21st Century Student FinLit -Getting Personal SW

21st Century Student FinLit -Getting Personal SW

STUDENT WORKBOOK

THE 21ST CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY GETTING PERSONAL

SUSAN MULCAIRE

COPYRIGHTED MATERIAL

GETTING PERSONAL PRODUCT PREVIEW

STUDENT WORKBOOK

COPYRIGHTED MATERIAL

The 21st Century Student’s Guide to Financial Literacy – Getting Personal (Student Workbook) PRODUCT PREVIEW Copyright © Susan Mulcaire 2017 This document is copyrighted. Reproducing or sharing this document with other users is a violation of copyright and intellectual property laws. All rights reserved. The content of this book and the teaching methods are protected by intellectual property laws. c21 Publishing grants permission to noncommercial users to provide instruction based on the content of this book, however no part of this publication may be reproduced in whole or in part, stored in a retrieval system or transmitted in any form, by any means, electronic, mechanical, photocopying, recording or otherwise, for any commercial or noncommercial use whatsoever without the express written permission of the publisher. All materials in The 21st Century Student’s Guide to Financial Literacy – Getting Personal have been prepared for information purposes only to permit students to learn general principles of financial literacy and personal money management. Nothing in these materials constitutes professional legal or financial management advice. Nothing contained in these resources is a substitute for obtaining advice from a qualified accountant, professional investment advisor or attorney. Any commercial business, product, services, or websites referenced in this book are included for informational and instructional purposes only. No endorsement is made or intended by the author of any of the commercial businesses, products, services, or websites reference in the materials. Always seek independent professional advice about your specific money management issue, financial or legal goals! 1 2 3 4

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Printed in the United States of America ISBN 978-0-9836906-4-1

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TABLE OF CONTENTS

Unit 1: Earning an Income Chapter 1: Getting Personal: You and Your Money . . . . . . . . . . . . . . . . . . . . . . 1 Defining financial literacy; introduction to course themes; income vs. wealth; wealth and financial security; income and class division in America; gender pay inequality debate. Chapter 2: Battle of the Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Retail and consumer banks, savings & loans; savings accounts, checking accounts, MMA and time deposits; avoiding bank fees and penalties; alternatives to traditional banking; deposit insurance; virtual currency controversy. Chapter 3: A Job That Pays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Job vs. career; education’s link to income, earnings and unemployment; job security and job satisfaction; career choices; postsecondary planning; college alternatives; future resume; copy cat careers. Chapter 4: Pay. It’s More Than a Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Compensation; salary and employee benefits; Social Security; healthcare insurance; workers compensation; disability insurance; pensions and retirement plans; employee stock purchase plans; perks; FMLA; freelancing; the job interview. Chapter 5: Honey, They Shrunk My Paycheck! . . . . . . . . . . . . . . . . . . . . . . . . 83 Paycheck withholdings and deductions; OASDI; federal and state income taxes; IRS forms W-2, W-4, 1099,1040; deciphering a pay stub; exploring flat tax vs. progressive tax. Chapter 6: The Global Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 A career overseas; multinational companies; overseas job search; work visas and permits; shortage occupations; developing cross-cultural skills; H1b Visa controversy. Unit 2: Building Wealth Chapter 7: The Credit Conundrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 The pros and cons of credit; credit and the economy; APR; credit report and credit score; student loans; exploring FICO; the FAFSA; free college controversy. Chapter 8: Supersize Your Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Savings; establishing savings goals; simple vs. compound interest; the Rule of 72; developing a savings habit in the 21st century; exploring income and wealth disparity in America. Chapter 9: Home is Where the Mortgage or Lease Is . . . . . . . . . . . . . . . . . . . . . 151 Homeownership; buying a home; amortization and appreciation; mortgages; rental agreements; building wealth through homeownership vs. renting; rent control vs. free market debate. PRODUCT PREVIEW

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Chapter 10: Your Risky Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Risks of an underfunded retirement; 401K plans and IRAs; calculating retirement benefits; 21st century challenges to funding retirement; age discrimination; Social Security benefits; Speak up about Social Security! Chapter 11: Investing 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Investing basics; risk and reward; stocks, bonds, mutual funds; real estate; commodities; mutual funds; portfolio diversification; return on investment; capital gains tax; Wall Street Reform student podcasts. Chapter 12: Small Biz Whiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Traits and skills of a small business owner; LLC, corporation, partnership, sole proprietorship, franchise; calculating a profit margin; building wealth through a small business; small business owner survey. Unit 3: Protecting and Preserving Wealth Chapter 13: Credit Card Craze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Consumer debt in America; credit card rates, penalties, and fees; grace periods; the credit card time line; how to read a credit card statement; responsible credit card ownership; predatory lending debate. Chapter 14: The Beauty of the Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Benefits of the personal budget; wants vs. needs; living within a budget; making a budget; exploring personal budget apps and programs; the federal balanced budget controversy. Chapter 15: Protect What You’ve Earned . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Insurance terms and concepts; homeowners insurance; auto coverage; healthcare insurance; HMO vs. PPO; term life insurance vs. whole life; making an insurance claim; protecting yourself from identity theft. Chapter 16: Share with Care! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 The risks of shared ownership; forms of joint ownership; joint tenancy vs. tenancy in common; risks of co-borrowing, co- signing and guarantees; faux fiancés financial compatibility challenge. Chapter 17: How to Lose it All... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 Addiction’s impact on income, education and wealth-building; gambling addiction; short term and long term financial impact of a criminal conviction; lifestyle debate: single vs. married? Chapter 18: Resolving Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 Insolvency; bankruptcy chapters 7, 11, & 13; liquidation, reorganization and debt restructuring; non-dischargeable debt; exempt property; limitations of bankruptcy; debt management agreements; reflecting on financial literacy. PRODUCT PREVIEW

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GETTING PERSONAL: YOU ANDYOUR MONEY

C H A P T E R 1

W here do you see yourself in 20 years? What will your life-style be? Will you be enjoying the perks of great financial success, or barely able to keep a roof over your head or food on the table? What are your personal financial goals? Q: I expect to be… a. Crazy rich (Think Bill Gates, Mark Zuckerberg…) b. Rich c. Moderately well off d. Living paycheck-to-paycheck e. Flat broke, without a penny to your name You probably believe (or at least hope), that you’ll experience moderate, if not great, financial success. The reality is, however, too many people do not have the skills or knowledge they need to meet their financial challenges or understand their financial risks. They are not financially literate . This lack of skills and knowledge about money is contributing to rising consumer debt, unstable financial futures, income and wealth disparity, and poverty. Whether you live the lifestyle of the rich and famous, are moderately comfortable and secure, or crash and burn into a pit of debt and financial despair depends a great deal on whether you are financially literate. Let’s get started exploring the knowledge and skills you’ll need to live an a, b or c lifestyle, and how to avoid a lifetime of d and e!

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Learning Goals By the end of this chapter you will be able to: • State the elements of comprehensive financial literacy • Compare income and wealth • List key features of U.S. socioeconomic classes • Explain the significance of the FPL • Summarize the relationship of wealth to financial security • (Opt.) Argue for or against Gender Pay Gap reforms

Chapter Resources: The Pew Research Center has an income calculator that enables comparison of income by education, age, race or ethnicity, and marital status. (Search Pew Research Center Income Calculator. ) Investopedia.com is a good go-to site for financial terms and definitions with easy to understand explanations of complex financial instruments and concepts.

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WHAT DOES THAT MEAN?

TERM

DEFINITION

blue collar worker

an occupational classification of workers who perform physical labor jobs such as plumbing and construction. “BLS”; a division of the U.S. Department of Labor that collects and analyzes >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128 Page 129 Page 130 Page 131 Page 132 Page 133 Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 Page 143 Page 144 Page 145 Page 146 Page 147 Page 148 Page 149 Page 150 Page 151 Page 152 Page 153 Page 154 Page 155 Page 156 Page 157 Page 158 Page 159 Page 160 Page 161 Page 162 Page 163 Page 164 Page 165 Page 166 Page 167 Page 168 Page 169 Page 170 Page 171 Page 172 Page 173 Page 174 Page 175 Page 176 Page 177 Page 178 Page 179 Page 180 Page 181 Page 182 Page 183 Page 184 Page 185 Page 186 Page 187 Page 188 Page 189 Page 190 Page 191 Page 192 Page 193 Page 194 Page 195 Page 196 Page 197 Page 198 Page 199 Page 200

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