FOUNDATIONS IN PERSONAL

FINANCE
TEEN EDITION

LEADERSHIP 2021
 Vocabulary 1
Personal Finance- All the $ decisions a person or
family makes including earning, budgeting,
saving , spending, and planning for the future.

Budget- A monthly plan for how you are going to

save and spend your income.

Credit- The granting of a loan and the creation of

debt.

Debt- An obligation to repay borrowed money.

Question of the Day
#1

Would you rather have $1,000,000 or start with a penny and double your money every day for 30 days?
Answer: Starting with a penny and
doubling it every day compounds to
$10.7 million after 30 days
Day 1: You would have $0.02
Day 2: You would have $0.04
Day 3: You would have $0.08
Day 4: You would have $0.16...
Day 30: You would have $10,737,418.24.
 FIVE FOUNDATION #1
5

01 Save a $500 emergency fund

FOUNDATIONS
FOUNDATION #2
02 Get out of debt

FOUNDATION #3
03 Pay cash for your first car

FOUNDATION #4
04 Pay cash for college

FOUNDATION #5
05 Build wealth and give
 Money 101
Money Smart
• Personal finance is about
80% behavior, and it’s only
20% head knowledge.

• Becoming money-smart involves four things:

Work, spend, save, and give.
 Money 101
Debt is Expensive
Debt is owing anything to
anyone for any reason.
 Vocabulary 2

Asset- Anything of value that is owned by an

individual.

Liability – Anything you owe; a debt

Net Worth – The total value of a person’s assets

minus their liabilities.
 Vocabulary 3

Consumer: A person or organization that

purchases a product or service.

Scarcity: – An unlimited amount of wants but

limited resources
 Vocabulary 4
1. Variable Expenses: change in dollar amount every month
and include things like utility bills, gasoline, and
groceries.

2. Fixed Expenses: remain the same from month to month like

rent and insurance premiums.

3. Discretionary Expenses: for things you don’t necessarily need

like eating out, gifts, and candy.

4. Intermittent Expenses: occur at different times throughout the

year and tend to be in large lump sums like tuition payments
and car repairs
 Budget Notes
Work: The ways you earn money. (Income)

Spend: How you spend money.

Save: Planning to use money later for purchases and wealth

building.

Give: Offering your money, time, talent, and abilities to

serve others.
Are you a Saver or a Spender?
Take the Saver or Spender Survey
HOW ARE TEENS SPENDING MONEY?
 FIVE FOUNDATION #1
15

01 Save a $500 emergency fund

FOUNDATIONS
FOUNDATION #2
02 Get out of debt

FOUNDATION #3
03 Pay cash for your first car

FOUNDATION #4
04 Pay cash for college

FOUNDATION #5
05 Build wealth and give
 HOW ARE TEENS SPENDING MONEY?

• Food – Chick-fil-a, Starbucks, Chipotle

• Clothing – Nike, American Eagle, Forever 21

Differed by Gender
• Females - Beauty Products

• Males- Entertainment
 Budgeting Notes cont.
Banks, Debit Cards, & Credit Cards

• Finding the right bank is important.

• Banks will offer you debit and

credit cards
 Budgeting Notes cont.

• A debit card only allows you to use

the money you already have in the
bank.

• Using a credit card means you use

debt to buy stuff.
 Budgeting Notes cont.

• Debt is marketed to us just like

any other product.
 Credit Cards
Are they worth it?

PROS CONS

Pro 1________________ YOU SPEND MORE $

. Research has proven that people
spend more $ when you using cc
over cash.

Pro 2 _______________ INTEREST CAN BE COSTLY

The average credit card debt balance
is $6,506.

Pro 3 _______________ YOU ARE INSTANTLY IN DEBT

1 IN 3 Americans are behind on their
bills every month.
 Vocabulary 5
1. Interest: The charge for borrowed money generally
defined as a percentage; also, the earned interest on
money you save or invest

2. Credit Score: An assigned number to signal to lenders a

person’s ability to repay a loan

3. Debt Collector: Someone who collects debts owed to

others

4. Lender: A person or company who loans money

CREDIT SCORES
 FICO
Credit
Scores
 Vocabulary 6
1. Investments: Money put into an account intended
for growth

2. Earned Income: Income produced by working at a job as an

employee

3. Wages: Payment for work, usually calculated in periods of an

hour.

4. Salary: Payment for work, usually calculated in periods of a

week or longer.

5. Take-home Pay: The amount of money you get to take

home after taxes and deductions.
 27
Certificate of Deposit (CDs)
Investments L
01 A savings account with a slightly
higher interest rate
O
A
N
Bonds
02 : A debt instrument by which the company
(or govt.) owes your money back in the form
of an I.O.U.

Individual Retirement Arrangement (IRA)

03 Any type of investment that carries a
special tax treatment (either pre-tax or tax-
deferred)

O Mutual Funds
W
N
04 An investment vehicle made up of a pool of money collected from
many investors for the purpose of investing in securities such as
stocks, bonds, money market instruments, and similar assets

Single Stock
05 A share of a company. Purchasing
single stocks comes with high risk
and the possibility of high returns.
Investments
28
Certificate of Deposit (CDs)
01 A savings account with a slightly
higher interest rate
L
O
A
N Bonds
02 : A debt instrument by which the company
(or govt.) owes your money back in the form
of an I.O.U.
 30

Investments
Individual Retirement Arrangement (IRA)
03 Any type of investment that carries a
special tax treatment (either pre-tax or tax-
deferred)

O Mutual Funds
W
N
04 An investment vehicle made up of a pool of money
collected from many investors for the purpose of investing
in securities such as stocks, bonds, money market
instruments, and similar assets
Single Stock
05 A share of a company. Purchasing
single stocks comes with high risk
and the possibility of high returns.
Investments
31
Certificate of Deposit (CDs)
01 A savings account with a slightly
higher interest rate
L
O
A
N Bonds
02 : A debt instrument by which the company
(or govt.) owes your money back in the form
of an I.O.U.
BUDGETING ASSIGNMENT 37

OPTIONS

APP
There are tons of budgeting apps on the market.
Be sure to look at reviews to make sure it’s legit.

PAPER BUDGETS
Pinterest, Google Images, etc.

OTHER PLACES?
Software, Excel Spreadsheet, ask a family member,
friends, etc.
 Vocabulary 7
1. ATM: Automated teller machine

2. Deposit: The process of putting money into an account

3. Withdrawal: The process of taking money out of an account.

4. Overdraft: Occurs when money is withdrawn from a bank

account and the available balance goes below zero
 Vocabulary 8
1. Inflation: An increase in the cost of goods and services over time

2. Liquidity: Describes the availability of money

3. Pre-tax Contributions: Money you invest which is taken from your gross income,
before taxes; taxes are paid when you withdraw the money from the investment;
referred to as tax-deferred (since you pay taxes at a later date)

4. Return on Investment (ROI): Refers to money earned on an investment; the

profitability of investments.

5. Risk: The likelihood of loss on an investment

6. Risk and Return Ratio: Relationship of possible reward compared to the amount of
risk taken