Foundations in Personal Finance | Student eText

1 DAVE R AMSE YRAMSEY EDUCATION SOLUTIONS SPONSORED BYLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:Notice of Copyright ProtectionCopyright 2014 by Lampo Licensing, LLCNOTICE OF RIGHTSAll rights reserved. No part of this publication (print or video) may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission from the for permission to make copies of any part of the work should be mailed to:Permissions Ramsey Education Solutions DepartmentThe Lampo Group, Mallory LaneBrentwood, TN 37027 NOTE TO THE READERThis publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or other expert assistance is required, the service of a competent professional person should be 3 4 5 6 7 8 9 10 11 rpc 18 17 16 15 14 Printed and bound in the United States of AmericaISBN 978 -1- 936 9 4 8 -1 2 -3It is unlawful to copy or reproduce any part of this Student text without the written consent of the publisher.

2 Notice of Copyright ProtectionCopyright 2014 by Lampo Licensing, LLCNOTICE OF RIGHTSAll rights reserved. No part of this publication (print or video) may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission from the for permission to make copies of any part of the work should be mailed to:Permissions Ramsey Education Solutions DepartmentThe Lampo Group, Mallory LaneBrentwood, TN 37027 NOTE TO THE READERThis publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or other expert assistance is required, the service of a competent professional person should be 2 3 4 5 6 7 8 9 10 rpc 18 17 16 15 14 f i r s t e d i t i o nPrinted and bound in the United States of AmericaISBN 978-1-936948-22-2It is unlawful to copy or reproduce any part of this Student text without the written consent of the publisher.

3 24/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:Acknowledgements The Ramsey Education Solutions team would like to give special thanks to the following people for their contributions to this product. Their input was essential for creating a financial literacy curriculum that empowers high school students to make sound financial decisions for life. EducatorsLen McKnattACCOUNTING/ECONOMICS TEACHERB attle Ground AcademyFranklin, TennesseeLeah ZimmerFINANCIAL LITER ACY TEACHERB remerton High SchoolBremerton, Washing tonBrittany Sampson TEACHERL akeland High SchoolLakeland, FloridaRamona HarperBUSINESS TEACHERLake Highlands High SchoolRichardson, TexasKathy JarmanTEACHERH elias Catholic High SchoolJefferson City, MissouriLeAnn DinsdaleCTE TEACHER/ACTE VPBrackenridge High SchoolSan Antonio, TexasLynn IsaacksSOCIAL STUDIES TEACHERA cademy of Creative EducationSan Antonio, TexasEric LambertTEACHERN orth Bullitt High SchoolShepherdsville, KentuckyLinda BrownCTE TEACHERS anderson High SchoolRaleigh, North CarolinaTerri WinkleTEACHERW estern Heights High SchoolOklahoma City.

4 OklahomaCreditsExecutive Vice PresidentJack Ga llowayChief Marketing OfficerJennifer SievertsenVice President of Education SolutionsJim KingCurriculum DesignMichelle ScottProduct ManagementBrett KozimorSales/Marketing/PRHerb JenkinsBeth TallentJacqueline GarneauJamie Moorer Christy RichardsonChristy WrightProject ManagementJosh CampbellKassidy SlamerLisa MaysContent Editing/ProofingAllen HarrisDarcie ClemenStephanie ThomasBrandon BrisonJennifer GingerichDanielle BrittJennifer NortonMolly PinkleyCreative DesignBrian WilliamsMarcus MeazzoJason MillerSteve RuppVideo/Audio ProductionJon MeltonDiana KeyMegan HillJosh FultonDave OglesbyDave DiCiccoMegan LedfordSara ZellnerChris WrightIan CollinsColin FatkeBobby Robertson David WilkinsonJosh HancockChris BlaylockInteractive/Web Development/UIAsh HarrisJon Wol s k iAndrew 34/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:4 Foundations in Personal Finance High School 44/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:Meet the ExpertsDave RamseyDave Ramsey is America s trusted voice on money and business.

5 He s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. By age twenty-six he had established a four-million-dollar real estate portfolio, only to lose it by age thirty. Using the wisdom he gained, Ramsey rebuilt his financial life and now teaches others how to be responsible with their money, so they can acquire enough wealth to take care of loved ones, retire with dignity, and give generously to CruzeRachel Cruze is a seasoned communicator and presenter, who has been speaking to groups as large as 10,000 for more than a decade. The daughter of Dave Ramsey, today she uses the knowledge and experiences from growing up in the Ramsey household to educate America s students and young adults on the proper ways to handle money and stay out of HoganA popular and dynamic speaker on the topics of financial education and leadership, Chris Hogan also works with businesses and high-profile clients across the country, helping them develop strategies to increase revenues, protect wealth and secure their financial futures.

6 Chris is also the host of the popular EntreLeadership podcast, one of the leading podcasts on business and 54/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:6 Foundations in Personal Finance High School EditionA Letter from DaveDear Student ,Welcome to Foundations in Personal Finance ! The information you are about to learn will change your financial future if you apply what we talk to people every day who tell me, I wish I had learned this stuff in high school! I could have avoided so many problems! I know how they feel. I built a multi-million-dollar business in my twenties, only to have it wiped out because I didn t know how to manage my money and I even had a college Finance degree!You don t want to learn about money the hard way like I did. Thanks in part to our friends at Fifth Third bank you will not have to. If you take what you learn from this class and apply it to your life, you ll never have to experience the pain and stress money problems can the class!

7 Use what you learn! Change your life!Sincerely,A Letter from Our SponsorDear Student ,It is a privilege for Fifth Third bank to sponsor Foundations in Personal Finance in your school. We are big fans of Dave Ramsey and what he teaches young people about money. We made this investment in you so that you d gain the knowledge that will pay you healthy dividends in the future. We care about your financial literacy how much you know about how money works and how to use it properly because, as a bank , we have a front-row seat to what can happen when you don t understand it. We want to be your partner on your journey to financial independence. All of us at Fifth Third bank wish you the very best as you move ahead toward graduation and into your adult life. Thanks for the opportunity to be a part of your luck! Kevin KabatVICE CHAIRMAN & CHIEF EXECUTIVE OFFICERFIFTH THIRD BANCORP 64/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:UNIT 1: SAVING AND BUDGETINGC hapter 1: Introduction to Personal Finance 8 Chapter 2: Saving 28 Chapter 3: Budgeting 48 UNIT 2: CREDIT AND DEBTC hapter 4: Debt 72 Chapter 5: Life After High School 100 Chapter 6: Consumer Awareness 126 UNIT 3: FINANCIAL PLANNING AND INSURANCEC hapter 7: Bargain Shopping 142 Chapter 8: Investing and Retirement 160 Chapter 9: Insurance 184 UNIT 4: INCOME, TAXES AND GIVINGC hapter 10: Money and Relationships 208 Chapter 11: Careers and Taxes 222 Chapter 12.

8 Giving 250 GLOSSARY 74/9/14 2:45 PMLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:What do other high school students know about spending? We asked other high school students if they or someone they know has ever bought something they could not afford. I haven t, but my younger sister always seems to need the latest and greatest technology, and she spends her college money on it! Sophomore, Louisiana No. But I have a family member who once bought a house that they ended up not being able to afford. Junior, New Jersey My dad bought a car that he could not afford, and he ended up getting it repossessed. Junior, Wyoming Yes. My parents buy things they can t afford all the time.

9 That s why we re in debt. That s why I need this course. Senior, Utah1 CHAPTERLICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:Introduction to Personal FinanceWELCOME TO A CLASS that is going to give you a head start on your future! Learning how to manage your money is one of the most important skills you can have. Why? Because your financial decisions will have long-term consequences, either good or bad. We ll give you the tools and knowledge that will help you win with money right from the start. When it comes to your financial future, we want you to aim high and dream big. There s a lot to learn, so let s get started!*National Foundation for Credit Counseling, parents feel it is their responsibility to teach their kids about money and savings.*81%of American parents surveyed thought that a course in Personal Finance should be a high school graduation requirement.*85%UNI T 1: CHAPTER 1 LICENSED FOR 2014 2015 SCHOOL YEAR ONLY SPONSORED BY:Key TermsGet to know the language of money.

10 Consumer: A person or organization that uses a product or service Credit: The granting of a loan and the creation of debt; any form of deferred payment Debt: An obligation of repayment owed by one party (the debtor/borrower) to a second party (the creditor/lender); in most cases this includes repayment of the original loan amount plus interest Economy: A system by which goods and services are produced and distributed Financial literacy: The knowledge and skillset necessary to be an informed consumer and manage finances effectively Interest: A fee paid by a borrower to the lender for the use of borrowed money; typically interest is calculated as a percentage of the principal (original loan amount) Loan: A debt evidenced by a note, which specifies the principal amount, interest rate and date of repayment Personal Finance : All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, OutcomesOnce you ve completed this chapter s videos, you will be asked to return to this list and place a checkmark next to the items you ve 1: What Is Personal Finance ?