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5.5: Unit 5- Basic Understandings, Vocabulary, and Objectives

  • Page ID
    1725
  • Unit 5 - Basic Understandings

    • Financial institutions offer a variety of accounts to facilitate money management.
    • Budgeting is an important money management tool and investing is fundamental for wealth accumulation.
    • There are costs and benefits to using credit and borrowing money.
    • Purchasing a home is an important financial decision.
    • Planning for the costs of post-secondary education is necessary.

    Unit 5 - Vocabulary

    investment - providing money or capital to an enterprise with the expectation of making a financial gain

    compound interest - interest which is calculated on the initial principle and on the accumulated interest

    credit score - a number based on an individual's credit history that indicates how much of a credit risk he or she may be

    risk/return relationship - the relationship between the risk of an investment and the expected return of the investment

    open end credit - a line of credit that can be used repeatedly, within an established borrowing limit

    closed end credit - a loan for a set amount that requires regular payments at certain intervals

    secured loans - a loan that is obtained by offering an asset as collateral to ensure repayment of the loan

    unsecured loans - a loan that is obtained without he use of collateral

    budget - an itemized plan of income and expenses for a given period of time

    Unit 5 - Related Vocabulary

    • diversification
    • income
    • expenditure
    • debt
    • grants
    • bankruptcy
    • dividend
    • collateral

    Planning for High School Students

    Unit 5 TEKS

    (16) Personal Financial Literacy. The student understands the role of financial markets/institutions in saving, borrowing, and capital formation. The student is expected to:

    (A) explain the functions of financial institutions and how they affect households and businesses;

    (B) explain how the amount of savings in an economy is the basis of capital formation;

    (C) analyze the role of interest and risk in allocating savings to its most productive use; and

    (D) examine the types of accounts available to consumers from financial institutions and the risks, monetary costs, and benefits of maintaining these accounts.

    (17) Personal Financial Literacy. The student understands the role of individuals in financial markets. The student is expected to:

    (A) asses ways to be a wise investor in the stock market and in other personal investment options such as developing a personal retirement plan;

    (B) explain how to begin a savings program;

    (C) demonstrate how to maintain a checking account, including reconciling a bank statement;

    (D) identify the types of loans available to consumers;

    (E) explain the responsibilities and obligations of borrowing money; and

    (F) develop strategies to become a low-risk borrower by improving and understanding one's personal credit score.

    (18) Personal Financial Literacy. The student applies critical-thinking skills to analyze the costs and benefits of personal financial decisions. The student is expected to:

    (A) examine ways to avoid and eliminate credit card debt;

    (B) evaluate the costs and benefits of declaring personal bankruptcy;

    (C) evaluate the costs and benefits of buys insurance; and

    (D) evaluate the costs and benefits of charitable giving.

    (19) Personal Financial Literacy. The student understands how to provide for basic needs while living within a budget. The student is expected to:

    (A) evaluate the costs and benefits of renting a home versus buying a home; and

    (B) assess the financial aspects of making the transition from renting to home ownership.

    (20) Personal Financial Literacy. The student understands the various methods available to pay for college and other post-secondary education and training. The student is expected to:

    (A) understand how to complete the Free Application for Federal Student Aid (FAFSA) provided by the United States Department of Education;

    (B) research and evaluate various scholarship opportunities such as those from state governments, schools, employers, individuals, private companies, nonprofits, and professional organizations;

    (C) analyze and compare student grant options;

    (D) analyze and compare student loan options, including private and federal loans; and

    (E) research and evaluate various work-study program opportunities.

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