Financial Literacy: A New Direction for Colorado. Dr. Teresa Yohon Colorado State University. Objectives. Introduce financial literacy and economic concepts Provide lessons that can be used in the classroom Provide resources in the financial literacy area. Introduction.
Financial Literacy: A New Direction for Colorado
Dr. Teresa Yohon
Colorado State University
Introduce financial literacy and economic concepts
Provide lessons that can be used in the classroom
Provide resources in the financial literacy area
What are the difficult financial concepts for students?
Economists are moving away from using “needs”. There are only wants!
What is a Necessity?
Pew Research – What Americans Need 2006-2009
What has decreased in value as a necessity?
--Car-- Clothes dryer --Air conditioning
--TV-- Home computer --Cell phone
--Internet-- Cable TV --Microwave
--iPod-- Dishwasher --Flat screen TV
Opportunity cost: the value of the best forgone alternative to any decision.
Tradeoff is the idea that you have to give up something to get something else. The tradeoff can be money, time, or completing a different activity.
Scarcity: when the available resources are insufficient to satisfy your wants.
Economic decisions need to be made.
Define the problem
State criteria (what’s important to you)
Make a decision
A + B = C
Activating Belief Consequences
Love and Marriage
Thoughts, feelings, and behaviors
Should I Use Credit or Not?
Staying Afloat Financially in the 21st Centuryhttp://www.econedlink.org/lessons/index.php?lesson=792&page=teacher
SNL skit:http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.phpYouTube: http://www.youtube.com/watch?v=nFY0HBkUm8o
1. Most millionaires inherited their wealth.
2. Most millionaires earn more than $500,000 per year.
3. College graduates earn about twice what high school graduates earn over a 40-year work life.
4. People who are self-employed rarely become millionaires.
5. All millionaires wear expensive clothes.
6. Millionaires usually drive new cars.
7. Many millionaires drop out of college to start work.
8. It is impossible to save enough to be a millionaire.
Building Wealth (Typical Millionaire list from this resource)
Link to all Federal Reserve educational materials http://www.federalreserveeducation.org/fred/
Liabilities + Owner’s Equity (Net worth)
What are Wealth-creating assets?
John is the president and CEO of a software company. He owns 60% of the stock in the company. He loves helicopters and built a pad next to his house so he could land his new helicopter on the property. He has a mortgage on the house and a loan for the helicopter. Create a balance sheet that shows John’s assets and liabilities.
Information on Student Credit Cards
Who is credit worthy?
Free credit reports
Use cases and ask students if the person if credit worthy (example)
The present value is the total amount that a series of future payments is worth now.
Looking at present value
Retirement and future value
Simple future value calculator
Compound interest calculator
Value of higher education
Lesson: Benefits of Investing Early