Case Study: Solving Problems and Managing Risk

Statement 1: Financial responsibility entails being accountable for managing money to satisfy one’s current and future economic choices.

a. Identify responsible ways for managing money for short- and long-term goals.

Statement 2: Financial responsibility involves lifelong decision-making strategies which include consideration of alternatives and consequences.

Statement 6: Financial responsibility includes the development of a spending and savings plan (personal budget).

a. Devise a budget for current short- and long-term goals, income and expenses.

b. Identify factors that could force an individual to change his or her budget.

c. Prepare a monthly budget for a family or individual given their income, savings goals and taxes, as well as their fixed and variable expenses.

Statement 7:  Financial institutions offer a variety of products and services to address financial responsibility. Analyze the costs and benefits of various types of credit.

a. Evaluate products and services from financial institutions that a student might use, such as a checking and savings account, and discuss advantages and disadvantages of different products.

b. Reconcile a checking and savings account balance using both an account register and an electronic tool.

Statement 9:  Planning for and paying local, state, and federal taxes is a financial responsibility.

Statement 11:  An informed consumer makes decisions on purchases that may include a decision-making strategy to determine if purchases are within their budget.

a. An informed consumer makes decisions on purchases that may include a decision-making strategy to determine if purchases are within their budget.

b. Advertising impacts consumers. Businesses need to make profits and advertise their products to gain more customers. Consumers must pay close attention to the details of advertisements to make sure they are receiving what is being advertised.

c. Explain the many factors a consumer considers before purchasing goods or services.

Standard 16: Using key investing principles, one can achieve the goal of increasing net worth.

a. Investing strategies may include planning, saving and investing for the long term, investigating before you invest, because individuals who start saving at an early age have more time for compound interest to increase their wealth.

b. Devise  plan to increase net worth [given a predetermined amount of money.]

Statement 17: Investment strategies must take several factors into consideration including the time horizon of the investment, the degree of diversification, the investor’s risk tolerance, how the assets are selected and allocated, product costs, fees, tax implications and the time value of money.

a.  The [time value of money] is the idea that a dollar today is worth more than a dollar in the future.

b.  Identify and compare the administrative costs (fees) and taxes of various investment products.

c. Identify the more advantageous investment strategy for different individuals in given scenarios.

Standard 18. Justify reasons to use health, disability, long-term care and life insurance.

Statement 21: Effectively balancing credit and debt helps one achieve some short and long-term goals.

a. Credit scores are based on factors such as length of time the person has had financial accounts, types of credit used, payment history, amounts owed and new credit.

b. Attaining a high credit score is one of the goals consumers should set

c .Discuss steps a consumer can take to get and keep a high credit score.

d. Discuss factors that will reduce credit scores.

Statement 22:  Financial documents and contractual obligations inform the consumer and define the terms and conditions of establishing credit and incurring debt.

a. Summarize the terms of a credit card or other loan agreement.

Statement 23:  Many options exist for paying for post-secondary education opportunities.

b. Evaluate the advantages and limitations of various career opportunities

Statement 24:  A risk management plan can protect consumers from the potential loss of personal and/or business assets or income.

 Statement 26: Diversification of assets is one way to manage risk.

a. Cite examples of high-, medium- and low-risk investments.

b. Explain why it is important to diversify and how the composition of a portfolio changes over time.

Statement 27:  A comprehensive insurance plan (health, life, disability, auto, homeowners, renters, liability, etc.) serves as a safeguard against potential loss.

a. Explore the coverage and cost for various insurance products such as health, life, disability, auto, homeowners, renters and liability.

b. Research the likelihood that disability and life insurance is needed to replace an income stream