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Economics Unit 5 – Personal Finance

Economics Unit 5 – Personal Finance. Investment. How many of you would like to invest money in the future? Why? Who thinks they will purchase a car in the future?. Investments. Investment : the action or process of investing money for profit or material result.

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Economics Unit 5 – Personal Finance

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  1. Economics Unit 5 – Personal Finance

  2. Investment • How many of you would like to invest money in the future? • Why? • Who thinks they will purchase a car in the future?

  3. Investments • Investment: the action or process of investing money for profit or material result. • Create a T-chart for good investments and bad investments • Take 5 minutes to make a list of good investments and bad investments • You will be sharing, and it will be turned in for a grade

  4. Risk and Reward • What is “risk” and “reward”? • Risk: the possibility that something unpleasant or unwelcome will happen; the possibility of financial loss. • Reward: a thing given in recognition of one's service, effort, or achievement

  5. Financial Assets and Investments • Use your textbook to fill in the different types of investments. • They are found in chapter 11 (pg 271) • The definition for Certificate of Deposit is in chapter 10 (pg 259) • IRAs and 401k are not in the book

  6. Personal Investment Goals • Look at the chart you filled in the other day • Using this information, you are going to create some investment goals for 10 years and 20 years • Criteria: • Age • Income • Short term goals • Long term goals • Tolerance for risk • Debt (think future debt)

  7. Taxable Income

  8. Give them taxes packet; discuss each part and let students answer questions

  9. Credit

  10. Show Credit and Credit Cards

  11. Benefits and Risks of Credit

  12. Good Credit vs. Bad Credit • Good credit indicators: • Making at least the minimum payment each month • Paying your bills before the due date each month • Making your payment each month, not skipping or missing a month • Keeping your balance below your credit limit • Results: • It will be easier to borrow money or get credit. • You will not be assessed costly late fees or over your limit fees. • You will have more money to spend on other things.

  13. Good Credit vs. Bad Credit • Bad credit indicators: • Paying less than the minimum payment each month • Payments received after the due date • Skipping or missing payments for some month • Charging over your credit limit • Your debt is too large a percentage of your income • Results: • It will be difficult to borrow money when you need it. • You will have to pay costly fees. • You will have to pay more in interest adding to the cost of the item

  14. Show How to Improve Your Credit • Give Your Credit Score to complete

  15. Money for College

  16. Steps for Financial Aid • Fill out the FASFA • Fill out any other forms your school requires • Look up online for any extra scholarships or grants you may qualify for • Accept your reward amounts

  17. Federal Grants • Federal Pell Grant • Does not have to be repaid • Based on financial need • Usually only for undergrad (bachelor’s degree) • Federal Supplemental Educational Opportunity Grant • For students with exceptional financial need • “Campus-based” aid; not all schools participate • Only so much money given to school – when it runs out, no more to give

  18. Federal Grants • TEACH Grant • Money if you plan to become a teacher in a high-need field in a low-income area • You are required to teach for a certain length of time after you get your degree or it becomes a loan • You must take certain classes and get a specific job to meet requirements for loan • Iraq and Afghanistan Service Grants • If your parent or guardian died as a result of military service in Iraq or Afghanistan, you may be eligible • You can not be eligible for a Federal Pell Grant because of EFC but meet other requirements, your parent needed to die in Afghanistan or Iraq after the events of 9/11, and you were under 24 years old or enrolled in college at least part time when the parent died

  19. Student Loans • MUST BE PAID BACK • Given at a lower interest rate than regular bank loans • Can be very costly if you’re not careful

  20. Student Loans • Direct Loan: • Federal loan • Advantages: • Borrowers have flexible repayment options • Disadvantages: • Not all schools participate and not everyone is eligible • Direct PLUS Loan: • Federal loan • Advantages: • Borrowers have flexible repayment options • Parents may borrow for their dependent undergrad student • Designed for graduate students • Disadvantages: • Borrower is fully responsible for paying the interest regardless of the loan status

  21. Student Loans • Subsidized loan: • Federal loan • Advantages: • Government pays the interest that accrues while the borrower is in school • Disadvantages: • Based on financial need • Unsubsidized loan: • Federal and private loans • Advantages: • No requirement to demonstrate financial need • Disadvantages: • Borrower is full responsible for paying the interest regardless of loan status • Interest accrues from the date of disbursement

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