THE COMPLETE MONEY WORKBOOK - NYSSCPA

THE COMPLETE MONEY

WORKBOOK

? Jarred R. Berman January 2015

CREATED BY THE FINANCIAL LITERACY COMMITTEE NEW YORK STATE SOCIETY OF CPAs

NASSAU CHAPTER

THE COMPLETE MONEY WORKBOOK

THANK YOU TO OUR SPONSORS:

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If your company is interested in sponsorship opportunities with the Financial Literacy Committee, please contact the author.

? Jarred R. Berman January 2015

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THE COMPLETE MONEY WORKBOOK

1 INTRODUCTION .................................................................................. 1

2 GRADES 1-4 ........................................................................................ 2

2.1 WHY TO HAVE THE CONVERSATION................................................................................................ 2 2.2 WHAT IS MONEY ............................................................................................................................ 4

2.2.1 What Money Is Not .................................................................................................................. 4 2.2.2 How To Make Money .............................................................................................................. 5 2.3 CAREERS VS. JOBS ........................................................................................................................ 6 2.4 WANTS VS. NEEDS ......................................................................................................................... 6 2.4.1 Questions to Think About ........................................................................................................ 7 2.4.2 Game ....................................................................................................................................... 8 2.5 ALLOWANCE .................................................................................................................................. 9 2.5.1 Allowance Guidelines .............................................................................................................. 9 2.6 SPENDING PLANS........................................................................................................................... 9 2.6.1 Examples of Spending Money............................................................................................... 10 2.6.2 Examples of Spending Time ................................................................................................. 10 2.7 OPPORTUNITY COSTS .................................................................................................................. 10 2.8 SAVING AND HOW IT IS DONE ....................................................................................................... 11 2.8.1 What It Is and Why It's Important .......................................................................................... 11 2.8.2 How Much Money Should Be Saved?................................................................................... 12 2.8.3 Where Can Money Be Saved?.............................................................................................. 12 2.8.4 How To Begin ........................................................................................................................ 13

3. GRADES 5-7 ...................................................................................... 14

3.1 DECISION MAKING............................................................................................................................... 14 3.1.1 Coach .................................................................................................................................... 14

3.2 GET A JOB! ................................................................................................................................. 14 3.2.1 Passive Income ..................................................................................................................... 15

3.3 THE ART AND SCIENCE OF BUDGETING ......................................................................................... 15 3.4 TYPES OF BANKING SERVICES OFFERED ........................................................................... 15

3.4.1 FDIC Insurance ..................................................................................................................... 15 3.4.2 Bank Services........................................................................................................................ 16 3.5 GOOD LOANS VS. BAD LOANS ................................................................................................ 16 3.5.1 Good loans ............................................................................................................................ 16 3.5.2 Bad loans............................................................................................................................... 17

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THE COMPLETE MONEY WORKBOOK

4 GRADES 8-12 .................................................................................... 18

4.1 WORD FIND .............................................................................................................................. 18 4.2 BUDGETING.............................................................................................................................. 18

4.2.1 First Rule of Budgeting .......................................................................................................... 19 4.2.2 Structure ................................................................................................................................ 19 4.2.3 Sample Monthly Budget ........................................................................................................ 19 4.3 PAYCHECKS............................................................................................................................. 20 4.3.1 Introduction ............................................................................................................................ 20 4.3.2 Example................................................................................................................................. 20 4.4 YOUR INCOME AND HOW IT'S AFFECTED ............................................................................ 21 4.4.1 Introduction ............................................................................................................................ 21 4.4.2 Factors................................................................................................................................... 21 4.4.3 Ensure your success ............................................................................................................. 21 4.5 SIMPLE INTEREST VS. COMPOUND INTEREST .................................................................... 22 4.5.1 Simple Interest Definition ...................................................................................................... 22 4.5.2 Compound Interest Definition ................................................................................................ 22 4.5.3 Simple Interest Examples...................................................................................................... 23 4.5.4 Compound Interest Example ................................................................................................. 23 4.6 WEALTH ACCUMULATION ...................................................................................................... 23 4.6.1 Time....................................................................................................................................... 23 4.6.2 Fees....................................................................................................................................... 24 4.6.3 Consistency ........................................................................................................................... 24 4.7 WHAT IS CREDIT AND USING IT WISELY............................................................................... 25 4.7.1 Definition................................................................................................................................ 25 4.7.2 Credit Card Terms ................................................................................................................. 25 4.7.3 Types of Credit ...................................................................................................................... 26 4.7.4 Sources of Credit................................................................................................................... 26 4.7.5 The DOs and DON'Ts of Using Credit Cards........................................................................ 26 4.8 BASICS OF INVESTING............................................................................................................ 27 4.8.1 The Difference Between Saving and Investing ..................................................................... 27 4.8.2 The Rule of 72 ....................................................................................................................... 27 4.8.3 Investment Options ............................................................................................................... 28 4.8.4 The Stock Market .................................................................................................................. 28 4.8.5 Asset Allocation and Diversification ...................................................................................... 28 4.8.5.1 Asset Allocation ..................................................................................................................... 29

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THE COMPLETE MONEY WORKBOOK

4.8.5.2 Diversification ........................................................................................................................ 29 4.8.6 Stock Market Resources ....................................................................................................... 30 4.9 YOUR FUTURE, YOUR CAREER ............................................................................................. 30

5 COLLEGE PLUS ................................................................................ 32

5.1 LOVING YOUR JOB AND CAREER ................................................................................................... 32 5.2 LIVING ON YOUR OWN ................................................................................................................. 33

5.2.1 Due-Diligence ........................................................................................................................ 33 5.2.2 Your First Apartment ............................................................................................................. 33 5.2.3 Your First House.................................................................................................................... 35 5.2.4 Plan for the unexpected: A Healthy Reserve ........................................................................ 38 5.3 CARS (LEASING VS. PURCHASING) ................................................................................................ 38 5.4 RENT AN APARTMENT VS. BUY A HOME ......................................................................................... 40 5.5 YOUR FUTURE............................................................................................................................. 41 5.5.1 Family Fun Finances ............................................................................................................. 41

6 CLOSING REMARKS ......................................................................... 42

6.1 TAKE AWAYS ............................................................................................................................... 42 6.1.1 Take Aways For Kids ............................................................................................................ 42 6.1.2 Take Aways For Adults ......................................................................................................... 42

7 AUTHORS .......................................................................................... 44

8 APPENDIX ......................................................................................... 45

9 OTHER RESOURCES........................................................................53

9.1 ALL AGES .................................................................................................................................... 53 9.2 PRE-TEEN THROUGH TEEN ........................................................................................................... 54 9.3 YOUNG CHILDREN........................................................................................................................ 54

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THE COMPLETE MONEY WORKBOOK

1 INTRODUCTION

Our mission is simple at the Financial Literacy Committee1 of the New York State Society of CPAs:

To reach out to children in order to guide them on their journey toward financial literacy and fiscal responsibility. We will expose them to engaging and instructional materials that will help them understand money and finances at an age-appropriate level.

We are a dedicated group of individuals including accountants, attorneys, educators, mothers, fathers, and grandparents that are concerned about your financial education. It is important that you understand your personal finances so that you can:

Save for things you want, need and desire Go on vacations Purchase luxuries Afford retirement Pay for your future kids' college education

If you are reading this workbook you most likely have been to one of our great events where we aim to educate our future leaders about money. The following chapters you are about to read educate and teach many financial concepts we as a committee feel are appropriate for your children to know at each grade level. Many of the sections are addressed to the reader to educate yourself and then, in turn, your children. Some of the sections are addressed directly to the children. We recommend reading the workbook and going over the sections with your child that are addressed to them and also finding a way to introduce these concepts in everyday life.

We hope you find the tools given in the workbook to be of help and that you will share your knowledge with your friends and family.

The Financial Literacy Committee of the New York State Society of CPAs Nassau Chapter

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? Jarred R. Berman January 2015

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