Personal Management Merit Badge

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Personal ManagementMerit Badge

• Mr. Sprinkle
• [phone] (H)
• [phone] (M)
• kens_at_infoservinc.com

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Skills youll learn

• Planning a major purchase
• Budgeting
• Thoughts on Buying
• Saving and Investing
• Stocks
• Investing
• Loans and Credit
• Time management
• Careers

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Plan for the half day

• Introduction and badge overview 30-45 min.
• Budgeting Exercise / Thoughts on Buying
• Bio break maximum 5 minutes
• Saving and Investing
• Loans and credit
• Bio break maximum 5 minutes
• Time management
• Careers
• Final Discussion
• Reserve 20 minutes

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How to earn a Merit Badge

• Read the Requirements
• You are expected to meet the requirements as they
  are stated -- no more and no less.
• If it says "show or demonstrate," that is what
  you must do. Just telling about it isn't enough.
  
• The same thing holds true for such words as
  "make," "list," "in the field," and "collect,"
  "identify," and "label."
• Meritbadge.org requirements, workbooks,
  reference links (very helpful)
• Use the workbook (not required, but helpful)
• Read the MB booklet
• Listen and participate in class
• If you dont know, say so and ask, dont guess
• The goal here is to demonstrate command of the
  subject
• no one knows it all
• You can finish up the requirements anytime no
  time limit
• But requirements can change at any time

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Remember
Earning a MB is a Learning Experience
When you do more than is required, you benefit
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Personal Management MB Requirements

• 1. Do the following
• a. Choose an item that your family might want to
  purchase that is considered a major expense.
• b. Write a plan that tells how your family would
  save money for the purchase identified in
  requirement 1a.
• 1. Discuss the plan with your merit badge
  counselor
• 2. Discuss the plan with your family
• 3. Discuss how other family needs must be
  considered in this plan.
• c. Develop a written shopping strategy for the
  purchase identified in requirement 1a.
• 1. Determine the quality of the item or service
  (using consumer publications or rating systems).
• 2. Comparison shop for the item. Find out where
  you can buy the item for the best price. (Provide
  prices from at least two different price
  sources.) Call around study ads. Look for a sale
  or discount coupon. Consider alternatives. Can
  you buy the item used? Should you wait for a
  sale?
• 2. Do the following
• a. Prepare a budget reflecting your expected
  income (allowance, gifts, wages), expenses, and
  savings. Track your actual income, expenses, and
  savings for 13 consecutive weeks. (You may use
  the forms provided in this pamphlet, devise your
  own, or use a computer generated version.) When
  complete, present the results to your merit badge
  counselor.
• b. Compare expected income with expected
  expenses.
• 1. If expenses exceed income, determine steps to
  balance your budget.
• 2. If income exceeds expenses, state how you
  would use the excess money (new goal, savings).

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Personal Management MB Requirements (cont.)

• 3. Discuss with your merit badge counselor FIVE
  of the following concepts
• a. The emotions you feel when you receive money.
• b. Your understanding of how the amount of money
  you have with you affects your spending habits.
• c. Your thoughts when you buy something new and
  your thoughts about the same item three months
  later. Explain the concept of buyer's remorse.
• d. How hunger affects you when shopping for food
  items (snacks, groceries).
• e. Your experience of an item you have purchased
  after seeing or hearing advertisements for it.
  Did the item work as well as advertised?
• f. Your understanding of what happens when you
  put money into a savings account.
• g. Charitable giving. Explain its purpose and
  your thoughts about it.
• h. What you can do to better manage your money.

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Personal Management MB Requirements (cont.)

• 4. Explain the following to your merit badge
  counselor
• a. The differences between saving and investing,
  including reasons for using one over the other.
• b. The concepts of return on investment and risk.
  
• c. The concepts of simple interest and compound
  interest and how these affected the results of
  your investment exercise.
• 5. Select five publicly traded stocks from the
  business section of the newspaper. Explain to
  your merit badge counselor the importance of the
  following information for each stock
• a. Current price
• b. How much the price changed from the previous
  day
• c. The 52-week high and the 52-week low prices
• 6. Pretend you have 1,000 to save, invest, and
  help prepare yourself for the future. Explain to
  your merit badge counselor the advantages or
  disadvantages of saving or investing in each of
  the following
• a. Common stocks
• b. Mutual funds
• c. Life insurance
• d. A certificate of deposit (CD)
• e. A savings account or U.S. savings bond

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Personal Management MB Requirements (cont.)

• 7. Explain to your merit badge counselor the
  following
• a. What a loan is, what interest is, and how the
  annual percentage rate (APR) measures the true
  cost of a loan.
• b. The different ways to borrow money.
• c. The differences between a charge card, debit
  card, and credit card. What are the costs and
  pitfalls of using these financial tools? Explain
  why it is unwise to make only the minimum payment
  on your credit card.
• d. Credit reports and how personal responsibility
  can affect your credit report.
• e. Ways to reduce or eliminate debt.
• 8. Demonstrate to your merit badge counselor your
  understanding of time management by doing the
  following
• a. Write a "to do" list of tasks or activities,
  such as homework assignments, chores, and
  personal projects, that must be done in the
  coming week. List these in order of importance to
  you.
• b. Make a seven-day calendar or schedule. Put in
  your set activities, such as school classes,
  sports practices or games, jobs or chores, and/or
  Scout or church or club meetings, then plan when
  you will do all the tasks from your "to do" list
  between your set activities.
• c. Follow the one-week schedule you planned. Keep
  a daily diary or journal during each of the seven
  days of this week's activities, writing down when
  you completed each of the tasks on your "to do"
  list compared to when you scheduled them.
• d. Review your "to do" list, one-week schedule,
  and diary/journal to understand when your
  schedule worked and when it did not work. With
  your merit badge counselor, discuss and
  understand what you learned from this requirement
  and what you might do differently the next time.

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Personal Management MB Requirements (cont.)

• 9. Prepare a written project plan demonstrating
  the steps below, including the desired outcome.
  This is a project on paper, not a real-life
  project. Examples could include planning a
  camping trip, developing a community service
  project or a school or religious event, or
  creating an annual patrol plan with additional
  activities not already included in the troop
  annual plan. Discuss your completed project plan
  with your merit badge counselor.
• a. Define the project. What is your goal?
• b. Develop a timeline for your project that shows
  the steps you must take from beginning to
  completion.
• c. Describe your project.
• d. Develop a list of resources. Identify how
  these resources will help you achieve your goal.
• e. If necessary, develop a budget for your
  project.
• 10. Do the following
• a. Choose a career you might want to enter after
  high school or college graduation.
• b. Research the limitations of your anticipated
  career and discuss with your merit badge
  counselor what you have learned about
  qualifications such as education, skills, and
  experience.

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Major Purchase

• What can we afford?
• Pay cash or finance?
• New or used?
• Warranty offered?
• Where do we buy it?
• Are we comparing the same product?
• What other costs are involved?
• Insurance
• Repairs
• Settlement
• Sales and other taxes

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Budgeting

• Must be balanced (income gt expenses)
• Should plan on some savings
• Should be realistic
• Limitations of planning
• Unexpected expenditures

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Thoughts on Buying

• Amount of Money you have impacting buying
  decisions
• Emotions and buying
• Buyers remorse
• Advertising a driver for buying are you being
  manipulated?
• What happens to money when you save it?
• What can you do to better manage your money?
• Appreciating items vs. depreciating items
• Dont hurry a buying decision
• Buy used instead of new
• Try to save at least half of what you earn

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Exercise

• Discuss with your merit badge counselor FIVE of
  the following concepts
• a. The emotions you feel when you receive money.
• b. Your understanding of how the amount of money
  you have with you affects your spending habits.
• c. Your thoughts when you buy something new and
  your thoughts about the same item three months
  later. Explain the concept of buyer's remorse.
• f. Your understanding of what happens when you
  put money into a savings account.
• h. What you can do to better manage your money.

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Difference between Saving Investing

• Saving
• involves putting small amounts aside
• Regular contributions
• Kept to carry you through high expenses
• Investments
• Involve larger amounts
• Risk is a factor
• Returns are more noticeable

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Traditional Investments
Remeber Diversify

• Stocks
• Common or Preferred
• Pays Dividends
• Price can change
• Traded in blocks of 100 or odd lots
• Trading on NY Stock Exchange or NASDAQ (OTC)
• Bonds
• Pays a consistent interest
• Corporate or government
• Value changed based on current Interest Rates
• Mutual Funds
• Pooled investment
• Different types (growth, income, bond, tax free,
  foreign exchange, index, etc.)

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Traditional Investments (cont.)

• Bank Savings Accounts
• Federally Insured
• CDs fixed rate for a fixed term
• Life Insurance
• Pays a benefit to your loved ones if you pass
  away
• Has cash value if retrieved
• Retirement Savings
• IRA
• 401K
• Penalty if you draw before age 65

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Other Investments

• Real estate
• Commodities / Futures
• Private offering
• Silent partner
• Set up a business
• Real estate development
• Other investments

Very Risky
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Investment Considerations

• Return on investment (time value of money)
• Risk on loss of principle
• Simple Interest
• Compound interest

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Exercise

• Invest 10,000
• Term 1 years
• Return choices
• 11 (Annual Percentage Rate) Simple Interest
• 10.5 APR Compounded Monthly

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Answer

• 11 Return is 1,100
• 10.5 compounded monthly is 1,102.03

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Exercise

• You have 1,000 invested for one year
• This investment is in a mutual fund
• You get back 1,400 total
• What is your rate of return?
• Is this a good rate?

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What is Risk?

• Risk is the chance youll loose some or all of
  your principle investment
• Could also loose your interest
• Federally insured savings is generally risk free
• Publically traded firms, Mutual Funds, etc. may
  go under (case in point General Motors)
• Could be fraud involved
• Generally higher risk better return

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How do you reduce risk

• Never invest more than you can afford to loose
• Avoid unrealistic return rate claims
• Heads up always monitor your investments
• Accept a lower rate of return with less risk
• Diversify your investments
• Dont put all your eggs in one basket

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The keys to choosing an investment

• Know what youre investing in
• Understand the business
• Know the risks
• Dont invest in out of town investments
• Dont go into business with anyone you dont
  personally know
• Any cash oriented business requires that you turn
  the door key in the AM and PM

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Exercise

• Whats the difference between Saving and
  Investing?
• What is return on investment?
• What is risk?
• What is simple interest and compound interest?
• How do these affected the results of your
  investment exercise?

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Picking a Stock

• Know the company
• Product lines
• Position in the marketplace / competition
• Industry
• Prospects
• Read Financial info
• Check out the PE Ratio (15 or less)
• Look at the performance for the past year
• Examine the Value Line Report
• Look at the dividend yield
• Price performance over five years

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Stock Examples

• McDonalds
• Wall Mart
• Pfizer / Merck
• Microsoft
• Exxon
• Ford
• Boeing

• Marriott
• Sara Lee
• Yum Brands, Inc.
• GE
• REIT
• Del Monte

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Things that Impact Stock Price

• Ratings by pros
• News events
• Takeovers
• Scandal
• Management errors
• Profitability

• Industry specific issues
• Forecasts
• Earnings reports
• Growth
• US Economy
• US World News

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Exercise

• Pick 5 Publically Traded stocks
• List the following
• Stock Name
• Stock Symbol
• Current Price
• High and Low for the year
• Change from yesterdays closing price

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Exercise

• Pretend you have 1,000 to save, invest, and help
  prepare yourself for the future.
• Explain the advantages or disadvantages of saving
  or investing in each of the following
• a. Common stocks
• b. Mutual funds
• c. Life insurance
• d. A certificate of deposit (CD)
• e. A savings account or U.S. savings bond

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Loans

• Principle the amount you borrow
• Interest (APR) rate of loan per year
• Term length of loan (typically in months)
• Payments payment amount (typically monthly)

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Types of loans

• Secured loan
• Mortgage
• Auto Loan
• Unsecured loan
• Personal loan
• Credit card
• Bank Overdraft protection

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Credit Cards

• Debit Card
• Draws directly from a bank account
• American Express
• Charge Card (department store, gas company, etc.)
• Credit Card (very high interest rates)
• VISA, Master Card, Discover
• Charge extra for missed payments, over limit, etc.

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Paying off debt

• Pay credit card balance monthly as used
• Avoid minimum payments
• Make extra payments on loans
• One extra payment every year will reduce a
  mortgage term by 50
• If you cant afford it, dont buy it

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What is a Credit Report?

• Three credit bureaus collect credit info on
  everyone who uses credit
• Equifax, TransUnion, Experian
• Indicates ability to pay off your debts
• Tracks late payments, defaults, bankruptcies,
  etc.
• Lists total debt and total monthly payments
• Evaluates how you use credit (FICA Score)
• Negative reports stay on credit report for seven
  years.

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How do you establish credit?

• Must be 18 or older
• Car loan
• Small credit card / bank loan
• Co-sign
• Be Responsible pay it off on time

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Review

• What is APR?
• Name an example of secured debt
• What is a unsecured debt?
• Whats the difference between a charge card and a
  credit card?
• Whats the difference between a credit card and a
  debit card?
• What is listed on a credit report?

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Exercise

• a. What a loan is, what interest is, and how the
  annual percentage rate (APR) measures the true
  cost of a loan.
• b. The different ways to borrow money.
• c. The differences between a charge card, debit
  card, and credit card. What are the costs and
  pitfalls of using these financial tools? Explain
  why it is unwise to make only the minimum payment
  on your credit card.
• d. Credit reports and how personal responsibility
  can affect your credit report.
• e. Ways to reduce or eliminate debt.

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What is a Project?

• Something unique that hasnt been done before
• Building a house or a home improvement
• Writing a paper for school
• Community Service Effort
• Specific Start and Finish events (temporary
  endeavor)
• Undertaken to meet unique goals and objectives
• Usually to bring about beneficial change or added
  value

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Plan a Project

• Define the project goal
• Describe the project in detail
• Develop a timeline/steps to complete
• List of resources (supplies, tools, labor, etc.)
• Develop a budget for your project
• Cost of resources
• Other costs (permits, food/water, safety
  equipment, mileage, etc.)

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Exercise

• Plan a project using your workbook

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Careers

• What do you want to be?
• What education is required
• What specialized training is needed
• Are there any certifications required
• Will you serve as an apprentice?
• How will you find your first job?
• How can you learn more about your field?

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Exercise

• Research two careers and report on
• Education
• Qualifications
• Specialized Skills
• Certifications required
• Work experience required

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Home Fun

1. Discuss your plan for a major purchase with your
   family
2. Keep a journal of money received and spent for 3
   months
3. Collect info on five publically traded stocks
4. Keep a journal of to do items for 7 days
5. Read the Personal Management MB Booklet
6. Review each of these with your counselor.

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Thank you for coming

• Great Job.