Consumer ed notes
Transcript of Consumer ed notes
BELL RINGER
What is opportunity
cost? Provide an
example of opportunity
cost.
When is it most beneficial to get a
loan?
1. Really needs a vacation (takes out a loan)
2. Some clothes go on sale (gets a loan)
3. Would like a car to drive to a high paying job (takes out a loan for a car)
4. Sees that the interest rate on a loan is very high (gets a loan)
When is it most beneficial to get a
loan?
When the pay off outweighs the cost (or the
loan)
Inflation
Def: A general increase in prices and fall in the purchasing value of money
Lets look at an example
Who is affected the most
THE INDIVIDUAL CONSUMER: if they earn a fixed amount of income, they are worse off as they will be experiencing a loss in their purchasing power.
LENDERS: they will lose because they will receive back a sum of money which is worthless in real terms
THOSE WHO HAVE BORROWED MONEY: they will gain as they will repay back a sum of money which is worth less in real terms.
Sales Tax
Def: A tax on sales or on the receipts from
sales
Why do we pay the sales tax?
Gov. services (schools, roads, police)
To discourage people from buying something
Rich will end up paying more and poor less
(How?)
Makes things more expensive for you to buy
Your Paycheck
Your Paycheck
What is take out of your paycheck:
Income tax
Social Security
Medicare (health insurance)
College job, part time ($15,000)
Post college job ($30,000)
Income tax is 5%
The dollar amount in income tax on the new job will:
Double
Go Up a Little
Stay the same
Be lower
Thinking about the future of your
children
What is the best way to invest money for your
child’s education?
Savings account?
Stocks?
Government Savings Bond?
Checking account?
What is the best way to invest money for your
child’s education?
Savings account? (2%)
Stocks? (10%)
Government Savings Bond? (4%)
Checking account? (.75%)
Why are stocks the best?
If you went to college and earned a
four year degree, how much more
money could you expect to earn
than if you only had a high school
diploma? Looking for a percentage
70%
ATMs
Keep in mind:
You need a bank account
Fees might be involved
What are they for:
Access to bank $$$ 24/7
Account balance info.
Caterpillar
Why is Caterpillar thinking of moving out of
Illinois?
Taxes on Businesses
If the tax is high are biz. likely to stay or leave a state ___________
How might high biz. tax impact the workers ____________
How might biz. react to high biz. taxes in a state________
Would workers expect to receive a bonus as a result of high biz tax ____________
Lets Talk About Risk
Health Insurances
Def: A type of insurance coverage that pays
for medical and surgical expenses that are
incurred by the insured
You get health insurance through your parents
until the age of 26.
You might loose it if your parents become
unemployed.
Car Insurance
Collision Insurance: covers damage to your car if you are the at-fault driver in a collision involving another car.
Liability Insurance: covers damage you do to others person or property but does not cover injury to yourself or your car
Comprehensive Insurance: covers losses resulting from a stolen car or for repairs if the car is hit by a falling object or damaged by fire, flood, or vandals.
Answer the following question in
your notes
Lets say you worked over the summer and earned $5,000. What would be the safest place for your money?
How many of you answered savings account in a bank? Why?
Why would it not be stocks?
Why would it not be bonds?
Why would it not be your closet?
Can you get a credit card after high
school?
Yeah!!!!
Credit Card company will be very careful
Your credit score might be low
You might be offered a small line of credit
Limit on how much you can spend
Credit Counseling Service
Agency which helps you find solutions to
financial problems
Can help you set up a payment schedule
Help you set up a budget
Educate
Kadija and Maya are young
working women. They have a good
credit history. They work for
Google and make the same salary.
Kadija borrows $3,000 to go on
vacation. Maya borrows $3,000 to
buy a car. Who is more likely to
pay lowest finance charge and
why?
If you use money to buy a physical object it
can be used as collateral. The bank can take it
away if you can’t pay the money back.
Charges are less because of that.
Devices of Spending
Hard Cash
Credit Cards
Debit Cards
Checks
Money Order
Credit Card Charges
Credit Card companies reward you for paying
in full and on time
You don’t have to pay what you owe in full
each month, but it is to your advantage
Who is most likely to pay the
highest dollar charge amount?
A. Brianna who pays the minimum amount each
month
B. Lexus who pays minimum amount some
months but more when she has the money
C. Connell who generally pays it off in full but
sometimes pays minimum amount
D. Lauren who always pays her credit card bill in
full
Credit Card Charges
Credit Card companies reward you for paying
in full and on time
You don’t have to pay what you owe in full
each month, but it is to your advantage
Those who pay the minimum amount each
month will pay the highest charge
Banks, credit card companies, and other
lenders share the credit history of the borrower
If you missed a payment, your other lender will
know
Programs Protected by the Gov.
Against Loss
1. Savings Bonds
2. Certificate of Deposit
3. Treasury Bonds
Life Insurance
Def: Insurance that pays out a sum of money
either on the death of the insured person or
after a set period.
Who needs it most:
People with dependants that need that persons
income
If you have a lot of children or a spouse that does not
work
Good Ways to Reduce Financial
Charge Rate for a College Loan
Have parents co-sign a loan
An additional mortgage taken by the parents
Get a federal loan