Grades 9, 10, 11, 12

Earning Income

Buying Goods and Services

Saving

Using Credit

Financial Investing

Protecting and Insuring

People choose jobs or careers for which they are qualified based on the income they expect to earn and the benefits, such as health insurance coverage or a retirement plan, that they expect to receive.

People choose jobs or careers for which they are qualified based on non-income factors, such as job satisfaction, independence, risk, family, or location.

People vary in their willingness to obtain more education or training because these decisions involve incurring immediate costs to obtain possible future benefits. Discounting the future benefits of education and training may lead some people to pass up potentially high rates of return that more education and training may offer.

People can make more informed education, job, or career decisions by evaluating the benefits and costs of different choices.

The wage or salary paid to workers in jobs is usually determined by the labor market. Businesses are generally willing to pay more productive workers higher wages or salaries than less productive workers.

Changes in economic conditions or the labor market can cause changes in a worker's income or may cause unemployment.

Taxes are paid to federal, state, and local governments to fund government goods and services and transfer payments from government to individuals. The major types of taxes are income taxes, payroll (Social Security) taxes, property taxes, and sales taxes.

People's sources of income, amount of income, as well as the amount and type of spending affect the types and amounts of taxes paid.

Consumer decisions are influenced by the price of a good or service, the price of alternatives, and the consumer's income as well as his or her preferences.

When people consume goods and services, their consumption can have positive and negative effects on others.

When buying a good, consumers may consider various aspects of the product including the product's features. For goods that last for a longer period of time, the consumer should consider the product's durability and maintenance costs.

Consumers may be influenced by how the price of a good is expressed.

People incur costs and realize benefits when searching for information related to their purchases of goods and services. The amount of information people should gather depends on the benefits and costs of the information.

People may choose to donate money to charitable organizations and other not-for-profits because they gain satisfaction from donating.

Governments establish laws and institutions to provide consumers with information about goods or services being purchased and to protect consumers from fraud.

People choose between immediate spending and saving for future consumption. Some people have a tendency to be impatient, choosing immediate spending over saving for the future.

Inflation reduces the value of money, including savings. The real interest rate expresses the rate of return on savings, taking into account the effect of inflation. The real interest rate is calculated as the nominal interest rate minus the rate of inflation.

Real interest rates typically are positive because people expect to be compensated for deferring the use of savings from the present into the future. Higher interest rates increase the rewards for saving.

The nominal interest rate tells savers how the dollar value of their savings or investments will grow; the real interest rate tells savers how the purchasing power of their savings or investments will grow.

Money received (or paid) in the future can be compared to money held today by discounting the future value based on the rate of interest.

Government agencies supervise and regulate financial institutions to help protect the safety, soundness, and legal compliance of the nation's banking and financial system.

Government policies create incentives and disincentives for people to save.

Employer benefit programs create incentives and disincentives to save. Whether or how much an employee decides to save can depend on how the alternatives are presented by the employer.

Consumers can compare the cost of credit using the annual percentage rate (APR), initial fees charged, and fees charged for late payment or missed payments.

Banks and financial institutions sometimes compete by offering credit at low introductory rates, which increase after a set period of time or when the borrower misses a payment or makes a late payment.

Loans can be unsecured or secured with collateral. Collateral is a piece of property that can be sold by the lender to recover all or part of a loan if the borrower fails to repay. Because secured loans are viewed as having less risk, lenders charge a lower interest rate than they charge for unsecured loans.

People often make a cash payment to the seller of a good—called a down payment—in order to reduce the amount they need to borrow. Lenders may consider loans made with a down payment to have less risk because the down payment gives the borrower some equity or ownership right away. As a result, these loans may carry a lower interest rate.

Lenders make credit decisions based in part on consumer payment history. Credit bureaus record borrowers' credit and payment histories and provide that information to lenders in credit reports.

Lenders can pay to receive a borrower's credit score from a credit bureau. A credit score is a number based on information in a credit report and assesses a person's credit risk.

In addition to assessing a person's credit risk, credit reports and scores may be requested and used by employers in hiring decisions, landlords in deciding whether to rent apartments, and insurance companies in charging premiums.

Failure to repay a loan has significant consequences for borrowers such as negative entries on their credit report, repossession of property (collateral), garnishment of wages, and the inability to obtain loans in the future.

Consumers who have difficulty repaying debt can seek assistance through credit counseling services and by negotiating directly with creditors.

In extreme cases, bankruptcy may be an option for consumers who are unable to repay debt. Although bankruptcy provides some benefits, filing for bankruptcy also entails considerable costs, including having notice of the bankruptcy appear on a consumer's credit report for up to 10 years.

People often apply for a mortgage to purchase a home. A mortgage is a type of loan that is secured by real estate property as collateral.

Consumers who use credit should be aware of laws that are in place to protect them. These include requirements to provide full disclosure of credit terms such as APR and fees, as well as protection against discrimination and abusive marketing or collection practices.

Consumers are entitled to a free copy of their credit report annually so that they can verify that no errors were made that might increase their cost of credit.

The real return on a financial investment is the nominal return minus the rate of inflation.

Federal, state, and local tax rates vary on different types of investments and affect the after-tax rate of return of an investment.

Expenses of buying, selling, and holding financial assets decrease the rate of return from an investment.

Buyers and sellers in financial markets determine prices of financial assets and therefore influence the rates of return on those assets.

An investment with greater risk than another investment will commonly have a lower market price, and therefore a higher rate of return, than the other investment.

Shorter-term investments will likely have lower rates of return than longer-term investments.

Diversification by investing in different types of financial assets can lower investment risk.

Financial markets adjust to new financial news. Prices in those markets reflect what is known about those financial assets.

The prices of financial assets are affected by interest rates. The prices of financial assets are also affected by changes in domestic and international economic conditions, monetary policy, and fiscal policy.

Investors should be aware of tendencies that people have that may result in poor choices. These include avoiding selling assets at a loss because they weigh losses more than they weigh gains and investing in financial assets with which they are familiar, such as their own employer's stock or domestic rather than international stocks.

People vary in their willingness to take risks. The willingness to take risks depends on factors such as personality, income, and family situation.

An economic role for governments exists if individuals do not have complete information about the nature of alternative investments or access to competitive financial markets.

The Securities and Exchange Commission (SEC), the Federal Reserve, and other government agencies regulate financial markets.

Probability quantifies the likelihood that a specific event will occur, usually expressed as the ratio of the number of actual occurrences to the number of possible occurrences.

Individuals vary with respect to their willingness to accept risk. Most people are willing to pay a small cost now if it means they can avoid a possible larger loss later.

Judgment regarding risky events is subject to errors because people tend to overestimate the probability of infrequent events, often because they've heard of or seen a recent example.

People choose different amounts of insurance coverage based on their willingness to accept risk, as well as their occupation, lifestyle, age, financial profile, and the price of insurance.

People may be required by governments or by certain types of contracts (e.g., home mortgages) to purchase some types of insurance.

An insurance contract can increase the probability or size of a potential loss because having the insurance results in the person taking more risks. Policy features such as deductibles and copayments are cost-sharing features that encourage the policyholder to take steps to reduce the potential size of a loss (claim).

People can lower insurance premiums by behaving in ways that show they pose a lower risk.

Health insurance provides funds to pay for health care in the event of illness and may also pay for the cost of preventive care. Large health insurance companies can often negotiate with doctors, hospitals, and other health care providers to obtain lower health care prices for their policyholders.

Disability insurance is income insurance that provides funds to replace income lost while an individual is ill or injured and unable to work.

Property and casualty insurance (including renters insurance) pays for damage or loss to the insured's property and often includes liability coverage for actions of the insured that cause harm to other people or their property.

Life insurance benefits are paid to the insured's beneficiaries in the event of the policyholder's death. These payments can be used to replace wages lost when the insured person dies.

In addition to privately purchased insurance, some government benefit programs provide a social safety net to protect individuals from economic hardship created by unexpected events.

Loss of assets, wealth, and future opportunities can occur if an individual's personal information is obtained by others through identity theft and then used fraudulently. By managing their personal information and choosing the environment in which it is revealed, individuals can accept, reduce, and insure against the risk of loss due to identity theft.

Federal and state regulations provide some remedies and assistance for victims of identity theft.