Bell Work, Wed. 5/13

OWhere is Shell going to start drilling for oil?

OWho created the first Presidential Library?

OWhat technology are firefighters experimenting with?

Bell Work, Thurs. 5/14

OWhat cities does AMTRAK’s Northeast corridor connect?

OWe haven’t had a category 3 hurricane or above for how many years?

OWhat is polo known as?

Personal Finance Literacy

Credit, Saving and Investing

What is Credit?OCredit means

someone is willing to loan money (principal) in exchange for your promise to repay it, usually with interestO Interest: the

amount you pay to use someone else’s money

Types of CreditO Borrow from

friends or relatives.O No interest

O Installment loansO Have terms and

monthly payments

O Student LoansO Delayed interest

rateO Mortgage Loans

O Buy a home

Annual Percentage Rate (APR)

OKey feature when comparing credit offers

OAPR tells you the cost of the loan per year as a percentage of the borrowed amount

Credit: RewardsO Opportunity to build

creditO Using credit

RESPONSIBLY

O Quicker gratificationO Buy expensive items

while you’re paying for them

O Special offersO Buy now pay later,

special interest rates

O BonusesO Points/cash back

O ConvenienceO Rather than

carrying large sums of cash

O ProtectionO Buyer

protection, easy refunds

O EmergenciesO Pay for

emergency expenses quickly

Credit: RisksO Identity Theft

O Someone uses your personal info without your permission

O InterestO Paying more for

the item

O OverspendingO Living beyond your

means

O DebtO Entire amount you

owe to lenders

Credit ReportsOCredit report:

record of one’s credit historyO Personal financial

transactions

OCredit scoreO Number that

reflects credit worthinessOChanges when

your financial situation changes

How to Build Good CreditOAlways pay bills

on timeOConsistent

savings patternOBe choosy about

your credit cards and loans

OMaintain a low balance on one card and pay it off each month

What Hurts Your Credit?

OMaking late payments

OBouncing checks

OHaving a lot of credit cards and loans

OChanging credit cards frequently

Personal Finance Literacy

Savings and Investing

What’s the Difference?O Saving

O Short term goalsO Accessible when

neededO Savings

accountsO Low-risk

O InvestingO Long term goalsO Not always

accessibleO Higher risk, but

higher payoff in the end

Why Save and Invest?O Time Value of

Money: refers to the relationship among time, money, and rate of interest

O Inflation: rise in the cost of goods over time. O Decreases spending

power of each dollar you have

O The more money you have to save/invest, the more you are likely to earn

O Higher rate of interest, more money gained

O Sooner you invest, the more money you could earn

Why Save and Invest?Simple Interest Formula

Interest=Principal x Interest Rate x Time

You put $100 in a savings account that pays 4% interest per year. How much will your $100 grow over the

year?

$100 x .04 x 1 year = $4

How much will I earn in 5 years?10 years? 20

years?Compound Interest Formula

Amount= Principal (1+Interest Rate) Number of years

compounded

ORA = P(1+i)n

$100(1 + .o4)5 = $121.67

Types of InvestmentsO Risk/Reward trade

off: O Safer investment,

lower returnO High risk

investment, higher returns

O Income investmentsO You will be paid in

cash for owning an account or investment

O Savings account, interest is your income

O Growth investmentsO Buy and hope it

grows over time