Earning Worksheet Directions: Review the information at http://www.themint.org/teens/index.html . Use the information to answer the following questions. Earning (Click on the Tips for Teens tab, then the Earning tab to complete this worksheet) Earning money at a job is a first step towards being on your own. Whether itis an odd job for neighbors or part-time employment, you can use that money to reach your goals. 1. Lista few things that your first job will help you learn: what you will like and dislike , the education and training you will need in that career. 2. Click on “Starting Salaries.” List three occupations and the education they require. Occupation Education a. Dentist Graduate Degree b, _HR Employment spec 4 year college degree c. __ Physical therapist masters degree 3. It pays to stay in school. How long you stay in school is one of the biggest factors in increasing your earning power. Click on “How to Learn and Ear” to explore the average earnings of different levels of education, How much more money will you eam PER YEAR and AFTER 40 YEARS for a: Professional Degree _agootyear Deen Masters Degree 55.3001year [Bachelors Degree: #2 46.S00\l\ year cect st sie Melis ie iit ietcteten Associate's Degree__35.4001year Some college, no degree__32.400 ‘year High school diploma/GED___28-800 tyear Some highschool wo clirloraa assem 1-400 jest euee eee ee eee4, On the same page, pick the level of education you plan on attaining, then write how much more you'll make OVER YOUR LIFETIME (working 40 years): Education:_MastersDegree After 40 Years: $_2.5 _ million 5. Diplomas = Dollars High school graduates earn about $7,000 more each year on average than those who don’t finish high school. After 40 years, that adds up to more than $200,000 in extra earnings! College graduates with bachelor’s degrees earn $16,000 more each year on average than those who earn a high schoo! diploma. After 40 years, that’s a difference of $900,000. That’s almost a million bucks! Short Answer: In five sentences, explain why education is so important to your future. Think about the kind of lifestyle you want to live as an adult with a family. What doors will education open for you? Education is important , becuase it will help me join into the navy. In order to join the navy you need to have a high schoo! diploma. Not to mention you also need college training to become a M.P, Its alot of training to get into that job catagory. However it is all worth it in the end becuase you are doing somthing you love and that makes you happy. Education will help you in many ways. _1.make more money 2.have a better life style 3.help get good jobsSaving Worksheet is (Click on the Saving tab to complete this worksheet) A good savings plan sets money aside for big purchases in the future and short-term needs. Even if your only money now is an allowance from your parents, you can get in the habit of saving and get your money to go further. Why is it a good jea to save a portion of your money each month? 2. There are 4 broad categories that you plan to save for. List them and give an ‘example of something you might need to pay for or buy that you'd use your savings for (Hint: click on the 5Step Save/Spend Plan): Category Example _wedding. gowns, minister b_new truck Joan ¢_house down payment d_furniture couch fridge,washer,dryer 3. Define interest as it relates to savings and banking: intrest is what you earn when you save money with a bank. The longer your there the more money you earn on intrest. 4, The amount a bank pays is talked about as a percentage. If the bank is paying 3% interest, the bank will pay you 3¢ for every dollar you deposit in your account. Why does the bank pay you? The bank wants to use your money to make loans — that is, lend people money. People often borrow money from the bank to buy expensive things like houses and ears. Adapted from: www.themint.org‘Which savings option is a better idea: Stashing money in a jar, or putting it in a savings account at your local bank. Why? | prefer bank so i eam intrest. Activity 2. Compound Interest Rates ‘Most savings accounts pay interest on the money in your account —and on any interest you've already earned. That's called compounding. Compounding usually happens annually. Many savings accounts compound more often, like four times a year. That's better. The more times your interest compounds, the faster your money will grow. Take an example. Let's say you put $1,000 in savings. Interest is compounded four times ‘a year. Here's what your money would do: $ In the account Interest earned at 3.5% January $1,000 $8.75 April $1,008.75 $8.83 July $1,017.58 $8.90 October $1,026.48 $8.98 Total: $35.46 In one year's time, you've earned $35.46, and you haven't had to work for it. It's like magic. And did you notice that each time you earned interest, you earned more than you did the last time? Your interest will get larger and larger as time goes on.Adapted from: www.themint.org Click on The Compounding Calculator under “Play” Follow the directions to see your money grow! A. How much money do you want to save each year? (Hint: put in $1000 to start)_ 1,000 B. Which interest rate do you wish to earn? (try a few!) U.S stock market a C. Select the number of years you'd like to save. A good idea would be to put 40 years, because most people work from their early twenties to their early sixties, which is about 40 years. D. Ifyou were to put $1000 away in a jar on your desk each year, you'd save $40,000 after 40 years (40x1000). If you were to put $1000 away in a savings account each year, how much would you save?__213,609.57 —$—$$—$——___ E. Subtract $40,000 (jar savings) from how much you'd make in a savings account (your answer from question D). That’s a difference of §_ 173,609.57 it you were to put your money in a savings account rather than saving it yourself in a jar! wow! Retirement Saving for retirement may seem pointless since it’s so far away, but in reality, if you don’t start soon, you may not have enough stored away to retire comfortably. Let’s ‘examine some Ways you can begin saving for retirement! Read the follo paragraphs. g articles, then respond to the short answer questiot hup:/www.kiplinger.com/columns/starting/archive/2006/st0309.htm hitp://frugaldad,com/2009/0 1/27/roth-ira-for-teenagers/Adapted from: www.themint.org Short Answer Question (Must be at least two paragraphs): ‘What is a Roth IRA (be specific) and why is it a smart idea to open one as soon as possible? Be sure to explain the benefits of a Roth IRA and how your money grows over time. Itis good to use them becuase they are tax free money. Uncle sam does not get this money. You can also invest unlike a 401k , Until i retire and make and average annual return of 8% intrest . | will have 1.4 million saved by the time i retire. Plus the IRS does not get any of it. Adapted from: http:/vww.kiplinger.com/columns/starting/archive/2006/st0309.htm and http://frugaldad.com/2009/01/27/roth-ira-for-teenagers!Activity Use this Roth IRA Calculator to see how much you could earn if you invest wisely for your retirement. Follow the instructions below after you go to the following websit Roth IRA Calculator http:/Awww,moneychimp.convarticles/rothira/roth_calculator.htm Instructions: Step 1: Plug in your age. Step 2: Pretend you already have $1000 saved up to invest in your Roth IRA. Plug that into Current IRA Balance. Step 3: Plug in 5% for Expected Return Rate. This is the interest percent YOU will be earning for saving your money. Step 4: Under “Your Plan,” enter how much you think you can realistically save over an entire year for each year until you turn 50. Then, plug in how much you think you can realistically save a year between the ages of 50 and whatever year you plan to retire (this ‘number can stay the same, increase, or decrease). Most people retire starting at 62, but some retire at 70, depending on health and how much more they need to save. Adapted from: http://www.moneychimp.convarticles/rothira/roth_calculator.htm Step 5: You will be able to withdraw that money in equal amounts each year once you retire. You want to plan in the event that you live a long time, say, until you're 95 years old (You never know!). So, in the last box, plug in 30 years because you'll be withdrawing from your Roth IRA for about 30 years after you retire (Age 65-95, for example). Step 6: Click Calculate. Fi the following blanks: At age 65 your account balance will be $_ 4,006,249 : ‘You'll then be able to withdraw $_55,850 annually for 30 years.Hopefully this amount will be enough for you to live comfortably during retirement. If ‘you plan right, you, like many retirees, will enjoy a life free of worry about money with enough saved up to take vacations or donate to good causes. If you don’t start saving soon: 1. You may have to retire when you're close to 70 years old 2. You may be struggling to pay your bills 3. You may perhaps put a financial burden on your children, who will have to pay for your everyday expense, which in many cases includes large healthcare bills or a ‘monthly rent to stay at an Assisted Living Home.Spending Worksheet Spending (Click on the Spending tab to complete this worksheet) Spending comes easy to all of us, so you may think you don’t have anything to learn. Use this seetion to learn ways to track what you spend and to spend your money more wisely. 1. What is impulse buying? Buying somthing you dont need 2. Select an item from your favorite store or shop. Then, answer the following questions to determine if it is an impulse buy or if you really need it: How do you hang on to your cash so you dont just buy impulsively? Ask yourself these questions: Do I really need this item? If don't need it, why do I really want it? Am sure that I'll use it? Wear it? If buy it now, will I have enough money for other things I might need later on — this week, this month, next month? Will this purchase take money away from paying off any debts I owe? Is there any risk in delaying this purchase in order to think about it longer? What are the chances this item might go on sale soon? Could I find this item somewhere else cheaper? ‘Could I find an item like this, but without a brand name? It will probably cost less. BENE 3. In 5-7 sentences, explain the difference between using cash, checking, and credit. When using cash it is a straight forward transaction, no waiting for clearance, holds, ect... When using a check to pay you must make sure that you have proper valid identification ‘and that all information on both the check and [.D. are the same or they may not accept it. Checks can take 3 to 5 days to clear. Lastly there is credit. Credit is a form of payment that [ete you Buy something now and pay for it later. You can have the choice to either means that you will be paying back more than original amount due to the interest. Adapted from: www.themint.orgActivity 1 - Writing a Check. (Under the “Play” heading) 1. Complete the Writing a Check interactive activity. When you have the check filled out, do a “print screen” (On the keyboard, hold down the blue “fn” key [lower left] WHILE ALSO HOLDING DOWN the blue “prt se” key [upper right, then open a word document and click paste. Print your check] OR see your teacher if you are unsure of how to do this—you are basically copying and pasting what you see on the screen, onto a word document to print out). Attach your completed check to this lesson. Activity 2— What kind of spender are you? Complete the “What kind of spender are you?” Quiz. Explain your resul Collector-you like to see your money make money, Adapted from: www themint.orgOwing Worksheet Owing (Click on the Owing tab to complete this worksheet) ‘Ifyou borrow money, you owe someone or a certain company a debt. Learn alll about credit now, before you start using it. Ifyou understand the advantages and. disadvantages of credit cards, they offer a convenience that can be worth the price, But remember: credit does come at a price! 1, In 5 sentences, explain the advantages and disadvantages of using a credit cai Advantages of a credit card is you can buy whatever you want when ever you want you! 2, Define the following words: a. Credit Limit the amount of money you are allowed to spend. b. Minimum Monthly Payment the minimum amount your aloud to pay . ¢. Grace Period extended period of payment. 4d. Late fees a larger payment becuase of being late on payments ¢. Interest Rates ig when you borrow money you end up oweing more then what you £ Secured Creait CMe credit card backed by a savings account 8 Credit Reports 4 detailed report of someones full back credit history. Adapted from: www themint.orgActivity 3. Complete the “Credit Card IQ Quiz” under “Play.” There are seven questions. Enter the correct answers in the following blanks: ul 2. true true true false false true true Adapted from: www.themint.org,Credit vs. Debit Debit cards and credit cards are both useful noncash spending tools for responsible young adults, The key word to remember is responsible. ‘Too many people get into debt because they don’t use them in the way they were designed to be used. Credit cards are not an endless pool of money, and debit cards could cause trouble if you don’t monitor your bank statements and how much you have available to spend. Read the following article, then answer the questions found in the lesson guide: Credit and Debit Cards: What You Need to Know By JENNIFER BARRETT Published: January 6, 2009 A generation ago, it wasn’t all that unusual to be out for dinner with friends or at the register with a cart fill of groceries and realize you didn’t have enough cash to cover the bill. But today, you're likely to pull out a debit or credit card and not think anything of it. Your Money Guides It’s hard now to imagine a time when those noncash options weren't available — especially if you were born in the 1970s or later. Credit cards have been around since the 1950s, and debit cards were introduced in the mid-1970s. By 2006, there were 984 million bank-issued Visa and MasterCard credit and debit cards in the United States alone. ‘Though the two types of cards may be used interchangeably, there are notable differences between them. Let’s start with debit cards. Debit cards are linked to your bank account so the money you spend is automatically deducted from your account. They provide a convenient aiternative to cash, especially if you do a lot of shopping online. Debit cards can also help you budget. Use your card to pay your bills and day-to-day expenses and your monthly statement will provide a good snapshot of how much you spend per month and where it’s going. There’s another benefit, as well: Unlike eredit cards, your bank balance goes down with each debit card transaction, so you're less likely to overspend. (Many banks offer “overdratt protection’ that allows you to exceed your balance. But you'll end up paying interest, and maybe extra fees, on the money you borrow from your overdraft account.) With so many benefits to the debit card, why use a credit card at all? There are three main reasons: You can spend more than you have — ot postpone paying, at least — and you typically get better rewards and better protection than you do with debit cards. Adapted from: http://www nytimes.com/2009/01/06/your-money/credit-and-debit- cards/primercards.htmlCredit cards basically allow you to use someone else’s money (the card issuer’s) to make a purchase while you pay the money back later. If you do so within the billing period — generally, 15 to 45 days — you can avoid paying any interest on it. The problem arises, of course, when you don’t pay the balance in full and are charged interest as well. That can quickly add up. Ifit takes you two years to pay off a $500 balance, for example, and you're being charged 18 percent interest, you'll end up paying nearly $100 more in interest. Ifyou use them responsibly though, credit cards can offer other advantages. They help build your credit, as long as you pay your bills on time. Some also offer rewards that you can use to get gifts, cash back or discounts for products, services and special events. They also provide more protection if someone steals your card or bank information. If you notice a fraudulent charge on your credit card account, you can call the card issuer, make a dispute claim, and the charge should be removed from your balance. But if thieves steal your debit card information and use it, it may take weeks for the bank to investigate your claim and replace the lost funds. In the meantime, you may have to deal with a dwindling bank balance or bounced checks. Federal law also protects you if you need to dispute charges on a credit card, but not if you use a debit card or other forms of payment. If you paid cash or used a debit card, the retailer already has your money. So you have a lot less leverage, and there’s no guarantee you'll get that money back. But if you pay for something with your credit card and aren't happy with the purchase, your card issuer can legally withhold payment from the retailer until they resolve the dispute, and you won't be charged. Let’s say you've decided you want a credit card, which one should you get? The answer depends largely on whether you plan to pay off the balance each month. If you know you'll probably carry a balance, look for a plain-vanilla card with no annual fee and the lowest annual interest rate available. (Any interest you pay on a carry-over balance will offset any perks you could get through a rewards card.) You can compare several low-interest credit cards at creditcards.com and bankrate.com, which both provide updated information on dozens of different cards. You can also apply online for cards through either site, but limit your applications to one or two to avoid hurting your credit. Be aware that card issuers can raise your interest rate after you've gotten the card. So check your monthly statements. (You should be aware, though, that the Federal Reserve hhas just passed rules that will take effect in mid-2010 limiting the card issuers’ ability to raise your rate, unless you're late with a payment.) Call the card issuer if your rate has increased to try and negotiate a lower rate, or consider transferring your balance to a lower-interest card. (Billshrink,com lets you see how much ‘more you could earn in rewards or save with a lower interest rate if you switched to various other credit cards, based on your credit score and how much you spend each year.)Adapted from: hitp/wvwv 1/06/your-money/credit-and-debit- cards/primercards, htm! Ifyou plan to pay your bill in full each month, seek out a card that provides rewards you actually want — whether that’s cash back, frequent flier miles or points redeemable for aifts. The interest rate shouldn’t matter, since you won’t be carrying a balance. But look for those with no annual fee. Bankrate.com and creditcards.com also provide comparisons of cards by the types of rewards offered, among other criteria. Generally speaking, if you plan to use your card a lot, eash-back programs may be the best bet. It’s easy to get the refund — either through a check or a credit on your account — and you can use that money for anything. Many large banks also offer debit cards with rewards, 50 it can be worth shopping around for them too. Creditcards.com also provides a comparison of different prepaid and debit cards, based on annual fees, related services and credit requirements. For most people, using both a debit card and credit card makes sense. The key is not to spend more than you have with either. If you can do that, you'll be able to enjoy the benefits that each provide.Adapted from: http://www nytimes.comv/2009/0 1/06/your-money/credit-and-debit- rds/primercards.html Credit and Debit Cards: What You Need to Know By JENNIFER BARRETT Published: January 6, 2009 Article Questions 1. What is the main difference between credit cards and debit cards? credit card can effect your credit score , debit card just takes money directly from account 2. List three benefits of debit cards. funds verification, no purchase fee,safer from thieves. 3. What is “overdraft protection?” to prevent having a negative balance. 4, What is interest? is amount charged by company for use of there card 5. Why do credit cards charge you interest to borrow their money? they have to make there money Ifyou pay off your credit card balance within the billing period — generally, 28 days, you can avoid paying interest on it. 7. What if you take longer than the billing period to pay the credit eard company back? then you will be charged intrest on the full amount owed . 8, What if'a thief steals one of your cards and uses it to make fraudulent charges? ‘Would it be safer for you if they stole your debit card or your eredit card? Why? debit card, its harder to get the pin to make purchases 9. Not all credit cards are created equal. What are some possible differences between different kinds of credit cards offered by different companies and why is it a good idea to “shop around” for the best one? so you get the best deal . 10. What is a credit score? tells people weather or not you pay your bills on time . 11. What could happen to your credit score if you don’t pay off your credit cards on time each month? it can lower your score. 12. For most people, using both a debit card and credit card makes sense. The key is not to_overspend with either. If you can do that, you'll be able to enjoy the benefits that each provide.Adapted from: httpy/www.nytimes.com/2009/0 1/06/your-money/credit-and-debit- cards/primercards.htm! Activity Go to the following website to see the “hidden costs” of using credit cards, Follow the instructions for use below, then answer the questions in the lesson guide. Payment calculator: How long will it take you to pay off your credit card and how much interest will you pay? http:/www,calculatorweb.convcaleulators/crediteardmincale.shtml Instructions: Choose an item you've always wanted to buy but you couldn't afford (choose something that is at least $300). What is it?_phone. How much does it cost?__1 labeled current account balance. Enter this number in the box Next, enter the credit card’s annual interest rate. Enter 16% because this is an average for all credit cards. Leave the minimum payment percentage at 3% Finally, enter how much you can realistically pay each month towards your new item. For instructional purposes, put $20. This is going to show you how much more you'll be paying for the item if you don’t pay it off in full atthe end of the billing cycle. Hit calculate. Hovy much interest will you end up paying ON TOP OF your item’s purchase price? 8 fwww.caley eb.com/calculators/erediteardmincale.shtml How long will it take you to pay off your new item? _1,8yeai Short answer: Explain why overspending on credit cards could easily lead to debt and financial ruin, if you cant afford it, you will be trying to pay it off for the rest of your life. if you dont think you can afford it dont but it.Adapted from: http://www.calculatorweb.com/calculators/creditcardmincale.shtm!Loans Ifyou ever plan to attend college, buy a car, or own a home, you will need a loan. It is important that you become knowledgeable about loans because at some point in your life, you will likely need one. Read the following article on student loans, then answer the following questions in the lesson guide. Student loan: https/www.howitworks.net/ho Article Questions: 1. There are four ways to raise money you need for college. What are they? need baised aid _, scholarships work study programs and student loans ; 2. Pick two from question 1 to compare and contrast (What are their differences and what are their similarities?)need baised aid , is when it is severly needed. student loans is when someone borrows money to go to school. 3. The majority of people cannot afford to pay upfront in cash for college expenses. Most borrow--Where do the most common forms of loans come from? student loans 4. How much does a college education typically cost? 60,000 5. How do you apply for student loans? FASFA 6. Like credit cards, loans charge _25% im exchange for letting you borrow large amounts of money. This is how loan companies/banks/the government make money. 7. What are the two major student loan types in the U.S.? scholarships and student loans 8. Loans can typically be repaid (cirele one) before/during/after graduation. during or afterAdapted from: http://www howitworks.net/how-student-loans-work,htm| Car Loans Buying a car is a big investment. Most people cannot afford to pay cash for a new or used car, so loans are made available to help. Read the following article, then answer the questions in the lesson guide. ersonalfinance.conVanswer/-How-do-auto-loans-work: hutp://vww.c- html Article Questions: 1. Auto loans, like home loans, are secured by an contact. If you take out a loan to buy a car, the finance company will hold title __ to your car until it is payed : At that point, it will sign over the title to you 2. Your monthly car payment is based on eight things. What are they? down payment,credit score, credit history,current job 3. Why is your credit score so important in determining your interest rate on the loan? it shows how good you are about paying stuff off on time . 4. Why is it a good idea to “shop for a loan” before you go into the dealership to buy a 2 8?’ 0 you get the best loan 5. ALWAYS READ THE fine PRINT. It is important to know what you are getting yourself into when securing @ loan, Don't buy a car without negotiating and asking a lot of questions. 6. 0% interest or financing sounds great (it means you won't have to pay any interest on top of the cost of the car). However, what will dealers do to make up for the lost interest income they would normally receive? make you pay more for the carAdapted from: http://www.e-personalfinance.com/answer/How-do-auto-loans-work html