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Section 2
The Basic Elements of Personal Finance
Personal Finance IQ Quiz!
What do you know about personal finance?
Financial Insecurity in America
Why is there so much financial insecurity in America?
Is it because our income is so low?
Not Really!Real Disposable Income Per Capita
0
5000
10000
15000
20000
25000
30000
35000
1970 1975 1980 1985 1990 1995 2000 2005
Bil
lio
ns o
f 2000 C
hain
ed
Do
llars
Consumption per person has also been growing!
Real Disposible and Consumption Per Capita
0
5000
10000
15000
20000
25000
30000
1970 1975 1980 1985 1990 1995 2000 2005
Year
Billio
ns o
f 2000 C
hain
ed
Do
llars
Real Personal Disposible Income Per Capita (2000 Dollars) Real Personal Consumption Per Capita (2000 dollars)
More Consuming + Less Saving = More Debt
As a Percentage of Real Disposable Income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 1975 1980 1985 1990 1995 2000 2005
Savings Rate Consumption Rates
Debt Per Household
Who needs money when we have credit!
Real Unpaid Credit Card Balance Per U.S. Household (2007 Dollars)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
1970 1975 1980 1985 1990 1995 2000 2005
Interest on household debt as a percentage of income
Planning for Financial Success!
The bad news:• Failure to save regularly, conserve wisely,
invest strategically, and use credit cards prudently is the major cause of financial insecurity in America
The good news:• Every one of these things is fixable!
The importance of financial security
Financial security leads to:
• Less conflict in marriage• Better health• Retirement• A greater ability to achieve personal goals
Why Teach Personal Finance in Middle School?
• The decisions of today have consequences that lie in the future!
• Our middle school students will some day be our teachers, janitors, health care providers, police officers, lawyers, and elected officials.
• Empower them now to build wealth and prosper in the future!
Three Valuable Resources
1. Common Sense Economics (2010)2. Learning, Earning and Investing (2004)3. Gen i Revolution (web based)
Common Sense Economics
Beginning on page 145 are the 12 Key Elements of practical personal finance that can help one establish and build wealth!
Common Sense Economics - Activities
Classroom activities that go along with these elements of practical personal finance:
1. The power of compounding: putting your money to work for you
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
2. How much does it cost to raise a childhttp://www.babycenter.com/cost-of-raising-child-calculator
3. Budgeting For Life
http://commonsenseeconomics.com/instructor-resources/supplementals/
Theo gets a Budgeting Lesson from Bill Cosby
Learning, Earning, and Investing… and the GEN i revolution!
You received a copy of the book Learning, Earning, and Investing which also contains lesson plans on sound personal finance practices…
…. There is also an accompanying video game that your students can play!
As a Teacher/Administrator
• Plug into your students’ fascination with the media
• Possibly make learning economics fun• Excite students about using some of their
recreational time to play the game• It is easy to get started.
As a Student
• Learning economics is fun and exciting.• Join your classmates and complete missions to
help you and others build wealth and prosper• Remember, the decisions of today have
consequences that lie in the future. Plan your future.
Advice
• Each mission has self-contained points and scoring. Student scores are only kept within missions, not across missions.
• Advise students to keep a calculator and notepad handy.• Testers reported that the 4-1-1 tutorials take up the most
time as students play the game, but also provide the most information.
• By going straight to the Battle questions, since students forgo opportunities to earn points and they have a lower chance of answering questions correctly.
• Advise students to work with others in a team setting.
End of Section 2…. Enjoy Your Break?
Thank You!
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