Financial Fitness

1
Financial Fitness

• A Lifetime Pursuit

2
Financial Health and Wellness

• Financial health and wellness are almost as
  important as physical, mental, and emotional
  health.

3
Financial Health and Wellness

• In fact, they are related People with financial
  worries are frequently stressed out and this can
  cause
• High blood pressure
• Anxiety
• Depression
• Substance abuse
• Other health and/or relationship problems

4
Financial Health and Wellness

• Debt can destroy marriages and even lead to
  suicide.
• As teachers it is important
• that we integrate financial fitness into the
• curriculum often and in creative and
• compelling ways.

5
Personal Finance

• Personal finance should not begin with making a
  budget and itemizing spending.
• It should begin with information about careers,
  education, and maximizing a young adults
  potential for earning a respectable income during
  their lifetime.

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Education

• Education pays off.
• More education higher earnings and
• more job security.

7
Adult Average Earnings Source U.S.
Census Bureau Facts, 2004

• High School Dropout
• 9.05/hr 18,826/year
• High School Graduate
• 13.12/hr 27,280/year
• Associate Degree
• 14.93/hr 31,046/year

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Adult Average Earnings Source U.S.
Census Bureau Facts, 2004

• Bachelors Degree
• 24.61/hr 51,594/year
• Advanced Degree
• 35.01/hr 72,824/year

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Adult Average Earnings Source U.S.
Census Bureau Facts, 2004

• Charting Adult Average Earnings

10
Adult Average Earnings

• Once they earn it
• Young adults need reliable information on how to
  manage their money to ensure they will have
  financial security and adequate funds to meet
  short and long term goals.

11
Strategies

• Financial fitness strategies can be entertaining
  as well as educational.

12
Strategies

• Challenge young adults to begin to think and act
  now in ways which will enhance their chances of
  becoming a millionaire over time.

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Strategies

• The Millionaire Game
• This game provides opportunities for discussion
  about a variety of myths and misconceptions about
  realistic strategies for them to become a
  millionaire.

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The Millionaire Game

• Most Millionaires are College Graduates.
• Most millionaires work fewer than 40 hours a
  week.
• More than half of all millionaires never received
  any sizeable amount of money from a trust fund or
  estate.
• More millionaires have American Express Gold
  Cards than Sears cards.

• T F
• T F
• T F
• T F

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The Millionaire Game

• More millionaires drive Fords than Cadillacs.
• Most millionaires work in glamorous jobs such as
  sports, entertainment or high tech.
• 7. Most millionaires work for big Fortune 500
  companies.
• 8. Many poor people become millionaires by
  winning the lottery.

• T F
• T F
• T F
• T F

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The Millionaire Game

• 9. College graduates earn about 65 more than
  high school graduates.
• If an 18 year old high school graduate spends the
  same amount as a high school dropout but the high
  school graduate invests the difference in his or
  her earnings at 8 interest, the high school
  graduate would have over 5 million saved when
  he/she retires at the age of 67.

• T F
• T F

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The Millionaire Game

• 11. Day traders usually outperform the stock
  market and many of them become millionaires.
• 12. If you want to be a millionaire, avoid the
  stock market. It is too risky.
• At age 18 you decided not to eat snacks and save
  1.50 a day. Invest this at 8 until you are 67.
  At age 67 your savings from not snacking are
  almost 300,000.

T F T F T F
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The Millionaire Game

• 14. If you save 2000 a year from age 22 to age
  65 at 8 annual interest, your savings will be
  over 700,000 at age 65.
• 15. Single people are more often millionaires
  than married people.

T F T F
19
Tips for Becoming a Millionaire

• Tips for becoming a millionaire over time
• Get a good education.
• Work long, hard, and smart.
• Learn money management skills.
• Live below your means.

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Tips for Becoming a Millionaire

• Buy a home.
• Save early and often.
• Invest in common stocks for the long term.
• Gather information before making decisions.
• Get married and stay married to the same person.

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Financial Reality

• The reality is that Americans of all ages are not
  doing a very good job of financial planning.
• Financial fitness is not taught often or well in
  the public schools.
• Young people and families of all ages spend more
  than they earn.
• Credit card debt is rampant.

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Financial Reality

• People are not saving for the future or for
  retirement.
• More specifically
• Americans bought over 2 trillion worth of
  stuff on credit last year.
• Current outstanding debt on credit cards thats
  the revolving part that we dont pay off every
  month totals nearly 700 billion, up from just
  50 billion in 1980.

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Financial Reality

• Three of five American families cant pay off
  their credit cards each month. Their running
  balance averages about 12,000 which is
  one-fourth of the median household income.
• By the mid-1990s, credit card debt held by
  Americans living below the poverty level more
  than doubled.

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Financial Reality

• Senior citizens, once noted for their frugality,
  are sinking deeper in debt Their average credit
  card balance increased by 89 between 1992 and
  2001.
• Total consumer debt in the U.S. comes to over
  7,100 per person and that doesnt include
  mortgages.

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Measure Success

• Measure success by net worth not possessions.
• The appearance of wealth or prosperity can be
  false. Many people buy expensive houses, cars,
  clothes, vacations, boats, etc. on credit. The
  equity they have is minimal. Their net worth is
  not much and they are in serious debt.

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Measure Success

• The difference between what you own and what you
  owe is equity or overall net worth.
• Financial Planning can help an individual or
  family increase their net worth and financial
  security.

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Realistic Guidelines

• Five Realistic Guidelines for Financial Fitness
• Live below your means and save the difference.
• Start saving now and save as much as you can on a
  regular basis.
• Save for the long term compound interest is
  free money.
• Manage the risk. Be prudent, but the stock
  market and a balanced portfolio has provided a
  better return than most other investments over
  the long term.

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Important Wisdom

• Improving basic financial education at the
  elementary and secondary school level is
  essential to providing a foundation for financial
  literacy that can help prevent young people from
  making poor financial decisions that can take
  years to overcome.
• Alan Greenspan, Federal Reserve Chairman, April
  6, 2001.

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Economic Way of Thinking

• Develop and Practice an Economic Way of Thinking
• The Economic way of Thinking is a powerful method
  for making decisions. It uses Opportunity Cost,
  Choice, Incentives, and Consequences as
  information tools in decision making.
• Using the Economic Way of Thinking can prevent
  hurried, poorly made choices.
• A cost-benefit analysis is a look at the pluses
  and minuses of alternatives.

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Economic Way of Thinking

• Talk to kids about the importance of their
  investment in themselves and how that will help
  them in the future.
• People with more education earn more money.
  Education can increase lifelong income
  dramatically. This improves ones standard of
  living and options.
• Go to school, attend class every day. Be on
  time, pay attention, stay focused, do the
  assignments, read the book, do the homework, and
  practice retaining and applying what you have
  learned.

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Economic Way of Thinking

• Talk about careers which match kids interests,
  aptitudes, and abilities.
• Share with them what you like or do not like
  about your job or career.
• If you had to do it all over again would you make
  the same or similar choices? Tell them why or
  why not?

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Economic Way of Thinking

• Explore the major Career Clusters
• Arts and Communication
• Business and Technology
• Engineering and Industrial
• Environmental
• Health, Education, Human Services

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Economic Way of Thinking

• Talk About Saving to Reach Long-Term Goals
  Include
• Inflation
• Function of Banks
• Compound Interest
• The Rule of 72 (a formula used to find out how
  long it will take money to double).
• Stocks and Bonds
• Risk
• Liquidity

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Economic Way of Thinking

• Talk About Credit
• Advantages disadvantages
• Finance Charges and Interest
• Credit Record Tell them that a bad credit
  rating can hurt their chances of getting a good
  job.
• Many employers check the credit rating of
  potential employees. They figure if a person is
  not responsible financially they may not be a
  responsible employee.

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Economic Way of Thinking

• Collateral, Character, Capacity to Repay
• The average American household has 10 credit
  cards.
• The average balance is 7,000 per family.
• The average interest rate is 18.9.
• Americans pay 64 million in credit card interest
  each year. That is 256 for every man, woman,
  and child in the US..
• Typical payments are 90 interest and 10
  principal (1999).

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Economic Way of Thinking

• Get Informed Stay Informed
• Sound money management includes an examination of
  earnings, a plan for saving, and a thoughtful
  spending strategy.
• Pay yourself first Direct deposit savings.
• Make a Budget
• Use a debit card instead of a credit card.
• Do not bounce checks or make late payments.

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Economic Way of Thinking

• Know and understand deductions and taxes
• Income Taxes
• Social Security Taxes
• Sales Taxes
• Property Taxes

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Money Smart

• How can you help kids become Money Smart?
• WE CAN HELP!
• The Idaho Council on Economic Education the
• UI, BSU, ISU centers can help you do this.

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Financial Fitness For Life

• A Personal Finance Curriculum developed by
• The National Council on Economic Education
• Funded by
• The Bank of America Foundation.
• Distributed by
• Idaho Centers on Economic Education.

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Financial Fitness For Life

• A recent National Council on Economic Education
  survey found that two-thirds of high school
  students are financially illiterate.
• They dont know much about the American economy
  or about personal finances because they have not
  been taught much, if anything, about it in
  school.
• The Financial Fitness for Life Curriculum can
  help but it must be used.

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The FFFL Curriculum is Designed toReverse
Financial Illiteracy

• The comprehensive curriculum
• Written by experts and field tested in
  classrooms
• Includes interactive computer resources.
• Geared to student interest and sound learning
  theory.
• Includes parents as educational partners.
• Includes teacher training by NCEE Network.

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The FFFL Curriculum is Designed toReverse
Financial Illiteracy

• The following themes are addressed throughout the
  Financial Fitness for Life Series.
• Theme 1 There is no such thing as a free lunch.
• Theme 2 Education pays off Stay in school and
  learn as much as you can.
• Theme 3 Tomorrows money Getting to the end of
  the rainbow (saving).
• Theme 4 Spending using credit are serious
  business.
• Theme 5 Plan, budget, save, conserve.
• (Money Management)

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Parental Involvement

• FFFL incorporates a powerful learning tool
  parental involvement and reinforcement at home
  using real information and situations.
• The Activity-Based Guide for Parents can help.
• A good place to start is talking about Net Worth.
• The appearance of wealth may be false.

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Workshop Information

• For more information about the Financial Fitness
  for Life Teacher Workshops in your area contact?
• Marty Yopp
• University of Idaho
• 322 E. Front Street, Suite 440
• Boise, ID 83702
• We can get you the training and materials you
  need to help your students and yourself become
• FINANCIALLY FIT FOR LIFE

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Fun Discussion

• Would YOU Loan Them the Money?
• Client One
• 17 years old
• Good grades in high school
• Admitted to a good state university
• Wants to attend school full-time for 4 years
• Major in chemical engineering
• Parents cannot help
• Wants to borrow 25,000 for college

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Fun Discussion

• Client Two
• 18 Years Old
• Attending local vocational technical school.
• Tuition is low and the program is 9 months.
• Plans to get an apartment after school is
  completed.
• Avid sports fan.
• Wants to borrow to buy a 38-inch TV for 3,000.

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Fun Discussion

• Client Three
• 21, senior in college, English Major
• Never had a vacation except with parents
• Wants to borrow 1,500 to bust out for Spring
  Break in Florida.
• Client Four
• 22 years old
• Completed a dental hygienist program

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Fun Discussion

• Has first job which pays 25,000 per year
• The job is 20 miles from home
• Has 2,000 for down payment
• Wants to borrow 12,500 for a new car.
• Is the loan being used to obtain a valuable
  asset?
• Will the client be able to repay the loan?
• Yes
• No
• Maybe