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There’s a lot to learn about money!. Why is Money Important?. Presented by the San Francisco Federal Reserve Bank in Collaboration with Operation Hope. There’s a lot to learn about money!. Key Concepts: Budgeting Rate of Return Risk. What Is A Budget?. A plan for spending money. Expense - PowerPoint PPT Presentation
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There’s a lot to learn about money!
Presented by the San Francisco Federal Reserve Bank in Collaboration with Operation Hope
Why is Money Important?
Key Concepts:
• Budgeting
• Rate of Return
• Risk
There’s a lot to learn about money!
What Is A Budget?
• Expense• Income
Budget Game
A plan for spending money
Budget Game Debrief
• What do you notice about the data?
• Why do you suppose there is a difference?
• Why do people create budgets?
A Budget Gives You Control
What would you do with the money left over at the end of each month?
Is money going to manage you?
Are you going to manage your money?
Or…
Where can I save or invest my money?
Types of Accounts: Saving and Investing• Savings Accounts
• Certificates of Deposits (CD)
• Stocks and Bonds
• Real Estate
Key Factor #1Saving & Investing
Rate of return
The amount of money you earn on your investment
•Amount
•Rate of Interest
•Time
• What is your return if you invested $500 at 3% for 1 year?
Rate of Return
3% 9% 15% 21%
$1,000
$15
24
The Rule of 72: 72 divided by the interest rate
5 38
How long would it take to double your money?
Key Factor #2 What is the Risk?
How much would I have to pay you to…..
• What is your return if you invested $500 at 3% for 1 year?
Rate of Return
3% 9% 15% 21%
$1,000
$15
24 5 38
1. Spend Less Than You Make
2. Pay Yourself First
Two Rules to Live By
What Happens When You Violate Rule #1?
• Borrow Money
• Credit Card
• Balance of $5,000 at 17% Interest
• Minimum Payment
• 81 years to pay off the balance
You Spend More Than You Make
What Happens When You Honor Rule #1?
• Honor Rule #2: Pay Yourself First
You Spend Less Than You Make
How Much Money Could You Earn If…
Pay Yourself First
At Age 65
5.00%Rate of Return
$420Save $15 everyday for one month
$15Coffee/hot chocolate & snacks
Saved $15/day until you were 65?
$1,000,000
Why is Managing Your
Money Important?
1. Spend Less Than You Earn
2. Pay Yourself First
• Budgeting
• Rate of Return
• Risk
Got Questions?
www.frbsf.org
www.FederalReserveEducation.org