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Measure Your ProgressBefore watching the video, read each statement below and mark whether you agree or disagree in the “Before”column. Then, after watching the video, do it again using the “After” column to see if you changed your mindon any statement.BEFOREAgreeAFTERDisagreeAgreeDisagree1. I already have a strong working knowledge ofpersonal finance.2. I think I have a lot to learn when it comes tomanaging money.3. Because I am a teenager, what I do now with mymoney will have little effect on my financial future.4. My parents have taught me a lot about how tomanage money.5. Most Americans are very wealthy and will havefinancial security when they retire.JOURNAL QUESTION: INTRODUCTIONCan you think of a financial goal you have at this moment? Is this a long-term or a short-term goal?Describe how you plan to achieve this financial goal.11Chapter 1: Introduction to Personal FinanceSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

SECTION 11 This is one of the mostimportant classes you willever take. We’re excitedyou are joining us. Nowlet’s begin!CHAPTER““Wealth is moreoften the result ofa lifestyle of hardwork, perseverance,planning and, mostof all, self-discipline.”The Millionaire Next Door 55% of teens surveyedsay that they want tolearn more about howto manage their money—particularly learningabout: investing (88%),saving (87%), budgeting(82%), checking accounts(80%), and financing for bigpurchases like a car or ahome (79%).Section 1:What Is Personal Finance?MOST HIGH SCHOOL students don’tspend their time worrying aboutmortgages and investments, but theyare at an age when smaller financialresponsibilities start creeping intotheir lives. Many of you are earningallowances or have already begunworking a part-time job. So what doyou do with your money? If you’rejust putting it in your pocket andspending without a plan, livingpayday to payday could become yournormal. You need to make decisionsabout what to do with your money.Have a money plan. Set moneygoals. Learning to manage moneyat this stage can eliminate financialmistakes and promote huge financialbenefits for the future.What is personal finance? Personalfinance refers to all the financialdecisions an individual or familymust make in order to earn, budget,save and spend money over time.These decisions are generally basedon a variety of financial risks andplanning for the future.National Foundation for CreditCounseling, Inc.12Foundations in Personal Finance High School EditionSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

VIDEO 1.1Key Components of Financial PlanningDirections: As you see words pop up on the left side of thevideo screen, write them into the workbook blanks.Assess yourassets and liabilities).1situation (your income,Set money! Make sure you have a mix of both2short-term and long-term goals.You must write out a detailedfor accomplishing3your goals. This begins with your budget.perseverance.4your plan! This involves discipline andKnow your moneyRegularlyReplace money56.and reassess your financial plan.7with money truths.JOURNAL QUESTION: VIDEO 1.1 Two in five U.S. adults gavethemselves a C, D or F ontheir knowledge of personalfinance.National Foundation for CreditCounseling, Inc.““Wealth building isn’trocket science, whichis a good thing for me(and probably you).Winning at moneyis 80% behavior and20% head knowledge.What to do isn’t theproblem; doing it is.Most of us know whatto do, but we justdon’t do it. If I cancontrol the guy in themirror, I can be rich.Find a mirror!”DAV E R A MSEYIn what ways could you do better when it comes to managingyour money? If you put into practice whatwe teach, you truly can winwith money!13Chapter 1: Introduction to Personal FinanceSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

SECTION 2Section 2: Money, the American WayVIDEO 2.1A History of Credit and ConsumerismIt is impossible to discuss the history of personal finance in America withouthighlighting the evolution of the credit industry. Think, for a moment, aboutthe most recent commercial you’ve seen advertising a big ticket item like anew car or new furniture. Do those ads target people who have “budgeted,PRIOR TO191719291939123Credit Prior to 1917Credit Takes Root»» Before 1917, buying things on credit wasnot common. Why? Because it had neverbeen legal for lenders to charge interest rates high enough to turn a profit.»» After 1920, consumer demand for bigticket manufactured products was onthe rise.Leveraging Credit to Escapethe Great Depression»» Lending money to others was not amoney-making business. Only wealthypeople could get personal loans. Withoutthe possibility of profit, lending moneyto the middle and lower class was notworth the risk.»» Small-time loan sharks (people whooffered loans at extremely high interestrates, which was an illegal activity at thetime) existed for people in desperatefinancial positions, but they were shadyoperations on the fringes of society.»» The highly evolved, highly acceptedconsumer credit as we know it todaydid not exist.»» Credit laws were relaxed in an attempt tocreate a mainstream, profitable alternative to loan sharks for the working class.»» Installment credit (type of credit thathas a fixed number of payments, alsoknown as revolving credit) and legalizedpersonal loans became big business.»» This era made consumer credit legaland more socially accepted.““In 1917, one popular historiandescribed debt as ‘semislavery’ . . . (which) existedbefore the dawn of history, andit exists today.”»» In an attempt to help Americans regaintheir financial footing, New Deal policymakers came up with mortgage (homeloans) and consumer lending policiesthat convinced commercial banks thatconsumer credit could be profitabledespite bankers’ long-held reluctanceto lend to the working class. The New Deal was the legislative andadministrative program of PresidentF. D. Roosevelt designed to promoteeconomic recovery and social reformduring the 1930s.Debtor Nation: The Historyof America in Red Ink14Foundations in Personal Finance High School EditionSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

Source: Debtor Nation: The History of America in Red Inksaved, and are ready to go make that large purchase”? Or are they more likelyto suggest that you “Buy NOW, pay LATER”? Which phrase is more familiar?Sadly, borrowing money is so ingrained in our culture that we can’t imaginelife without it. So how did we get here? Let’s take a look.19451970TO THE PRESENT456WWII Fuels anEconomic RecoveryPost World War IIConsumerismThe Decline Into Debt:1970–Present»» After the Great Depression, WWIIproved to be the most important economic event of the 20th century. The warended the Great Depression by revivingAmerican industry through governmentspending and consumption. In short,the economy improved because thewar created a ton of new jobs. Thesejobs provided considerable increasein personal income and led Americansto predict permanent improvements totheir standard of living.»» Ah, the birth of the suburbs! The postwar middle class bought the AmericanDream with consumer credit. Americans “learned” to borrow in the midstof prosperity.»» After 1970, consumer debt skyrocketednot because people were borrowingmore, but because they continuedto borrow as their parents had donesince WWII. The difference was theydidn’t have the postwar period’s wellpaying jobs.»» They borrowed because they believedtheir incomes would continue to growinto the future . . . and they were right.Incomes rose steadily from 1945 to 1970.»» Financial institutions lent more money,and borrowers paid it back. Borrowingbecame a post-war normalcy.““Americans left governmentmortgaged homes ininstallment-financed cars toshop on revolving credit atshopping centers.”Debtor Nation““If you will happen to yourmoney, then you will havesome. If you just let all yourmoney happen to you, you’llnever win.”DAV E R A MSEY»» Banks were willing to lend even morebecause they were now making hugeprofits off consumer debt. The creditindustry had become smarter thanborrowers.»» As consumers borrowed to deal withunexpected job losses and medical expenses, as well as to live “the good life,”banks were willing to continue lending.»» Due to the clever structuring of financial institutions, the credit world nowresembles the pre-1920s loan sharksmore than the 1950s banks.»» In short, an old credit system premisedon rising wages and stable employment(low-risk borrower) was reformed to accommodate uncertain employment andincome instability (high-risk borrower).15Chapter 1: Introduction to Personal FinanceSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

SECTION 2Today’s American Reality““When we participatein what the crowdidentifies as normal,even if it is stupid, wegain acceptance intothe club. Sometimeswe don’t even realizewhat we are doingis stupid becausewe have been taughtthat it’s just ‘the wayyou do it,’ and so wenever ask why.”DAV E R A MSEYUnfortunately, many Americanfamilies only have the appearance ofbeing financially secure. If you drivethrough a middle-class neighborhood,you might look at the manicured lawns,nice houses and new vehicles in thedriveways and think, Wow, they’redoing all right. I want to live like thatwhen I’m an adult.The sad reality is that most of thepeople in those houses are strugglingwith debt in the form of mortgages, carloans, student loans and credit cards.Based on statistics, Americans arehorrible at saving money and planningfor retirement. They are so conditionedto think debt is normal, they can’tenvision paying cash for a car oreven a dining room table! Americansoften spend more money than theymake. Most Americans don’t have anemergency fund. Saving, budgeting,retirement planning and staying outof debt are all basic money principles,not complex economics.So why aren’t Americans better atmanaging money? They were nevertaught the right way. As you gothrough this course, we will focus onteaching you what to do with moneyand then show you how to do it. Moneymath is easy. It’s controlling yourmoney behavior that’s the challenge.A s you eva luate the “norma l”American family, consider your ownfinancial future.The fact is, this doesn’t have to be your future reality.»» You don’t have to spend morethan youmake just to look good in front of your friends. You canlearn basic money principles and put them into practice.8»» When you manage money well, you’ll experience deeper.9»» It’s really simple! Personal finance is 80%and 20% head knowledge.»» Money10is easy—it’s controlling yourbehavior that’s the real challenge.11»» As you think about the “” Americanfamily, remember that normal is broke. You don’t have tobe normal!1612Foundations in Personal Finance High School EditionSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

A Snapshot of the “Normal” American FamilyDon’t be fooled by outside images of new cars and expensive homes. Most Americansare struggling financially and drowning in debt.DEBT PROFILE OF THE AVERAGE AMERICAN FAMILY *Average Credit Card Debt (of households with credit card debt)Average Mortgage Debt 15,799 149,667Average Student Loan Debt 32,559Average Car Loan Debt 13,125This does not have to be your future reality. If you manage money well from the start andmake the decision not to use debt as a financial tool, you can avoid the stress of living paycheckto paycheck.* NOTE: Average credit card debt of all American households is 7,000, source: Nerd Wallet*Federal Reserve, U.S. Census Bureau, Internal Revenue Service, manilla.comDave’s StoryWith more than 20 years of experience counseling people onhow to manage their money, Dave knows what it takes to getcontrol of your cash.More than 20 yearsago, my wife, Sharon,and I went broke. Welost everything dueto my stupidity inhandling money, ornot handling it, as the case may be.Hitting bottom and hitting it hard wasthe worst thing that ever happenedto me and the best thing that everhappened to me.We started with nothing, but by thetime I was 26 years old, we held realestate worth more than 4 million. Iwas good at real estate, but I was betterat borrowing money. Even though Ihad become a millionaire, I had builta house of cards. The short version ofthe story is that debt caused us, overthe course of two and a half years offighting it, to lose everything. We weresued, foreclosed on, and, finally, witha brand-new baby and a toddler, wewere bankrupt. Scared doesn’t beginto cover it. Crushed comes close, butwe held on to each other and decidedwe needed a change.17Chapter 1: Introduction to Personal FinanceSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

SECTION 2Dave’s Story (Continued)““Today there arethree kinds of people:the haves, the havenots, and the havenot-paid-for-whatthey-haves.”EA R L WILSONAmerican columnistAfter losing everything, I went on aquest to find out how money reallyworks, how I could get control ofit, and how I could have confidencein handling it. I read everything Icould get my hands on. I interviewedolder rich people, people who mademoney and kept it. That quest ledme to a really, really uncomfortableplace: my mirror. I came to realizethat my money problems, worriesand shortages largely began andended with the person in my mirror.I also realized that if I could learnto manage the character I shavedwith every morning, I would winwith money.The stuff we teach in this classrepresents everything I’ve learnedabout money since then, fromsavings and debt, to insurance andinvesting. And I’m excited that mydaughter Rachel has joined me toget this information to you beforeyou graduate high school. Trust me,knowing this stuff then would havesaved me a whole lot of trouble!What’s Your Money Personality?StageofLife.com conducted a writing contest toevaluate students’ attitudes toward money andthe role of money in their lives. The following wasthe contest writing prompt:“What is your relationshipwith money? How do you spend(or save) and why?”More than 3,335 students from all 50 U.S. statescontributed a 500-word essay response. Fromthe essay submissions, several themes emerged:1. FRUSTRATION: Many teens expressed negativeemotions about money: anger, frustration,stress, distrust and even hatred.182. ROLE MODELS: Teens are watching how theirparents treat money. In several of the essays,the teens made a point to criticize how theirparents handle money and vowed not to “belike them.”3. PRAGMATIC: There was a minority voice thatdid approach the topic with a more pragmaticpoint of view and in some rarer cases, evenpositivity. Students shared their personalsaving tips, budgeting experience and more.4. MONEY ISN’T EVERYTHING: A good percentageof the essays address a more universal truth:that money isn’t everything. Yes, it’s needed tosurvive, but it’s not a requirement in makingpeople happy.Foundations in Personal Finance High School EditionSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

Americans Are Being OutsmartedUltimately, what made our currentindebtedness possible was that itbecame profitable. Yes, a debt systemthat keeps Americans from achievingwealth and makes us “slaves” to thelender exists because it became aprofitable industry. Today, withAmericans charging more than atrillion dollars each year on theircredit cards, one can understandwhy the credit card companies areso profitable. There is nothing wrongwith a business turning a profit; what’swrong is that these companies areoutsmarting Americans. That shouldbother you!Why do we allow ourselves to be outsmarted when itcomes to our own money?»» We like13—lots of stuff!»» We are told that debt is. It has becomeacceptable in our culture to use credit to buy things.14»» We are taught that we can15This is simply not true!»» Our debt system keeps us from buildingTeen money attitudesshifted with the recentrecession. Nine in 10 teens say theywere affected by therecession. Nearly two-thirds ofteens (64%) are moregrateful for what theyhave. The majority (58%) ofteens say they are lesslikely to ask for thingsthey want. The majority (56%) ofteens have a greaterappreciation for theirparents’ hard work. More than a third (39%)of teens appreciate theirfamilies more.16because we are constantly giving our money away to payfor things we bought years ago.»» In America, we are bombarded with marketing ads thatpush us to buy things. “You can buy it today with no moneydown and no interest for 90 days!” Sound familiar?»» We want you to be Nearly three-quarters(73%) of teens say it isimportant to have anemergency fund. More than half (51%) ofteens say it is importantto understand debt.CBS Money Watchof the financialcondition of our country—and we want you toit!1718We will talk more about consumerism and debt in laterchapters. Right now, our focus is to be aware of thefinancial “condition” of America and begin to question it.19Chapter 1: Introduction to Personal FinanceSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

SECTIONS 2 & 3JOURNAL QUESTION: VIDEO 2.1““You will eithermanage your money,or the lack of it willalways manage you.”What was Dave’s biggest lesson when it came to managing money andbuilding wealth?DAV E R A MSEYSection 3: You and MoneyVIDEO 3.1Learn the Language of MoneyNo one is born financially smart!Learning the language of personalfinance is the first step in becomingmoney smart. The language ofmoney is spoken in the vocabularyof accounting: understanding whatcredits, debits, assets and liabilities»» Knowing thetell your money what to do.are. You’ve got to learn enough tounderstand your personal financialstatements a nd communicateeffectively about your finances.How smart you are with your moneywill determine your financial wellbeing in life.19of money allows you to»» That means deciding where your money is going to go20you get your paycheck.»» You’ll be able to communicate effectively with21, financial planners and insurance agents.»» Focus on understanding the22move through this course.»» You’ll become theas youon your money. Winningwith money is not complicated, but it does involve somebasic knowledge.2023Foundations in Personal Finance High School EditionSPONSORED BY:LICENSED FOR 2014 –2015 SCHOOL YEAR ONLY

Learning the language is the key to the game.Learning the language of money is alittle bit like learning the languageof sports. You can’t really follow—much less enjoy—a football game ifyou don’t know what the ref is talkingabout when he uses words like “blitz,”“option” or “stunt.” But once thoseterms are explained to you and yougrasp their meaning in the context ofthe game, you can easily get into it andshout for your team.It’s the same way with money. Beingfinancially literate allows you toparticipate in the game. And if youreally put what you learn into practice,you can even become a coach—andtell your money what to do! Of course,that doesn’t mean talking to yourBenjamins. It’s about effectivelycommunicating w ith ba nkers,financial planners and insuranceagents—people who provide t

Meet the Experts Dave Ramsey Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 mil