7th Personal Money Management Part 1

Personal Money Management

​SS7E10

• I can understand that income is received from work and that it is limited.

• I can understand that a budget is a tool to plan spending and saving of income.

• I can understand the reasons and benefits of saving.

• I can understand the uses and costs of credit.

Multiple Choice

What do people need to be able to pay bills, buy groceries or other necessities, go on trips, shop, etc.?

• luck

• a fairy godmother

• money

• pizza...it helps everything...

Open Ended

How are people able to make money?

​Money & Income

• Money is not so important for what it is but for what it can do.

• Your income provides you with money to spend on goods and services you need or want.

  • People earn income by giving their time and services to an employer and receiving money in return.

• Income from work, however, is limited. You must make good choices with your earnings.

Open Ended

What happens if you run out of money and need or want to buy something? Is there a way that you can still get that item, good or service?

​Credit

• People use credit to buy goods now and pay for them later.

• When you buy an item on credit, you usually have to pay the amount you borrowed plus an additional amount in interest.

  • Banks make money by earning interest—interest is a fee paid for the use of someone else’s money.

Open Ended

What are some payment methods that people use when buying something or making a purchase?

​Payment Methods

• There are several methods, or ways, that people are able to use when paying for something:

  • cash

  • check

  • credit card

  • debit card

​Paying with Cash

• Advantages or benefits of using cash:

  • Almost all sellers accept cash payments.

  • Sometimes sellers only accept cash.

  • When you pay with cash, you know you are spending money that you actually have available!

• Disadvantages of using cash:

  • To pay with cash, you must have it with you when you make the purchase. That means you must plan for your purchase in advance.

  • Cash can be lost or stolen. Having too much cash with you is a risk! A bank is a safer place to keep your cash.

  • You cannot pay with cash if you shop online. Plus, it is not safe to send cash through the mail.

​Paying with Check

• Advantages or benefits of using a check:

  • When you pay by check, you don’t have to have the cash with you.

  • Checks protect you from theft. If someone steals your checks and uses them (this is called forgery), banks refund your money as long as you notify them promptly. But, it is important to safeguard your checks because it takes time to get your money back.

  • Checks help you keep track of your spending because each purchase is listed on your bank statement. That can be great for budgeting!

​Paying with Check

• Disadvantages of using a check:

  • Sellers require you have a photo ID to pay by check. That way they know the check is yours. This is only a disadvantage if you do not have a photo ID.

  • Some sellers will not accept checks. Why? Because some buyers write checks for more money than they have in their bank account, and then the seller does not get paid. The seller has to contact you to request a new check or cash.

  • If you write a check for more money than is in your account—even accidentally—the seller and your bank will charge you fees. And, you will still need to pay the buyer for your purchase. That’s expensive!

​Paying with Credit Card

• Advantages or benefits of using a credit card:

  • A credit card can be helpful in an emergency, such as if your car breaks down.

  • If you pay the full amount due each month, the credit card does not charge you interest or fees.

  • Most credit cards issue reward points for free goods or services, or maybe even cash!

  • If you use a credit card responsibly, you can build a good credit history. A good credit history can help you if you ever want to borrow money to buy a car or house.

  • You are not responsible for charges made by someone else as long as you notify the company promptly.

  • Credit card companies offer protection if something you buy is not delivered as promised.

​Paying with Credit Card

• Disadvantages of using a credit card:

  • If you do not pay the full amount due each month, you will owe interest.

    • interest - a fee paid on the money that has been loaned

  • If you make your payment late, you will also owe a fee.

  • Sometimes people forget that using a credit card is using real money.

    • They spend more than they can afford. Then it can be difficult, and stressful, to get out of debt. Sometimes people struggle with credit card debt for YEARS!

​Paying with Debit Card

• Advantages or benefits of using a debit card:

  • Debit cards are accepted at most stores—even online.

  • A PIN is a secret code that only you know. It stops anyone else from using your debit card. You enter the PIN when you use your debit card to make a purchase.

  • Debit cards help you keep track of your spending because each purchase is listed on your bank statement. That can be great for budgeting!

  • You can use your debit card to get cash from your bank account at an ATM and at some stores.

​Paying with Debit Card

• Disadvantages of using a debit card:

  • If you do not have enough money in the bank, the card will not work.

  • If you forget your PIN, you will not be able to use your card. You can choose your PIN to be something you can easily remember.

  • If you tell someone your PIN, or if someone watches you input it, they can make charges on your debit card and you will be responsible for paying them. Giving out your PIN is like handing out a key to your bank account—bad idea!

​Bank Loans

• Sometimes people have to make really big purchases, such as buying a new house, buying a new car, paying or medical expenses, or making home improvements, just to name a few.

• When people make these big purchases, they often do not have that big amount of money, so they chose to get a bank loan.

  • A bank loan is essentially money borrowed from a bank that you promise to pay back, plus an extra amount called interest.

  • It's like a temporary agreement where you borrow a sum of money with the understanding that you'll return it over time with a fee for using the money. 

Multiple Select

What payment method(s) would a person use to pay for lunch, a haircut, or textbooks? (Hint: There might be more than one answer!)

• cash

• check

• debit card

• credit card

• bank loan

Multiple Choice

Sarah's car is old and she is worried it may break down. She decides to get a new car. What payment method might Sarah use the purchase her new car?

• cash

• check

• debit card

• credit card

• bank loan