Transcript Africa

Personal Money Management
Day 1
Standard:
SS7E4
Students explain personal money management
choices in terms of income, spending, credit,
savings, and investing.
Agenda Message:
Social Studies GMAS is Wednesday, April 29th. Invest 20-30
minutes a night in studying your Study Guide.
Standard SS7E4: Students explain personal money
management choices in terms of income, spending, credit,
savings, and investing.
Essential Question for Monday April 27th :What is the
theme for Personal Money Management?
Warm-Up:
Why do countries need economies?
Today We Will:
GMAS Review
E.Q. Answer for Monday April 27, 2015:
It’s not about how much money you make, it’s all about how
much money you keep.
Warm-Up:
To help them manage distribution of resources
Income
When people go to work, they earn an income. An
income is the total of a person’s earnings that they
can then decide how to use.
Broadly speaking a person only has two choices
about what to do with income: spending money
now for goods and services or saving for the future.
Savings
Savings are after tax income minus consumption
spending, that is, the money you have not spent
after buying things you need or want.
To help people make decisions about using their
limited income a budget can be developed.
Budget
A budget is a;
1. Spending-and-savings plan,
2. Based on estimated income and expenses,
3. For an individual or an organization,
4. Covering a specific time.
Investing
From an individual point of view, savings typically
become a form of investing, because the savings is
put into a bank account, stock, bond, or mutual
fund that pays a rate of return (interest).
Investing refers to postponing current consumption
or rewards to pursue an activity with expectations
of greater benefits in the future.
Real investment or physical capital investment
Real investment or physical capital investment refers
to decisions by businesses to purchase equipment
and physical plants and the purchase of new
homes by consumers.
The amount of real investment is critical to
economic growth. Financial investment and real
investment or connected but they are not the
same.
Credit
Credit refers to the ability to borrow money. Some
forms of credit commonly used by consumers are
car loans, home mortgage loans, and credit cards.
Firms also use credit regularly, either by borrowing
from a bank or issuing corporate bonds.
Government also uses credit when it needs to
borrow money to finance a budget deficit (e.g.,
savings bonds, treasury notes).
Those who can borrow moderate or large sums of
money at a reasonable rate of interest are
sometimes said to have good credit, while those
who cannot borrow such amounts are said to have
bad credit.
Credit is extremely useful to the economy. Most
people would have great difficulty in buying a
house if the couldn’t borrow the money.
Many people also use credit to further their
education.
Many firms would be unable to build new factories if
they had to save all the money first.
In addition, short-term credit is often used by
people (through credit cards) as a simple and
convenient method of paying for purchases.
However, excessive borrowing can b a problem for
households, firms and government.