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Learn how to manage yourself and your money in this session. Topics include comparison shopping, emotions and discipline, financial goals, budgeting, and more.
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Personal Management Session #1 Management, Money, and Orientation Objective #1: Complete the Course and Merit Badge Objective #2: Live the Material Does everyone have a booklet and worksheets?
Management Versus Leadership • The Manager’s job is to plan, organize and coordinate. What’s the Leader’s job? • The Leader’s job is to inspire and motivate. What’s the Manager’s Job? 2
You Will Learn • To Manage Yourself • To Manage Your Money 3
Let’s Talk About Money • What are some of the things YOU can manage? • Who wants to be a millionaire by the time you retire? • Who wants a nice new car? • Who wants to visit Hawaii, or Europe or Asia? • Who wants to go to college? • What to all these things have in common? 4
Personal Management Concepts • Comparison Shopping • Emotions & Discipline • Financial Goals • How to Prepare a Budget • Short-Term versus Long-Term Planning • Income, Savings & Investment • Understanding Financial Risk • Borrowing Money • Credit, Loans & Interest • Personal Responsibility • Setting Priorities & Accomplishing Goals • Thinking About Your Future 5
List of PotentialBig-Ticket Itemsfor Requirement #1 • Car • Flat Screen TV • New Roof • New Furnace • Boat • Gaming System • Computer • iPhone/iPad • Vacation 6
Requirement #1 • Do the following: • A. Choose an item that your family might want to purchase that is considered a major expense. • B. Write a plan that tells how your family would save money for the purchase identified in requirement 1a. • Discuss the plan with your family • Discuss how other family needs must be considered in this plan • Bring the plan to the next meeting and discuss the plan with your merit badge counselor 7
Comparison Shopping • Who is selling it for the best price? • Research store prices online (BizRate.com) • Study ads. • Look for coupons (CouponCabin.com) or sales. • Consider alternatives: • Could you buy it used? (CraigsList, eBay) • Should you wait for a sale? • Discuss your shopping strategy with your counselor. 8
Your Assignment:Requirement 1 (continued) • C. Develop a written shopping strategy for the purchase identified in requirement 1a. Bring this shopping strategy with you to Day 2 • 1. Determine the quality of the item or service (using consumer publications or rating systems). • 2. Comparison shop for the item. • Find out where you can buy the item for the best price. (Provide prices from at least two different price sources.) • Consider alternatives. Can you buy the item used? Should you wait for a sale? 9
Personal Management Session #2 Comparison Shopping Game, Budgeting, and Emotions
Begin Session 2 Homework due today: • Read pages 20 through 26. • Hand in Requirement #1 (after class). Start After Today’s Class: • Requirement 2: How much money you earn and spend . Track EVERYTHING! Additional Materials: • Handout for Parents regarding bank accounts and Roth IRA. 12
What’s Da Betta Buy? 32 oz At $2.99 64 oz At $3.99 14 oz At $1.79 13
What’s Da Betta Buy? Bounty Paper Towels 6 rolls for $9.49 Brawny Paper Towels 6 rolls for $7.79 14
An Informed Shopper I want my teeth to be really clean and really white. Which one do I buy? Pro-Health or Pro-Health Advanced? 15
This assignment takes 13 weeks—start from last session. Prepare a budget reflecting your expected income, expenses, and savings. Track your actual income, expenses, and savings for 13 consecutive weeks. You may use the forms provided in the merit badge pamphlet, devise your own, or use a computer generated version from the website. When complete, present the results to your merit badge counselor. Requirement #2a 17
Budgeting • What is a Budget? • It’s the process of making sure your resources are being used for the things that matter most to you—your personal goals • A budget is a star to set your sights by, not a stick to beat yourself with. It’s an important tool • While a budget is easy to understand, it takes self-discipline to follow. • Self-discipline is probably the most important single factor in helping you to attain your personal goals. 18
Budgeting(continued) • What is in a budget? • All cash inflows and outflows • Income: • Money coming in, from work, savings, parents • Expenses (Two types): • Fixed • These are expenses that do not change each month, i.e. non-discretionary (Rent, Water, Heat) • Variable • These are expenses that can change, i.e. discretionary (Entertainment, Food, Dating) 19
Budgeting: The Old Way Income Expenses Available for Savings Personal Goals 20
Budgeting: The Right Way Income Pay Yourself Expenses Other Savings Personal Goals 21
It is amazing to me that so many people work all of their lives for the grocer, the landlord, the power company, the automobile salesman, and the bank, and yet think so little of their own efforts that they pay themselves nothing. L. Tom Perry, “Becoming Self-Reliant,” Ensign, Nov. 1991, 64 The Right Way (continued) 22
Tracking Methods • There are different methods to track expenditures: • Checks and credit cards • These expenditures leave a paper trail • Cash • Record expenditures in a notebook • Computer programs, i.e., Quicken, Money or spreadsheets • These are very useful, especially if tied to bank and credit card companies • Generate a monthly record of spending and income 23
Prepare a personal budget for 3 months. Put money into savings before spending it on anything else. Keep track of everything you buy. Balance your income (money you receive) with your savings and expenses (things you spend money on). Open Excel Spreadsheet to explore budget Your Personal Budget 24
2b. Report to Your Counselor • After the 3 months, share your budget with your counselor. • Explain how you determined how much you saved, what you spent money on, and what was left over. • Did you spend more or less than you budgeted? 25
Time-Check If time: Do Assignment #3 in class. • (see next slides) • Take out your pencils and worksheets If not time: • Questions • Hand in Assignment #1 • Roth IRA Handout for Parents if not enough time. 26
Assignment 3 • Discuss with your merit badge counselor FIVE of the following concepts: • A. What emotions do you feel when you receive money? • What does it make you feel like? • Does it vary, depending on how much money you receive? 27
Assignment 3 (continued) • B. How does the amount of money you have with you (in your pockets) affect your spending habits? • If you have money in your pocket, are you more likely to spend it or save it? • If you are more likely to spend it, what does this indicate about money you have in your pockets? • If you want to save money, should you keep it with you or not? 28
Assignment 3 (continued) • C. What are your thoughts when you buy something new and your thoughts about the same item three months later? Are they the same? • What is buyer's remorse? • Buyer’s remorse is when you buy a product for a certain reason, and then afterwards realize that it did not fulfill that reason • Often we buy things we think will satisfy us, and then after we have owned it for a while, realize that it did not fulfill those needs • How can you guard against buyers remorse? 29
Assignment 3 (continued) • D. How does hunger affect you when shopping for food items (snacks, groceries)? • If you are hungry, will you buy more food? • Will you buy more junk food? • If hunger affects what you purchase, should you eat well before shopping? 30
Assignment 3 (continued) • E. Share an experience of an item you have purchased after seeing or hearing advertisements for it. Did the item work as well as advertised? • What did you do when it didn’t work as advertised? • Should we take things back that don’t work? • Is that the correct thing to do? 31
Assignment 3 (continued) • F. What happens when you put money into a savings account? • Is it safe? • What does the bank do with the money? • What is the difference between interest you earn and interest you pay? 32
Assignment 3 (continued) • G. What is charitable giving? Explain its purpose and your thoughts about it. • Charitable giving is sharing the things we have received with others • God gives to us freely. We should share with others 33
Assignment 3 (continued) • H. What you can do to better manage your money? • Ideas include: • Be more careful with your spending • Plan your spending and live your plan • Live within your means • Be smart--Earn interest—don’t pay interest. 34
Personal Management Session #3 with Saving Versus Investing
Overview of Session 3 Saving versus Investing Homework due today: • Read pages 27 through 39. • Show your Counselor Requirement #2 at beginning of class. Start After Today’s Class: • Requirements 4, 5, 6 Additional Materials: Did you and your parents setup a checking/savings account or Roth IRA? 37
Savings • Bank Savings Account • There are many benefits to keeping your money at a bank rather than at home. • What do you think a few of these reasons might be? • Money kept at a bank is insured by the federal government against loss or theft • A fire or other natural disaster could destroy your money at home • The bank will pay you money, called interest, on the money you deposit in a savings account
Savings (continued) • Certificates of Deposit • Certificates of deposit, sometimes called time deposits, are issued by banks and are loaned investments. • The investor (you) lends the bank a specific amount of money for a specified period of time at a specific interest rate. • In general, the longer the period of time, the higher the interest rate.
Savings (continued) • U.S. Savings Bond • You might already own a U.S. Savings Bond. These make popular gifts for families, grandparents, or others to buy for children. • Basically, savings bonds are a loan to the federal government. • The government agrees to repay the bondholder the amount invested, with interest, after a set period of time. • Governments or companies issue bonds to raise money for certain projects, such as building roads or factories, or for general purposes.
Compounding Interest • Compound interest is interest on interest. • Compound interest is a very important part of investing (open spreadsheet to demo). 41
Scouts explain the following: • A. What is the difference between saving and investing? Why would you use one over the other? • Saving: to put money aside, usually in a bank account for future use • The return you earn is generally very low but certain • Investing: to invest money to make even more money in the future • The return is generally higher but uncertain • Generally you save for short-term goals, and invest for long-term goals 44
Investing • Unlike savings in a bank account, investing implies there is a risk. • There is no guarantee that you will get your money back, or that you will earn a higher return. • Because of these greater risks, investors have a chance to earn higher returns (increase in value) than they would from a savings account, especially over a long period of time.
Reminder: Requirement 5 • Select five publicly traded stocks from the business section of the newspaper. Explain to your merit badge counselor the importance of the following information for each stock: • Current price • How much the price changed from the previous day • The 52-week high and the 52-week low prices 46
Wall Street Journal Online Google IPO = $100 48
Homework • Read pages 40 through 43 • Continue doing Requirement #2 • Do Requirements #4, #5, #6 49
Troop 512 Personal Management Session #4 Investing Continued Objective #1: Complete the Course and Merit Badge Objective #2: Live the Material Does everyone have a booklet and worksheets?
