What functions does money have?
Medium of Exchange: We trade “Money” for
“Goods & Services”
Store of Value: We hold our wealth in the form of
“Money” until we are ready to use it.
Measure of Value: Money is a measuring stick that
can be used to assign a “Value” to a “Good or
What different types of money can be used?
Historically: Salt, Animal Hides, Gems, Tobacco
Today Currency: Coins, Paper Money, Debit Cards,
& Credit Cards
What gives money value?
We are absolutely sure that someone else will
accept its “Value” as well.
What types of institutions work within our financial system?
Commercial Banks: Financial Institutions that offer full
banking service to all individuals & businesses.
Savings and Loan Associations (S&Ls): Financial
Institutions that traditionally “Loan Money” to people
buying homes; however, today they also perform many
of the service that “Banks” perform.
Credit Unions: These are “Non-Profit” institutions that
are only open to members of the group that sponsors
them…EX…SECU (State Employees Credit Union)
What makes our financial system safe?
FDIC: The Federal Deposit Insurance Corporation is a
National Corporation that “Insures” individual accounts in
financial institutions for up to $100,000…created after
the Great Depression.
Government Regulation: Banking is one of the most
“Regulated” industries in the nation because of the
banking disaster in the 1920s…they are required to follow
rules and accounting practices that minimize unnecessary
Within the free enterprise system individuals have a number of
rights that include:
The right to enter into any business or profession you are
interested in if it is Legal
The right to buy the products and brands that you like & to
reject others that you don’t like.
Identify each of the following:
Disposable Income – The money that remains after “ALL TAXES”
on it have been paid.
Discretionary Income – The money remaining after paying for
In the past the rights of consumers were limited and could be
summed up with the phrase caveat emptor “Let the Buyer Beware”
What is consumerism? A movement to educate Buyers about the
Purchases they make and to demand better & safer products from
Identify the purpose of each of the following acts:
The Food, Drug and Cosmetic Act: Requires packages to list their ingredients
according to the amount of each.
The Pure Food and Drug Act: Requires Manufacturers of foods, cosmetics, &
drugs to prove that their products are safe.
The Fair Packaging and labeling Act: Requires every package to have a Label
identifying its contents and its weight.
What is the Better Business Bureau (BBB) – Provides info about Local Businesses
and warn Consumers about dishonest business practices.
What does the Consumer Bill of Rights (1960’s) state:
Right to a Safe Product
Right to be Informed
Right to Choose
Right to be Heard
Right to Redress…Ask for your Money Back!!
What responsibility do consumers have?
What is a budget? A careful record of all the money you earn and
What is income? The Money you Earn
What are expenses? The Money you Spend on Everything
What is a:
Balanced budget- A Budget in which there is no Surplus or Deficit
Budget surplus- Money is left over after you have paid all Expenses
Budget deficit- You are short money after paying all Expenses
What is credit? Borrowing Money to pay for something now while
promising to repay later
Where do people go to borrow money (sources of credit)?
Credit Term Description
Person who loans the money
Person that Receives the
The cost for the use of the
Annual Percentage Rate (APR)
The annual cost of credit
expressed as a % of the
An Evaluation of the likelihood
of a borrower defaulting or
being unable to repay a loan.
Property that a borrower
pledges as security for a loan.
The inabilities to pay off
debts…you have no money.
Type of Account Definition Return Time Frame
Accounts at a
at any time.
Bank Notes for a
set period of
time at a Fixed
Rate of Interest
higher than rates
for Bank Savings
Vary from 6
months to 5
offered by Banks
that require a
higher than rates
for regular Bank
at any time.
as one of its
Interest Rate is
than rates on
What are the different kinds of savings accounts individuals can save money in:
What are investments? Risking your income for a greater
profit at a later time.
Besides savings accounts what are other ways in which
people can invest their money?
Stocks: Partial Ownership Shares of a Corporation
Dividend: Payment received for Ownership of
a Share of Stock.
Bonds: Lending or Investing your Personal Income
with the U.S. Government…you are loaning the
Mutual Funds: Pools of money from many people
who are invested in a selection of individual stocks
or bonds chosen by financial experts.