Personal Finance

Supply

• The amount of a good or service that is available in a specific time.

• Best Buy has a large SUPPLY of Ipods.

Demand

• The quantity of a good or service that people are willing to buy at all possible prices for a certain period of time.

I can’t wait to buy the new IPad! It’s $600 but I HAVE to have

it!!!

I’d pay ANY price! Gosh, I hope they

don’t run out before it’s my turn!

Income

• Money earned by a person most often by having a job

• Can also include salaries, wages, interests and dividends

Expenses

• Money you spend on a good or service

Budget

• A plan that helps you understand how much money you make and how much money you spend.

Credit

• Borrowing money to purchase goods or services in return for your promise to pay later.

Buy Now, Pay Later

Credit Card

• The device used to purchase a good or service in order to have it now, but pay for it later.

Checking Account

• An account used to pay for day to day items. It has a lower interest rate than savings, but is easier to access.

Check Cards

• Device used to access money in a checking account.

• You can also writechecks to access the money in thesame account

Savings

• A bank account used to set aside money for future use.

• Has a slightly higher interest rate

• More difficult to access.

Making a Decision

Complete the question on your notes page.

Investing

• When you use money to make money!

• Examples:homes, stocks, bonds, mutual funds, real estate

Retirement

• A plan to provide economic resources for use when you no longer work.

• Usually not accessed until age 65.

• Help Mrs. Soper out by answering the question in your notes.

TEST YOUR KNOWLEDGEYou need a new laptop for school.Which is an example of effective

decision making?A. You buy the first laptop you see at Best Buy.

B. You buy the most stylish and sleek laptop available.

C. You shop at several stores and choose the best laptop based on price and options.

D. You decide to buy the hot new IPhone. Who cares about school, anyway?

A computer tech needs his car fixed. He will trade his computer skills with a mechanic in order to get

his car fixed.This is an example of

what economic activity?

Barter

What does this sign mean?

Buy Now,Pay Later!

Why buy bulk?

Buying in bulk is more economical than smaller packages!

Saving is the opposite of _______________

Borrowing is the opposite of ____________

Investing is the opposite of _____________

What are banks good for?

• Protecting your money up to $100,000

• Loaning money to people for various things (cars, houses, boats, etc)

• Giving interest on money deposited

Principal

• The amount of money that is borrowed on a loan.

principal

Simple interest

Compound Interest

Simple Interest• Interest paid on the principal of a loan.

• Money paid on the principal (P) on a loan or investment.

• Caluclated using the following formula

Interest rate X Principal X number of years

6% X $150,000 X 30 years

Compound Interest

Interest on Interest

paid on a loan

.You are a credit advisor. Your friend Brian wants to buy a new Ipod but only has $50. What advice would you give him?

A. Put the money in a Checking Account

B. Put the money in a Savings Account

C. Put the money in your sock drawer.

D. Forget it, just get an Ipod Shuffle.

What does this mean?

Assets

- Liabilities

Net Worth

• What a person is really worth financially.

• Someone who has millions in assets but owes billions in liabilities is not a millionaire.

AssetsThe property a person

accumulates after all debts have been paid.

Liabilities

The amount of debt you have or could incur.

If you do not spend all of the money on your credit card, can it still count against you?

Credit Report• A report that lists all of your credit information.

• Includes all credit cards (even old ones that are not used anymore)

• Includes all money you have borrowed (even if you have paid it back) and the amount you borrowed

• Includes payment history (so, don’t forget to pay on time!)

• Includes all addresses that you have lived at

• Includes all jobs you have worked at

Bigger is BETTER!

Does the interest rate really matter?

What could a few little points matter?

If you were to invest $1,000 without taking any out, after 40 years you would have…

At 6% $10,285At 12% $93,050

At 18% $750,378

So, do a few little points really matter?

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6% 12% 18%

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