accident that you pay out of pocket before insurance starts to pay

Common deductible amounts are usually $250, $500, and $1000

The higher the deductible amount you pay the lower your premiums are

Automobile Insurance: The Policy

A common mistake when shopping for automobile insurance is looking only at the price between two policies

Policies differ from policy to policy and company to company

Five parts to an insurance policy

Declarations

Coverages

Exclusions

Conditions

Definitions

Automobile Insurance: The Policy

Coverage Parts/Insuring Agreement

Outlines the coverage options and coverage limits purchased

In short, what your insurance company promises to provide in return for your payment, based on the coverages and coverage limits selected

Exclusions

Details what is not covered by the policy

Examples:

Intentional damage to your own vehicle

Damages caused while vehicle is used as a delivery vehicle

Conditions

Define the insured’s and the insurer’s duties that, under the terms of the policy, must be fulfilled

Includes:

premium payment obligations

steps to filing a claim

procedures for resolving a claim

Definitions

Explains specific terms used throughout the policy

Examples:

“You” or “Your” refers to the “Named Insured”

“We” or “Us” or “Our” refers to the insurance company

“Family Member” refers to a resident of your household

Automobile Insurance: Accidents

Chances are even if you are never in an accident you will witness one

What should you do if you are involved in an accident?




Steps to take after an accident

•Help anyone who is injured

•You have an ethical and legal responsibility

•Notify the police

•Prevent further accidents

•Protect the accident scene

•Record information

•Exchange information with the parties involved

•Take note of time, location, weather, and road conditions

It is important that the accident is reported promptly to the insurance agent or company

The policy will guide the insured on the correct steps to take to report the claim

The company will guide the insured through the process

Filing a Claim

When you are liable for an accident

•The insurance company covers the loss up to the policy limits

•Your insurer represents you if you are sued

•Your insurer has the right to settle any legal action without your permission

•Your premium may rise

•Insurer has the right to cancel your policy

•If the losses exceed the policy provisions, the insured is responsible to cover the excess

Filing a Claim


What can you do to reduce risk and lower premiums?

Use your seatbelt

Observe Speed Limits

Know your own limits

Concentrate on driving

Be Patient

Don’t Drink and Drive

Get good grades




Steps to take after an accident

•Help anyone who is injured

•You have an ethical and legal responsibility

•Notify the police

•Prevent further accidents

•Protect the accident scene

•Record information

•Exchange information with the parties involved

•Take note of time, location, weather, and road conditions

It is important that the accident is reported promptly to the insurance agent or company

The policy will guide the insured on the correct steps to take to report the claim

The company will guide the insured through the process

Filing a Claim

When you are liable for an accident

•The insurance company covers the loss up to the policy limits

•Your insurer represents you if you are sued

•Your insurer has the right to settle any legal action without your permission

•Your premium may rise

•Insurer has the right to cancel your policy

•If the losses exceed the policy provisions, the insured is responsible to cover the excess

Filing a Claim

Building Wealth for the Long Term

Lesson 12

Lesson 12 Visual 1Three Rules for Building Wealth

1. Start early.– Give money time to grow.

2. Buy and hold.– Keep your money invested.

3. Diversify.– Don’t put all your eggs in one basket.

Lesson 12 Visual 2Charlayne Becomes a Millionaire-- Accidentally

Beginning Addition to EndingYear Balance Principal Return Balance

0 $0.00 $2,080.00 $88.40 $2,168.401 $2,168.40 $2,080.00 $272.71 $4,521.112 $4,521.11 $2,080.00 $472.69 $7,073.813 $7,073.81 $2,080.00 $689.67 $9,843.484 $9,843.48 $2,080.00 $925.10 $12,848.585 $12,848.58 $2,080.00 $1,180.53 $16,109.116 $16,109.11 $2,080.00 $1,457.67 $19,646.787 $19,646.78 $2,080.00 $1,758.38 $23,485.168 $23,485.16 $2,080.00 $2,084.64 $27,649.809 $27,649.80 $2,080.00 $2,438.63 $32,168.43

Lesson 12 Visual 2 (continued)

Charlayne Becomes a Millionaire-- Accidentally10 $32,168.43 $2,080.00 $2,822.72 $37,071.1511 $37,071.15 $2,080.00 $3,239.45 $42,390.5912 $42,390.59 $2,080.00 $3,691.60 $48,162.1913 $48,162.19 $2,080.00 $4,182.19 $54,424.3814 $54,424.38 $2,080.00 $4,714.47 $61,218.8515 $61,218.85 $2,080.00 $5,292.00 $68,590.8516 $68,590.85 $2,080.00 $5,918.62 $76,589.4817 $76,589.48 $2,080.00 $6,598.51 $85,267.9818 $85,267.98 $2,080.00 $7,336.18 $94,684.1619 $94,684.16 $2,080.00 $8,136.55 $104,900.7220 $104,900.72 $2,080.00 $9,004.96 $115,985.6821 $115,985.68 $2,080.00 $9,947.18 $128,012.8622 $128,012.86 $2,080.00 $10,969.49 $141,062.3523 $141,062.35 $2,080.00 $12,078.70 $155,221.0524 $155,221.05 $2,080.00 $13,282.19 $170,583.2425 $170,583.24 $2,080.00 $14,587.98 $187,251.2226 $187,251.22 $2,080.00 $16,004.75 $205,335.9727 $205,335.97 $2,080.00 $17,541.96 $224,957.9328 $224,957.93 $2,080.00 $19,209.82 $246,247.7529 $246,247.75 $2,080.00 $21,019.46 $269,347.2130 $269,347.21 $2,080.00 $22,982.91 $294,410.12

Lesson 12 Visual 3Charlayne Becomes a Millionaire-- Accidentally

31 $294,410.12 $2,080.00 $25,113.26 $321,603.3832 $321,603.38 $2,080.00 $27,424.69 $351,108.0733 $351,108.07 $2,080.00 $29,932.59 $383,120.6634 $383,120.66 $2,080.00 $32,653.66 $417,854.3135 $417,854.31 $2,080.00 $35,606.02 $455,540.3336 $455,540.33 $2,080.00 $38,809.33 $496,429.6637 $496,429.66 $2,080.00 $42,284.92 $540,794.5838 $540,794.58 $2,080.00 $46,055.94 $588,930.5239 $588,930.52 $2,080.00 $50,147.49 $641,158.0140 $641,158.01 $2,080.00 $54,586.83 $697,824.8441 $697,824.84 $2,080.00 $59,403.51 $759,308.3542 $759,308.35 $2,080.00 $64,629.61 $826,017.9643 $826,017.96 $2,080.00 $70,299.93 $898,397.8944 $898,397.89 $2,080.00 $76,452.22 $976,930.1145 $976,930.11 $2,080.00 $83,127.46 $1,062,137.57

Lesson 12 Visual 4The Magic of Compounding

• When you save, you earn interest.• When you take the interest out and spend it, it stops

growing.• But if you leave the interest in your account so it can grow,

you start to earn interest on the interest you earned previously.

• Interest on interest is money you didn’t work for. It is money your money makes for you!

• Over time, interest on interest can increase your total savings greatly.

Lesson 12 Visual 5Marcus’s Mistake

Beginning Addition to EndingYear Balance Principal Return Balance

0 $0 $0 $01 $0 $0 $02 $0 $0 $03 $0 $0 $04 $0 $0 $05 $0 $0 $06 $0 $0 $07 $0 $0 $08 $0 $0 $09 $0 $0 $0

10 $0.00 $2,080.00 $88.40 $2,168.4011 $2,168.40 $2,080.00 $272.71 $4,521.1112 $4,521.11 $2,080.00 $472.69 $7,073.8113 $7,073.81 $2,080.00 $689.67 $9,843.4814 $9,843.48 $2,080.00 $925.10 $12,848.5815 $12,848.58 $2,080.00 $1,180.53 $16,109.1116 $16,109.11 $2,080.00 $1,457.67 $19,646.7817 $19,646.78 $2,080.00 $1,758.38 $23,485.1618 $23,485.16 $2,080.00 $2,084.64 $27,649.8019 $27,649.80 $2,080.00 $2,438.63 $32,168.4320 $32,168.43 $2,080.00 $2,822.72 $37,071.1521 $37,071.15 $2,080.00 $3,239.45 $42,390.59

Lesson 12 Visual 6Marcus’s Mistake

22 $42,390.59 $2,080.00 $3,691.60 $48,162.1923 $48,162.19 $2,080.00 $4,182.19 $54,424.3824 $54,424.38 $2,080.00 $4,714.47 $61,218.8525 $61,218.85 $2,080.00 $5,292.00 $68,590.8526 $68,590.85 $2,080.00 $5,918.62 $76,589.4827 $76,589.48 $2,080.00 $6,598.51 $85,267.9828 $85,267.98 $2,080.00 $7,336.18 $94,684.1629 $94,684.16 $2,080.00 $8,136.55 $104,900.7230 $104,900.72 $2,080.00 $9,004.96 $115,985.6831 $115,985.68 $2,080.00 $9,947.18 $128,012.8632 $128,012.86 $2,080.00 $10,969.49 $141,062.3533 $141,062.35 $2,080.00 $12,078.70 $155,221.0534 $155,221.05 $2,080.00 $13,282.19 $170,583.2435 $170,583.24 $2,080.00 $14,587.98 $187,251.2236 $187,251.22 $2,080.00 $16,004.75 $205,335.9737 $205,335.97 $2,080.00 $17,541.96 $224,957.9338 $224,957.93 $2,080.00 $19,209.82 $246,247.7539 $246,247.75 $2,080.00 $21,019.46 $269,347.2140 $269,347.21 $2,080.00 $22,982.91 $294,410.1241 $294,410.12 $2,080.00 $25,113.26 $321,603.3842 $321,603.38 $2,080.00 $27,424.69 $351,108.0743 $351,108.07 $2,080.00 $29,932.59 $383,120.6644 $383,120.66 $2,080.00 $32,653.66 $417,854.3145 $417,854.31 $2,080.00 $35,606.02 $455,540.33

Lesson 12 Visual 7Buy and Hold

• In order to leave money in savings or investments, you have to do these things:

• Spend less than you receive. How?– Earn more by improving your formal education or job skills.– Spend less by using a budget to keep track of where your money is

going.• Become connected to financial institutions.

– Open and maintain accounts at mainstream financial institutions--banks, credit unions and brokerages.

Lesson 12 Visual 7(continued) Buy and Hold

• Manage your credit responsibility. How?– Limit the number of credit cards you have.– Limit your purchases to what you can pay off each

month.– Apply for loans when you are confident that your

current income (in the case of college loans, future income) will allow you to repay the loan.

Lesson 12 Visual 8The Stock-Market Roller Coaster

If you buy and sell on the ups and downs, you may lose money.

But if you buy and hold on for the long term, the ups are greater than the downs.

Lesson 12 Visual 9Don’t Put All Your Eggs in One Basket

If you put all your money in one stock, a disaster befalling that stock will hit you hard--as if you had put all your eggs in one

basket and then dropped the basket. With your money spread out across variety of assets (stocks, bonds and cash, for example), you’re not hurt as badly when any one asset does poorly.

Lesson 12 Visual 10 Forms of Saving and Investing: Some Benefits and Costs

• Savings accounts: provide a small but steady return.• Certificates of deposit: very safe, but instant access carries a

penalty.• Bonds: lending money to a corporation or government, with a

promise of higher returns than those offered by bank savings accounts and CDs.

• Stocks: part ownership in a company, offering higher risks and, potentially, higher returns than some other investments.

• Real estate: the risks and benefits of being a landlord.

Lesson 12 Visual 11Investment Situations

• You have $5,000 to invest. No other information is available.• You have $4,000 that you’ll need six months from now.• You inherited $10,000 from your great-aunt; she has suggested that

you save it for use in your old age.• You are just starting a career and can save $50 per month for

retirement.• A new baby arrives, and Mom and Dad plan to save $100 a month for

the child’s college education.

Lesson 12 Visual 12The Pyramid of Risks and Reward

Highest Risk--Highest Potential Return or Loss

Lowest Risk--Lowest Potential Return or Loss

Lesson 12 Visual 13Mutual Funds

• A mutual fund pools investors’ money.• The fund puts its investors’ money into the markets on

their behalf.• In effect, investors own small amounts of many different

assets.• Mutual funds enable investors to avoid the risk that comes

from owning any one asset. In other words, mutual funds make it easy to diversify.

PersonalFinance

James B. Wilcox

RESOURCES PROVIDED BY:

THE UNIVERSITY OF SOUTHERN MISSISSIPPICENTER FOR ECONOMIC AND ENTREPRENEURSHIP EDUCATION,

MISSISSIPPI STATE UNIVERSITY, VIRTUAL ECONOMICS,NATIONAL COUNCIL ON ECONOMIC EDUCATION, THE MOODY’S FOUNDATION

Personal Finance James B. Wilcox RESOURCES PROVIDED BY: THE UNIVERSITY OF SOUTHERN MISSISSIPPI CENTER FOR ECONOMIC AND ENTREPRENEURSHIP EDUCATION, MISSISSIPPI.

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