Consumer ed notes
- 1. BELL RINGER What is opportunity cost? Provide an example of opportunity cost.
- 2. When is it most beneficial to get a loan? 1. Really needs a vacation (takes out a loan) 2. Some clothes go on sale (gets a loan) 3. Would like a car to drive to a high paying job (takes out a loan for a car) 4. Sees that the interest rate on a loan is very high (gets a loan)
- 3. When is it most beneficial to get a loan? When the pay off outweighs the cost (or the loan)
- 4. Inflation Def: A general increase in prices and fall in the purchasing value of money Lets look at an example Who is affected the most THE INDIVIDUAL CONSUMER: if they earn a fixed amount of income, they are worse off as they will be experiencing a loss in their purchasing power. LENDERS: they will lose because they will receive back a sum of money which is worthless in real terms THOSE WHO HAVE BORROWED MONEY: they will gain as they will repay back a sum of money which is worth less in real terms.
- 5. Sales Tax Def: A tax on sales or on the receipts from sales Why do we pay the sales tax? Gov. services (schools, roads, police) To discourage people from buying something Rich will end up paying more and poor less (How?) Makes things more expensive for you to buy
- 7. Your Paycheck What is take out of your paycheck: Income tax Social Security Medicare (health insurance)
- 8. College job, part time ($15,000) Post college job ($30,000) Income tax is 5% The dollar amount in income tax on the new job will: Double Go Up a Little Stay the same Be lower
- 9. Thinking about the future of your children What is the best way to invest money for your child’s education? Savings account? Stocks? Government Savings Bond? Checking account?
- 10. What is the best way to invest money for your child’s education? Savings account? (2%) Stocks? (10%) Government Savings Bond? (4%) Checking account? (.75%) Why are stocks the best?
- 11. If you went to college and earned a four year degree, how much more money could you expect to earn than if you only had a high school diploma? Looking for a percentage
- 12. 70%
- 13. ATMs Keep in mind: You need a bank account Fees might be involved What are they for: Access to bank $$$ 24/7 Account balance info.
- 14. Caterpillar Why is Caterpillar thinking of moving out of Illinois?
- 15. Taxes on Businesses If the tax is high are biz. likely to stay or leave a state ___________ How might high biz. tax impact the workers ____________ How might biz. react to high biz. taxes in a state________ Would workers expect to receive a bonus as a result of high biz tax ____________
- 16. Lets Talk About Risk
- 17. Health Insurances Def: A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured You get health insurance through your parents until the age of 26. You might loose it if your parents become unemployed.
- 18. Car Insurance Collision Insurance: covers damage to your car if you are the at-fault driver in a collision involving another car. Liability Insurance: covers damage you do to others person or property but does not cover injury to yourself or your car Comprehensive Insurance: covers losses resulting from a stolen car or for repairs if the car is hit by a falling object or damaged by fire, flood, or vandals.
- 19. Answer the following question in your notes Lets say you worked over the summer and earned $5,000. What would be the safest place for your money? How many of you answered savings account in a bank? Why? Why would it not be stocks? Why would it not be bonds? Why would it not be your closet?
- 20. Can you get a credit card after high school? Yeah!!!! Credit Card company will be very careful Your credit score might be low You might be offered a small line of credit Limit on how much you can spend
- 21. Credit Counseling Service Agency which helps you find solutions to financial problems Can help you set up a payment schedule Help you set up a budget Educate
- 22. Kadija and Maya are young working women. They have a good credit history. They work for Google and make the same salary. Kadija borrows $3,000 to go on vacation. Maya borrows $3,000 to buy a car. Who is more likely to pay lowest finance charge and why?
- 23. If you use money to buy a physical object it can be used as collateral. The bank can take it away if you can’t pay the money back. Charges are less because of that.
- 24. Devices of Spending Hard Cash Credit Cards Debit Cards Checks Money Order
- 25. Credit Card Charges Credit Card companies reward you for paying in full and on time You don’t have to pay what you owe in full each month, but it is to your advantage
- 26. Who is most likely to pay the highest dollar charge amount? A. Brianna who pays the minimum amount each month B. Lexus who pays minimum amount some months but more when she has the money C. Connell who generally pays it off in full but sometimes pays minimum amount D. Lauren who always pays her credit card bill in full
- 27. Credit Card Charges Credit Card companies reward you for paying in full and on time You don’t have to pay what you owe in full each month, but it is to your advantage Those who pay the minimum amount each month will pay the highest charge
- 28. Banks, credit card companies, and other lenders share the credit history of the borrower If you missed a payment, your other lender will know
- 29. Programs Protected by the Gov. Against Loss 1. Savings Bonds 2. Certificate of Deposit 3. Treasury Bonds
- 30. Life Insurance Def: Insurance that pays out a sum of money either on the death of the insured person or after a set period. Who needs it most: People with dependants that need that persons income If you have a lot of children or a spouse that does not work
- 31. Good Ways to Reduce Financial Charge Rate for a College Loan Have parents co-sign a loan An additional mortgage taken by the parents Get a federal loan