Laura Ewing President/CEO 1801 Allen Parkway, Houston, TX 77019 P: 713.655.1650 F: 713.655.1655 laura@econ

1. Helping young people learn to think, choose, and make better • economic and financial choices in a global economy Cindy Manzano Director of Smarter Texas 1801 Allen Parkway, Houston, TX 77019 C: 713.503.5338 F: 713.655.1655 cindy@economicstexas.org Laura Ewing President/CEO 1801 Allen Parkway, Houston, TX 77019 P: 713.655.1650 F: 713.655.1655 laura@economicstexas.org • www.economicstexas.org • www.smartertexas.org

2. Financial Fitness For Life • Spiraled Curriculum • Kindergarten – Grade 2 • Grades 3 – 5 • Grades 6 – 8 • Grades 9 – 12

4. Free lessons for grades 2-8 • Coming June 2014: Lessons for grades 2-3 funded by • Lessons for grades 4-6 funded by • Lessons for grades 7-8 funded by • www.smartertexas.org under Resource tab

5. The TCEE programs are made possible by the following TCEE partners. EnviroChem Services, Inc. John Anderson Trout Foundation Less B. Fox RBC Wealth Management copyDR.

6. Personal Financial Literacy is making thoughtful, well-informed decisions about important aspects of finances. Why do we need it?

7. Nationwide Financial Capability Study Financial Industry Regulatory Authority in 2012: • 39% of individuals in Texas used a form of non-bank borrowing, i.e. an auto title loan, pay day loan, pawn shop loan, or other high interest uneconomical source of debt • 54% of individuals in Texas broke even or spent more than their annual income • 57% of individuals in Texas did not have enough money saved to cover expenses for three months • 67% of individuals in Texas scored 60% or less on a financial knowledge test, which comprised of questions regarding basic economics and finance concepts encountered in everyday life

8. Student Loan Debt • Average student loan debt • 2010 – $24,000 • 2011 – $25,250 • 2012 –$33,000 • Total student loan debt: • 2010 – 850 billion dollars • 2012 – over 1 trillion dollars

9. 2013 Student Loan Debt as Reported by Forbes • The total outstanding student loan balance is $1.2 trillion. • Reasons for rising student debt: • Rising cost of education • Students with little to no credit history are being approved for thousands of dollars loan • Students don’t understand the terms of getting a loan • Students did not save or plan for the cost of college • After graduation: • Loan debt exceeds annual salary • Many can’t find a job • Graduates are delaying buying a home or car • Unable to start a business • Unable to save for the future

10. . . . then why get a higher education? • The demand for higher education in the job market is increasing. • The potential to earn more increases as the level of education increases. • The percent of unemployment decreases as educational attainment increases. Higher education is still the best investment in your future.

11. TCEE Grade 7, Lesson 2 Personal Budget

12. The student is expected to: • Math 7.13B identify the components of a personal budget, including income, planned savings for college, retirement, and emergencies; taxes; and fixed and variable expenses and calculate what percentage each category comprises of the total budget

13. Vocabulary • Budget • A tool that helps people manage their money and plan for the future. • A budget is a plan to manage income and expenses.

14. CREATE A MONTHLY BUDGET • Step 1: Calculate the monthly net income. • Step 2: Categorize monthly expenses. • Step 3: List categories and their total in budget worksheet.

15. Step 1: Calculate the monthly net income. Below is Barney’s semi-monthly net income.

16. Step 1: Calculate the monthly net income. Below is Barney’s semi-monthly net income.

17. Step 1: Calculate the monthly net income. Below is Barney’s semi-monthly net income.

18. Step 1: Calculate the monthly net income. Barney’s semi-monthly net income $1392.45. • What is his monthly net income? $2784.0

19. Step 2: Categorize Monthly Expenses.

20. Step 3: List categories and their total in the budget worksheet.

21. Step 3: List categories and their total in the budget worksheet.

22. Why is it important to create a budget based off the net income rather than gross pay?

23. Theo’s Budget

24. Vocabulary • Fixed expenses are those expenses that remain the same each month. • Variable expenses are those expenses that vary from month to month.

25. BALANCE BETTY’S BUDGET • Barney’s girlfriend, Betty, is still in college. She is determined not to get a loan to pay for tuition and books. Therefore she lives at home and works part-time. She knows that if she can save $300 every month, she will have enough money to pay for next semester’s college tuition and books. Every month Betty spends more money than she makes. Her father has been giving her money when she overspends. He has explained that he will no longer bail her out.

26. Texas Reality Check • Now it is time for you to take a reality check. Have you thought about your future? What will your budget look like? What type of an occupation do you need to afford this budget? The following simulation will help you make these decisions. • Go to the following website: http://www.texasrealitycheck.com

27. TCEE Grade 7 Lesson 4 Know Your Worth

28. The student is expected to: • Math 7.13C: create and organize a financial assets and liabilities record and construct a net worth statement

29. Engage • What does it mean to be wealthy?

31. Net worth is the value of what you own minus what you owe.  $30,000

33. Activity 7.4-1a • Work in pairs. • Use the Activity 7.4-1a sheet and the blue and yellow cards to determine each families net worth. • When you are finished read teachers notes, step 8-9 on page 3.

34. Chalkboard Splash • What could Family B do to increase their net worth? • Determine if idea is increasing income or decreasing debt.

35. Budget or Net Worth? • Budget is a tool used day to day to make sure your expenses don’t exceed your income. • To determine if you are getting out of debt or if you are increasing your wealth, one needs to analyze their net worth.

36. Calculate Your Net Worth While Budgeting to Maintain Perspective by Eric Ravenscraft • “An increase in net worth meant that I was unquestionably spending less than what I earned, which is the key to personal finance success. An increase in net worth meant that all of the hard day-to-day choices I was making were actually adding up to something big.” • “It was exhilarating. Each time I calculated that number, I could clearly see the impact that my choices were having even if they weren't really evident in my day-to-day life.”

37. TCEE Grade 7 Lesson 6 Smart Shopping

38. The student is expected to: • Math 7.13F: analyze and compare monetary incentives including sales, rebates and coupons

39. TCEE Grade 8 Lesson 1 Saving for My Future

40. The student is expected to: • Math 8.12C: explain how small amounts of money invested regularly, including money saved for college and retirement, grow over time • Math 8.12D calculate and compare simple interest and compound interest

41. Saving for your education is an investment in yourself.

42. ACTIVITY 8.1-1

43. Bankrate.com

44. Calculating Interest

45. TCEEGrade 8Lesson 2 Borrowing Money

46. The student is expected to: • Math 8.12A: solve real‐world problems comparing how interest rate and loan length affect the cost of credit • Math 8.12B: calculate the total cost of repaying a loan, including credit cards and easy access loans, under various rates of interest and over different periods using an online calculator

47. When Joaquin sat down to negotiate his auto loan with the dealership, he was told that he could borrow $15,000 at 6% interest for 3 years. His payments would be $456 per month. Joaquin explained that he could not afford $456 per month and he wanted a better deal. The car dealer agreed to give Joaquin a better deal. He told him that he could bring down his monthly payments to $289 per month for 5 years. Was this a better deal?

49. Activity 8.2-1 Decoding Loans with APR • According to Investopedia, “The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.” [Source: http://www.investopedia.com/terms/a/apr.asp] Bottom line: Always ask for the APR when getting a loan.

50. What is a Payday or Title Loans? • Easy access loans are sometimes called title loans or payday loans. They make it “easy” to get a loan. The high cost is due to the short time period of the loan and to the fee. When the interest rate or fee is calculated over the short time period, the Annual Percentage Rate (APR) will be huge.