Banking 101

Misconceptions Around Banking:

There’s a lot of confusion about how banks work and where money comes from. Very few members of the public really understand it. Economics graduates have a slightly better idea. In course we’ll discover how banks really work, and how money is created. But first, to clear up any confusion, we need to see what’s wrong about the way that most people think banks work:

What is a dollar? Sure, it allows us to buy things like food, cars, and iPods; yet, most of us don't really understand money beyond that. Dr. Martenson not only provides an understandable definition, but also explains what gives our green pieces of paper value, and what dangers any currency must face.

 

Understanding how money is created provides a foundation for appreciating the implications of our massive levels of debt, because it tells us how that debt came into being. As John Kenneth Galbraith once said, "The process by which money is created is so simple, the mind is repelled." Dr. Martenson walks us through this simple process of fractional reserve banking.

#8 This is a Fun One!

Old then New
Once upon a time, you could buy a cellphone.
They were not SMART at all, no special features at home.
Make a call, see contacts, a calendar, and of course, text.
There was really not much to them, not at all complex.

When receiving a call, from a dear friend,
A tune counld be heard, then just a flip of the lid.
Having a cellphone became such a huge trend,
Much money was spent so that others knew that you did.

Now, to the point of the lesson for today.
These early phones did not have keyboards built in.
So, using the phone dial pad to message was the way,
Each number had three letters, all coded within.

To text the third letter, of a certain key.
The button had to be pushed to the third number of places.
Only then in the window the letter you would see,
A very long time it took for a message to be.

So, quick acronyms and abbreviations were made.
But, since the smartphone, and voice recognition,
The use of these acronyms from memory will fade.
Each and every one giving way to attrition.

One day historians will marvel at an old recovered message.
The "codes" they will marvel, their face in confused visage.
A different language, perhaps they will think,
Maybe it is a most ancient computer link?

Written by Mr. Wink.

What You Need to DO:

Click on the image of the worksheet that Mr. Winkelman has designed for you. On the worksheet are a list of acronyms and abbreviations that are commonly used in texting and other short forms of communication.
When the worksheet opens make a copy (FILE -> MAKE A COPY), this will put a copy of the worksheet into your GOOGLE DRIVE, You can then begin the lesson on this document.
Once you have completed have answered as many of these as you can, go back and color the text of the ones that you could not answer, in RED. Look these up on GOOGLE for the answers, and fill them in with RED text also.
Lastly, go back and use the YELLOW highlighter to highlight the acronyms and abbreviations that you use often in your correspondence.
Once you have completed the entire form: Answers in normal text, looked up definitions in red, and the ones that you still use today highlighted in yellow. Then Embed the Paper in your BLOG.

#7 Teens and Money

MONEY, MONEY, MONEY--Show me the MONEY!

     but, Are you Ready?

Teens face a lot of money problems. Many say they do not manage their own money at all. According to a 2012 Junior Achievement USA/Allstate Foundation survey, over 1/4 of teens do not expect to be able to support themselves financially until after the age of 25. 

According to the same survey, only 56 percent of teens think they will be financially as well off, or better off, than their parents. Many students will wind up in hundreds of thousands of dollars of debt in the few years after graduating from high school, with a combination of student loans, credit cards, car loans, and mortgages.

Teens do not have confidence in their ability to handle their finances and their time, and this course is directed at changing that. Instead of working without goals, students will learn how to develop goals and achieve them. 

Instead of habitually over-spending, students will learn the techniques of managing their finances with longer-term goals. Instead of thinking about how to spend resources they did not earn, students will learn how to imaginatively create wealth. 

Instead of joining the 30% percent of student loan borrowers who are delinquent on their payments (and that's not counting those in deferment or grace periods), students will learn to avoid debt traps.

I teach this course from the point of view of a parent of young adults, and I show students how the real world works. In parts of the course, I bring my 15+ years of experience as a teacher of Economics, Business Law, Accounting, Computer Technology, Marketing and Finance to bear, as well as my experience as a Personal Business Owner, Conference Center Manager, and Mechanical Contractor to show students how broader economic events, business decisions, marketing and management can affect their personal finances.

Financial Struggles of Teens

Timothy Terrell - June 22, 2013

According to a 2012 Junior Achievement USA/Allstate Foundation survey, only 40 percent of teens say that they "manage their money in some manner." Only 56 percent of teens think they will be financially as well off, or better off than, their parents.

This is down from 89 percent in a 2011 survey. And many teens are planning to be dependent on their parents for an extended period of time--over one fourth of respondents to the survey said that they do not expect to be able to support themselves financially until after the age of 25.

Parents of today's teens grew up in a less complicated time--a teen's finances in the 1970s or 1980s would have consisted of a wad of cash and maybe a savings account mostly managed by parents. Spending was usually on a cash basis. Holding a debit card would have been unusual for a teen, and online transactions were nonexistent.

Today's teen is faced with a wide array of financial management options, from debit cards to PayPal and smartphone apps. Banks have special accounts for teens with options for parental oversight and money transfers. But the prevalence of electronic payment options means that spending can easily get out of control. Teens still need to know the basics, such as how to read a bank statement and how to budget. Many large purchasing decisions are made in the late teens and early twenties. With offers of large amounts of credit starting in the college years, teens need to know early on how to make wise decisions about borrowing and spending.

Teens have a wonderful opportunity to get off to a good start financially. For most teens, the vast majority of necessary expenses are covered by parents. The financial freedom that affords should be taken advantage of. Working 40 hours a week at only $9 an hour for 10 weeks per summer can put around $10,000 in a teen's account over three summers. A higher-paying job, part-time work during the school year, or an entrepreneurial venture could boost that sum considerably. What teens do now with those earnings from work, plus monetary gifts, can make a big difference when they establish their own household just a few years from now. It could mean paying cash for what other young adults are buying on credit, capital for a small business, or a head start on a down payment for a modest house.

As I teach my own children and the personal finance class for a local home school co-op, I want to explain how to avoid these common mistakes:

Working without a plan/goals

Impulse buying 

Forgetting the full cost of items

Lending money to friends

Out-of-control spending on small items, leaving nothing for big-ticket items

Poor priority-setting

Thinking about spending, and ignoring earning

Developing financial self-discipline and appropriate priorities can be one of the greatest accomplishments of a teenager. Since financial problems can lead to or aggravate so many other life problems, such as stress (and accompanying health problems), marital difficulties, a derailed career, and disputes with extended family, getting off to a good start in these early years is vital.

One of the most important financial decisions in the late teen years is whether or not to go to college, and if so, how to pay for it. Student loans can be a crippling expense early in life, amounting to a car payment or even a house payment. The weight of the debt shows up in default statistics: In 2013, according to a New York Federal Reserve study, 11.7 percent of student loan borrowers are delinquent--90 days or more late on payments. That figure includes student loans that are in deferment or grace periods, where borrowers are temporarily not required to make payments. If those loans are left out, over 30 percent are delinquent. That is up from less than 20 percent in 2004. Student loan debt, according to Constantine von Hoffman of Moneywatch, was the only kind of household debt that continued to rise throughout the recent recession, and the total debt--nearly $1 trillion--has eclipsed credit card debt and is now the second largest category of debt after mortgages.

There are ways to avoid this financial catastrophe. I believe that personal finance courses for teens should emphasize entrepreneurship. As an economist in the Austrian tradition (following the thinking of Ludwig von Mises and Friedrich Hayek), I teach my college students of the importance of entrepreneurial behavior to a growing economy. Teens need to be introduced to the career option of entrepreneurship, so that they can make an informed decision about the costs and benefits of higher education. Given some ideas, encouragement, ambition, and a small amount of capital, most teens can do quite well for themselves in a small business. That could be lawn maintenance, eBaying, baking or crafts, photography, or a number of creative endeavors that provide confidence as well as real-life lessons that will never be forgotten.

Building good financial habits now will help teens immeasurably in the future. When they are able to put a large down payment on a house, give generously, pay cash for a car instead of borrowing, or weather a crisis with a healthy emergency fund, they will be glad they made wise decisions while still in high school.

WHAT YOU NEED TO DO:

Read the following article:

WHAT DO YOU THINK: Copy and Paste the following questions and comment into your BLOG and write responses to these questions. Use complete sentences and provide as much detail as necessary to thoroughly answer the question.

1. What kind of DEBT can you expect to have after college?
2. Do you think that your parents manage their money well? Explain. What would you do the same, what would you do differently?
3. Write a paragraph or two about what you expect your lifestyle to be like when you are in college, compared to once you have completed your education and entered into the workforce.

What would be your response to the following comment?:

The Millennials have seen their Baby Boomer parents leverage themselves to the hilt to finance lifestyles they could not otherwise afford. These kids have no idea where the money comes from, nor do they care as long as Mom and Dad continue to supply them with smart phones and North Face jackets. Once they finish college, the Millennials will finally learn, one way or another, the harsh reality that working for one's money is rather difficult.

#6 The Creation of Money Out of Thin Air

Please Read the Following Article:

Copy and paste the following directions and questions into your BLOG. Title your post "Warm-Up: Money, Money, Money", and answer the questions.

In just a few sentences, and in your own words answer the title:

1. What is Money?

2. How is it created? There is more than one way...

#5 Retirement Calculator

SITE: https://www.retirementsimulation.com/

Monte Carlo Retirement Calculator

Confused? Try the simple retirement calculator

How much money do I need to retire?

This retirement calculator runs simulations based on past data from the S&P 500, 10 Year Treasury Bond, 3 month T-Bill, and US inflation. For each year of each simulation, a random return and inflation amount is chosen.

How to use: Enter your current age and the age when you retire. Then enter your current savings, the amount that you can save annually before you retire, and the amount that you plan to withdraw after retirement. Your annual deposits and withdrawals take inflation into account. For example, if you need $50,000 to live on in retirement using today's dollars, we will automatically take into account the cost of living for your retirement years. The same is true for your annual deposits. Next, decide if you'd like to simulate a stock market crash.

Portfolio Section:
In the portfolio section, choose the makeup of your portfolio with stocks, bonds, and cash. Cash assumes that your money is stored in a savings account. You can then alter the future returns and inflation. For example, if the market has historically returned about 10%, but you think the future will be worse, modify the stock returns by -3%, and the future returns will average out to 7%. Investment fees can also lower stock market returns. Many index funds and ETFs offer extremely low fees and expenses.

Additional Income:
Many people receive income in retirement, such as social security, pension plans, part time jobs, annuities, and other benefits. This would allow you to take out smaller distributions every year. Please note that taxes must also be considered, but are not used in this simulation. A 401k, Roth IRA, and Traditional IRA are taxed differently than a standard investment account, as are dividends.

Note: This assumes that the future is at least somewhat like the past. In reality, anything could happen. The Soviet Union collapsed, Japan's Nikkei Index is still well below its 1989 peak. Numerous other markets have changed drastically and never recovered. However, this online tool is helpful in retirement planning and estimating how much you might need for retirement, especially those hoping to retire early. We recommend receiving advice from a financial planner.

WHAT YOU NEED TO DO: Read the above description of the RETIREMENT CALCULATOR. If you would rather switch the the more simple calculator that is fine. Use the Calculator to figure out an amount that you will need to have to live on after you retire. Try to consider all factors, but also look for the best case scenario the system of saving that will work best for you and provide for your needs.

Some factors to consider are: Consider making changes to your lifestyle when you retire; no kids, smaller home, travel? How will your lifestyle change when you retire? You should run the lifestyle calculator considering these changes. What age do you want to retire at? Early? Never? When considering these factors use the calculator to help you determine how much you should save and when you should start saving so you can retire on your own terms.

#4 Lifestyle Calculator

A way of living of individuals, families (households), and societies, which they manifest in coping with their physical, psychological, social, and economic environments on a day-to-day basis.

Lifestyle is expressed in both work and leisure behavior patterns and (on an individual basis) in activities, attitudes, interests, opinions, values, and allocation of income. It also reflects people's self image or self concept; the way they see themselves and believe they are seen by the others. Lifestyle is a composite of motivations, needs, and wants and is influenced by factors such as culture, family, reference groups, and social class.

The type of LIFESTYLE that we are going to focus on today is that of how we want to live. What kind of house? What kind of car? How much food? All of these good questions about our expectations of our own living conditions. BUT, WAIT! Not for today, not even for tomorrow, not even for when you go to college or work....the lifestyle that we want to look at is what you will expect to have when you retire. That's right when you are OLD and WRINKLY!

WHAT YOU NEED TO DO:

CLICK the NEXT button to go to a page that will ask you some questions regarding your NEEDS and WANTS. Remember this is for when you are RETIRED. Then it will give you a number for dollars of income for you to live that way.

SUBMIT:
Write a report that describes your new LIFESTYLE and how much you must monthly earn in order to achieve it. Include how  much At the end you should come up with a TOTAL AMOUNT that you need per MONTH to live the way that you want to live.

#3 Financial Planning

Financial Decisions and Goals

Whether you are spending, saving or investing money, planning can help you to make big or small financial decisions. The financial planning process has 6 STEPS to help you reach your goals.

#2 How to EMBED a DOCUMENT in you BLOG

Here is something NEW to LEARN!

In computer lingo, EMBEDDING, is to create a space in your code (HTML) to force the viewing of a file in the page that you are designing.

You can EMBED documents, Slide Presentations, Movies, Music, and more.

You will need to EMBED your submissions for lessons in this class in your BLOG. Here is a video that demonstrates exactly HOW to do just that: (by the way, this video is embedded in this post).

OK, so now you know how to EMBED, but what about changing the SIZE of the WINDOW that your paper is EMBEDDED in?

This is done in your HTML code, and is easy to do, just follow the steps:

1. COPY the following:   height="500" width="95%"
2. Go back and edit your POST
3. Switch to HTML view (just like in the video) 
4. Scroll down to the CODE that copied into the post that has your paper embedded
5. Place your cursor right after the code "<iframe" and just before the "scr=" code.
6. Paste the code you copied into the line, it should look like this:

<iframe hieght="500" width="95%" src="https://docs.google.com/document/d/1sB9fH3tlrbXkq4XwYkIqz1u-8G_uKQ8EOa0NcyXN1Rg/pub?embedded=true" ></iframe>

Now click the UPDATE button and your document window should be much bigger.