Common Sense Practical Personal Finance (Part 4 Study Guide)

	Yoga participants meditate in the background as stacks of coins and a piggy bank symbolize financial growth and savings in the foreground.
Concepts	Comparative advantage and discovery of career opportunities; Entrepreneurship, productivity, and personal success; Attitudes, productivity, and personal success; and Budgeting and getting more out of your income
Objectives	CSE 4.1 Discover your comparative advantage.
	CSE 4.2 Cultivate skills, attitudes, and entrepreneurship over your lifetime.
	CSE 4.3 Budget to provide the most value from your income.
Financial Literacy Standards	Income for most people is determined by the market value of their labor, paid as wages and salaries. People can increase their income and job opportunities by choosing to acquire more education, work experience, and job skills. The decision to undertake an activity that increases income or job opportunities is affected by the expected benefits and costs of such an activity. Income also is obtained from other sources such as interest, rents, capital gains, dividends, and profits. (Financial Literacy Standard I. Earning Income, PDF) People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed spending decisions, which entails collecting information, planning, and budgeting. (Financial Literacy Standard II. Buying Goods and Services, PDF)
Read and watch	Read about the 4.1 - 4.3 elements in your Common Sense Economics (CSE) textbook pages 180 – 195, watch videos on the key topics, and listen-on-the-go to audios https://www.commonsenseeconomics.com/practical-personal-finance. Free digital copy of Common Sense Economics outside of the U.S.A in 15 different languages: https://www.econfun.org/
Videos to pique your financial literacy interest	Videos: (i) CSE Slice of Life 12 (7:27); (ii) CSE 4.1 20/20 Getting Rich- Millionaire mind (4:51); (iii) CSE 4.2 Stossel Micro 10- Poverty and entrepreneurship (4:00); (iv) CSE 4.2 Lending Tree Commercial- In debt to eyeballs (0:54); (v) CSE 4.2 Babson College- CreAction (3:53); (vi) CSE 4.2 Steve Jobs advice (1:30); (vii) CSE 4.3 Financial EDU- Economic reality (3:31); and (viii) CSE 4.3 Financial EDU- War for your wallet (2:43).
Using your favorite chatbot, use the following prompt to test your knowledge.	Prompt your favorite chatbot to help you relate this discussion to X: cultivate your financial skills, Y: personal financial attitudes, and Z: entrepreneurship throughout your lifetime. PROMPT: Prepare me—a student with a background with (fill-in-the-blank)—to strategically prepare for (an international economics competition, an exam, an oral presentation, or another high-stakes activity) by strengthening my performance on MCQs, FRQs, and oral economic argumentation while mastering the core “concepts of X, Y, Z”. (You choose the topics.) Identify the key analytical framework for the “core concepts of X, Y, Z”. Ensure all MCQs include five possible answers, with the correct answers being accompanied by a brief explanation. Include a template for the FRQs. Offer recommendations for an oral defense. List traps to avoid when covering the core concepts of “X, Y, Z”.
STUDY SESSION 2	Read: CSE PART 4.4 – 4.4
Concepts	Strategic spending: used versus new; Dangers of debt and credit card use; and Prudent saving: emergency funds
Objectives	CSE 4.4 Manage credit and debt wisely.
	CSE 4.5 Spend strategically.
	CSE 4.6 Pay into an emergency fund every month.
Financial Literacy Standards	Saving is the part of income that people choose to set aside for future uses. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates, and inflation affect the value of savings. (Financial Literacy Standard III. Saving, PDF) Credit allows people to purchase goods and services that they can use today and pay for those goods and services in the future with interest. People choose among different credit options that have different costs. Lenders approve or deny applications for loans based on an evaluation of the borrower’s past credit history and expected ability to pay in the future. Higher-risk borrowers are charged higher interest rates; lower-risk borrowers are charged lower interest rates. (Financial Literacy Standard IV. Using Credit, PDF)
Read and watch	Read about the elements 4.4 -4.6 in your Common Sense Economics (CSE) textbook pages 195 – 203. Watch videos on the key topics, and listen-on-the-go to audios https://www.commonsenseeconomics.com/practical-personal-finance. Free digital copy of Common Sense Economics outside of the U.S.A in 15 different languages: https://www.econfun.org/
Using your favorite chatbot, use the following prompt to test your knowledge.	PROMPT: Prepare me—a student with a background with (fill-in-the-blank)—to strategically prepare for (an international economics competition, an exam, an oral presentation, or another high-stakes activity) by strengthening my performance on MCQs, FRQs, and oral economic argumentation while mastering the core “concepts of X, Y, Z”. (You choose the topics.) Identify the key analytical framework for the “core concepts of X, Y, Z”. Ensure all MCQs include five possible answers, with the correct answers being accompanied by a brief explanation. Include a template for the FRQs. Offer recommendations for an oral defense. List traps to avoid when covering the core concepts of “X, Y, Z”.
STUDY SESSION 3	Read: CSE PART 4.7 – 4.9
Concepts	Power of compound interest; Diversification and reducing investment risk; Risk and return: stocks versus bonds; Random walk theory and stock prices; and Indexed versus managed equity funds
Objectives	CSE 4.7 Put the power of compound interest to work.
	CSE 4.8 Diversify: Don’t put all of your eggs in one basket.
	CSE 4.9 Indexed equity mutual funds can help you outperform the experts.
Financial Literacy and Economic Standards	Financial investment is the purchase of financial assets to increase income or wealth in the future. Investors must choose among investments that have different risks and expected rates of return. Investments with higher expected rates of return tend to have greater risk. Diversification of investment among a number of choices can lower investment risk. (Financial Literacy Standard V. Financial Investing, PDF) Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses.  (Economics Standard 12: Interest Rates, PDF)
Read and watch	Read about the elements 4.7 - 4.9 in your Common Sense Economics (CSE) textbook pages 203 – 216. Watch videos on the key topics, and listen-on-the-go to audios https://www.commonsenseeconomics.com/practical-personal-finance. Free digital copy of Common Sense Economics outside of the U.S.A in 15 different languages: https://www.econfun.org/
Using your favorite chatbot, use the following prompt to test your knowledge.	PROMPT: Prepare me—a student with a background with (fill-in-the-blank)—to strategically prepare for (an international economics competition, an exam, an oral presentation, or another high-stakes activity) by strengthening my performance on MCQs, FRQs, and oral economic argumentation while mastering the core “concepts of X, Y, Z”. (You choose the topics.) Identify the key analytical framework for the “core concepts of X, Y, Z”. Ensure all MCQs include five possible answers, with the correct answers being accompanied by a brief explanation. Include a template for the FRQs. Offer recommendations for an oral defense. List traps to avoid when covering the core concepts of “X, Y, Z”.

STUDY SESSION 5	Read: CSE PART 4.10 – 4.12
Concepts	Portfolio adjustments and phases of life; Risk and insurance; and Risk and investments
Objectives	CSE 4.10 Adjust your asset mix to match the timing of financial goals.
	CSE 4.11 Reduce risk when making education, housing, and other investment decisions.
	CSE 4.12 Use insurance to help manage risk.
Financial Literacy Standards	People make choices to protect themselves from the financial risk of lost income, assets, health, or identity. They can choose to accept risk, reduce risk, or transfer the risk to others. Insurance allows people to transfer risk by paying a fee now to avoid the possibility of a larger loss later. The price of insurance is influenced by an individual’s behavior.  (Financial Literacy Standard VI. Protecting and Insuring, PDF)
Read and watch	Read about the elements 4.10 - 4.12 in your Common Sense Economics (CSE) textbook pages 216 – 234. Watch videos on the key topics, and listen-on-the-go to audios https://www.commonsenseeconomics.com/practical-personal-finance. Free digital copy of Common Sense Economics outside of the U.S.A in 15 different languages: https://www.econfun.org/
Using your favorite chatbot, use the following prompt to test your knowledge.	PROMPT: Prepare me—a student with a background with (fill-in-the-blank)—to strategically prepare for (an international economics competition, an exam, an oral presentation, or another high-stakes activity) by strengthening my performance on MCQs, FRQs, and oral economic argumentation while mastering the core “concepts of X, Y, Z”. (You choose the topics.) Identify the key analytical framework for the “core concepts of X, Y, Z”. Ensure all MCQs include five possible answers, with the correct answers being accompanied by a brief explanation. Include a template for the FRQs. Offer recommendations for an oral defense. List traps to avoid when covering the core concepts of “X, Y, Z”.