grade subject first nine weeks instruction dates...

Grade _______ Subject _________ First Nine Weeks Instruction Dates: September 2 to October 31 ___22_Days

Teacher Brent Brown Draft Date June 2014

Curriculum Focus: Smart Start Financial Education Curriculum

Fir

st Q

ua

rte

r

Standard of Learning w/Essential Knowledge and Skills (from 2010 SOL Documents) Number of days

6

Resources and Materials used for

instruction Go over Dual Enrollment Requirements

WISE 50 Question Pre-test

Lesson 1: Money Wise – Money and Financial Institutions

EPF.6 The student will demonstrate knowledge of the nation’s financial system by

a) defining the role of money; and

b) explaining the role of financial markets and financial institutions.

EPF.12 The student will demonstrate knowledge of banking transactions by

a) comparing the types of financial institutions;

b) examining how financial institutions affect personal financial planning;

d) differentiating among types of electronic monetary transactions;

g) comparing costs and benefits of online and traditional banking; and

Terms:

Commodity Money Interest Federal Reserve System

Securities and

Exchange

Commission

Federal Deposit Insurance

Corporation FDIC

Automated Clearing House ACH

Checking Account Check Cashing Company

National Credit Union

Administration NCUA

Mortgage

. https://www.vacu.org/Education_Resources/Articles_Tips/Financial_Education_for_Kids_Teens/Resources_for_Teachers/Smart_Start_Curriculum.aspx

https://www.vacu.org/Education_Resources/Articles_Tips/Financial_Education_for_Kids_Teens/Resources_for_Teachers/Smart_Start_Curriculum.aspx









Savings Account Fiat Money Loan

1. Assign seating and groups.

2. Complete WISE Pre-test

3. Get out notebook and write down objectives and terms to define.

4. Groups define assigned terms in PPT to save in shared folder.

5. Groups present their terms to the class.

6. Grade WISE Pre-test at the end of class. – 200 points

7. Group financial institution worksheet. – 50 points

8. Group checking account comparison worksheet – 50 points

9. Individual – vocab fill in the blank quiz. – 100 points

Lesson 2: Making the Most of Your Money – Savings and Financial Institutions

EPF.10 The student will develop consumer skills by

i) accessing reliable financial information from a variety of sources;

j) explaining consumer rights, responsibilities, remedies, and the importance of consumer

vigilance; and

EPF.12 The student will demonstrate knowledge of banking transactions by

e) preparing all forms necessary for opening and maintaining a checking and a savings

account;

f) reconciling bank statements;

EPF.13 The student will demonstrate knowledge of credit and loan functions by

a) evaluating the various methods of financing a purchase;

b) analyzing credit card features and their impact on personal financial planning;

c) identifying qualifications needed to obtain credit;

d) identifying basic provisions of credit and loan laws;

e) comparing terms and conditions of various sources of consumer credit;

f) identifying strategies for effective debt management, including sources of assistance;

g) explaining the need for a good credit rating;



h) comparing the costs and conditions of secured and unsecured loans; and

i) comparing the types of voluntary and involuntary bankruptcy and the implications of each

EPF.17 The student will demonstrate knowledge of personal financial planning by

a) identifying short-term and long-term personal financial goals;

b) identifying anticipated and unanticipated income and expenses;

c) examining components and purposes of a personal net worth statement;

d) developing a personal budget;

Terms: Opportunity Costs, SMART Financial Goals, Budget, ChexSystem, Credit Cards, Credit

Bureaus, Experian, Trans Union, Equifax, and FICO score.

1. Play song by O’Jays ―For the Love of Money‖.

2. Review learning objectives above.

3. Group definitions of terms.

4. Opportunity Costs slide.

5. Chat: pros and cons of using cash – no interest, easy to lose cash and does not earn

interest.

6. SMART Financial Goals – create a table in MS Word create your own.

7. Review spending plan budget slide.

8. View M&M Budgeting slide and the Monthly Budget Blueprint Careers. – 100 points

9. Complete the credit card choice activity.

10. Complete the alternative endings quiz

11. Vocab Quiz – 100 points

Lesson 3 Career Central – Careers and Taxes

EPF.15 The student will demonstrate knowledge of income earning and reporting by

a) examining how personal choices about education, training, skill development, and careers

impact earnings;

c) calculating net pay;

d) investigating employee benefits and incentives; and

e) completing a standard W-4 form.



EPF.16 The student will demonstrate knowledge of taxes by

a) describing the types and purposes of local, state, and federal taxes and the way each is

levied and used;

e) explaining the content and purpose of a standard W-2 form; and

Terms:

Gross Pay Net Pay Social Security Taxes

Medicare Taxes Federal Income Tax Payroll Tax

W-4 Form W-2 Form FICA

State Income Tax Tax Bracket

Lesson:

1. Review learning objectives.

2. Write down terms. Each group defines one term to present to the class.

3. Use your budget career. Complete the writing a check worksheet.

4. Go over the W-4 and W-2 forms.

Lesson 4 What a Ride! – Car Buying


d) determining the consequences of conspicuous consumption;

e) describing common types of contracts and the implications of each;

f) demonstrating comparison-shopping skills;

EPF.11 The student will demonstrate knowledge of planning for living and leisure expenses by

a) comparing the costs and benefits of purchasing vs. leasing a vehicle;

EPF.13 The student will demonstrate knowledge of credit and loan functions by

a) evaluating the various methods of financing a purchase;

g) explaining the need for a good credit rating;



EPF.14 The student will demonstrate knowledge of the role of insurance in risk management by

a) evaluating insurance as a risk management strategy;

Terms:

Term Insurance Personal Property Tax

APR GAP Lease

Credit Premium Auto Full Coverage

Auto Liability Insurance Factors that impact auto

insurance premiums

Extended Warranty Plan

Advantages and

Disadvantages of Buying

a New Car

Advantages and

Disadvantages of Buying

a Used Car

Depreciation

Lesson:

1. Write down the terms. Go over the definitions.

2. Role play script one and script two.

3. What was wrong

4. Review the Virginia Buyers Order for the auto.

5. Check out Edmunds.com

6. Calculate a car payment on www.vacu.org using the vehicle loan calculator.

7. Go over the advantages and disadvantages of buying used cars compared to new cars.

Lesson 5 Home Sweet Home – Renting vs. Buying


e) describing common types of contracts and the implications of each;

f) demonstrating comparison-shopping skills;

EPF.11 The student will demonstrate knowledge of planning for living and leisure expenses by

b) comparing the advantages and disadvantages of renting vs. purchasing a home;

c) describing the process of renting housing;

http://www.vacu.org/



d) describing the process of purchasing a home;

e) calculating the cost of utilities, services, maintenance, and other housing expenses; and

f) evaluating discretionary spending decision

Terms:

Lease Lessor Lessee

Security Deposit Renter’s Insurance Mortgage

Down Payment Principal Interest

Real-estate tax PITI

Homeowners Insurance Term Fixed

ARM Equity

Lesson:

1. Write down the terms. Group definitions.

2. What do you think of when you think of home. What is important for your home?

3. Take the Are you Ready to be on Your Own.

4. Look over police officers budget. How much is available for a home? Keep that number

in mind.

5. Discuss the difference between renting and buying. Complete the worksheet.

6. View a sample lease agreement.

7. View and discuss initial renting expenses.

8. View and discuss renters insurance slide.

9. View and discuss the buying a home slide. What is a mortgage made up of?

10. View and discuss the homeowner’s insurance slide.

11. View and discuss the how much do you qualify for slide.

12. View and discuss the ongoing expenses slide.

13. View the mortgage application. Now we can go shopping for a home.

14. What are some advantages of buying a home?



Lesson 6 Inheritance and Investing


a. Examining precautions for protecting against identity theft and other personal information.

EPF.14 The student will demonstrate knowledge of the role of insurance in risk management

a. Evaluating insurance as a risk management strategy

b. Distinguishing among the types, costs, and benefits of insurance coverage, including

automobile, life, property, health, and professional liability.

c. Explaining the roles of insurance in financial planning.

EPF.18 The student will demonstrate knowledge of investment and savings planning

a. Comparing the impact of simple interest vs. compound interest on savings

b. Comparing and contrasting investment and savings options.

c. Explaining costs and income sources for investments

d. Describing how the stock market works

Terms:

Lesson:

1. Read the story of Auntie Sue.

a. Retirement income, medical insurance, long term care insurance, homeowners, car

insurance, life insurance, and a will.

2. Groups define the terms above.

3. Windfall unexpected income. What are you going to do? Pay yourself first - save.

4. View and discuss the saving and investing slide.

a. Compound interest and compound interest calculators

5. Types of savings accounts

a. Regular, money market, CD

6. Investments

a. Usually long-term thinking

b. Broker or financial advisor

c. Fees involved

d. Buying a stock

7. View and discuss the buying a stock investment slide.

a. Pros and cons



8. View and discuss bonds slide.

a. Less risky

b. Corporate vs. government

c. Treasury notes

9. View and discuss mutual funds slide.

a. Diversified

b. Stocks, bonds, cash equivalents

c. Thousands

d. View mutual fund slide and examples

10. Retirement Accounts

a. 401k

b. 403b

c. IRA vs. Roth IRA

11. Discuss supply and demand in the stock market.

12. Play the stock market game on investopedia.

13. Discuss identity theft

a. Identifying information that could be stolen

b. Methods to secure your identity

c. Who can steal your identity?

d. How to protect yourself from identity theft

e. Federal Trade Commission identity theft survey

14. Happy Ending Slide – What would you do with your inheritance?

Ass

ess

me

nt

Fir

st Qu

art er Learning

Objective Formative/ Informal Assessments To Be Used Approx.

Date(s)



Lesson 1 Money Wise

Checking Account Comparison Sheet Financial Institution Worksheet Vocabulary Assignment

Lesson 2 Savings and Financial Institutions Knowledge Life Budget M&M Game Savings Goal and Transaction Record Alternate Endings Credit Union Application Career Monthly Budget

Lesson 3 Career and Taxes Write a check for your salary Complete a W-4 form Fill in a W-2 form Occupation worksheet The parts of a check

Lesson 4 Car Buying Car Buying Role Play Loan and Credit Card Application Car Buyers Order

Lesson 5 Renting vs. Buying Home Sweet Home Off to College? First Apartment? First House? Not So Fast! Police Officer’s annual gross income Renting vs. Buying Residential Rental Agreement Wants and Needs Home Shopping Residential Loan Application

Lesson 6 Inheritance and Investing Ticker symbol pit cards What will you use the money for?

Sept 2-9



Learning Objective

Summative Assessments To Be Used Approx. Date(s)

Vocab Quizzes for Lessons 1-6 Sept 8-9

Curriculum Focus: Stock Market and Simulation

Fir

st Q

ua

rte

r

Standard of Learning w/Essential Knowledge and Skills (from 2010 SOL Documents)

Number of days

6

Resources and Materials used for instruction

Module 150 Basics of Stocks

EPF.18

The student will demonstrate knowledge of investment and savings planning by

EPF.18f:

describing how the stock market works.

There are different forms of business organizations including sole

proprietorships, partnerships, and corporations.

A corporation is owned by many people who each own one or more parts, or

shares, of the business.

Corporations issue or sell shares of ownership in the form of stock.

Shareholders or stockholders own shares of a corporation.

An initial public offering occurs when a corporation sells stock for the first time.

An investment bank helps the corporation sell stock for a fee.

Underwriting is the process of selling stock for the first time at an initial public

offering through an investment bank.

The federal government requires all IPOs to be registered with the Securities and Exchange Commission (SEC). The SEC is an independent federal agency that administers and enforces federal laws on securities (stocks and bonds). Once the SEC certifies the underwriting, the investment bank must announce the IPO in a major publication, such as The Wall Street Journal.

The investment bank sells the stock to investors and transfers funds to the

Sept 18-19 1 day

http://quizlet.com/latest http://www.virtualvirginia.org/ Teacher-made questions and terms http://www.investopedia.com/ Dow 30 Companies

S & P 500

NYSE Listings - NYSE Listings Wiki

NASDAQ - NASDAQ (Tech Stock Listing Wiki)

AMEX - All Stock Exchanges

Market Watch Symbol Lookup

Jim Cramer Stock Picks

http://quizlet.com/latest

http://www.virtualvirginia.org/


http://www.investopedia.com/

http://www.investopedia.com/

http://money.cnn.com/data/dow30/

http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--

http://www.nyse.com/about/listed/lc_all_overview.html

http://en.wikipedia.org/wiki/Companies_listed_on_the_New_York_Stock_Exchange_(A)

http://www.nasdaq.com/screening/company-list.aspx

http://en.wikipedia.org/w/index.php?title=Category:Companies_listed_on_NASDAQ&from=0

http://en.wikipedia.org/w/index.php?title=Category:Companies_listed_on_NASDAQ&from=0

http://www.advfn.com/amex/americanstockexchange.asp

http://eoddata.com/symbols.aspx

http://www.marketwatch.com/tools/quotes/lookup.asp

http://www.thestreet.com/find/results/index.html?q=Jim+Cramer+Stock+Picks



corporation through the primary market. The corporation no longer receives money from the sale in the secondary

market where the stock changes hands between only the buyer and the seller.

A stock market or stock exchange is a marketplace where buyers and sellers of

stock exchange money and stocks.

The New York Stock Exchange is the biggest and oldest stock exchange in the United States where the stocks of more than 8,000 corporations are traded.

The NASDAQ is the world’s first electronic stock exchange, the NASDAQ, is the second largest in the United States; it also operates eight stock exchanges in Europe.

The AMEX is another important stock exchange that was originally called the American Stock Exchange.

A ticker symbol is a unique series of letters identifies each stock. A stock ticker is an electronic display of stock purchases and sales.

Suppose you buy stock at one price and then later sell it at a higher price. The profit you made on the sale is income—money you made. However, unlike wages or a salary, it is not considered earned income. The money you made by selling your stocks for a profit is called capital gains.

Module 151 E-trading

EPF.18


EPF.18f:


A limit order specifies an upper price or a lower price when the broker should buy or sell and usually specifies an expiration date—in case the share price never meets either limit price.

In an auction market floor traders, brokers, or other specialists execute most of the trades

A hybrid market allows a transaction to be executed manually on the trading floor (as above) or by electronic trading via computer.

Sept 22-23 1 day

http://www.virtualvirginia.org/ Teacher-made questions and terms





Module 152 Types of Low-Risk Investments

EPF.18


EPF.18b:

comparing and contrasting investment and savings options; and

EPF.18c:

explaining costs and income sources for investments.

These savings certificates of deposits CD entitle the owner to receive interest.

They are safe investments because they deliver just what they promise. You put

your money into a CD and expect to get your principal back plus interest at a

specified time. For that security, you agree to leave the money in for a certain

term (length of time).

These money market mutual funds are invested in short-term, fixed-income

securities. They are for people who want a low-risk investment that offers

stability and liquidity. They are based on securities, so they are not part of the

stock market like regular mutual funds. When you invest in a money market

mutual fund, an investment company puts money together from investors to buy

short-term investments, such as Treasury bills, CDs, and short-term bonds offered

by large corporations.

Laddering is one strategy for CD investing because you can find the best interest rates spread over months or years and still have some liquidity. The interest rate could be higher or lower, but it should balance out over the long run.

Bonds are loans you make to corporations, the government, or federal agencies and are often called debt securities. They pay a specified amount of interest on a regular basis. In addition, you get your original investment back when the bond matures.

Annuities are long-term investments and can offer tax-deferred growth. You fund the annuity either through a lump sum of money or periodic payments, and receive payments from the policy provider over a specified period of time. They can be fixed or variable. Fixed annuities credit your account at a fixed rate. Variable annuities invest money in financial markets similar to

Sept 24-25 1 day


Treasury Bonds -

https://www.treasurydirect.gov/







mutual funds. Annuities are a popular way to save for retirement, but they might not provide as good a return as some other investments.

Corporate bonds are issued by corporations with the funds used for many purposes including purchasing equipment and expanding the business. Interest payments are taxable. High-rated bonds have a low-risk of default, but are not totally safe.

Municipal bonds are issued by states, cities, and counties to build schools, highways, and other projects. Some municipal bonds offer tax-exempt income, but others may be taxable. Interest rates are lower than corporate bonds, but there is less risk.

Savings Bonds are debt securities issued by the U.S. Department of the Treasury to help pay for the government’s borrowing needs—are the safest bonds because they are backed by the government. Series I Bonds are sold at face value and offer a fixed interest rate and an inflation rate. If inflation goes up, so does the interest rate. If it goes down, the interest rate goes down too. Savings bonds are tax-exempt from state and local taxes, and federal taxes can be deferred until you cash in the bond or it matures.

Series EE Paper Bonds are bought at a discount of half their face value, so if you

buy a bond worth $100, you only pay $50 for it. When the bond matures in 30

years, you will receive the money you paid and interest. Electronic EE Bonds are

purchased at face value, so you pay $100 for $100 bond.

Series I Bonds are sold at face value and offer a fixed interest rate and an inflation rate. If inflation goes up, so does the interest rate. If it goes down, the interest rate goes down too. Savings bonds are tax-exempt from state and local taxes, and federal taxes can be deferred until you cash in the bond or it matures.

Fixed annuities give a guaranteed payout. The main advantage of annuities is that they allow you to save for retirement and defer paying taxes on your earnings. Disadvantages are fees associated with annuities that cut into profits, early withdrawal charges and tax penalties, and the money you put in is not tax-deductible.

Variable annuities change based on how successfully the money is invested. The main advantage of annuities is that they allow you to save for retirement



and defer paying taxes on your earnings. Disadvantages are fees associated with annuities that cut into profits, early withdrawal charges and tax penalties, and the money you put in is not tax-deductible.

Module 153 Investment Goals Change over Time, so Portfolios Should Change

EPF.18


EPF.18b:

comparing and contrasting investment and savings options; and

EPF.18f:


Step 1 for Creating an Investment Portfolio - Goals

1. Determine why you are investing. What are your goals?

2. Consider how much money you need?

3. How long do you have to accumulate it?

4. Think about inflation since it will affect how much money you will need in

10, 20, or 30 years.

5. Find a balance between high risk and lower risk investments.

Step 2 for Creating an Investment Portfolio – Allocation and Risk Assessment

1. Decide how much money you want to put into stocks, bonds, and cash

investments called asset allocation.

2. Consider your comfort level.

Step 3 for Creating an Investment Portfolio – Diversify within each asset allocation.

1. Select stocks from different companies of different sizes and different

industries.

2. Select bonds with a mix of short-term and long-term bonds as well as

government and corporate.

Sept 26-29 1 day

http://www.virtualvirginia.org/ Teacher-made questions and terms Investment Brokers - https://www.fidelity.com/ https://www.schwab.com/ https://us.etrade.com/home?coid=search_tiger&SC=S118401&ch_id=P&s_id=GOOG&c_id=BR&o_id=60DAY600&kw=etrade&gclid=CNLRg7TWl78CFW4Q7AodQxgAtg&mt=e&mkwd=qDzMaUCm



https://www.fidelity.com/

https://www.schwab.com/

https://us.etrade.com/home?coid=search_tiger&SC=S118401&ch_id=P&s_id=GOOG&c_id=BR&o_id=60DAY600&kw=etrade&gclid=CNLRg7TWl78CFW4Q7AodQxgAtg&mt=e&mkwd=qDzMaUCm









Why do people restructure portfolios?

Changing goals

Shifting assets

Changing markets

Underachieving financial strategies

Spread your money across many securities to reduce risk.

As investors reach middle age, they might become more moderate in their strategies by looking for stocks with predictable growth.

As investors head toward retirement, most become more conservative in their investment strategies. Rather than focusing on growth, they tend to look for stability.

National Association of Securities Dealers Automated Quotation System

(NASDAQ):

AMEX – trades mainly smaller companies

NYSE – largest organized stock exchange in the United States.

People lesson the risk of investing by buying several different kinds of stocks

referred to as a stock portfolio.

It is a good idea to diversify your stock portfolio or to choose many different

stocks of many different kinds. Even if one stock preforms poorly, others are

likely to do well. Over time, a diversified stock portfolio is likely to make

money.

Some people focus on how a stock did today or this week. You should think of

stocks as long-term investments. If you hold on to stocks for many years, they are

likely to be worth a lot more than what you paid for them. In fact, stocks

generally offer higher returns than low-risk investments.

Stock prices are not fixed, and only a certain number of stocks for any company

are in circulation. This means that price increases and decreases are based on

supply and demand. If many people want shares in a particular company, the

price increases. When they want to sell their shares, the price decreases.

Your investment portfolio is the collection of all the different types of

investments that belong to you. As with a stock portfolio, it is a good idea to

diversify your investment types.



Monitoring could involve portfolio restructuring by selling unwanted assets and

purchasing different ones when your investment goals or the market conditions

change.

Module 154 Types of High-Risk Investments

EPF.18


EPF.18b:

comparing and contrasting investment and savings options;

EPF.18c:

explaining costs and income sources for investments; and

EPF.18f:


Which category are you in?

High-Risk Tolerance: You are an aggressive investor, willing to use high-risk

investments for higher profits. You could gain high profits or suffer high losses.

Medium-Risk Tolerance: You are a moderate investor, wanting to balance your

portfolio by using asset allocation. You could have a diverse portfolio with both

low- and high-risk investments. You would avoid ―get-rich-quick schemes.‖

Low-Risk Tolerance: You are a conservative investor, willing to accept lower

returns if your capital is safe. You likely would have your money in bonds,

money markets, and annuities, with no prospects for high returns over time.

When will you need the return from your investments?

Consider the amount of time you have before you will need the money. If you are

35 and do not plan to sell your investments until you are 67, you still have 32

years.

The longer the amount of time, the greater your risk tolerance likely will be —

and the shorter the time, the lower the risk tolerance.

Do you depend on the income from your investments?

Investors who depend on investment income should have a low-risk tolerance

because they will need that income.

Sept 30 – Oct 1 1 day






Investors with a secure job are not dependent on investment income and can

withstand the ups and downs of the markets. Therefore, they tend to have a higher

risk tolerance.

How do you feel about taking risks and losing money?

If you worry and stay away from risks in your life, it might be best to avoid high-

risk investments.

If you are not plagued by worry and enjoy taking chances, you will most likely be

okay with high-risk investments.

With great risk comes great reward. In some cases, you could lose your entire investment. Then again, there is the possibility of a great payoff. Should you risk it?

investing in real estate is still a viable option because you purchase actual property. The value may change, but the land is not going to disappear. You will still have something tangible.

Sometimes people develop a property by building on it (shopping centers and apartment complexes, for example) and then make money by charging rent.

Sometimes investors purchase a property to improve it and then sell it for a higher value. This is called "flipping" a property.

A hedge fund is similar to a mutual fund because it involves a group of investors whose money is being managed by knowledgeable brokers. Unlike mutual funds, hedge funds, in most cases, are not registered with the Securities and Exchange Commission, so they are often unregulated. However, they must always follow the same regulations against fraud as other funds traded on the stock market. Hedge fund managers use investment strategies including leverage, short-selling (selling shares without owning them in hopes of buying them back at a later date at a lower price), and investing in deeply discounted securities. Not all hedge funds are volatile. Some strategies are able to generate high returns in both increasing and decreasing equity and bond markets. Given that hedge funds are high-risk investments, they require a substantial initial investment. Because the SEC does not want middle-class investors to



lose their savings in such a risky venture, the average hedge fund investor usually has a net worth of more than $1 million

The opportunity cost is the cost of the next best alternative that you give up to gain something else.

Module 155 Watch for Red Flags

EPF.18


EPF.18b:

comparing and contrasting investment and savings options;

EPF.18c:

explaining costs and income sources for investments; and

EPF.18f:


1. Promise high return with minimal risk

2. Phone

3. email

4. Quick decision

5. overseas

6. polished website

7. Double check with bbb and state attorney general.

the group of people most susceptible to high-risk investment scams is the elderly—people such as your grandparents.

In a Ponzi Scheme, scammers promise high returns or dividends, but they keep the money. They use funds from other investors to pay the first group of investors, which is the only group to get money back on the initial investment.

The Financial Industry Regulatory Authority,Inc. (FINRA) regulates securities firms to protect investors in U.S. markets. Notify FINRA of suspicions of fraud

Oct 2-3 1 day






Ass

ess

me

nt

Fir

st Q

ua

rte

r

Learning Objective

Formative/ Informal Assessments To Be Used Approx. Date(s)

EP 18 Investopedia Stock Market Portfolio Fill in the blank terms or crosswords. Module Homework Assignments Module Comprehension Checks

Sept 10-25

Learning Objective


Vocab Tests Module Quizzes WISE Practice Test – Investing

Need to know: Risk vs. Return, Liquidity, Diversification, , Mutual Fund, , Treasury Bond, Treasury Bill, , Taxes, , Municipal Bonds, Investment Portfolio, Diversification, Pensions, 401K, 403B, Social Security, Traditional IRA, Roth IRA,

Sept 24 & 25

Curriculum Focus: The Fed

Fir

st Q

ua

rte

r


Number of days

3


Module 65 The Federal Reserve’s Structure and Function

PF.7

The student will demonstrate knowledge of how monetary and fiscal policy

influence employment, output, and prices by

EPF.7a:

describing the purpose, structure, and function of the Federal Reserve System.

There are 12 regional Federal Reserve systems in the United States.

The nearest Federal Reserve System is in Richmond, VA.

The Fed was created in 1913 due to a financial crisis.

Oct 6-7 1 day

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms http://quizstar.4teachers.org/ http://www.moneypower.org/wise/testing/choosetest.jsp

https://d2l.virtualvirginia.org/d2l/home


http://quizstar.4teachers.org/

http://www.moneypower.org/wise/testing/choosetest.jsp




A bank run reflects a lack of trust.

The five responsibilities of The Fed include:

a. Supervise and regulate banks within the country to promote reliability

and confidence in the banking system.

b. Maintain stability in the financial markets by controlling the money

supply (amount of money in the economy).

c. Ensure that all banks comply with the laws and regulations that apply to

them.

d. Supply paper currency and coins to banks.

e. Process checks and electronic payments.

The Fed is supervised by congress but is not a government agency.

The three parts of The Fed include:

a. Board of Governors has seven members located in Washington DC appointed by the President with a term of 14 years

b. the regional reserve banks, and c. the Federal Open Market Committee

Decreasing the money supply is associated with low spending levels throughout

the economy.

Increasing the money supply is associated with increased spending levels

throughout the economy.

Lowering the reserve requirement or discount rate will increase the money

supply.or vs. versa by increasing the reserve requirement or discount rate will

decrease the money supply.

If the FOMC wants to decrease the money supply, and therefore decrease spending in the economy, it will sell bonds. The sale of these bonds is paid for with money held in banks. When the money is taken out, it decreases the reserves held by the banks and therefore the amount of money available for consumers and investors to borrow and spend

The FOMC wants to increase the money supply, and therefore increase spending in the economy, so it will buy bonds. By paying for the bonds, the Fed makes more money available for borrowing. When consumers and



businesses borrow money, both consumption and investment increase, which helps the economy grow.

The Federal Reserve System also known as the "Fed," is the central bank of the United States. It was created on December 23, 1913, during a time when the United States experienced several financial crises

Fiat money - is money which derives its value from government regulation or law. It differs from commodity money, which is based on a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange. The term derives from the Latin fiat ("let it be done", "it shall be"). Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for "it shall be".

A bank run occurs when a large number of people race to withdraw their

deposits from a bank because they believe the bank will not be able to pay back

the money to depositors

The Federal Open Market Committee which controls the country's monetary

policy. In addition, the Board oversees the activities of all twelve regional banks

and approves the appointment of their presidents.

The monetary policy refers to the control of the country's money supply by the

central bank for the purpose of promoting economic growth.

The money supply refers to the specific amount of money circulating in a

country's economy at a particular period of time.

The percent of the bank's funds that are held in its vaults, or on deposit at a

Federal Reserve System, is called the reserve requirement ratio (RRR).

The discount rate is the interest rate charged by a Federal Reserve System to

depository institutions, such as your local bank, to borrow short-term funds. The

Board of Governors determines the discount rate.

The interest rate that the Federal Reserve charges to commercial banks on

http://en.wikipedia.org/wiki/Money

http://en.wikipedia.org/wiki/Commodity_money

http://en.wikipedia.org/wiki/Precious_metal

http://en.wikipedia.org/wiki/Gold_standard

http://en.wikipedia.org/wiki/Silver_standard

http://en.wikipedia.org/wiki/Medium_of_exchange

http://en.wikipedia.org/wiki/Latin_language

http://en.wiktionary.org/wiki/fiat#Latin



overnight loans is called the federal funds rate. The target for the federal funds

rate is determined during FOMC meetings, and announced to the public after

every meeting (eight times a year).

Open Market Operation is the principal monetary tool used by the Federal

Reserve System. It is directed by the FOMC and executed by the Federal

Reserve System of New York. It consists of the purchase and sale of government

bonds, which are an example of government debt issued by the U.S. Treasury

Department.

Module 66 FDIC and Stability Measures

EPF.5

The student will demonstrate knowledge of a nation's economic goals, including

full employment, stable prices, and economic growth by

EPF.5d:

describing strategies for achieving national economic goals.

EPF.7



EPF.7b:

describing the government's role in stabilizing the economy.

EPF.12

The student will demonstrate knowledge of banking transactions by

EPF.12a:

comparing the types of financial institutions.

A bailout is a loan or financial gift given to a financial institution or company on the verge of closing

When many people rush to withdraw their bank deposits at the same time, this is known as bank run.

The Glass Steagall Act of 1933 established the FDIC. Federal Deposit Insurance Corporation (FDIC) is an independent agency of

the federal government. Its headquarters are located in Washington, D.C., but it conducts extensive business at six regional offices and two area offices. The six regional offices are located in Atlanta, Chicago, Dallas,

Oct 8-9 1 day





Kansas City, New York, and San Francisco. The two area offices are in Boston and Memphis.1 The map shows the specific areas that each FDIC regional and area office serves. It is managed by a five-member board of directors appointed by the president of the United States and confirmed by the U.S. Senate. To avoid political bias, no more than three members on the Board of Directors can be from the same political party.

The FDIC insures only bank deposits, which include savings and checking

accounts and certificates of deposits (savings certificates with fixed interest rates). It does not insure other types of financial investments that banks offer, such as mutual funds (pools of investment tools, like stocks and bonds) and U.S. Treasury bonds (government-issued debt obligations with fixed interest rates). Currently, the FDIC insures more than $7 trillion in deposits in U.S. banks.2 Each of these insured banks pays a premium to the FDIC. These premium payments and investments in U.S. Treasury bonds are the FDIC’s main sources of income.

The FDIC’s main mission is to protect Americans’ bank deposits. It does not plan or execute the country’s monetary policy, which is the Federal Reserve’s job. In 2010, the Wall Street Reform and Consumer Protection Act permanently expanded the maximum insurance limit to $250,000 per depositor. This change came following a temporary increase to $250,000 as the maxiumum insurance limit when Congress passed the Emergency Economic Stabilization Act in 2008. Since so many banks failed during the recession, the FDIC also implemented the Temporary Liquidity Guarantee Program2 and the Legacy Loans Program to protect depositors and to restore confidence in the banking system.3

Since the FDIC’s creation in 1933, depositors have not lost any money that was covered by federal deposit insurance. By responding to more than 3,000 bank failures, the FDIC has helped stabilize the U.S. banking system.2

The FDIC makes sure that if a bank closes or goes bankrupt, all of the bank’s customers will receive their deposits and interest earnings—up to a maximum limit of $250,000 for each person. he insurance limit of 2008 was passed as a temporary increase but was made permanent by the Dodd-



Frank Wall Street Reform and Consumer Protection Act in July 2010.1

Module 67 Fiscal vs. Monetary Policy EPF.5

The student will demonstrate knowledge of a nation's economic goals, including

full employment, stable prices, and economic growth by

EPF.5d:

describing strategies for achieving national economic goals.

EPF.7



EPF.7a:

describing the purpose, structure, and function of the Federal Reserve System;

and

EPF.7b:

describing government's role in stabilizing the economy.

A government’s policies that affect aggregate spending are known as fiscal

policy. refers to the use of a national government’s budget to affect that

country’s total level of spending

Monetary policy includes actions by the central bank that affect the country’s

money supply and the availability of credit. includes the set of regulations and

tools used by a country’s central bank primarily to affect the nation’s money

supply and the availability of credit. In doing so, this affects the country's overall

levels of spending and employment and the prices of goods and services.

If you recall from Module 51, GDP includes four components: (1) consumption,

(2) investments, (3) government spending, and (4) net exports (exports minus

imports). A government has direct control over the quantity of goods and

services it purchases in any particular year.

Disposable income = [income from profits, employment,

interest - taxes] + transfers

includes payments received from employment, interest, profits, and transfers.

This is the amount of money that households can spend after subtracting taxes.

More disposable income means more household spending and less disposable

Oct 10-13 1 day





income means less household spending

The fiscal policy that increases aggregate spending is called expansionary

increases the money supply to encourage economic growth

A policy that reduces aggregate spending is called contractionary

Transfer payments unlike taxes, are given by the government to select

households. In the United States, transfer payments include Social Security,

Medicare, Medicaid, food stamps, and unemployment benefits

Reserve requirement ratio refers to the percentage of deposits a bank must keep

in its vaults or at the Federal Reserve at all times

Federal funds rate is the interest rate that the Federal Reserve banks charge to

other banks for lending their money overnight

Discount rate The federal funds rate is affected by the discount rate, which is

established by the Federal Reserve Board of Governors.

Open Market Operation involves the purchase and sale of government bonds.

Subprime loans are given to people who do not meet the typical requirements

needed for most home loans.

Ass

ess

me

nt

Fir

st Q

ua

rte

r

Learning Objective


EPF 5, 7, 12 Virtual Virginia Homework Assignments Virtual Virginia Comprehension Checks Fill in the blank terms or crossword puzzle.

Sept 26- Oct 3

Learning Objective


EPF 5, 7, 12 Virtual Virginia Quizzes Vocabulary Tests WISE Money Intro to Finance

Terms to know: The Federal Reserve, Monetary Policy, US Treasury, Traveler’s Checks, Debit Card, Cash Card, Money Color, Denominations, Education and Earning Potential

Oct 2 & 3



Curriculum Focus: Money Management

Fir

st Q

ua

rte

r


Number of days

7


Module 98 Saving to buy a car

EPF.11

The student will demonstrate knowledge of planning for living and leisure expenses

by

EPF.11a:

comparing the costs and benefits of purchasing vs. leasing a vehicle.

EPF.17

The student will demonstrate knowledge of personal financial planning by

EPF.17a:

identifying short-term and long-term personal financial goals.

In a lease you make monthly payments for a specific time—often one, two, or three

years—and then you return the car to the leasing company. Leasing makes sense for

people who drive company cars or for business executives who move often. With

leasing, the monthly payments are high, and, in the end, you give the car back. For

most people, this is not a wise use of money.

In finance, a loan is a debt provided by one entity (organization or individual) to another entity at an interest rate, and evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.

Property damage liability which is required by nearly every state, is one of the most

important kinds of car insurance. It covers damages caused to another vehicle if you

are responsible for an accident—if you have adequate property damage liability

coverage, you will not have to pay for the other vehicle’s damages from your own

pocket. What do you think would happen if you hit an expensive luxury automobile

and did not have property damage liability coverage? It could easily bankrupt you.

Oct 14-15 1 day

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms http://quizstar.4teachers.org/ http://www.moneypower.org/wise/testing/choosetest.jsp

http://en.wikipedia.org/wiki/Debt

http://en.wikipedia.org/wiki/Interest_rate

http://en.wikipedia.org/wiki/Promissory_note

http://en.wikipedia.org/wiki/Asset

http://en.wiktionary.org/wiki/lender

http://en.wiktionary.org/wiki/borrower



http://quizstar.4teachers.org/





Bodily injury liability insurance covers an injury to or the death of another person that

results from an accident you caused. It covers the victim’s medical expenses and can

also pay for your legal defense costs, if needed.

Medical payment insurance is optional in most states. It covers your medical

expenses—and those of any passengers in your vehicle—whether or not an accident

was your fault.

Uninsured motorist coverage pays for damages if you are the victim of an accident

caused by an uninsured driver. In a ―hit and run‖ situation, you would need this

coverage to pay for your medical expenses. Even though most states require proof of

automobile insurance to register a vehicle, many drivers still do not carry it. In

Virginia, registering a vehicle without insurance costs $500 a year. The purpose of

this fee is to encourage motorists to insure their vehicles.

Collision pays for damages to your car in case you are in an accident. When pricing

collision insurance, consider the cost of your vehicle. There is no point in getting

collision insurance that costs more than your car is worth

Comprehensive pays for damages from theft, vandalism, acts of nature, fire, and

collisions with animals. Many lenders require comprehensive coverage as part of a car

loan. It also covers the cost of these damages to victims in case you cause an accident.

Interest – is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds.

Down payment - is a payment used in the context of the purchase of expensive items

such as a car and a house, whereby the payment is the initial upfront portion of the

total amount due and it is usually given in cash at the time of finalizing the

transaction.[1] A loan or the amount in cash is then required to make the full payment.

Credit rating - is an evaluation of the credit worthiness of a debtor, especially a business (company) or a government, but not individual consumers. The evaluation is made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default. Evaluations of individuals' credit worthiness are known as credit reporting and done by credit bureaus, or consumer credit reporting agencies, which issue credit scores.

Module 99 Paying for Post-High School Education

http://en.wikipedia.org/wiki/Fee

http://en.wikipedia.org/wiki/Credit_worthiness

http://en.wikipedia.org/wiki/Debtor

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Company

http://en.wikipedia.org/wiki/Credit_rating_agency

http://en.wikipedia.org/wiki/Default_%28finance%29

http://en.wikipedia.org/wiki/Credit_bureau

http://en.wikipedia.org/wiki/Consumer_credit_reporting_agency

http://en.wikipedia.org/wiki/Consumer_credit_reporting_agency

http://en.wikipedia.org/wiki/Credit_score



EPF.15

The student will demonstrate knowledge of income earning and reporting by

EPF.15a:

examining how personal choices about education, training, skill development, and

careers impact earnings.

EPF.17


EPF.17a:

identifying short-term and long-term personal financial goals; and

EPF.17d:

developing a personal budget.

Human capital is the stock of competencies, knowledge, habits, social and personality attributes, including creativity, cognitive abilities, embodied in the ability to perform labor so as to produce economic value.

Grants and scholarships are awards of money students may receive to pursue higher

education. Grants typically come directly from the institution and scholarships may

come from many different sources. Grants and scholarships can both be awarded to a

student based on academic merit, financial need or accomplishments (like athletic or

music scholarships), or just meeting certain criteria (like being from a certain city or

pursuing a type of study).

Work study programs allow students to work on campus in order to offset tuition costs. If you are offered one of these, you do not have to pay back anything

Student loans are money borrowed from an institution, usually the federal government

or a bank. The institution provides a set amount of money at a price with an agreed-

upon interest rate. Student loans are legal obligations that you must repay regardless

of bankruptcy.

529 College Plans are provided by most states offer tax-advantaged college savings plan. The four 529 plans offered by the Commonwealth of Virginia? VPEP Virginia Prepaid Education Program, Virginia Education Savings Trust VEST, College Wealth, College America. they grow tax-free—and some offer additional state tax advantages. The earlier you start saving, the better. You have to pay income tax on interest earned from a regular savings account but not a 529 as

Oct 16-17 1 day

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms VA 529 Plans - http://www.virginia529.com/ College Costs - https://trends.collegeboard.org/college-pricing/figures-tables/average-published-undergraduate-charges-sector-2013-14 College Costs and Requirements - https://www.vawizard.org/vccs/Main.action Saving for College - http://www.savingforcollege.com/college-savings-calculator/#. http://apps.finra.org/Calcs/1/CollegeSavings

http://en.wikipedia.org/wiki/Knowledge

http://en.wikipedia.org/wiki/Creativity

http://en.wikipedia.org/wiki/Labour_%28economics%29

http://en.wikipedia.org/wiki/Economic_value



http://www.virginia529.com/

https://trends.collegeboard.org/college-pricing/figures-tables/average-published-undergraduate-charges-sector-2013-14





https://www.vawizard.org/vccs/Main.action

https://www.vawizard.org/vccs/Main.action

http://www.savingforcollege.com/college-savings-calculator/

http://www.savingforcollege.com/college-savings-calculator/

http://apps.finra.org/Calcs/1/CollegeSavings

http://apps.finra.org/Calcs/1/CollegeSavings



long as money saved is used on qualified education expenses.

1. Virginia Education Savings Trust (VEST)—multiple investment portfolio options

subject to investment risk

2. CollegeAmerica—multiple American Funds mutual fund investment options

subject to investment risk

3. CollegeWealth—FDIC insured bank savings accounts

guaranteed by the FDIC

All Three Savings Programs Offer:

Open year-round

No beneficiary age restrictions

No residency restrictions

May rollover into another 529 college savings program

May use for ANY qualified higher education expenses

Tax advantages: earnings grow tax free; no tax on qualified distributions; VA

taxpayers—state income tax deduction

Financial aid generally is a package of grants, work-study options, and loans.

Education Cost

Technical school can be expensive, especially if they are profit bearing. They can

cost upwards of $11,000 a year (although they may be shorter programs than

traditional colleges).

Public college (in-state) In-state colleges have an average cost of $7,600 a year.



Public college (out-of-state) Out-of-state colleges have an average cost of $11,900

per year.

Private four-year college Private schools do not usually have separate charges for

in-state or out-of-state residency. Their average cost is $27,700 per year.

Two-year community college Community colleges charge an average of $2,700 a

year.

Module 100 Buying a Home

EPF.11


by

EPF.11d:

describing the process of purchasing a home.

A down payment normally pays part of the cost and takes out a loan for the rest. Typically 20% of negotiated price. How much does a down payment on a home

typically cost if you have good credit? 10 % of negotiated price

A debt ratio in the consumer lending and mortgages business, two common debt ratios used to assess a borrower’s ability to repay a loan or mortgage are the gross debt service ratio and the total debt service ratio. The gross debt ratio is defined as the ratio of monthly housing costs (including mortgage payments, home insurance and property costs) to monthly income, while the total debt service ratio is the ratio of monthly housing costs plus other debt such as car payments and credit card borrowings to monthly income. Acceptable levels of the total debt service ratio, in percentage terms, range from the mid-30s to the low-40s.

For the remainder of the price, you will need to take out a type of loan called a

mortgage, where the lender uses the property—in this case, the house—as collateral.

A mortgage is a type of loan where the lender retains a lien on a property until the

debt is paid off typically in 15 or 30 years.

Collateral is the use of property to guarantee a loan.

The right of a lender to reclaim property. This means the lender has a lien on the

property, which gives the lender the right to evict you from the property if you fail to

make your mortgage payments or live up to other terms of the loan

Oct 20-21 1 day

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms Mortgage Calculator http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx



http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx





If you fail to make your payments, the lender can take over the property in a process

known as foreclosure. Default is when a borrower fails to repay a loan or stop making your mortgage

payments, the lender likely will foreclose on and repossess the house, which means

the lender will evict you and most or all of the money you have invested will be lost.

A foreclosure will negatively affect your credit rating, possibly for the rest of your life

Bankruptcy is a legal procedure in which individuals or companies cannot repay their

debts

Appreciate (gain value),

Depreciate (lose value)

Equity in the context of real estate, is the difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount that the owner would receive after selling a property and paying off the mortgage.

Fixed rate mortgage are based on interest rates that do not change as you repay the

loan. If interest rates are low, it is to your advantage to choose a fixed-rate mortgage.

Adjustable rate mortgage ARM varies, depending on the current interest rate—also

known as the prime rate. This means the rate will increase or decrease based on the

current prime rate, which, in turn, means you could end up paying more or less

interest over the course of the loan.

There is another expense related to purchasing a house: points. A point is a fee levied

by the lender when you have a closing (when you sign the documents related to

buying the house). The lender charges you these points for lending you its money. A

point is 1% of the amount you borrow. Many lenders charge 1.5 points for a home

mortgage—this means, if you borrow $100,000, you will pay an additional $1,500 in

points.

anticipated expenses must be paid every week, month, or year—such as credit

card bills, phone and utility bills, rent, insurance, grocery bills, income taxes, and

transportation costs.

unanticipated expenses are bills to help a sick pet, fix a broken tooth, repair a flat

tire, replace a ruined pair of shoes, or pay off an unexpectedly high electricity bill.

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and





HUD ONE is a summary of all costs associated with buying a house.

Module 101 An Annual Budget

EPF.11


by

EPF.11f:

evaluating discretionary spending decisions.

EPF.17


EPF.17a:

identifying short-term and long-term personal financial goals;

EPF.17b:

identifying anticipated and unanticipated income and expenses; and

EPF.17d:


A budget is a plan for spending money.

Income is the money you earn.

Inheritance and interest from investments are examples of unearned income

Earned income is income from working at a job;

Expenses are the things on which you spend money, such as food, clothing, rent, and

transportation.

Discretionary income is the money you have left over after paying for the essentials,

such as food, clothing, utilities, insurance, and shelter. Discretionary income is used to

pay for nonessentials—dinners at restaurants, movie tickets, music downloads, gifts,

computer gadgets, video games, and so on. Discretionary income is usually spent on

―fun stuff‖; however, it can also cover emergencies or unexpected expenses or be

saved.

A budget variance is the difference between the budgeted or baseline amount of expense or revenue, and the actual amount. The budget variance is favorable when the actual revenue is higher than the budget or when the actual expense is less than the budget.

Oct 22-23 1 day

terms Ideal Budget - http://cgi.money.cnn.com/tools/budget101/budget_101.jsp https://d2l.virtualvirginia.org/d2l/home

http://cgi.money.cnn.com/tools/budget101/budget_101.jsp

http://cgi.money.cnn.com/tools/budget101/budget_101.jsp





A budget surplus is a situation in which income exceeds expenditures. A budget shortage is a situation in which expenditures exceeds income.

Module 102 Monthly Budget

EPF.17


EPF.17d:


Discretionary income is the money you have left over after you pay for essentials, that

is, the things you need. Discretionary income is for paying for nonessentials and

unanticipated expenses. Discretionary income is the same as disposable income.

Credit cards simply defer payments you make until the end of the month. At the end

of the billing period, all that money is due (plus interest and fees if you are late with

your payment). If you fail to pay off the entire balance, you will be charged with

additional fees. That is why you should budget for credit card bills and treat them as

essential expenses.

Debit cards are like using a check or cash. The money you spend comes out of your

bank account immediately. Treat your debit card with the same caution as you treat

the cash in your pocket. If money in your bank account is already budgeted toward a

specific expense, do not spend it on an unbudgeted item, such as movie tickets or

music.

Module 103 Net Worth, Simple and Compound Interest, Rule of 72, and Time Value of

Money

EPF.17 The student will demonstrate knowledge of personal financial planning by EPF.17c: examining the components and purposes of a personal net worth statement.

EPF.18 The student will demonstrate knowledge of investment and savings planning by EPF.18a: comparing the impact of simple interest vs. compound interest on savings.

Oct 27-28 1 day Oct 29-30 1 day

Teacher-made questions and terms https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms





You need to know your net worth so you can clearly understand your financial position. If you know what you are worth financially right now, then you can make better informed choices about how to invest your money for maximum gain in the future. Assets – Liabilities = Net Worth

Total Assets = ____________ - Total Liabilities ____________= Net Worth_________________

Simple Interest Formula

FV = Principal * Rate * Time

Compound Interest Formula

P = principal amount (the initial amount you borrow or deposit)

r = annual rate of interest (as a decimal)

t = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after n years, including

interest.

n = number of times the interest is compounded per year

Net worth is a snapshot of a person's financial condition at a given moment. It is the

total value of the person's assets, or possessions, minus the value of his or her

liabilities, or debts. In other words, net worth is the value of what you own minus the

value of what you owe. Simply put, a net worth statement tells the value of what a

person owns (assets) minus the value of what that person owes (liabilities). Your net



worth can be calculated by subtracting what you owe from the value of what you own.

Everyone wants a positive net worth, but, for some, that number may be negative.

Assets or possessions or economic resource. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent value of ownership that can be converted into cash although cash itself is also considered an asset. Assets include cash and investments—such as checking and savings accounts—personal property (jewelry, a car, or a computer), stocks (shares in a corporation), real estate, and business equipment. Assets have economic value that can change over time

Liabilities are financial obligations, or amounts of money you owe. Liabilities include

outstanding bills and debts of any kind, such as student loans, car loans, money

borrowed from friends or family, mortgages (and rent, if you have a lease), and taxes.

Investments are similar to savings; you put a little money into them now with the hope

that your money will grow in value.

Stocks are shares in a corporation or company. When a person buys a share, he or she

becomes a stockholder. As a stockholder, that person owns one small piece of the

corporation and is entitled to a fraction of its profits. People invest in, or buy, stocks in

corporations and companies with the hope that the value of the business and the value

of its stock will increase over time. Stocks are not a fail-safe investment. Stock values

fluctuate, and investors can lose money.

Property or physical objects—is also a form of investment. Fine art, old jewelry,

precious metals, and real estate (houses, buildings, land) are typical forms of

investments. Physical objects often make good investments because they generally

keep or increase their value over time. For example, a painting may increase in value

if the artist's works become popular and people wish to collect them. Until recently,

houses and land were a form of investment that historically increased in value over

time. Technology is another physical object investment, but it loses value over time.

As you will learn in the next module, some physical objects—such as cars, cell

phones, and computer equipment—actually lose value over time because they wear

out, become too slow, or become obsolete. You should not invest in these kinds of

objects and expect them to gain value. In addition, many ―collectable‖ items are not

sound investments. Antiques and art may be worth buying if they are important to

http://en.wikipedia.org/wiki/Economic_value

http://en.wikipedia.org/wiki/Ownership

http://en.wikipedia.org/wiki/Cash



you, but do not depend on them to gain in value; often, such "collectables" tend to lose

value rather than gain value over time. Also, they can be difficult to resell for a profit.

Inflation is defined as a sustained increase in the general level of prices for goods and

services. It is measured as an annual percentage increase. As inflation rises, every

dollar you own buys a smaller percentage of a good or service.

Liquid assets Can be sold quickly for cash – checking savings, jewelry, automobiles,

computers

Restricted assets Cannot be turned into cash without paying a penalty – CD, IRA,

Keogh, stock options,

Fixed assets Slow to convert to cash – property, houses, real-estate, large machinery,

business equipment

The principal is the money you deposit in the bank. Remember, the point of an

investment is to make a profit or to increase the value of the money you invested (the

principal)

Simple interest is interest paid on only the principal. It is a fixed amount paid at

regular intervals (usually monthly or annually). It is based solely on the principal in

the account and not on any interest that has accumulated

Compound interest is also paid periodically; however, it is paid on the principal plus

any previously earned interest. In other words, your principal earns interest, and then,

that combination of principal and interest also earns interest. Depending on the rate

and the amount of principal, savings accounts with compound interest generally grow

much faster than those that pay simple interest.

The rule of 72 reveals how long it will take for an investment to double in value: 72 ÷

interest rate = the number of years it will take for the money to double.

The time value of money is a way of thinking about how money changes in value over

time. Think of it this way: the value of a dollar is greater today than the value of any

dollar you make in the future. This is true, in part, because of inflation. In addition, the

dollar you have right now can be earning interest while you are acquiring that other

dollar.

Module 104 Why You Should Evaluate the Value of Your Assets Over Time

EPF.17


Oct 30-31 1 day

https://d2l.virtualvirginia.org/d2l/home Teacher-made questions and terms





EPF.17c:

examining components and purposes of a personal net worth statement.

An asset is something you own that has financial value.

Depreciation is a loss of value of an asset. This may include wear and tear and

fluctuations in the market.

Liquid assets are tangible things that you can sell quickly for cash; they can include

cash and personal possessions, such as jewelry, cars, computers, TVs, furniture,

clothing and books. In addition, stocks, money market mutual funds, and savings and

checking accounts are also considered liquid assets. Money that is owed to you for

work you have already done is also known as liquid assets. Liquid assets can be

referred to as current assets; current assets are able to convert to cash easily and can be

used to pay off liabilities (typically, money borrowed from creditors) within a 12-

month period. A company's liabilities may include costs for operations, inventories,

and other short-term debts. An individual's liabilities may include small personal loans

or other short-term debts. Thus, it is important that some assets have liquidity.

Restricted assets are assets that cannot be turned into cash without paying a penalty.

Restricted assets are most often regulated by government laws, but are sometimes

regulated by creditors, like financial institutions. Restricted assests include certificates

of deposit (CDs), retirement funds (IRAs, Keoghs, etc.), and stock options

(agreements to buy stocks in the future at a lower than market price). These assets can

be turned into cash (although, not easily) through imposing heavy financial penalties.

Operating costs are what you pay for repairs, fuel, or insurance policies. These add up

over the life of the asset

Another cost you may need to pay taxes on your asset, which add up over time.

Replacement cost which is what you would pay if you had to replace the asset right

now

Historical cost is the price you paid for an asset at the time of the purchase or

transaction

Fixed assets, also known as "tangible assets" [1] or property, plant, and equipment

(PP&E), is a term used in accounting for assets and property that cannot easily be

converted into cash.



Ass

ess

me

nt

Fir

st Q

ua

rte

r

Learning Objective


EPF. 11, 15, 17

Fill in the blank terms or crosswords. Virtual Virginia Homework Virtual Virginia Comprehension Checks

Oct 6 - 23

Learning Objective


PF.11, 17 Virtual Virginia Quizzes Vocabulary Test WISE Money Management

Need to know: Federal Reserve, Monetary Policy, US Treasury, Traveler’s Checks, Cash Card, Debit Card, Money Color, Coin Denominations, Education and Earning Potential, Budget, Debt Ratio, Variance, Surplus, Shortage, Net Worth, Assets, Liabilities, Disposable Income, Net Income, Gross Income, Fiat Money, Liquidity, Discretionary Income, Money Orders, Liability, Collision, and Comprehensive, Credit rating, Interest, CD, Savings account, Checking account

Oct 22 & 23