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Financial Literacy

Please follow along with the


presentation and fill in the
blanks on your paper.
Budgeting

What is Budgeting?

● It’s a plan that will


help you eventually
save money
● Can help you reach a
financial goal
Budgeting (continued)

● Why is Budgeting Important?


- always have enough money for your needs
- Budget plan/ spending plan keeps you out of Debt

● Financial goals and how does Budgeting help?


- Some of my goals are college, traveling, and getting a car.
- Helps you organize your savings and spending, and helps you
save money.
Wants and Needs

Wants Needs

● Shoes *Water
● Eating out *Clothes, Money, House
● Shopping
● Traveling
Activity- Budgeting

Make A Budget
For Example ->
Good Debt vs Bad Debt
● Can you afford it?
● Is it a want or a need?
● Will it help you gain
more money?
Good Debt or Bad Debt?

Cost in 2003: $371,520

Cost in 2018: $506,750

Estimated cost 2040: $1.2 Million


Good Debt or Bad Debt?

Cost: $399
Good Debt or Bad Debt?
Cost of graduating: $144,000-
$280,000

People with college degrees make


an average of $17,500 more a
year.

Lifetime gain: +$700,000


Credit

● What is credit?
● Credit is an agreement in which someone decides to pay for
something later with interest fee’s later.
● What are credit scores?
● - if you have higher or lower interest rates.
1. Buying a House
2. Buying a car.
Annual Percentage Rate (APR)

● APR describes the interest rate for a whole


year rather than a monthly fee.

● Example: Loan, Mortgage Loan, Credit


Card., ETC
Can credit hurt you?
1. Lack of Access to Money
2. Higher Down Payments
3. Higher Interest Rates
4. Risk of Relationship Failure
(Spouse)
5. Risk of Relationship Failure
(banks, people who need
money)
Example #2
Credit - Activity Who has Good Credit who
has Bad Credit? Why?
1. Frank takes out a loan for a new tv.
2. William takes out a loan for a new tv.

1. Frank’s Loan 2. William’s Loan

Amount of loan: 4,000 Amount of loan: 4,000

Loan Term: 5 years Loan Term: 5 years

Interest Rate: 4.5% Interest Rate: 20%

Monthly Payments: $75 Monthly Payments: $106

Payment difference: $31


Interest difference: 3,660
Credit 2/4
DeJohn takes out a loan for a new car. Who has Good Credit who
Ronald takes out a loan for a new car. has Bad Credit? Why?
Ronald’s Loan Dejohn’s loan

Amount of loan: 8,000 Amount of loan: 8,000

Loan Term: 2 years Loan Term: 2 years

Interest Rate: 3% Interest Rate: 18%

Monthly Payments: $344 Monthly Payments: $399

Payment difference: $55


Interest difference: $1,320
Credit 3/4
Who has Good Credit who has
Alexa takes out a loan for a new PC. Bad Credit? Why?
Giselle takes out a new loan for a new PC
Alexa’s Loan Giselle’s loan

Amount of loan: 3,000 Amount of loan: 3,000

Loan Term: 1 year Loan Term: 1 year

Interest Rate: 5% Interest Rate: 25%

Monthly Payments: $257 Monthly Payments: $285

Payment difference: $28


Interest difference: $336
Credit 4/4 Who has Good Credit Who
has Bad Credit? Why?
Kimberly takes out a loan for a new phone
Alayda takes out a loan for a new phone.
Kimberly’s loan Alayda’s loan

Amount of loan: 1,200 Amount of loan: 1,200

Loan Term: 1 year Loan Term: 1 year

Interest Rate: 4.5% Interest Rate: 30%

Monthly Payments: $102 Monthly Payments: $117

Payment difference: $15


Interest difference: $180
Investment

What is investment?

◆ Money committed for


future profit

Why is investment important?

◆ Use your money now,


make more money
later
Return on Investment (ROI)

What is Return on Investment


(ROI)?

○ The amount of gain


from an investment

Why is ROI important?

○ You find out if you


made a bad or good
investment
An Example

You buy a used


car for $1200

You sell it for


$1800

Your net profit is


$600
An Example: Investment Growth Over Time
Investment Activity
You invest into McDonalds

Amount Invested Interest Rate Time Value

$1,000 5% 1 year ?

$1,000 5% 5 years ?

Amount Invested Interest Rate Time Value

$10,000 6% 1 year ?

$10,000 6% 5 years ?
Thank you!!

Questions??