Teen Guide - Money Matters

Transcription

www.MoneyMattersMakeItCount.com
National Headquarters
1275 Peachtree St. NE
Atlanta, GA 30309
www.bgca.org • (404) 487-5700
© 2010 Boys & Girls Clubs of America • 1640-10
Made possible through the generous support of the
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Copyright © 2010 Boys & Girls Clubs of America • 1640-10
Contents
Unit 1: Budgeting and Living Within Your Means . . . . . . . . . 3
My Savings Goals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
I Want It, I Need It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Analyzing Spending Habits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Proof of Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Budget This! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Budgeting Plus 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Put It in the Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Unit 2: Saving and Investing: Put Your Money to Work . . . 17
Comparing Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Stock Scramble. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Unit 3: Planning for College: College as an Investment. . 29
ii
Limited permission is granted free of charge to photocopy all pages
of this guide that are required for use by Boys & Girls Club staff
members. Only the original manual purchaser/owner may make
such photocopies. Under no circumstances is it permissible to sell
or distribute on a commercial basis multiple copies of material
reproduced from this publication.
Personal Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Career Path. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Ready for College! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Unit 4: Credit and Debt: Protect Your Future. . . . . . . . . . . 43
Copyright © 2010 Boys & Girls Clubs of America
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Except as expressly provided above, no part of this book may
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Boys & Girls Clubs of America
1275 Peachtree St. NE
Atlanta, GA 30309–3506
404–487–5700
Unit 5: Entrepreneurship: Making It On Your Own. . . . . . . 47
Entrepreneur Checklist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Answer Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Money Matters: Make it CountSM | Teen Guide
Money Matters: Make it Count SM | Teen Guide
Important Guidelines for Photocopying
iii
Introduction
You’re never too young – or too old – to learn how to manage
money and make smart financial decisions. Some very wealthy
people are wealthy not because they won the lottery or inherited
millions, but because they managed their money well, invested
wisely and lived within their means. And you can, too.
Within this guide are useful tricks, terms and tools you’ll need
to build a solid financial future. You won’t find any get–rich–quick
schemes, but you will find the long–term strategies that will help
you make smart decisions that keep your money safe and, over
time, even help it grow.
There’s more online! When you see one of the icons below, hop over to
www.moneymattersmakeitcount.com to learn more.
Spending Plan
Saving and Investing
Plan for College
Credit and Debt
Money Matters: Make it Count | Teen Guide | Introduction
Legend
Entrepreneurship
1
Unit 1
BUDGETING AND LIVING
WITHIN YOUR MEANS
My Saving Goals
List some things in the appropriate category below that you would like to be able to afford.
•Long–term Financial Goals: Items that you can save enough money for in a few years
(e.g., a car, college tuition).
Short–Term Financial Goals
Long–Term Financial Goals
Short–term goals are those you can
put money aside for in a bank account
and take the money out when you have
enough for your goal.
Long–term goals are those for which you
put money aside for a year or more until
you have enough for your goal.
Item
1.
2.
3.
4.
5.
Cost
Item
Cost
Money Matters: Make it CountSM | Teen Guide | Unit 1: Budgeting and living within your means
•Short–term Financial Goals: Items that you can save for now or within a few months (e.g.,
an MP3 player, a cell phone).
6.
3
I Want it, I Need it
To live within your means, you need to first figure out what’s really important to you. The first
step to taking control of your financial future is learning to tell the difference between the things
you want and the things you need.
Anticipate items you will want and need during your first year out of high school:
Items I Will WantItems I Will Need
_____________________________
Focus on: Personal Sacrifices
Saving money is one of the most important steps to achieving financial freedom. By saving
money a little at a time, you get the freedom of purchasing big–ticket items like a car, a house
or a college education. One paycheck is never enough to pay for one of those big expenses, but
by putting a little something away each time you earn, your purchasing power grows and grows.
A savings account also gives you peace of mind – because you know you have a cushion in case
of unexpected expenses.
There are three good ways to save up money for the important stuff:
•Saving regularly
•Increasing your earnings
•Making smart choices
4
_____________________________
_____________________________
Wants vs. Needs
So what’s the difference between a want and a need? A want is something you would like, but
can live without. A need is a necessity — something you can’t live without like food, shelter
and clothing.
WANTS
A budget is a plan you make in advance for how you will spend your income. You can take time
to investigate your spending options and carefully decide how to meet your savings goals, pay
for your needs and prioritize what you want to buy. In an ideal budget, every penny is spoken
for – but that doesn’t mean you never get to have any fun. For example, you can put a certain
amount in your monthly budget for entertainment. As long as your needs are being met and
money is going toward savings, then it’s a great idea to include things like movies or dining out
in your budget.
At some point, you’re going to be in a situation where you will have to make a smart choice and
prioritize something you need over something you want. It’s not fun to think about, but figuring
out what things you could give up in order to increase your savings can help you avoid a lot of
anxiety in the future.
NEEDS
CarGroceries
Questions:
Why is saving important?
Cell phone
Place to live
Music playerClothes
TVMedical care
_______________________________________
How can you increase your earnings?
Expensive sneakers
_______________________________________
Questions:
When does a want become a need?
_______________________________________
When would a car move from a want to a need?
_______________________________________
How does a budget help you make smart choices?
_______________________________________
_____________________________
5
Proof of Purchase
Analyzing Spending Habits
Have you ever stopped and wondered why you buy the things you do? Think about the last
big–ticket purchase you made. Why did you spend your money on that? Did a friend suggest it?
Did you see an ad and feel you had to have it? Were you feeling low and you wanted something
that might make you feel better? Understanding your own motivations and spending habits can
help you resist unnecessary temptations.
Use this spending tracker to keep track of where you’re spending your money. Make a point of
writing down each purchase you make.
You can also find this Spending Tracker on the Money Matters website, so you can
track your spending in your Personal Locker.
6
Date
Amount
Transportation
Item
Date
Amount
Personal Care
Item
Date
Amount
The last unnecessary purchase (a “want”) I made was:
It cost:
I got the money from:
The main reason that I purchased that item was:
Friend suggested
Made me feel good
It was just so cool
Don’t know
Item
Other (specify)
If I hadn’t spent $______ on ______ I could:
Tips for Managing Sp
1.
Food
Date
Amount
Music/Electronics
Item
Date
Amount
Item
Other
Date
Amount
Item
ending:
Use direct deposit to
have your
paycheck automatic
ally put into
your account.
2. Make a budget an
d stick to it.
3. Purchase items
on sale.
4. Make a list befo
re going
shopping.
5. Buy only items
that you need.
Clothing
Answer the questions below in the column on the right.
7
Gross Pay vs. Net Pay
Focus on: Income
If you don’t already have one, you soon will have a job. Which means you soon will have a
paycheck. There are two ways to look at a paycheck. It comes down to gross vs. net.
Income is any money that you receive. You can receive income from a full–time or part–time job,
birthday gifts, an allowance, scholarships, prizes or from proceeds/profit you make from items
you sell – cookies, clothes, etc. Money from a regular job is money you can count on. Some jobs
will pay you an hourly rate, and you’ll receive a paycheck every week or every two weeks. Other
jobs will pay you an annual salary, and that amount will get divided into regular pay periods,
such as one every two weeks. Other jobs are contract work – meaning you get paid for a specific
project and a specific amount of time. For example, you might decide to be a painter or hair
stylist and get paid for each job you do.
Your gross pay or total pay is always larger than your net pay or take–home pay. If you get paid
hourly, your gross pay is your hourly rate times the number of hours you worked. But you usually
do not receive a paycheck equal to your gross pay. Where does the rest of the money go?
Out of your gross pay, several deductions are removed by your employer (see “Understanding
a Paycheck and Deductions” below). Your net pay is the amount that’s actually on the check
you receive. Net pay is gross pay minus all of those deductions. When you’re calculating your
monthly budget, you should only include net pay as your income.
8
Everyone’s paycheck and deductions will be slightly different, but the following are the most
common deductions:
Federal Tax: Federal taxes withheld from each paycheck. This money is spent by the federal
government on a wide variety of programs.
Social Security Tax: You pay 6.2 percent* of your salary to FICA. It stands for Federal
Insurance Contributions Act. The good news is that your employer contributes an additional
6.2 percent* into FICA. That means a total of 12.4 percent* of your salary is automatically
being put into the Social Security system. When you retire, or in case of a disability, you’ll
have the opportunity to receive Social Security benefits.
State Tax: State taxes withheld from each paycheck. This money is used by your state. In
some locations, but not many, you will also see a deduction of taxes for your city or town.
There are also a few states that don’t have a state income tax.
Medicare: Medicare deductions are primarily used to help senior citizens with their medical
expenses. 1.45 percent* of your income goes toward Medicare, and your employer
matches an additional 1.45 percent*.
401(K): Some employers will automatically deduct a certain amount of your pre–tax
paycheck and put it toward a retirement plan. This money is still yours – it’s simply being
saved up for you for when you retire, and in some cases, employers will match your 401(k)
contributions up to a limit.
Insurance: If you receive health insurance from your job, a part of that cost is usually
deducted from your paycheck. Your employer typically pays the majority of the cost of your
health insurance.
*Percentages indicated above are valid rates at the time of printing.
During the school year, it’s difficult to find free time after school, homework, sports and other
activities. But if you manage your time well, you probably can find some free hours during the
week or on the weekend.
When do you have free time during the week or on weekends?
_______________________________________
Instead of hanging out with friends or relaxing at home, you could spend some of those free
hours making use of one or more of your talents to earn extra income. Almost anything you’re
good at doing or making can be a profitable talent. Some may not seem like a talent to you –
but it would be valued by others. For example, maybe you’re great with animals, but you never
thought much about it. Fact is you could make extra money walking dogs or pet sitting.
What talents do you have? What are you good at doing or making? What kinds of activities do
you enjoy?
____________________ ________________________ _______________________
Now that you’ve identified some windows of time when you’re available and some things you’re
good at or like doing, it’s just a matter of finding the right opportunities. If you have time on
the weekends you could seek opportunities to work at a movie theater, in a restaurant, at a
clothing store or as a tutor. To find these opportunities, you could look in the “Help Wanted”
section of the local newspaper or conduct an online job search. Or if you enjoy being outside,
and have access to garden tools and a lawnmower, you could make extra money cutting yards or
gardening. You can try to find these opportunities by putting up flyers around your neighborhood.
Where will you look for opportunities to earn extra income? What steps will you take to find
these opportunities, or to help these opportunities find you?
____________________ ________________________ _______________________
Understanding a Paycheck and Deductions
Time + Talents + Opportunities = Income
9
Pay Yourself First!
Expenses are anything you spend money on: food, transportation, rent, shoes, video games,
etc. To make a budget, you need to classify all of your expenses. You don’t have to list every
item of food you buy or every grocery store you go to; instead, you can have one category called
“Groceries” and budget a certain amount to cover all expenses that pertain to groceries.
Have you ever heard the expression, “Living paycheck to paycheck?” Unfortunately, many
Americans would describe themselves as living exactly that way. Living paycheck to paycheck
means that whatever money comes in each month, all of that money is in turn spent just to
cover monthly expenses, with nothing left over.
Although everyone’s list of expense types might be a bit different, there are some common
expense categories that apply to most adults. Here’s a list to get you started when planning
your own budget:
To avoid living this way, you have to do two things. First, as you learned in the last section of
this guide, you need to make personal sacrifices by recognizing the difference between Needs
and Wants, and cutting back on unnecessary expenses. Second, you must always follow the 10
percent rule and pay yourself first.
Common Expense Categories:
Essential Expenses (Money you must spend)
Savings: Set aside 10 percent of your income in a savings account; this should always be
your first expense.
Home: Monthly rent or mortgage payment, including insurance and any maintenance.
Groceries: Food purchased to be prepared or eaten at home.
Transportation: Gas, cost of public transportation or the cost for maintaining a car,
including insurance.
Utilities: Electric bills, water, sewage, cable television, mobile phone and home phone bills.
Medical: Doctor visits, prescriptions, urgent care.
The 10 Percent Rule
The 10 percent rule is easy: when you receive any income at all— whether it’s birthday cash or
a paycheck from your job — 10 percent of that amount goes into a savings account. Any budget
you make should list savings as your first monthly expense, and 10 percent of your net (after
tax) income should be allocated toward it.
Setting aside 10 percent of your net income in a savings account can do even more than help
you save up for big long–term expenses; one of the most important benefits is that this 10
percent acts as a safety net. If you are living paycheck to paycheck, without putting anything
aside, you will have no money left over in case of emergency or unexpected expenses; for
example, if you lose your job, you will not have the safety net of that savings account while you
look for a new job.
Discretionary Expenses (Money that you’d like to spend but don’t have to spend)
Eating out: Money spent on food prepared out of the house, including food purchased at
restaurants or coffee at coffee shops.
Health and fitness: Gym memberships; non-essential doctor, dentist or eye care visits.
Entertainment: Movie tickets or DVD rentals, concert tickets or any other money spent
on recreation.
Shopping: Clothing, electronics, books or sporting goods.
Personal care: Haircuts or styling, manicures or pedicures.
Gifts and donations: Gifts for friends or family or donations to charity.
Question:
If you took home a net pay of $700 a month, how much money would you immediately set aside
for savings?
_______________________________________
10
Focus on: Expenses
11
Budget This!
Use this worksheet to put together your monthly budget.
You can also visit www.moneymattersmakeitcount.com to use an interactive
budget worksheet and save it in your Personal Locker.
Total Monthly Income = $__________
12
CostFrequency
Multiplier
Cost Per Month
In the Cost column, list the cost of that expense. For example, if you budget $200 per year on
clothing, enter $200.
Essential
Expenses
In the Frequency column, indicate whether this is a Daily, Weekly, Monthly, or Annual expense
(Daily=D; Weekly = W; Monthly = M; Annual = A).
Savings
Rent
Transportation
In the Multiplier column, enter x30 for Daily; x4 for Weekly; x1 for Monthly; and x.083 for Annual.
In the Cost Per Month column, multiply the Cost and Multiplier columns together and enter the
result here.
Food
Education
In the Total box at the bottom, add up all the Cost Per Month values. Make sure that your total
is less than or equal to your total monthly income.
Clothing
Utilities
Note that the first expense – money set aside for savings – has already been listed. This should
always be the first item on any budget. The Cost Per Month of savings = .10 times your Monthly
Net Pay.
Medical
Other
Discretionary
Expenses
Question:
Music
What steps can you take now to reduce your monthly expenses?
Movies
Entertainment
Gifts and
donations
_______________________________________
_______________________________________
Eating Out
Health and Fitness
_______________________________________
Other
TOTAL:
Monthly income
___________________ -
Monthly expenses
___________________
=Remaining dollars
___________________
Expense
In the Expense column, feel free to add additional categories, or to cross off any categories that
don’t apply to you.
13
Budgeting Plus 10
For this activity, you’re going to create another budget. But this time, instead of starting with
your current income and deciding how to plan your spending as wisely as possible, you’re going
to use a budget as a way of imagining the future.
So, in the budget below, write the amounts of money that you WANT to be spending 10 years
from now.
BUDGET IN 10 YEARS:
Expense
CostFrequency
Multiplier
Questions:
What career path can you follow that will result in approximately that salary?
Savings
______________________________________________________________________________
Rent
Transportation
Food
What steps can you take today to start moving toward that long-term goal?
Education
_______________________________________
Clothing
Utilities
_______________________________________
Medical
Other
_______________________________________
Discretionary
Expenses
Music
Movies
Entertainment
Gifts and
donations
Eating Out
Health and Fitness
Other
TOTAL:
Now add up the Cost Per Month column to get your total. That number is how much money
you’ll need to be earning as your monthly take-home income in 10 years, in order to cover your
10–year dream budget. If you multiply that number by 12, you’ll get the approximate annual
take-home salary you’ll need to earn.
Cost Per Month
Essential
Expenses
14
In the Expense column, feel free to add an additional category. In the Cost Per Expense
column, list how much you want to be spending in 10 years. In the Frequency column, indicate
whether this is a daily, weekly or monthly expense (Daily = “D”; Weekly = “W”; Monthly = “M”).
In the Multiplier column, enter x30 for daily; x4 for weekly; and x1 for monthly. In the Cost Per
Month column, multiply the Cost and Multiplier columns together and enter the result here.
15
Put it in the Bank
Budgeting Review Crossword Puzzle
Congratulations! You’ve just covered the ins and outs of budgeting. Now let’s see if you really
know your stuff. Using the clues below, write the answers in the correct spaces. (Hint: If you get
stuck, don’t worry. All the answers can be found throughout the previous pages of this unit.)
Unit
2
SAVING AND INVESTING –
PUT YOUR MONEY TO WORK
16
If you picked the million, congratulations. You’ve got a million dollars.
If you picked the doubling penny, in a week, you’ll have $1.28. Not such a smart choice, huh?
Well, after one month you’ll have $10,737,418.24 – almost 11 million dollars!
ACROSS
1 Something you like but can live without.
4 Money withheld from your paycheck that is used by your state.
8 Many Americans claim that they are living paycheck to ___.
9 Expense category that involves electric bills and cable.
11 Payment type: paid for the completion of a certain project.
13 Payment type: a yearly sum divided and paid out over a series of pay periods.
14 A necessity: something you can’t live without.
15 Expense category that involves monthly rent.
DOWN
2 Payment amount after deductions and taxes.
3 Social security tax.
5 Expense category that involves school supplies and tuition.
6 Payment amount before deductions and taxes.
7 Payment type: paid for each hour of work completed.
10 Any type of money you receive, whether it’s from a job, allowance, birthday gift, etc.
Money Matters: Make it CountSM | Teen Guide | Unit 2: Saving and Investing: Put your money to work
Which would you rather have: a million dollars or a penny? Wait, before you answer, there’s a
special deal with that penny. Today you only get a penny, but tomorrow you get two pennies.
And the day after you get four pennies. And that penny will keep on doubling each day for a
month. So which would you pick? Remember, with the million dollars up front, you can do
whatever you’d like with that money – invest it, save it, grow it. So which would you pick?
12 When saving, try to follow the 10 percent ___.
17
Focus On: Compound interest
One of the added benefits of saving money in a savings account is that not only are you spending
your money wisely and planning for your long–term goals, you are also allowing your money to grow
in that savings account. Your money keeps on growing because it is earning compound interest.
18
Be sure to visit www.moneymattersmakeitcount.com to check out the
Compound Interest Calculator so you can get a sense of the real power
of compounding.
Helpful Hint: Write It in the Register!
When you open a checking account, you’ll receive a small book of starter checks. Then the
bank will send several books of checks that have your name and address printed on them.
You’ll also receive a little plastic wallet for holding your checks, and it will come with a register
— which is a blank form for recording all of your transactions. To avoid ever paying overdraft
fees (money the bank charges you if you write a check for more money than you have in your
account), or injuring your credit score, it’s critical to get in the habit of always recording every
transaction in this register.
•When you deposit money in your account – write it in the register.
•When you take out money from an ATM – write it in the register.
•When you use your debit card to make a purchase – write it in the register.
•When you write a check – write it in the register.
•Are you seeing a pattern here? WRITE IT IN THE REGISTER!
Tip: Check your balances two to three times per week. You can check your balance online, but
be sure to use a secure computer, and log out and close the browser when you’re finished.
When you open a new bank account, you’ll almost always receive something that looks like a
credit card. But look carefully at your card – there’s usually much more than meets the eye.
ATM Card
Some banks still issue a card that only lets you get money from their ATM’s (Automated Teller
Machines). Withdrawing money from an ATM is the same as writing a check, except that you
receive the cash immediately. For almost all banks, using your ATM card at a branch of your
own bank is free, but there can be fees if you use a different bank’s ATM machine.
DEBIT CARD or CHECK CARD
A debit card and a check card are two names for the same thing. The name “check card”
makes more sense, because using a check card is just like writing a check. The difference
between an ATM card and a check card is that a check card can be used in stores and online
– wherever a credit card is accepted. But unlike a credit card, you do not run up debt.
Instead, when you purchase something with
this kind of card, the money is automatically
deducted from your account. If you don’t have
enough money in your bank account, the
purchase will be declined.
CAUTION!
Debit Cards
Although many A
TM
cards have credit
card logos, they
are
not credit cards.
You
must have money
in
your bank accou
nt
to use them.
CREDIT CARD
A credit card looks like a check card. But it
works completely differently. When you make
a purchase with a credit card, the money does
not come directly out of your bank account.
Instead, you borrow money from a credit card
company, and the company sends you a bill. If
you don’t pay your credit card bill in full each
month, you pay interest, and if your payment
is late, you pay a penalty. Credit cards can be
useful, but they can also be dangerous.
Compound interest means that when you put money in a bank account that earns interest,
the bank pays you for keeping your money there. If you leave the money sitting in the bank,
you start earning interest not only on the money you originally put in, but also on the interest
itself. That’s right: the interest earns interest, too!
Different Types of Cards
19
Focus On: Money in the bank
Types of Financial Institutions
Money kept in a savings account can earn interest. You can keep making contributions and
that money will keep on growing. But even if you keep your money in an account that doesn’t
earn interest, like many checking accounts, there are still many incredible advantages. It’s
important to know what your goals are, and to learn the fees charged by different institutions
for different account types. Only by knowing your goals and these terms can you make the
best possible choice for yourself.
Bank
•Insured by the federal government
Visit www.moneymattersmakeitcount.com
to learn more.
•Offer a range of different accounts
•Big banks have branches in lots of locations
•No charge to deposit a check in your account
20
Your Money Is Safe. Money in the bank
is money that only the account holder can
access. If you open an account in your name,
only you and any other named account holders
on the account can touch that money. In fact,
most banks require those under 18 years
old to have parental consent or joint account
status with a parent or guardian.
DID YOU KNOW?
Did you know for your money to
be safe, it has to be in an insured
institution? Look for FDIC banks
Your Money is Insured. The U.S. government
insures the deposits kept in insured
and NCUSIF for credit unions.
banks, credit unions and savings and loans
institutions up to $250,000* per account. If the institution closes, or is robbed, your money is
still safe. But if someone takes money you have stored at home in a drawer or under your bed,
you have no insurance.
•Money can earn interest
Credit Union
•Insured by the federal
government
•Not–for–profit cooperative
financial institution – money
is generally kept in the
community to help the
community
•When you put your money in a
credit union, you become part
owner of the credit union
•No charge to deposit a check to
your account
A Bank Account Builds Good Credit. Keeping a bank account active is a step toward
borrowing money, which you may need someday to buy a house or a car.
•Generally lower monthly fees
than banks
Items usually required to open an account with a bank or credit union:
•Money can earn interest
o Valid Photo ID (driver’s license, state-issued ID card, passport)
o Social Security Number
o Proof of current address (a utility bill or phone bill)
o Parent or Guardian (if under 18 years old)
o For non-citizens: proof of alien registration
o An initial deposit (the money you’ll use to open the account; can be cash, a check or
money order)
Note: Some banks will also ask for a second form of ID. To save yourself time, call the bank
first and confirm what you items you’ll need.
*Limits indicated above are effective as of this printing
Check Cashing Store
•Will cash your paychecks for a
large fee
•Provide fewer services than a bank,
and charge much, much more
•No matter what you hear, there is
absolutely no good reason to use a
check cashing store
CAUTION!
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•Money you pay to a check cashing
store will never earn interest
Question:
What type of financial institution is best for you?_______________________________
Why Should You Keep Your Money in a Bank or a Credit Union?
21
Activity: Comparing Accounts
As you investigate different financial institutions – either by visiting websites or by visiting
actual branches around town, you can use the form below to compare the different types of
accounts available to you. You might also discover that within the financial institutions you visit,
they offer different types of accounts that will suit your needs. Remember, it is important to
choose a financial institution that is right for you and provides you the most bang for your buck!
22
Name of financial institution
Fees and Penalties
Type of account
Minimum deposit required
Banks and credit unions provide many services for
Interest rate (if any)
How often is interest
compounded?
Number of free withdrawals
per month
Service fees
Can you write checks; if so, is
there a charge per check?
Can you cash a check for
free; if so how many per
month?
ATM charge (Same
institution)
ATM charge (Other
institution)
Distance from my
home/school/Club
free. But if you’re not careful, you can also rack
up a lot of penalties and fees. It’s important to
be aware of all the fees, charges and penalties
your institution might impose. All banks and
credit unions have different schedules of fees,
so check with yours before opening an account.
Here is just a sample of a typical fee schedule
of a checking account:
• Using your ATM card at another bank: $2.50
• Stop payment on a check (when you make a
payment with a check and then you change your
mind): $25.00
• Non–sufficient funds (not enough money to
cover a check you wrote): $27.00
The financial institution that is best for me is: ______________________________________
CAUTION!
COMPARING ACCOUNTS
23
Focus on: Investing in stocks
Have you heard about stocks and shares before, but weren’t sure what they were? Read
below to find out, then test your new knowledge in the Stock Scramble.
Stock market – Public market for shares in companies to be bought and sold.
Stock Scramble
Stock Market Word Jumble
Unscramble the words below to find important investing terms. When you’re finished, write down
the letters in the circled boxes and unscramble them to get “the phrase that pays.”
24
Dividends – Money that shareholders receive (often from corporate profits) from the company
in which they have stock; not all companies pay dividends.
evisnetntm
Diversification – Investing your money in a wide range of companies, industries and
investments; much safer than “putting all your eggs in one basket.” Remember, it is important
to diversify your portfolio.
ieysfidvr
Buy and Hold – Strategy of buying stock in a company and then holding onto it for many years
because over long periods of time, stock prices tend to rise.
Mutual Fund – A type of investment that gives you the benefits of diversification; instead of
buying stocks in many different companies, you buy shares in a broad-based mutual fund; the
fund, in turn, invests this money in a wide range of companies.
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The phrase that pays:
Shareholder – Someone who owns stock (shares) in a company.
25
Making Your Money Grow
The following chart shows how an investment grows over different periods of time. Few
people get rich from their wages alone. By taking advantage of the “miracle” of compound
interest, anyone can end up with significantly more than their original savings amount and
be on the way to meeting long–term financial goals. When the interest earned on an account
also earns interest, it is called compound interest. It is growth on top of growth! 26
Starting Early
Starting Later
A Lifetime of Saving
AgeSavings
AgeSavings
AgeSavings
16
$1,000
16
16
17$1,000
17
17$1,000
18
$1,000
$1,000
18
18
19$1,000
19
19$1,000
20$1,000
20
20$1,000
Time is Money
21$1,000
21
21$1,000
22$1,000
22
22$1,000
Assume you’re 16 years old and decide to invest $1,000 a year with money you earn from
summer jobs. Your investment grows by 9 percent each year. You set aside the money each
year for 10 years, but at age 26 you decide to stop.
23$1,000
23
23$1,000
24
$1,000
24
24
25$1,000
25
25$1,000
26
26
27
27$1,000
27$1,000
28
28
28
29
29$1,000
29$1,000
30
30$1,000
30$1,000
31
31$1,000
31$1,000
32
32$1,000
32$1,000
33
33$1,000
33$1,000
34
34
34
35
35$1,000
35$1,000
36
36
36
37
37$1,000
37$1,000
38
38
38
39
39$1,000
39$1,000
40
40
$1,000
40
$1,000
41
41
$1,000
41
$1,000
42
42
$1,000
42
$1,000
43
43
$1,000
43
$1,000
44
44
$1,000
44
$1,000
45
45
$1,000
45
$1,000
46
46
$1,000
46
$1,000
47
47
$1,000
47
$1,000
48
48
$1,000
48
$1,000
49
49
$1,000
49
$1,000
50
50$1,000
Meanwhile, your friends save nothing until they are 25. At 25, they begin to put aside $1,000
every year, and like you, earn 9 percent on their money. At age 50, you have a reunion and
compare notes. Who has the most money? The correct answer is the person who began
saving at age 16.
The following chart, “The Impact of Time on the Value of Money,” shows the surprising results.
The chart shows how time can be a significant factor in helping you achieve your financial
goals. Note: Examine the chart with your own situation in mind and take into consideration
that saving consistently throughout your life will provide you with the best chance of staying
financially secure.
Test your financial knowledge! Visit www.moneymattersmakeitcount.com
to play a game. Have your friends play it and see who is the finance whiz!
“Show m
Cuba Go
e the mo
oding Jr.
, in the m
ovie Jerr
ney!”
y Maguir
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$1,000
$1,000
$1,000
$1,000
$1,000
26
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
50$1,000
Total invested $10,000
Amount available by age 50:
$131,010
$84,701
$215,711
Adapted with permission from National Endowment for Financial Education.
Investing small amounts each month may not seem like a lot, but if you start early, even in
your teens, it’ll translate into big dollars down the road.
The Impact of Time on the Value of Money
(9 percent rate of return)
27
Unit 3
PLANNING FOR COLLEGE:
COLLEGE AS AN INVESTMENT
Activity: Personal Inventory
A personal inventory can help you decide on a career path or which subject to major in when
you get to college.
Favorite subject(s) in school: ________________________________________________________
Sports or physical activities you enjoy: _______________________________________________
Hobbies: _________________________________________________________________________
Artistic talents: ___________________________________________________________________
Language skills: __________________________________________________________________
Other talents: _____________________________________________________________________
Areas of interest: _________________________________________________________________
Now that you have assessed your interest and talents, what types of careers are best for you?
_________________________________________________________________________________
_________________________________________________________________________________
What type of degree would you need to pursue this type of career?
_________________________________________________________________________________
_________________________________________________________________________________
Money Matters: Make it CountSM | Teen Guide | Unit 3: Planning for college: College as an investment
You might already be thinking about a career; but almost all of the most in–demand (and
highest paying) careers require some form of post–secondary education: trade school, an
associate’s degree, a college degree or a post–graduate degree, like one from medical
school or law school. So, taking things one step at a time, that means the next big step after
high school will be going to college or a trade school. That’s one of the best ways to increase
your career options and your earning potential.
29
Activity: Career Path
Instructions:
Education Alternatives
There are a lot of options for continuing your education after high school, so be sure to talk
with your parents, guidance counselor or Club staff to help choose what’s right for you.
1. Write your career destination in the blank below.
2. Add to the list on the left everything else you can think of that you can do to help you reach
your career destination.
30
MY CAREER DESTINATION IS ___________________.
A BENEFIT OF CHOOSING THIS CAREER IS __________________________.
My Plan for the Future
Educational Setting
Four-year
Universities
• Undergraduate and graduate degrees
Four-year Liberal
Arts Colleges
• Generalized (not career–specific) curriculum with declared majors
• Large choice of majors
Community and
Two-year Colleges
• Career–oriented degrees not offered by four–year colleges
(such as fashion design, computer repair, electronics, food
service, technology, paralegal studies, etc.)
• Can be a stepping stone to a four–year college or university
Join extra–curricular activities.
Save money.
Research schools to attend after high school.
• May be a good choice if you are not sure what to major in
• Flexible hours so students can work
Practice for the SAT or ACT.
Find an internship.
• Open to everyone
• Economical way to take classes and build grade point averages
Improve my grades.
Get a job.
• Generally smaller classes than universities
• Usually more faculty–student interaction than universities
WHAT I WILL DO HOW I WILL ACCOMPLISH THIS
Perform community service.
Benefits
Technical Training
or Vocational
School
• Certification in particular skill (such as cosmetology,
nursing assistant, computer repair, culinary arts and
fashion and design schools, etc.)
Military Service
• Way to build character and get an education while serving
the country
• GI Bill helps cover cost of higher education
Learn more about my career destination.
Improve my interview skills.
Want to see how your level of education can affect your income?
Visit www.moneymattersmakeitcount.com and check out the “Planning for
College” section to learn more!
3. In the right–hand column, indicate how you are going to accomplish these goals. Be
specific. For example, for “improve my grades,” you might say “study harder” or “work with a
tutor at the Club” or “talk with my teachers during their office hours,” or you might even list all
of those things.
31
Topic: Paying for your education
Financial Aid Services
Yes, education can be expensive. But because people with a college education tend to have
more opportunities and higher–paying jobs, continuing your education past high school is
probably the best investment you can make for yourself.
This is a comprehensive suite of assistance that most educational institutions can provide for
you, combining loans, grants and work/study programs. Some financial aid does not need to
be repaid, but you must qualify to receive it. (Visit www.finaid.org for more information).
It’s important to find out all the ways you can pay for college. After all, paying for college is
more than just tuition. If you plan to live on campus you’ll have expenses like room and board.
Here is an overview of resources to help you pay for your college expenses:
Note: Loans do require repayment.
32
Conventional Savings Account.
Deposit 10 percent of any money
you receive as income or gifts into
a conventional savings account at a
bank or credit union to start your own
education savings program.
Coverdell Savings Account. In order
to participate, your family must have
an adjusted gross income of less than
$110,000* ($220,000* if filing a joint
return). This money has to be used to
pay for school. Non–qualified withdrawals
are taxed as ordinary income at donor’s
rate and subject to a 10 percent tax
penalty. (For more information, visit CFED.
org or www.finaid.org)
Watch Out!
enough
Only borrow
for
money to pay
o avoid
college; try t
ary debts.
any unnecess
529 College Plan. Also known as qualified tuition plans, this is named for section
529 of the Internal Revenue Code. You can invest long–term in mutual funds or pay
future tuition costs at today’s prices. As with the Coverdell, money has to be used for
education or you have to pay a penalty. (For more information, visit CFED.org)
Educational Savings Plans. Several companies and organizations now offer educational
savings plans as a way to earn enough money to pay for college. Special incentives
allow you to put away college savings every time you use a credit card or make specific
types of purchases. (For more information, visit www.upromise.com)
An Individual Development Account is a matched savings account that can be used
to pay for post–secondary education. A “matched” account means that for every
contribution that you or your family makes to the account, additional money is placed
into the account by various government and private sources. (For more information visit,
CFED.org)
Savings Bonds. You or your family can purchase U.S. Savings Bonds that only cost a
fraction of their face value, but over time, they mature and end up being worth more
than you paid for them; once they mature, you can cash them in and use them to pay
for school. As an added bonus, the government gives you tax credits when savings
bonds are used to pay for college. (For more information on how to use Savings Bonds
to pay for post–secondary education, visit www.treasurydirect.gov)
*Limits listed above are valid at the time of printing.
Work/Study programs: A portion of your financial aid package might derive from the
Federal Work Study Program, in which schools offer students jobs that allow them to
earn up to a certain amount each year. You get paid just like a normal job.
Loans
Loans are easier to qualify for than financial aid, but they must be repaid with interest.
Repayment usually begins immediately after graduating.
Federal Loans: The U.S. government offers Stafford and Perkins student loans, and
PLUS Loans for parents. (Visit the Department of Education for their complete guide to
repaying loans: http://studentaid.ed.gov)
Private Loans: Many financial institutions, like Sallie Mae, offer private student loans
and consolidation loans.
Scholarships & Grants
These don’t ever have to be paid back. All you have to do is qualify. And qualifying can
sometimes be much easier than you think. Grants and scholarships can come from the
federal or state government, a high school, college or university, a business, an individual or
even a nonprofit organization.
Merit-based: These are scholarships that you earn, like academic or athletic
scholarships.
Need-based: Need–based scholarships, like the Federal Pell Grant, are determined by
financial need factors.
Visit www.moneymattersmakeitcount.com to use the Scholarship Search tool
– you can save all the scholarships you find in your Personal Locker.
Savings Plans
FAFSA: This is the central application you’ll need to complete, with the assistance of
your parents or guardians, to apply for financial aid. (You can find the application and
more information here: www.fafsa.ed.gov)
33
Getting Into College Checklist
Senior Year Financial Aid Guide and Checklist
Getting into college does not mean you need a 4.0 average and perfect scores on the SAT. In
fact, colleges look at a wide range of factors when they decide whom to admit into next year’s
freshman class. Here’s a checklist of some of the things you’ll need to do to help you get into
the college of your choice.
Note: You can begin your scholarship search during your junior year of high school.
o PSAT – The PSAT is a practice test that you usually take in 10th and 11th grade to
prepare for the SAT.
o SAT/ACT – Most schools require that applicants submit their scores on either the SAT
or ACT, which are standardized admissions tests.
34
o Extra–curricular activities – Involvement in extra–curricular activities, like sports,
clubs or student government, show that you are well–rounded and can manage your
time well.
o Hobbies – Hobbies help to present you as an interesting, well–rounded person.
WHEN
o Ask your counselor about local scholarships available in your community.
October
o Apply for local scholarships in time to meet deadlines.
November
o Get a free application for Federal Student Aid (FAFSA).
November
o Gather all the necessary information to complete the FAFSA. December
oDetermine if your prospective schools require the CSS PROFILE.December
o Get a Personal Identification Number (PIN) from the U.S. Department of Education in order to complete the FAFSA online.
December
o Get a copy of parents’ or guardians’ tax return. January
o Community service – Look for opportunities through your school, church or other
organizations to get involved in making a difference in your community.
o Complete and submit the FAFSA.
January
o Part–time and summer jobs – A job can not only earn you money to pay for college, it
can also be used to impress the admissions team by demonstrating your work ethic
and responsibility.
o Complete and submit the CSS PROFILE (if applicable). January
o Receive a copy of your Student Aid Report.
February
o Part–time and summer internships – Internships offer the chance to learn much more
about your possible profession.
o College application – Usually includes one long essay and one or more short–answer
essays. Some schools participate in the common application process, which has
one standard application for some 400 schools. Visit www.commonapp.org for more
information.
o College interview – A great opportunity to let the admissions staff get to know the
real you.
o Letters of recommendation – These can come from a favorite teacher, coach,
guidance counselor, employer or community leader.
o
Receive aid offers from schools.March
o Accept financial aid offer from the school you will attend. April
How to Keep Costs Down When Applying to Colleges
•Buy used SAT practice books or check out copies from the library.
•Apply for an SAT or ACT fee waiver through your guidance counselor.
•Apply for an application fee waiver.
•Look for school– or Club–sponsored trips to visit colleges.
o Completed financial aid application – Also known as the FASFA.
o Scholarship search – A chance for you to research additional ways to pay for your
college education.
Visit www.moneymattersmakeitcount.com to check out an interactive
checklist that you can save to your Personal Locker!
!
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o GPA – Your grade point average is weighted heavily in college admissions because it
reflects your long–term performance in school.
TO-DO
35
Did you know
A 2008 study*
?
reveals the fo
llowing ab
their co
llege education
:
36
What kinds of scholarships and programs are available in colleges and universities in your
community?
Do some research about the colleges, universities or campuses in your area. Write, call or use
the Internet to identify a contact person at an institution and gather the following information:
•What kinds of high school courses would help prepare you for success?
Did you notice
that the percen
tages add up to
In other words
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ic Interest
Question: How do you plan to pay for college? Check off the boxes below to indicate which
sources you will use.
Parents/Family
Scholarships/Grants
•Does the school have brochures and program descriptions that outline information
helpful to pursing your career?
•What scholarship information is available?
Using the information you’ve gathered, fill in the Ready for College! chart below to help you
keep your eyes on the goal.
HELPFUL HINT! Visit the Money Matters website (www.moneymattersmakeitcount.com) to
research scholarships opportunities and the CareerLaunch website to explore careers or build
your resume. Also, www.collegeboard.com is a great site to learn more ways to pay for your
college education.
Ready for College!
Three schools I am interested in attending:
Name of Institution
Cost of Tuition + Room & Board
 Student Loan/Financial Aid
 Summer Job
 Part-time Job
 Savings Account
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Organizations that offer scholarships and grants take into consideration a wide variety
of factors in awarding their financial packages. The following is only a partial list of
information that you may need to have on hand to apply for various scholarships. Fill
this out as best you can and ask your family to help you with any missing information.
Remember, you can save all of this information in your Personal Locker on the
Money Matters website (www.moneymattersmakeitcount.com).
• Parents 61 percent
• Scholarships
40 percent
• Student Loan
s 38 percent
• Summer Jobs
32 percent
• Part-time jo
bs 29 percent
out how stude
nts pay for
Information Scavenger Hunt
37
Last name:
Not all of the information you collected about yourself and your family may seem relevant
when applying for college, but there are scholarships associated with many obscure talents,
hobbies, family situations or histories. Now that you have spent some time thinking about the
qualities that make you unique, use Internet search tools like Google and Bing to search for
scholarships, grants and contests where these qualities may help you to pay for college.
Gender:
After researching some scholarships online, I think I qualify for the following:
My Scholarship Worksheet
First name:
Country of birth:
38
Countries where your ancestors came from (list all):
Sports you play:
Musical instruments you play:
GPA:
Majors you’re interested in:
Career objectives:
Organizations you belong to:
Organizations your parents belong to:
Colleges attended by your immediate family members:
Did your parents serve in the military:
Parent or Guardian careers:
Fraternities/Sororities for your immediate family members:
Hobbies:
Extra-curricular activities:
Awards:
Do you have any disabilities:
Family members with disabilities:
Total household annual income:
Additional information:
Deadline for Submitting Application
Money Matters Scholarship
Ask Club staff for the deadline!
Ethnicity (list all):
Name of Scholarship/Contest/Grant
39
READY FOR COLLEGE!
Some colleges may require an interview before admission is granted. Here are a few
questions that can help you prepare for your face–to–face interview or complete your college
application. Review your responses before each interview or before applying to a college of
your choice.
College Interview Tips and Questions
The interview is not an adversarial situation. Admissions folks want to like you, have you like
them and like their school. Remember to:
•Have a positive attitude
40
Tell me about your experiences at your high school. Is there a particular experience you had
there that stands out? ______________________________________________________________
__________________________________________________________________________________
What might your teachers say is your greatest strength as a person and as a student, and
what are your weaknesses in each area?_______________________________________________
__________________________________________________________________________________
•Take a moment to think about an answer before replying
•Ask questions; this shows interest in the college and what the admission officer has
to say
•Highlight the good things from your academic past and put a positive spin on your
background
•Rehearse for the interview with family, friends or a coach
What sort of things do you like to do outside of school?__________________________________
__________________________________________________________________________________
What do you want to do in the future?__________________________________________________
__________________________________________________________________________________
College Prep Questions
Here are some questions you can ask your high school guidance counselor, and also discuss
at home with your family:
What do you want out of college?_____________________________________________________
__________________________________________________________________________________
•Which are the best colleges, universities or trade schools for my interests?
•Are my current grades good enough to get into the schools of my choice?
•What can I do to improve my grades?
•Do those schools have financial aid?
Where do you see yourself in 10 years?________________________________________________
__________________________________________________________________________________
•When should I start researching scholarships and other ways of paying for school?
What are you doing to prepare for college?_____________________________________________
•What other steps can I take during school and after school to improve my chances of
getting into those schools?
__________________________________________________________________________________
•Are there any extra–curricular activities I can participate in that will help me in my
acceptance to the school of my choice?
What accomplishment are you most proud of?__________________________________________
•What do these universities/colleges/schools look for in a student?
__________________________________________________________________________________
•When do I start taking the SAT, PSAT or ACT?
•Are there programs I can use to help me practice for those tests?
Give me three characteristics that describe you._________________________________________
__________________________________________________________________________________
Tell me about someone who has influenced you in your life._______________________________
__________________________________________________________________________________
•Smile and maintain eye contact
Sample College Interview Questions
Here are some questions you can use to practice and prepare for your college interviews. Use
the space below to brainstorm your responses!
41
Unit 4
UNIT 4: CREDIT AND DEBT:
PROTECT YOUR FUTURE
42
Credit is borrowed money you can use to pay for things. The creditor (also known as the
lender) trusts that you (the borrower) will pay them back later, usually with interest.
As teenagers, now is the time to start building up good credit, to prove to future lenders
that you are responsible. This will be ver y important when you eventually apply for other
types of credit, when you want to buy a car, rent an apartment or even apply for a business
loan, for example.
Every single financial transaction you engage in –– whether you pay your bills on time, if you
miss some payments, how much debt you have –– is tracked and recorded in a document
known as your credit report. Some simple ways to build a good credit report are paying your
bills on time and managing your checking account responsibly. Whether or not you have good
credit will affect almost every single aspect of your life.
Did You Know?
•80 percent of college students received credit card offers in the mail.
•Students received an average of nearly five credit card offers in the mail per month.
•66 percent of students have at least one credit card.
•For students paying their own bills, about half reported that they pay their credit card bills
in full each month.
•25 percent reported that they had paid at least one late fee.
•15 percent reported that they had paid at least one over–limit fee.
Source: Mierzwinski, Edumund, and Christine Lindstrom. The Campus Credit Card Trap: A Survey of College
Students and Credit Card Marketing. U.S. Public Interest Research Group Education Fund, March 2008
CREDIT CARD REMINDERS:
 Never charge more on a credit card than you can afford to pay
back right away.
 Only use credit cards for planned expenses (use your budget!).
 Pay off credit card balances in full each month.
 Limit the number of credit cards you have.
 Carefully evaluate all credit card offers you receive.
 If anything ever sounds too good to be true, it probably is.
 Late or missing payments can make your credit card interest rates
go up and will have a negative impact on your credit score.
Money Matters: Make it CountSM | Teen Guide | Unit 4: Credit and Debt: Protect Your Future
Credit and debt: Protect your future
43
How to Manage Your Credit Score
Focus on: How Credit Affects Your Life
Your credit report is a detailed account of
your financial history – it shows you how
responsible you have been (or have not been)
with your money, especially with paying back
money you owe. It shows your payment history,
your current credit accounts and other related
information.
Your credit score will be considered by future employers, landlords, bankers, credit card
companies, phone companies, utilities. It can mean getting a job or not. It can mean getting
an apartment or not. Getting a home loan or not. These are huge and important impacts.
44
um payment
Making only the minim
amount to
can add a considerable
and can take
your original purchase
ance.
years to pay off a bal
1. Payment History – 35 percent
But besides these all–or–nothing situations, your credit score will also have an impact on
almost all of your financial dealings. For example, let’s take a look at the situation where
you’re going to buy a car and you want to finance $10,000. (In other words, you’re getting a
loan of $10,000 to buy the car.)
Your credit score won’t just determine whether or not you get the loan. It will determine the
TERMS of the loan –– how favorable the interest rate is. Take a look at the chart below. The
person with a really bad credit score ends up paying about $2,200 more for the car than the
person with a really good credit score. So even this one transaction, buying a car, cost the
financially irresponsible person an extra $2,000. Bad credit is a penalty you pay over and over
and over again.
So keep your debts to a minimum – and always pay your bills – and pay them on time!
2. Total Amounts Owed – 30 percent
3. Length of Credit History – 15 percent
4. New Credit – 10 percent
5. Type of Credit in Use – 10 percent
*Source: “How Your FICO Credit Score is Calculated.” MyFICO. Fair Isaac Corporation. Web. 04 Feb. 2010.
www.myfico.com/CreditEducation/WhatsInYourScore.aspx
As a teenager, there’s nothing you can do about numbers 3 and 4 above. But as you can see,
by using a budget, spending your money wisely and using credit cards responsibly (if you use
them at all), you can focus on the #1 and #2 items that make up your credit score. Keep the
amount you owe to a minimum, and always pay your bills on time.
Check Your Own Credit Reports
Your credit report is maintained by three different credit bureaus: TransUnion, Experian and
Equifax. There really is no significant difference among these three companies. But if you
ever have any problems with your credit, it’s a good idea to contact each of the three bureaus
separately in order to correct any inaccuracies you might find on your credit report.
You can order a free credit report from all three credit bureaus for free from the official
website that helps consumers keep track of their credit reports:
www.annualcreditreport.com
Once you’ve reviewed your report, www.annualcreditreport.com has a list of frequently asked
questions where you can find out how to dispute or correct inadequate information.
Amount borrowed: $10,000 • Repayment period: 36 months*
FICO® score
APR
Monthly payment
Total paid
720-850
5.149%
$300
$10,800
690-719
6.677%
$307
$11,052
660-689
8.610%
$316
$11,376
620-659
12.219%
$333
$11,988
590-619
17.958%
$361
$12,996
500-589
18.957%
$366
$13,176
Source: MyFico.com.
*Based on available rates at the time of printing.
Visit www.moneymattersmakeitcount.com to use an interactive repayment
calculator. You will see how quickly interest charges add up!
Your credit score, or FICO score, is a number
based on the results of your credit report. It
is a number between 300 and 850; the higher
the score, the better. Anything above 700
is generally considered to be a good score.
Your FICO score is essentially made up of the
following*:
Caution!
45
Real Cost of a Computer
The way in which you purchase items can have a big effect on your bottom line. Look at the
scenarios below to see how improper use of a credit card on a $500 computer purchase can
quickly land you in hot water.
Scenario #1: Put the $500 on a credit card and make monthly payments of $50 until the
balance is paid off. At this rate, it will take you 12 months to pay off the debt, and you will
have paid about $55 in interest. Total cost of the computer is $555.
Scenario #4: You save up $500 in your bank account. You withdraw the $500 cash from your
bank and pay for the computer in full. Total cost: $500. Or, same situation, but you pay with a
check. Or with your debit card. If you’re paying for the computer all at once, at the beginning,
you pay no extra fees or interest, so the total cost is $500.
An entrepreneur is a business owner – someone who starts their own enterprise, and
assumes all the risks. It’s a lot less work, and a lot safer, just to work for someone else as
an employee. But with greater risk comes greater reward. Entrepreneurs are often attracted
by the opportunity to be their own boss, to make the rules, do things their own way, and then
enjoy the lion’s share of the profits. That all sounds great, if the business is successful. But if
the business fails, it’s the entrepreneur who suffers the majority of the consequences.
Entrepreneur Checklist
Are you a self-starter?
YesNo
Are you a risk taker?
YesNo
Are you comfortable with uncertainty?
YesNo
Are you a natural leader?
YesNo
Are you very organized?
YesNo
Do you like making plans?
YesNo
Are you good at sticking to your plans?
YesNo
Are you good at making decisions?
YesNo
Do you consider yourself a hard worker?
YesNo
Do you have a lot of self-discipline?
YesNo
Are you productive even without a lot of structure?
YesNo
Are you a creative person?
YesNo
Are you highly competitive?
YesNo
If you answered yes to 10 or more of these questions, then you might be very happy and
successful as an entrepreneur.
Unit 5: Entrepreneurship: Making it on your own
46
Scenario #3: Put the $500 on a credit card and make monthly payments of $50. One problem
– you missed your payment deadline four times. You end up paying almost $120 in late fees,
plus about the same amount in interest. It takes you a year and a half to pay off the debt.
Total cost of the computer: $780.
ENTREPRENEURSHIP:
MAKING IT ON YOUR OWN
Money Matters: Make it CountSM | Teen Guide |
Scenario #2: Put the $500 on a credit card and make the minimum monthly payment of $15
each month until the balance is paid off. At this rate, it will take you more than four years to
pay off the debt. In the end, you will have paid a total of about $750 for the computer.
Unit 5
47
What’s a Business Plan?
Before starting any business, you need to create a business plan. And before you can write
a business plan, you need to do a lot of careful research and planning. A business plan
helps you outline all of your goals and the steps you will take to achieve those objectives.
Most entrepreneurs need help financing their new business; they may look for investors,
or they may seek out a small business loan. Either way, a business plan is needed to help
communicate your vision to the potential investor or lender – it’s a document that lets people
understand what the business is all about, and why you think it will be successful.
Answer Key
Unit 1 Crossword Answer Key
Visit www.moneymattersmakeitcount.com to start drafting your own business
plan and to learn more about budgeting for start-up costs.
Answer key
48
At the heart of the business plan are your financials – these reveal the details of your current
financial situation, as well as projections for the future of the business – typically three years
into the future.
Unit 5: Entrepreneurship: Making it on your own
A good business plan should talk about your professional background, as well as the
background of any other key members of the team. It should also explain what products or
services you will offer, and show an understanding of the competitive marketplace – who are
your competitors and how will you compete with them? You will also need to discuss who your
customers are, and how you plan to reach them.
49
Unit 2: Stock Scramble Stock Market Word Jumble Answer Key
Unscramble the words below to find important investing terms. When you’re finished, write
down the letters in the circled boxes and unscramble them to get “the phrase that pays.”
evisnetntm
ieysfidvr
ltiropfoo
toskc
dnob
ekatrmearb
mlfuuntuda
dhol
P O R T F O L I O
S T O C K
B O N D
B E A R
M A R K E T
M U T U A L
F U N D
H O L D
D I V I D E N D
B U L L
The phrase that pays:
M A R K E T
B U Y
A N D
H O L D
Answer key
50
ltakurlbem
D I V E R S I F Y
Answer key
ivediddn
I N V E S T M E N T
Notes
51
Answer key
Notes
52

Teen Guide - Money Matters

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