Consumer ed notes

BELL RINGER

What is opportunity

cost? Provide an

example of opportunity

cost.

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)

When is it most beneficial to get a

loan?

When the pay off outweighs the cost (or the

loan)

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.

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

Your Paycheck

Your Paycheck

What is take out of your paycheck:

Income tax

Social Security

Medicare (health insurance)

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

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?

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?

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

70%

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.

Caterpillar

Why is Caterpillar thinking of moving out of

Illinois?

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 ____________

Lets Talk About Risk

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.

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.

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?

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

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

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?

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.

Devices of Spending

Hard Cash

Credit Cards

Debit Cards

Checks

Money Order

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

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

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

Banks, credit card companies, and other

lenders share the credit history of the borrower

If you missed a payment, your other lender will

know

Programs Protected by the Gov.

Against Loss

1. Savings Bonds

2. Certificate of Deposit

3. Treasury Bonds

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

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