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Unit 6: Personal Financial Decisions Review

Unit 6: Personal Financial Decisions Review. TEKS E.17 The student understands the role of financial markets/institutions in saving, borrowing, and capital formation. 17A Explain the functions of financial institutions and how they affect households and businesses.

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Unit 6: Personal Financial Decisions Review

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  1. Unit 6: Personal Financial Decisions Review TEKS E.17 The student understands the role of financial markets/institutions in saving, borrowing, and capital formation. 17A Explain the functions of financial institutions and how they affect households and businesses.

  2. Personal Financial Decisions • 17A continued • Technological developments have led the banking industry toward electronic banking • The technological advancement call smart card has led to the replacement of magnetic strip technology • Pension funds collect and invest income for later payments to eligible recipients • Credit Union: financial organization that is a nonprofit service cooperative • Finance Company: financial organization the specializes in buying installment contracts from merchants who sell on credit • Coupon Rate: Rate of return on a bond

  3. Personal Financial Decisions • 17B Explain how the amount of savings in an economy is the basis of capital formation. • In the flow of the financial system, people have a safe place to save, and borrowers have sources of financial capital • 17C Analyze the role of interest and risk in allocating savings to its most productive use. • Savings accounts, buying certificates of deposit, & buying a insurance policy allow people to save money with little risk • People should invest in financial investment they understand

  4. Personal Financial Decisions • 17D Examine the types of accounts available to consumers from financial institutions and the risks, monetary costs, and benefits of maintaining these accounts. • A checking account is an example of a DDA • Successful investors invest consistent contributions over a long period of time • Certificates of Deposit (CDs) are a common investment because they require only a small investment and have various maturity dates • State & local governments issue tax exempt municipal bonds

  5. Personal Financial Decisions • 17D continued • The Dow Jones Industrial Average gives investors an overall picture of the value of markets • TEKS E.18 The student understands the role of individuals in financial markets. • 18A Assess ways to be a wise investor in the stock market and in other personal investment options. • A diversified portfolio has many different investments • 18B Explain how to begin a savings program. • People can save money in a passbook account

  6. Personal Financial Decisions • 18C Examine investment options available in a personal retirement plan. • Treasury bonds, savings bonds, and municipal bonds allow a person to invest in the government • 18E Identify the types of loans available to consumers. • Unsecured loans are guaranteed only by a promise • Creditor: a financial institution that loans money • Borrower: an entity that takes out a loan • Collateral: a guarantee on a loan that insures the creditor will not lose money if the loan is unpaid • 18F Explain the responsibilities and obligations of borrowing money • Borrowers pay interest on loans

  7. Personal Financial Decisions • TEKS E.19 The student applies critical-thinking skills to analyze the costs and benefits of personal financial decisions. • 19A examine ways to avoid and eliminate credit card debt • The Disadvantage of using Credit Cards is ending up with the equivalent of a never-ending loan • Living on a budget makes your life easier • 19C Evaluate the costs and benefits of buying insurance. • Examples of popular types of insurance coverage: long-term care, disability, and life • In most states it is illegal to drive without liability insurance

  8. Personal Financial Decisions • TEKS E.20 The student understands how to provide for basic needs while living within a budget. • 20B Evaluate the costs and benefits of buying a home. • When buying a house through a loan, if you do not repay the money the bank can take the house as collateral • Fixed-Rate Mortgages: Interest rate remains the same • Adjustable-Rate Mortgages: Interest rates can vary over time

  9. Personal Financial Decisions • TEKS E.21 The student understands the various methods available to pay for college and other postsecondary education and training. • 21A Understand how to complete the Free Application for Federal Student Aid (FAFSA) provided by the United States Department of Education. • Students who want financial aid must compete the FAFSA application form

  10. Personal Financial Decisions • TEKS E.22 The student applies critical-thinking skills to organize and use information acquired from a variety of valid sources, including electronic technology. • 22A Analyze economic information by sequencing, categorizing, identifying cause-and-effect relationships, comparing, contrasting, finding the main idea, summarizing, making generalizations, and predictions, and drawing inferences and conclusions. • Mutual Funds offer an investor diversity in their investments

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