27
It’s March! Time to Think Green
It’s March!
Time to Think Green
HOW MONEY
$MART ARE YOU?Test your knowledge and learn about
financial concepts in the following
slides. Once you have finished, you will
create a cartoon that teaches others
about one of these concepts.
1) Which of these items might
increase in value after you
purchase it?A
B
C
1) Which of these items might
increase in value after you
purchase it?A
B
C
Why?
Clothing and automobiles depreciate or lose
value as soon as they are used. So do items
such as computers, phones and other
gadgets.
The price of gold and other precious metals
changes with the market; sometimes it
decreases but often it increases. Other
items that can appreciate or increase in
value are homes, land, and special
collections (artwork, coins, etc.).
True or False: All bank accounts
offer the same features?
a. True
b. False
True or False: All bank accounts
offer the same features?
a. True
b. False
• Banks offer different types of accounts:– Savings accounts are protected by insurance and therefore risk-free; they
usually offer low interest rates. Some might require a minimum deposit.
Many allow you to use an ATM card.
– Checking accounts are used for more frequent access to money (paying
bills) and come with paper checks and often an ATM card. Again deposits
are protected by insurance. Many checking accounts do not offer interest.
There are frequently charges for overdrawing (spending more than you
have).
– Money market accounts usually pay a higher interest rate but require a
large minimum balance. They are often used for the infrequent purchase of
big-ticket (expensive items.)
– Certificates of deposit, or CDs, usually require you to keep your money in an
account for a specific amount of time, anywhere from 3 months to 10 years.
They pay a higher rate of interest but you cannot access your money during
the term of the CD.
• It’s important to do your research before you
choose a bank. Check to see what fees the bank
might charge; what interest it offers on various
accounts; and what requirements they have to
open and maintain an account.
True or False: Using credit
cards is a form of borrowing?
a. True
b. False
True or False: Using credit
cards is a form of borrowing?
a. True
b. False
Why?
• Credit cards are a very expensive way to
borrow money, because the interest rates
(the percentage you pay for borrowing
money) are very high and can be
accompanied by other fees –such as an
annual cost for having the card, and
charges for withdrawing cash, making late
payments, etc.).
• Credit cards should only be used for
purchases that can be paid off each
month.
2) Which of these long-term savings plans
will result in the largest sum by the time the
individual is 65?
a. Joe saves $1,000 per year
from age 25 to 35 in an
account earning 8 percent
interest; after 35 he simply
leaves his money in the
account.
b. Gina saves $1,000 per year
from age 35 to 65 in an
account earning 8 percent
interest.
Both will have the same.
2) Which of these long-term savings plans
will result in the largest sum by the time the
individual is 65?
a. Joe saves $1,000 per year
from age 25 to 35 in an
account earning 8 percent
interest; after 35 he simply
leaves his money in the
account.
b. Gina saves $1,000 per year
from age 35 to 65 in an
account earning 8 percent
interest.
Both will have the same.
Why?• That is the beauty of compound interest!
Your money earns interest, and then you
earn more interest based on your original
investment plus that interest. Over time,
compound interest can result in significant
money earned.
• Joe saved $10,000 but comes out ahead
with $169,000. Hard to believe? (Gina
saved $30,000 but her money did not have
as much time to grow. Still, she has
$125,000 in her account.)
• See how Joe’s interest is compounded on
the next page.
Age Begin Year Interest End Year
25 $1,000.00 $80.00
$1,080.00
26 $2,080.00 $166.40
$2,246.40
27 $3,246.40 $259.71
$3,506.11
28 $4,506.11 $360.49
$4,866.60
29 $5,866.60 $469.33
$6,335.93
30 $7,335.93 $586.87
$7,922.80
31 $8,922.80 $713.82
$9,636.63
32 $10,636.63 $850.93 $11,487.56
33 $12,487.56 $999.00 $13,486.56
34 $14,486.56 $1,158.92
$15,645.49
35 $16,645.49 $1,331.64
$17,977.13
36 $17,977.13 $1,438.17
$19,415.30
46 $38,811.27 $3,104.90
$41,916.17
47 $41,916.17 $3,353.29
$45,269.46
48 $45,269.46 $3,621.56
$48,891.02
49 $48,891.02 $3,911.28
$52,802.30
50 $52,802.30 $4,224.18
$57,026.49
51 $57,026.49 $4,562.12
$61,588.60
52 $61,588.60 $4,927.09
$66,515.69
53 $66,515.69 $5,321.26
$71,836.95
54 $71,836.95 $5,746.96
$77,583.90
55 $77,583.90 $6,206.71
$83,790.62
56 $83,790.62 $6,703.25
$90,493.87
57 $90,493.87 $7,239.51
$97,733.37
The slight difference in the finishing amount is due to the fact that this chart reflects annual
compounded interest, rather than monthly compounded interest, which the retirement account would
pay.
2) Jasmine and Chris just had a baby. They
received money as baby gifts and want to
put some of it away for the baby’s college
education. Which of the following tends to
have the highest growth over longer
periods of time (in this case, about 18
years)?
a. A U.S. Government savings bond
b. A savings account
c. A checking account
d. Stocks
2) Jasmine and Chris just had a baby. They
received money as baby gifts and want to
put some of it away for the baby’s college
education. Which of the following tends to
have the highest growth over longer
periods of time (in this case, about 18
years)?
a. A U.S. Government savings bond
b. A savings account
c. A checking account
d. Stocks
Why?
Stocks are a RISKIER investment than
bonds or bank accounts. With greater risk
(the possibility of losing money) comes the
potential for higher returns (earnings) when
the stock’s value grows.
Without expertise about the stock market, it
is better to use this type of investment for
longer-term goals and to invest in a mutual
fund or other tool that allows you to own a
mix of stocks, rather than a single stock.
3) What is one thing that will NOT improve
your credit score?
a) Pay all your bills on time.
b) Keep more than one credit card.
c) Always pay in cash.
d) Keep your credit card balances under
30% of your credit limit.
3) What is one thing that will NOT improve
your credit score?
a) Pay all your bills on time.
b) Keep more than one credit card.
c) Always pay in cash.
d) Keep your credit card balances under
30% of your credit limit.
Why?
A credit score is a rating system that identifies the
risk a potential lender, such as a bank or credit
card company, might face by giving you money.
You build a credit score by showing that you pay
bills on time, over a long period of time. When you
pay in cash, you do not establish a track record. As
an adult, it is good to have a credit card that you
can pay in full each month; this establishes you as
responsible with your money to potential lenders
(for example, if you needed to apply for a loan for
a major purchase).
What does it mean to be on a
budget?a. You pay bills every month at the
due date
b. You follow a plan that keeps your
expenses less than or equal to
your income
c. You are earning enough money to
be able to live well
d. Your bills are mostly paid by their
due date
What does it mean to be on a
budget?a. You pay bills every month at the
due date
b. You follow a plan that keeps your
expenses less than or equal to
your income
c. You are earning enough money to
be able to live well
d. Your bills are mostly paid by their
due date
What is a budget?
• A budget is a plan for your money, a map
to your financial destination, made up of
two major components:
– Income: what your earn
– Expenses: what you spend, both NEEDS
(housing, food, healthcare, basic clothing) and
WANTS (bling, entertainment, travel etc.)
– The trick is to cover your NEEDS before you
spend money on your WANTS.
Let’s Review the Financial
Concepts• Appreciate
• Depreciate
• Compound Interest
• Risk
• Returns
• Credit Score
• Budget
Which one can you teach to others?
Time for you to show your money
$marts!Assignment:
Using one of the concepts you reviewed in this
presentation, you are going to create a comic strip to
help build the money $marts of others.
1) Read the assignment sheet.
2) Choose a concept from the assignment sheet.
3) Using stripcreator.com, Create a 2 or 3 panel comic
that teaches others about that concept.
4) Review a sample on the next page.
5) Look at the rubric on the assignment sheet to see how
your comic will be graded.
Sample Cartoon
Financial concept?
Compound interest
