Invest Ed my money handbook

              managing money
banking basics
protecting your
identity & money
resources
Invest EdTM my money
handbook
This handbook is made possible by the Oklahoma Department of Human Services, the
University of Oklahoma National Resource Center for Youth Services and Invest Edtm.
contents
Made possible by...
Introduction
Pre-Quiz
Chapter I: Money Management
First Paycheck
Spending vs. Saving
Budgeting Basics
Chapter II: Banking Basics
Types of Banks
Checking Accounts
Savings Accounts
Savings & Investing Products
Investing Risk
Credit
Chapter III: Protection
Protecting Your Identity
Protecting Your Money
Chapter IV: Conclusion
Conclusion
Resource List
Contact List
Post Quiz
Answer Key
Evaluation
The views expressed herein are those of the
cited resources selected and adapted for this
workbook by the individual contributors and are
not necessarily those of the Oklahoma Securities
Commission, Department of Securities and its
Administrator, the University of Oklahoma
Outreach, the Oklahoma Department of Human
Services, the employees of these organizations or
any associated partners.
Revised 2008
Copyright © 2008 Oklahoma Securities Commission
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what to look out for can save you (and
your money) from becoming a victim.
How do I use thi s handbook?
Consider your Money Handbook a
reference, tool or guide, but not an
absolute authority.
The information contained in this
handbook is current as of July 2008 and
is subject to change.
For the most up-to-date information,
talk with an expert before making
any decisions about how to manage
your money, even if it is just opening a
checking account.
If you are not comfortable doing this on
your own, ask someone to go with you
whom you trust.
Now with that stuff out of the
way... it is time to talk money!!
>> THIS IS ________________ MONEY HANDBOOK. <<
(your name here)
It is your money and
we promise this will
all make cents.
In school we learn a lot about
English, math, history and science.
But the subject you will use every day
(if you do not already) of your life is
called money management.
Money management is all about know-ing
how to use your money wisely. There
is a lot more to it than you might think,
but this handbook will break it down
in ways that make it easy to understand
and fun to do, as we talk about bank-ing
basics, savings and investing, and
protecting your identity and money. We
think you will enjoy these pages, and
hope you will hang on to this handbook
as a reference guide for years to come.
Why it is important?
The material things we need or want
in life are not without cost. It is not
enough just to make money - you have
to get the most out of your money by
spending and investing in smart ways.
But there is another side that not every-one
thinks about: the losers who want
to cheat you out of it.
Knowledge is protection. We want to
help you learn how to be wise when it
comes to your money management and
how to protect yourself from those who
are dishonest and want to steal your
money from you. Knowing who and
intro
2
I n t r o d u c t i o n
3
i n t r o d u c t i o n
69
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my money Invest EdTM
handbook
i cha p t e r i
pop quiz, hot shot!
Just for fun, let us see how much
you know about what to do with
your money before we get into it.
Do not worry - it is not for a grade.
1 Which of the following is
NOT a deduction on a paycheck?
A. Social Security tax
B. Medicaid tax
C. State income tax
D. Medicare tax
2 Which investment vehicle has the
potential for higher returns as well
as greater risk?
A. Savings bonds
B. Stocks
C. Treasury bills
D. Certificates of deposit
3 What does APR stand for?
A. Annual Percentage Rate
B. Approximate Percentage Rate
C. Applicable Payment Rate
D. Annual Payment Ratio
4 When will having bad credit
affect you most?
A. When cashing in credit card
rewards points
B. When applying for a loan
C. When applying for a job
D. When renewing your driver’s license
5 Which one is not considered
an investment tool?
A. Treasury bill
B. Savings bond
C. CD
D. Checking account
6 You have been asked to pay cash to
get in on a money making opportunity.
You will get money by getting others
to pay cash to join. This scam is an
example of:
A. Penny stock fraud
B. A commission
C. Affinity fraud
D. A pyramid scheme
7 When someone uses your personal
information to obtain a credit card,
it is called:
A. Declined card
B. Mail fraud
C. Identity theft
4 D. Credit crisis
p r e - q u i z
first paycheck
to spend or
to save: wants
vs. needs
budgeting basics
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Bank on it!
words you
need to know
deduc t i ons
gr o s s pay
ne t pay
Welcome to the wonderful world of
deductions. Those are the amounts taken out
of your pay before you take it home. It is not your
boss’ fault, either. No matter where you work in
this country, whether you make thousands or mil-lions
of dollars a year, deductions are a part of life.
So you might as well know what they are.
(AND HOW TO READ IT)
>> Wrong.
money management:
your first
paycheck
So you have your first
paycheck.Congratulations!
You get paid $6 an hour and you
worked 20 hours, so that comes
to $120 in your pocket, right?
Though there could be more,
here are four basic deductions:
1 Social Security tax
2 Medicare tax
3 Federal income tax
4 State income tax
Social Security and Medicare are the fed-eral
programs that help out the elderly with
monthly payments and health insurance. And
income taxes fund all kinds of government
programs that are intended to benefit people.
Once these deductions are made, you take
home the rest. You may see your share listed
as net pay. Gross pay is what you made
before deductions. You can remember the
difference by thinking of a net: What you
catch in it is what you keep.
All these amounts are clearly shown on your
paycheck. Usually your pay stub will list
what you have made since the last check and
what you have made for the year to date.
Once you have made it, the next step is figur-ing
out what to spend and what to save. 6 7
m o n e y m a n a g e m e n t
f i r s t p ay c h e c k
When b uying things,
it is important to realize
the difference between a
need and a want. A need
is something you cannot
do without, like food and
shelter. A want is just that:
something you would like
to have, but you can survive
without.
That is not to say you
should only buy things you
need, but buying something
you want should not take
priority over your needs or
blow your budget (and we
will get to that next). Some
things should be saved for
over time.
Remember, to make a smart
purchase, all you have to do
is P.I.C.K. it:
P Problem:
What is the issue?
I Information: Get it.
C Consequences:
Think about them.
K Kick it into action!
to mon sepye mnda noarg teom seanvte:?
>> But do you need it?
Have you ever
spotted some-thing
at the mall
that caught your eye
and made you say,
“I need this.”
exercise
Using the paycheck example above,
answer the following questions:
1 How much money have you earned
all year before deductions?
2 How much net pay have you earned
for this check only?
3 How many hours did you work for this check?
4 How much were you paid per hour?
5 How much has been deducted for
Medicare for the year?
John Doe
1234 Main St.
Anytown, OK 73071
Taxable Marital Status: Single
Exemptions/Allowances
Federal: 1
State: OK State 1
Earnings rate hours this period year to date
6.50 40 $ 260.00
Gross Pay $ 260.00
Deductions
Federal Income Tax -$ __ 3.12
Social Security -$__16.12
Medicare -$ __ 3.77
Oklahoma State Tax -$ __ 2.00
Net Pay $ 234.99
$1560.00
$ 204.85
$ 96.72
$ 22.62
$ 79.00
$1156.81
Tax by the state to pay
for state programs.
Funds medical care
for the elderly.
Federal fund to assist
the elderly.
Tax to pay for federal
programs.
Pay after deductions.
This is what you get
to take home.
Pay before
deductions.
Amount of money earned
from the beginning of the
year to the current date.
Answer key on page 70.
8
m o n e y m a n a g e m e n t
9
s p e n d o r s a v e ?
Let us apply the P.I.C.K. rule to Sandy
to see how her needs and wa n t s p l ay out
agains t each other...
P Problem:
Sandy wants a new CD that
is coming out this Tuesday.
I Information:
By checking out ads in
the Sunday paper and on
the internet, Sandy finds
out what the CD costs at
various retailers.
C Consequences:
Now that she knows what
she would be spending,
Sandy can determine
whether the CD is
affordable with the money
she has for the week.
K Kick it into action:
Sandy needs to fill her
car with gas to get to and
from work this week. She
decides to wait and buy the
CD later.
By recognizing the problem,
researching the information
and considering the benefits
and trade-offs, Sandy
was able to make a smart
financial decision.
What are your wants? Circle them!
How need
savvy are you?
circle your needs!
r ent
vacat i o n
c lothe s
wat e r
mounta in b ike
sof t dr inks
ga s o l ine
lunch $
dent i s t
car
p rom dr e s s
plasma s c r e en
purse
insur anc e
c r edi t card
b i l l s
c e l l phone
10
Bank on it!
words you
need to know
ne ed
wa n t
m o n e y m a n a g e m e n t
Now let us compare how the P.I.C.K. rule
plays out for Daryl’s need.
P Problem:
Daryl’s electric bill doubled this month because last month
was so hot. He owes $100. Paying an extra $50.00 on his elec-tric
bill was not something Daryl expected this month. He
planned to spend the money on a concert.
I Information:
Disappointed, Daryl considers how he should spend the
$50.00. He remembers turning down the air conditioning more
than ususal to stay cool, so he knows his bill is not a mistake.
Also, the month-by-month history on his bill shows that $100
is about what he paid this time last year. So Daryl knows he
owes the extra money to the electric company, but he really
wants to go to the concert with his friends.
C Consequences:
This is a no-brainer. If Daryl pays the bill, he will have air
conditioning for another month. If he chooses not to pay the
bill, Daryl will have a very hot summer. In this case, all the
concerts in the world will not substitute for air conditioning.
K Kick it into action: Daryl decides to skip the con-cert
this month and pay the bill. To avoid another unexpected
high electric bill, he will not turn down his thermostat.
11
s p e n d o r s a v e ?
13
need
___________________________________________
___________________________________________
PROBLEM ______________________________
___________________________________________
___________________________________________
___________________________________________
INFORMATION _________________________
___________________________________________
___________________________________________
___________________________________________
CONSEQUENCES ______________________
___________________________________________
___________________________________________
___________________________________________
KICK IT INTO ACTION _________________
___________________________________________
___________________________________________
___________________________________________
want
___________________________________________
___________________________________________
PROBLEM ______________________________
___________________________________________
___________________________________________
___________________________________________
INFORMATION _________________________
___________________________________________
___________________________________________
___________________________________________
CONSEQUENCES ______________________
___________________________________________
___________________________________________
___________________________________________
KICK IT INTO ACTION _________________
___________________________________________
___________________________________________
___________________________________________
Think about something that you need and something that you want. Apply
the P.I.C.K. rule to each. Would you think twice about buying either item after
going through these steps? Why or why not?
s p e n d o r s a v e ?
exercise
The decision process
wa s the same.
By recognizing the problem,
gathering the information,
and considering the benefits
and trade-offs, both Sandy
and Daryl were able to make
smart financial decisions that
met their needs first.
The stuff we want may not always
cost a lot, but you would be sur-prised
at how fast inexpensive
wants can add up.
Think about less expensive ways
to spend on your needs. To save
money, Daryl chose not to turn his
air conditioning down the next time
he feels a little uncomfortable in his
apartment.
Instead of spending $10.00 at the
movies on opening night, consider
saving money by going to a matinee,
waiting until the movie plays at the
dollar theater, or renting the DVD.
Tips & tricks
my notes
12
m o n e y m a n a g e m e n t A need is something you cannot do without.
money management:
and a whole pizza has been placed
in front of you. In order to take
care of what matters most (your
growling stomach), which slice do
you reach for first? The biggest
one, of course.
Budgeting your money is some-what
like that. The greatest needs
are taken care of first.
Imagine you are starving
you cannot fudge
it with a budget
14
m o n e y m a n a g e m e n t
Bank on it!
words you
need to know
disposable income
my notes
exercise
Savings
Food & Groceries
Clothes & Cosmetics
Rent & Utilities
Telephone
Car & Gas
Entertainment
Charity & Gifts
Medical
Miscellaneous
TOTAL
Today, start your budget by writing an “Amount Budgeted” for each category, using your
monthly take-home pay. If you do not currently work, use $524.00; this figure is based upon
four 20-hour work weeks at a $6.55-per-hour minimum wage.
For the next 30 days,
every time you spend
money in one of the
categories subtract
it from the “Amount
Budgeted” and write
that number in
“Amount Left After
Spending.”
On the 30th day, add
the “Amount Left
After Spending”
column up. The total
shows how much un-der
budget you were.
How did you do?
AMOUNT
BUDGETED
AMOUNT LEFT
AFTER SPENDING
16
m o n e y m a n a g e m e n t
Budgeting lets you see where
your money needs to go, and
helps you make sure that hap-pens.
Once your needs are met, you
know exactly how much you have left to
spend on the things you want. This “fun
money” is called disposable income.
Imagine if you got your monthly pay all
in cash, and had to divide the cash up
into piles according to where they were
going to be spent. Think about all the
things you have to pay for every month:
rent, food, bills, gas - that sort of thing.
Then think about all the fun things you
would like to do, like movies or con-certs.
Even though the stuff you want
may not always cost a lot, you will be
surprised how fast it adds up.
The goal of budgeting is to
have some money left over. After
all, you cannot spend what you do not
have. Do not forget about setting money
aside for savings or for emergencies that
might come up.
CD
Rent
Bills
Gas
Food
17
b u d g e t i n g
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23
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41
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Invest EdTM
ii chapterii
types of banks
checking accounts
savings accounts
savings & investing
products
investing risk
credit
1
2
3
4
5
Answer key on page 70.
QUIZ
ch.i
Circle the letter that best answers the question.
Which of the following is
not a deduction on a paycheck?
A Social Security tax
B Medicaid tax
C State income tax
D Medicare tax
Certain deductions are taken
from your paycheck because:
A This money is put away
until you turn 65
B Employers get a percentage
of what you earn
C They are required by the
government
D They fund other programs
of the company
In making smart financial decisions,
what does P.I.C.K. stand for?
A Problem/Information/Consequences/
Kick it into action
B Pursue/Information/Consequences/
Kick it into action
C Problem/Intelligence/Consequences/
Kick it into action
D Problem/Information/Control/
Kick it into action
In budgeting, money left over after
all needs are taken care of is
called what?
A Leftover funds
B Free money
C Net pay
D Disposable income
Which of these budget items is a want?
A Utilities C Entertainment
B Gasoline D Groceries 18
c h a p t e r i q u i z
my money
handbook
take that to
the bank...
Most banks offer checking and savings accounts, credit
cards, loans, travelers’ checks and safety deposit boxes for
both business and personal use. Generally, your deposits
are insured up to $100,000 in regular accounts and up to
$250,000 in retirement accounts by the governmental Fed-eral
Deposit Insurance Corporation or FDIC (in case your
bank fails).
Savings and loans may offer some of the same services, but focus on loans
for people who want to buy or fix up a home. Here, your deposits are also
similarly government-insured, but by the Savings Association Insurance
Fund (SAIF) administered by the FDIC.
Credit unions also operate like banks, but are owned and operated
by a group of people having something in common, like attending the
same church or working at the same place. They only serve their own
members, who can buy life or health insurance or get loans at low rates.
Generally, deposits in federal and most state-chartered credit unions are
insured up to $100,000 in regular accounts and up to $250,000 in retire-ment
accounts by the governmental National Credit Union Administra-tion
(NCUA).
Just as those three groups offer different services, they also offer those
services at different prices. For example, many banks offer free check-ing
accounts or ATM transactions, while others charge fees. Just asking
around can help you find the institution that is right for you.
> > > BUT WHICH ONE?
Check-cashing and “cash in advance”
businesses you see around town and
in strip malls, may be convenient and
quick, but they are not banks. These
businesses may charge a big fee for
cashing your paycheck! (You have
worked way too hard for your money
to throw it away like that!)
Thirsty for a soda?
be aware! Check Cashing & Cash in Advance Busineses:
What kind?
Regular? Diet? Cherry?
Vanilla? Lime?
Not all soft drinks are exactly alike, and
the same goes for banks and other finan-cial
institutions. We think of them as places
that store money and have free lollipops at
the drive-thru window, but there is much
more to it than that. They fall into three
main categories: banks, savings and loans,
20 and credit unions. 21
b a n k r e v i e w
b a n k i n g b a s i c s
banking basics:
Bank on it!
words you
need to know
commercial banks
full-service banks
savings and loans
credit unions
fdi c
sai f
A ___________________ is owned and operated by a
group of people having something in common, like a
place of employment. It is supervised and may be
insured by the government.
A ___________________ offers checking and savings
accounts, credit cards, loans, travelers’ checks and
safety deposit boxes. Your deposits are insured
up to $100,000 in regular accounts and up to $250,000
in retirement accounts by the Federal Deposit
Insurance Corporation.
A ___________________ offers the usual accounts and
other services, but focuses on loans. Your money is in-sured
by the Savings Association Insurance Fund.
That is why getting a checking
account may be a good idea - besides
safety, it is a good way to keep track
of your money and lets you pay bills
by mail or online instead of in person.
When you cash your paycheck,
it is a nice feeling to have all
that money in your pocket.
Unfortunately, it is not very safe!
>>>>>
Bank on it!
words you
need to know
che ck r egi s t e r
ov e rdraf t
r e conc i l ing
checking out
checking accounts
banking basics:
22 23
b a n k i n g b a s i c s
exercise For each situation below, fill in whether it best describes a bank,
savings and loan or credit union.
1
2
3
Answer key on page 70.
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>
1 The date you write the check
2 The name of the person or business
to whom you are writing the check
(payee)
3 The amount of the check in numeric
form (such as $27.34)
4 The dollar amount of the check in
word form and the cents amount in
numeric form (such as twenty-seven
dollars and 34 cents)
5 Your signature (payor)
(There is also a “Memo” line where you
can write what the check is for, but you
do not have to use it. However, it comes
in handy when noting the last four digits
of an account number for paying bills.)
24
b a n k i n g b a s i c s
Jane Doe 1500
123 Main St 405-555-5555
Oklahoma City, OK 74066 DATE
PAY TO THE ORDER OF
$
DOLLARS
MEMO
|: 123456789 |:1500 0009876543" "0000012300,’"
BANK
May 12, 2008
Grocery Store 27.34
Twenty-seven dollars and 34/100
groceries Jane Doe
The name of the person or business
to whom you are writing the check.
The date you
write the check
The amount of the check in
numeric form (example: $27.34)
The dollar amount of the check
in word form and cents amount
in numeric form (example:
twenty-seven dollars and 34 cents)
Used to write what the check is for. Your signature
There are five areas you must fill out:
Writing a check
can be easy, too. It
is all about filling
in the blanks.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
What is a check card?
A check card is a combination of a
check and an ATM card; you can use
your check card to buy and pay for
things and to get money at the ATM.
A check card is linked directly to
your checking account, so every time
you use it, money is taken out of your
checking account. Remember to always
write down your check card purchases
and ATM withdrawals in your check
register. You do not want to spend more
money than you have in your checking
account by accident. 25
c h e c k i n g a c c o u n t s
making
ATMs
a-ok!
What to do when
writing a check:
• Write clearly, in black
or blue ink.
• Fill remaining spaces
with a line to avoid
tampering.
• Immediately record each
transaction in the register,
so you do not overdraft
your account. Spending
more than you have in the
bank can cost you penalty
fees and hurt your credit
rating.
What not to
do when writing
a check:
• Use a pencil.
• Use incomplete names
or nicknames.
• Leave it blank.
• Date it with a day that has
not happened yet.
By keeping an accurate
record, it will be easy to
check your register against
the monthly account state-ment
you will get from the
bank. Do this every time
to make sure there are no
errors, yours or the bank’s.
There, you will note:
1 The date you write the check
or make the transaction.
2 The check number.
3 The name of the person or business to
whom the check is written.
4 The amount of the check in numeric
form (such as $20.34).
5 Your remaining balance, once the
check, ATM withdrawal or check card
transaction is subtracted from the
previous amount.
6 If you have online banking and check
your account online, remember that
some transactions take longer to post
to your account, so you may not see
them taken out right away, but they
will show up, so do not spend money
you have already spent.
The other blanks you will have to fill are on your
check register, which is where you list the details
on each and every check you write. (You will also use the check
register to record all deposits into your account, as well as all ATM and check
card transactions.)
26
• • • • • • • • • • • •
Remember to write
down all ATM, check or
debit card transactions
in your register. If you
do not have it with you,
stick that receipt in
your wallet until you
get home!
• • • • • • • • • • • •
Choose a PIN
number you can
easily remember, but
do not tell anyone!
• • • • • • • • • • • •
Check with your
bank to see if fees are
charged for using ATMs
they do not own. Those
fees can add up!
• • • • • • • • • • • •
Treat your ATM, check or
debit card transactions
as you would a check - it
is not “free” money!
• • • • • • • • • • • •
b a n k i n g b a s i c s
s 27
c h e c k i n g a c c o u n t s
Vital Records
Service
Oklahoma State
Department of Health
1000 Northeast 10th
Oklahoma City, OK
73117
405.271.4040
Social Security
1.800.772.1213
www.ssa.gov/dollars
Reconcile!
To make sure your register
matches up with the bank
- called reconciling - follow
these four simple steps. You
will likely find them on the
back of your statement as
well:
1 In your register, check
off every transaction that
also appears on your
statement.
2 On a piece of paper, write
down your balance ac-cording
to the statement.
3 Add in all unchecked
deposits from your regis-ter
that are not on the
statement.
4 Subtract all unchecked
withdrawals (or checks
you wrote not yet cashed)
from your register balance
that are not on the state-ment.
That amount should
now match the balance
on your statement. If not,
recheck your math. Do not
be afraid to ask your bank
for help - that is what they
are there for!
You also should not be
afraid to ask questions when
opening a checking account,
especially how much it costs.
Many banks offer free check-ing,
while others will charge
a fee for every check written.
yh ogeuroe!
>>>>>>>>>
28
b a n k i n g b a s i c s
YOU: I saw your free checking pro-motion
and I wanted to ask about
opening an account.
TELLER: I can help you. All you need
are two forms of I.D. and your opening
deposit.
YOU: I only have a library card and
my driver’s license. Will those work?
TELLER: Driver’s license, yes, but you
need an original birth certificate or So-cial
Security card for your second form.
YOU: Where would I get those?
TELLER: The Department of Vital
Statistics for a birth certificate, and
the Social Security office for your card.
There may be processing fees.
YOU: I was not born in Oklahoma,
so can they still help me?
TELLER: Call the Department of Vital
Statistics in your birth state for a birth
certificate. I am sorry for the inconve-nience,
but that is how we protect cus-tomers
from having their identity stolen.
When applying, dress nicely, act pro-fessionally
and be prepared to show two
forms of valid identification. Here is a
quick scenario of what you might expect:
STATEMENT FOR
Jane Doe
123 Main St.
Oklahoma City, OK 74066
CHECKING
ACCOUNT
0009876543
THIS STATEMENT COVERS
4/20/08 through 05/12/08
Previous Statement Balance on 4/19/08
Total of 1 Deposit
Total of 3 Withdrawls
New Balance
500.32
72.23 +
69.85 -
502.70
CHECKS AND
OTHER DEBITS
CHECK
1499
DATE PAID
5/10
AMOUNT
40.03
Withdrawl #031 at ATM
Withdrawl #0123 Check Card
5/11
5/12
21.50
8.32
DEPOSITS AND
OTHER CREDITS
DATE POSTED
5/9
AMOUNT
Direct Deposit from #1234 on 5/8 72.23
BANK
29
c h e c k i n g a c c o u n t s
Your Name
123 Main St 405-555-5555
Oklahoma City, OK 74066
DATE
PAY TO THE ORDER OF
$
DOLLARS
MEMO
|: 123456789 |:1502 0009876543” “0000012300,’”
BANK
Your Name
123 Main St 405-555-5555
Oklahoma City, OK 74066
DATE
PAY TO THE ORDER OF
$
DOLLARS
MEMO
|: 123456789 |:1503 0009876543” “0000012300,’”
BANK 30
b a n k i n g b a s i c s
exercise Your Name
123 Main St 405-555-5555
Oklahoma City, OK 74066
DATE
PAY TO THE ORDER OF
$
DOLLARS
MEMO
|: 123456789 |:1501 0009876543” “0000012300,’”
BANK
Your Name
123 Main St 405-555-5555
Oklahoma City, OK 74066
DATE
PAY TO THE ORDER OF
$
DOLLARS
MEMO
|: 123456789 |:1500 0009876543” “0000012300,’”
BANK
1501
1500
1502
1503
• On April 4, pay John Doe
the $20.25 he loaned you.
• On April 18, pay your $42.73 bill
with Gasoline Credit, account number
7158-6402.
• On April 23, give $74.66 to Dan’s
Market for your groceries.
• On April 27, write yourself a check
for $15.00 cash.
Write checks for each of the following situations and record them on
the sample check register on the next page.
31
c h e c k i n g a c c o u n t s
32
CHECK
NUMBER
DATE DESCRIPTION OF TRANSACTIONS PAYMENT/DEBIT
{-} ?FEE
{-}
DEPOSIT/CREDIT
{+}
BALANCE
exercise On the check register below, record the following:
• Include a $237.42 deposit on April 16 from your paycheck.
• Also note ATM transactions for $20.00 on April 2 and $40.00 on April 30,
each having a transaction fee of $1.
When you put money into
an interest-bearing account,
it does not just sit there -
it earns interest.
We have
all heard
money does
not grow
on trees.
> > > But it does grow when
you save and/or invest.
>>>
>>>
>>>
>>>
>>>
>>>
>>>
BANKING BASICS:
saving and investing puts
your cash on the grow
b a n k i n g b a s i c s
33
Saving is important
for two major reasons:
1 You never know what life is going to
throw your way. We do not know when
emergencies will happen - like a health
problem or losing your job - but we know
they will, and savings gives you
a cushion to fall on.
2 There are some things you will want
to buy that you cannot swing right now.
Someday when it comes time to buy a
house or pay for your college education
or some other high-ticket item, you will
be glad you socked some bucks away.
Oh, you could treat a savings account
like checking and take money out of it all
the time, but let us show you why you do
not want to do that.
Say you put $25 a month into savings
for a whole year, that would be $300. If
that $300 earned an interest rate of 5%
(meaning the bank would pay you 5% of
what your balance was), it would grow to
almost $400 in fi ve years, to nearly $500
in 10 years and just shy of $800 in 20
years. And that assumes you did not add
another penny.
Interest is money paid to you by the bank for saving and
for letting the bank use your money to loan to others. The
more you put in and the longer it stays there, the more
interest you earn. Even better, the deposits are insured up
to $100,000 or more.
And there lies the major difference between checking and
savings accounts. Your balance gets smaller in checking be-cause
you are writing checks, but it gets bigger in savings
because you are not touching it. Think of money in savings
like a seed you have planted and interest like the water you
pour on it. Interest helps make your money grow.
> > > But noW We Bet you Want to! And the earlier
you start, the more you will have when you need it.
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
34 35
s a v i n g s a c c o u n t s
b a n k i n g b a s i c s
Bank on it!
words you
need to know
s av ings ac c ount
int e r e s t
int e r e s t r at e
the earlier you start saving,
the more money you will
have when you need it
Consider all the things you buy in a month. What could you give up and instead
put that money into savings? List them below with how much each item costs.
Then total it and think about how that money would grow in savings.
item cost
exercise
36
b a n k i n g b a s i c s
banking basics:
Cars all do
the same thing:
Take us from Point A
to Point B. But no two are
exactly alike. Some are built
for speed, while others work
for the long haul.
And savings accounts are just like
that, too. Even though they all can
make your money grow, they do it in
different ways, at different rates. You
just have to pick which one fits your
savings goals, whether it is for the
short term or the long term.
savings and
investing products:
when a piggy bank
just does not cut it
37
We have talked about
the standard bank sav-ings
accounts. These
are popular because:
• you can take money out
at any time. (Double
check with your financial
institution, they may have
a limit on the number
of free withdrawals per
month.)
• they are FDIC-insured.
• and many financial in-stitutions
offer a savings
account with a low mini-mum
monthly balance
requirement.
And those other
options include:
• Certificates of deposit -
You might hear these
called “CDs” (but they
sure do not play music).
With CDs, you put your
money in for a set amount
of time, anywhere from
a few weeks to several
years. The longer term CD
you buy, the more interest
you will make. Just do not
take any money out before
the time is up, or you will
be charged a penalty.
• U.S. savings bonds - These
are backed by our federal
government. You can buy
a bond for $50 and let it
mature (or earn interest)
for 30 years before cash-ing
it in. It works like
an IOU; you are loaning
money (in this case, $50)
to the government, who
promises to pay it all back
- with interest - at the
maturity date (30 years).
The interest rates may not
be huge, but the invest-ment
is backed by the U.S.
government.
Whatever the interest, you
have to report it on your
yearly income taxes when
you cash in the bond. If
it was more than $1,500,
note it on Schedule B of
Form 1040 or Schedule
1 of Form 1040A. If it
was less than $1,500,
simply note it with any
other interest on the
“Interest” line of your
return. If you are paying
your own way through
college at the time, you
may be able to exclude
it. Just consult the In-ternal
Revenue Service
rules at www.irs.gov.
• Treasury bills and notes -
These also are backed
by the government.
Treasury bills are for
short-term investing
(between a few days to
six months) and can be
bought at a discount.
Treasury notes are for
longer-term invest-ments,
and they earn in-terest
every six months.
• Stocks - Instead of
investing in the gov-ernment
as savings
bonds and Treasury
bills and notes, through
purchasing stocks you
can invest in specific
companies. You buy
shares - or pieces - of
that company, making
you a shareholder - or
owner - of that portion
of the entire company.
There is no guarantee in
stocks, but the earn-ings
can be huge. You
could make a fortune
or lose your shirt. This
potential to win or lose,
like in a game, is why
you might hear people
talking about “playing”
the stock market. But
investing is a serious
business.
• Mutual funds - These
take your money and
put it together with
other investors’ money
to invest in certain
stocks and bonds. When
the stocks and bonds do
well, so does the mutual
fund. They often are
considered a valuable
long-term investment
tool.
• Money market funds -
These are mutual funds
that invest in extremely
short-term, govern-ment-
guaranteed bonds.
Interest rates are usu-ally
higher than those
of saving accounts, so
these may be best if you
are planning on saving
some money for years,
or even decades. But
you can take money out
at any time without be-ing
penalized.
All of these carry a
different amount of risk,
or danger, which we will
38 get to next. 39
s a v i n g s & i n v e s t i n g p r o d u c t s
b a n k i n g b a s i c s
Bank on it!
words you
need to know
c e rt i f i cat e s
of depos i t
U.S. s av ings b onds
mat u r e
maturi ty dat e
Tr easury b i l l s
Tr easury no t e s
s tocks
shar e s
shar eholde r
mu t ua l funds
mo n ey marke t
funds
40
Using the following investment products and clues, fill in this crossword puzzle.
use
these
words:
BONDS
DEPOSIT
MONEY MARKET
MUTUAL FUNDS
SAVINGS
STOCKS
TREASURY BILLS
TREASURY NOTES
D O W N A C R O S S
exercise
b a n k i n g b a s i c s
clues
4 Investment specializing in extremely short-term bonds
5 Short-term, discounted, government-backed investment
7 Certificates of __________ charge penalties if money is taken out before
the specified time period
8 U.S. savings ________ work like IOUs
1 Purchasing makes you a shareholder of the company
2 Long-term, government-backed investments earning interest twice a year
3 Investments which pool investors’ money
6 ________ accounts are insured by the FDIC, but provide low returns
Bank on it!
words you
need to know
r i sk
r e turn
the risky
business of investing
banking basics:
41
Quick, pick
a number
between 1 and
1,000,000.
Wh at is it?
No, sorry, we were
thinking 64,237. You
were not even close.
Answer key on page 70.
42 43
i n v e s t i n g r i s k
b a n k i n g b a s i c s
Lower-risk investments include
bank savings accounts, money market
accounts, CDs, U.S. savings bonds and
Treasury bills and notes. These are
considered safe because most of them
are either guaranteed or backed by the
federal government. And because they
are less risky, the interest you earn will
not be as great as the other categories.
Stocks and mutual funds generally
fall into the medium-risk and high-risk
categories. Remember, stocks
are an equity investment in various
corporations, and sometimes companies
lose money and may even go out of
business. When they do, those stocks can
become worthless. On the other hand,
when those businesses do well, so does
their stock.
Generally, the older and more well-known
a company is, the less chance
you take. But each stock and mutual
fund are classified according to risk, so
you are likely to find one that fits your
comfort level.
Note that mutual funds often charge
fees, typically per transaction, for
changes you make in your account. So
if you make too many changes, your
fees could exceed your earnings – just
something to keep in mind.
Good thing we did not
put money on that one!
With odds like that, you were not likely
to ever win. However, in the world of
investing, having zero return on your in-vestment
is not the norm. But risk - the
possibility that you may not win - does
exist.
The different types of savings and
investing options we discussed pre-viously
can fall into one of three
categories:
1 Lower risk
2 Medium risk
3 Higher risk
Generally, the lower the risk, the lower
the return - or increase - on your invest-ment.
So which is which?
Are you a risk taker?
Think of the biggest
risk you have taken.
YIKES!
exercise
LOWHEIRG RIHSKE R RISK
At this point in your life, are you ready for low-risk or high-risk investments? Circle
your answer to each question, and you will see what road might be right for you.
Have you ever
invested before?
Are you wanting a
return on your invest-ment
right away?
Are you willing to give up
security in exchange for
higher returns?
Is your income high
and stable?
LOWER RISK
NO
NO
NO
NO
HIGHER RISK
YES
YES
YES
YES Stick a nice hunk of cheese in a
trap and the mice will come for it.
And also get into a heap of trouble for doing so.
Today, credit can be just as tempting and just as
dangerous. But it is designed to help you. And
as long as you use it wisely, it will.
charging ahead
wi t h c r edi t
banking basics:
44 45
b a n k i n g b a s i c s
Where credit can be dan-gerous
is in the form of
a little piece of plastic
called the credit card.
Here is why:
• If you fail to pay off your monthly
credit card bill in full you are charged
interest on the closing date balance.
• The finance charge is added to your
balance every month, reducing your
available credit and increasing the
amount you owe. Making even one late
payment can negatively affect your
credit rating.
• Additional fees are also charged for
going over your credit limit and for
taking out cash advances, which usu-ally
carry a higher interest rate.
The bank issuing your credit card will
provide you with a fee statement. Read
it carefully before you use your card!
Credit card companies make money
from you in the fees and interest rates.
Shop around for the lowest interest rate,
because the lower the rate, the lower the
finance charges, and the lower your debt
will be if you cannot pay the bill in full
each month.
If you do pay your bill in full month after
month, you get a good credit rating.
That is a score of how well you do with
credit. If you have good credit, banks
will want to loan you money for a home
or car at a low interest rate. If you do
not, you may have some problems.
46 47
c r e d i t
b a n k i n g b a s i c s
Bank on it!
words you
need to know
c r edi t
l ende r
bor rowe r
de b t
c r edi t r at i n g
annua l
p e r c entage r at e
c r edi t limit
Credit is when you are loaned money that
you promise to pay back by a certain date,
with interest.
If you plan to buy a home or a car that comes with
a hefty price tag, lenders - or those who loan the
money - will give you credit so you can move in
or drive away immediately. As the borrower, you
make monthly payments until you are no longer in
debt - or owing the lender - for that amount.
Credit
b a n k i n g b a s i c s
•Ask the seller as much as you can about
the vehicle, including mile-age,
accident history, repairs.
• Then find out how much the car is
worth considering the shape it is in by
logging on to www.kelleybluebook.com
or www.nadaguide.com
• Always take it for a test spin.
• Have it checked out by a trusted
mechanic before buying.
• Look the car over for scratches, dents,
stains or anything that may help you
negotiate a lower price.
• Bring an adult you trust with you
for a second opinion.
You can get good credit by:
• Having a steady job.
• Having a savings and a
checking account.
• Paying your bills in full and on time.
• Never bouncing checks.
• Paying off debts on time or even
ahead of time.
• Making regular monthly payments
on time.
When you sign up
for a credit card,
be sure you know:
• The interest rate (or APR - annual
percentage rate) and late fees.
• Whether the interest rate goes up
after a certain period.
• The due date and grace period
for payments.
• The minimum monthly payment.
• The credit limit
(the maximum you can charge).
• The company - do not sign up if
it is not a trusted name.
Just remember, credit
cards are not “free money.”
They are handy, but you do not want to
get in over your head. Before you make
a credit card purchase, apply the P.I.C.K.
method from Chapter 1 to figure out if
this is something you really need and
can afford, and what will happen if you
cannot pay it back. Taking a minute to
do that can save you months of heartache
later.
WHAT YOU ‘AUTO’
KNOW WHEN
BUYING A CAR
You may not
need credit
if you are buying
a car from some-one
other than a
dealership.
But you wi l l ne ed
s ome know-how.
To make sure you do
not throw your money
away on a lemon,
follow these tips:
48
b a n k i n g b a s i c s
49
c r e d i t
51
1
2
3
4
5
6
7
8
9
On what date was gasoline
purchased?__________________
How much was spent at
Music World? _______________
What is the amount owed this
month?_____________________
What is the minimum pay-ment
due?__________________
When is payment due?
_________________________
What is the current interest
rate? ____________________
How much is the credit limit?
_____________________________
What was the balance on last
month’s bill? ___________
How much was the last pay-ment
made? _________________
exercise Look at this sample credit card bill and answer
the following questions.
BANK ACCOUNT NUMBER 1234-56-789
NAME Jane Doe
CREDIT LINE $500.00 CREDIT AVAILABLE $433.73
MINIMUM DUE
PAYMENT DUE DATE 05/06/08
CLOSING DATE 04/28/08 DUE DATE 05/06/08
REFERENCE POSTED ACTIVITY AMOUNT
43567BF 04/05 GAS STOP ANYTOWN, OK 34.15
FTX456 04/06 PAYMENT THANK YOU - 120.34
78SD32F 04/12 MUSIC WORLD ANYTOWN, OK 24.12
TX23476 04/15 BIG SCREEN MOVIES SMALLTOWN, OK 8.00
CURRENT AMOUNT DUE $66.27
$20.00
NEW BALANCE $66.27
PREVIOUS BALANCE - PAYMENTS + PURCHASES CASH ADVANCES
120.34 120.34 66.27 0.00
FINANCE CHARGES NEW BALANCE APR CURRENT AMOUNT DUE
0.00 66.27 19.80% 66.27
SUMMARY OF TRANSACTIONS
50
b a n k i n g b a s i c s
Answer key on page 70.
my notes
c r e d i t
54
58
64
protecting
your identity
protecting
yourself from
investment
scams
quiz
my money Invest EdTM
handbook
iii c H a p t e r iii
1
2
3
4
5
Answer key on page 70.
QUIZ
ch.ii
Circle the letter that best answers the question.
wHicH of tHe following
is not like a bank?
A Savings and loan
B Credit union
C Cash in advance
D Commercial bank
reconciling your
cHeckbook means:
A Not writing more checks than
you have money for
B Keeping it in a safe place
C Writing the date of a check before
that date has happened
D Making sure your transactions
match your bank statement
if you wanted to see a larger
return on your investment, wHicH
option migHt provide tHat?
A Savings bonds
B Stocks
C Treasury bills
D Certifi cates of deposit
wHat does apr stand for?
A Annual Percentage Rate
B Approximate Percentage Rate
C Applicable Payment Rate
D Annual Payment Ratio
wHen will Having bad credit
affect you most?
A When cashing in credit
card rewards points
B When applying for a loan
C When applying for a job
52 D When renewing your driver’s license
c H a p t e r i i q u i z
Ever have one of
those days where
you just do not
feel like yourself?
Well, what if you
really were not? In a
way, it could happen.
Imagine applying for your
driver’s license and being
told you already have one
... Or trying to open your
first bank account and
being told you cannot
because you have a history of writing
bad checks ... Or even being arrested for
stealing ... when you did not, because
someone assumed your identity.
It sounds crazy, but it is happening
more and more. And it is called identity
theft, when someone uses your personal
information - often your Social Security
number - to pretend to be you, either
to get a driver’s license to replace their
suspended one, or to rack up huge bills
they have no intention of paying. It can
destroy your credit, complicate your life
and even get you thrown in jail.
Even worse, your identity may be stolen
by someone you know and trust, includ-ing
a parent, a relative or a friend. Kids
are often targeted for identity theft
because it can take years for the crime
to be discovered, because after all, what
six-year-old needs to get a loan?
Many victims do not know they
are a victim at all until years
have passed, when they:
• Cannot get credit or a loan
• Cannot get a checking
or savings account
• Cannot get an apartment
• Cannot get utility service
• Cannot get a driver’s license
• Cannot get a job
• Cannot get Social Security or
welfare benefits
• Are sent bills for accounts they
never opened
• Are investigated or arrested for a
crime they never committed
Tip: Check your credit history for free each
year at annualcreditreport.com. No need
to commit to any program or pay money to
check your credit history. You won’t get your
credit score for free, but you will find out if
other people have applied for credit cards us-ing
your social security number. You will also
find out if there are any mistakes in current
accounts or addresses and have a chance to
correct them. Check it out! It’s worth it.
Bank on it!
words you
need to know
ident i t y thef t
c r edi t r e port
identity theft:
has someone stolen you?
protecting yourself:
54 55
i d e n t i t y t h e f t
p r o t e c t i n g y o u r s e l f
If you find your identity
has been stolen, immedi-ately
take these steps:
• Call the three main agencies for
credit reports, which are
detailed listings of your entire
credit history (see pg. 68)
• Call the police
• Call all the credit issuers and
collection agencies involved,
speaking only to fraud investi-gators
• Write down the name and num-ber
of everyone that you speak
to, including the time and date
you called, and a brief summary
of the conversation
• Clear your records following the
steps provided in the Identity
Theft Resource Guide, available
from www. idtheftcenter.org
If your identity was stolen by
someone close to you, like a parent
or family member, you have every
right to feel betrayed. But do not
feel guilty, as the fault does not lie
with you.
But how do you avoid becom-ing
a victim at all? First, protect
your Social Security number as
if it were worth a million dollars
- because it just might be! Do not
carry the card in your wallet, do
not use it on your driver’s license
or student I.D. and do not give it
out to just anyone who asks for
it, especially on the Internet. It is
your number; you have the right to
ask what they might need it for, as
well as to say “no.”
You should also shred any mail
or papers you get with the num-ber
on it, instead of just throwing
them away. And request a copy of
your credit report once a year at
annualcreditreport.com to make
sure nothing sneaky is going on
that you do not know about.
exercise
If some of the impor-tant
cards in your
wallet or purse
already have your
Social Security
number on them,
experts suggest you
make a copy of those
cards and cut out
the last four digits
to prevent identity
theft.
But how can you eas-ily
recall what those last
four digits are? Using the
letters associated with a
numeric phone keypad,
play around with your
numbers until they spell
a word that you can
remember.
For example, if your
Social Security number
ends in 6427, that could
spell out “mics,” “nibs”
or “ogar.” It does not
have to be a real word
- just something you can
remember off the top of
your head.
MY WORDS
________________________
________________________
________________________
____________________________________________________________________________________________________
________________________
________________________
________________________
________________________________________________________________
________________________
________________________
________________________
________________________
________________________
________________________________________
________________________
________________________
________________________
________________________________________________________________________________________
________________________
1
4
7
2
5
8
3
6
9
GHI
PQRS
ABC
JKL
TUV
DEF
MNO
WXYZ
56 57
i d e n t i t y t h e f t
p r o t e c t i n g y o u r s e l f
GET REAL: A TRUE STORY
When John, age 20, tried to move into his own apartment after saving $400, he was
told he could not until he paid off a $665 electric bill and a $550 gas bill. But he
had never lived alone before! Turns out that years earlier, his own mother used his
name and Social Security number to set up accounts for her own use. John could
either pay the bills (which he couldn’t afford) or file fraud charges against his mom.
the 411 on
investment s cams
protecting yourself:
Fraud or a scam is the
art of deception.
Con artists misrepresent the
truth on purpose to build your
trust, and then steal your money.
BE AWARE .
Phony investments scams are
an ever present danger for an
investor who is unsuspecting or
uninformed.
Get educated before
investing.
Understand the different types
of investment scams a con artist
might use to separate you from
your money (see pages 59 and
60) and learn how to protect
yourself (page 61). Investing is a
risky enough business without
adding a lack of knowledge to
your vulnerability. Ask questions
and remember to always investi-gate
before giving your money to
anyone for an investment of any
kind.
If it sounds too good to be
true, it probably is. Scam
artists know what it takes to get
your money, so be careful, ask
questions and investigate before
giving your money to anyone for
an investment of any kind.
TIP:
Before you invest check that a
security or your broker-dealer/
investment advisor is registered
with the Oklahoma Securities
Commission. To do this, visit
securities.ok.gov.
The Scams
Common investment swindles seen in
Oklahoma are pyramid schemes - a
scam in which people invest in the right
to sell the investment to other people,
there is no significant profit from sales
of goods or services, and cash comes
from recruiting new investors who
pay for the right to enlist more future
investors. Inevitably, a point is reached
where there are not any new suckers.
Bank on it!
words you
need to know
py ramid s cheme
Ponz i s cheme
p enny s tock f r aud
af f ini ty f r aud
boi l e r rooms
f r audul ent
You’ve heard it before, “If It Sounds
Too Good To Be True, It Probably Is”.
Investment Con Artists Will Promise “BIG”,
“RISK-FREE” Returns To Get Your Money.
Don’t Believe Them or You Will Lose Your
Money! Investigate Before Investing.
58 59
i n v e s t m e n t s c a m s
p r o t e c t i n g y o u r s e l f
* Ponzi Schemes: Early investors are
paid off with money from new investors.
The scheme may operate for a long time
before the promoter “pulls the plug” or
disappears with all the cash or reveals
that the investments have gone “sour.”
For everyone who makes money some-one
loses money. Promoters or early
investors show checks and claim they
are profits.
* Penny Stock Fraud involves
investment in promotional bogus com-panies
with untested products, or no as-sets,
employees or business plan. Insid-ers
get cheap stock, control the market
price, artificially inflate the price and
then dump the worthless stock on you at
the high price.
* Affinity Fraud targets an entire
group at once, like professional organi-zations,
minority groups, or church or
religious groups. Here, the con artists
often pose as a member of the group to
get their foot in the door and win over
everyone’s trust. Their goal is to get the
group excited about a supposedly “safe”
investment, which usually takes the
form of a pyramid or Ponzi scheme. The
money is pocketed, not invested.
* Boiler Rooms are another com-mon
scam to watch out for. They use the
phone, even your cell phone, to get your
money. Telemarketers will give scripted
sales pitches using lines like, “Act now
or the deal is gone” or “You are silly or
stupid not to take advantage of this op-portunity.”
You may be asked to give out
information like your Social Security or
bank account numbers. If you get a call
like this one, just hang up.
With all the scams out there, how do you
avoid becoming the next victim? Easy!
HERE YOU GO!
To report a con
artist, contact these
organizations:
Oklahoma Securities
Commission
(405) 280-7700
www.securities.ok.gov
Financial Industry
Regulatory Authority
(FINRA)
(301) 590-6500
www.finra.org
North American Securi-ties
Administration As-sociation
(202) 737-0900
www.nasaa.org
U.S. Securities and
Exchange Commission
(202) 551-6551
www.sec.gov 60
p r o t e c t i n g y o u r s e l f
• Stay away from “investments” that
offer you money to recruit others, ask
for cash to join or want you to buy
goods or services.
• Do your research before deciding to
buy in. If there is little or no informa-tion
or history, beware.
• Do not be afraid to say “no” or hang
up the phone.
• Do not be pushed around by the high-pressure
sales pitches of salespersons
that want you to act immediately.
Never purchase any investment unless
you have had time to get informa-tion
and make a thoughtful decision.
Worthwhile investments rarely involve
such short time constraints.
• Do not trust sales people just because
they seem friendly.
• Never give out your bank account
number or other financial informa-tion.
• Be suspicious of offers of “free”
trips or gifts.
• Remember there is no such thing
as a “guaranteed” or “risk-free”
investment.
However, if you do lose
money to a scam, report it
to the Oklahoma Securi-ties
Commission!
It is totally natural to be embarrassed,
but reporting the scam to authorities
can improve your chances of getting
your money back. Investment fraud is
not only lying, it is illegal, and the losers
who cheat honest people out of their
money can only go to jail with your
help.
scams
61
i n v e s t m e n t s c a m s
62 63
p r o t e c t i n g y o u r s e l f
exercise
TRUTH?OR LINES?
When are you being fed a line? For each of the con artists’ quotes below,
match it to the reason you should be suspicious of their pitch.
LINES
1 “I’ll need an answer today
if you want to get in on this deal.”
2 “Your money will double in
the first two months.”
3 “What’s great about this deal
is that there is no risk involved.”
4 “You haven’t heard of this company
because what they’re doing is
top secret.”
TRUTHS
A Beware of outrageous claims of
profit. If it sounds too good to be
true, it probably is.
B The business likely does not even exist.
C Virtually any investment is subject
to a risk of loss.
D Before investing, you should take
your time to research it. Investigate
before you invest.
Answer key on page 70.
my notes
i n v e s t m e n t s c a m s
Nigerian Scams
We get e-mails from foreign nations,
like from Nigeria, that seek your aid
in getting large sums of money out of
that country. The hook is that you have
to give information like your bank
account number and send cash before
you get anything. Once your money is
sent, you never hear from them again.
Beware, phony investment scams
abound on the Internet.
1
2
3
4
5
66
67
68
69
70
71
conclusion
resources
contact list
post quiz
answer key
evaluation
Invest EdTM my money
Answer key on page 70.
QUIZ
ch.iii
Circle the letter that best answers the question.
Identity theft can affect all
of the following except:
A Your credit history
B Your criminal record
C Your transcript
D Your welfare benefits
The three major credit
report companies are:
A Equicare, ExpoNet and TransCredit
B Equalcom, Experian and TransCom
C Equifax, Expert and TransUnion
D Equifax, Experian and TransUnion
The scam named for a person is:
A Ponzi
B Penny
C Affinity
D Pyramid
Which group is most likely to be
targeted for affinity fraud?
A Unions
B Republican Party
C Shriners
D First Christian Church
Which investment does not exist?
A Risk-free
B Slight risk
C Moderate risk
D High risk 64
c h a p t e r i i i q u i z
handbook
66
c o n c l u s i o n
By now, you have gone
through a crash course in
money basics from that first
paycheck to learning how to
protect yourself (and your
money) from an investment
scam artist. Hopefully you
know a little bit more about
the importance of treating
money wisely, so you can get a
lot more out of it, both today
and in all your tomorrows.
We have discussed
spending vs. saving, how to
budget your money, the differ-ent
types of banks, investment
options, credit, investment
scams and protecting your
identity and earnings. While
you might not encounter all
of these down the road, each
piece gives you the knowledge
to make smart, careful deci-sions
about your income.
We know money is not
easy to come by, but now
that you have completed this
workbook-cd, it will be much
easier to make it work for
you. And just knowing that
is priceless. This handbook is
yours to keep and use anytime
you need it. Remember to
investigate before you invest
in any financial product.
conclusion:
it was all about
the benjamins
Whew!
That was not
so hard, was it?
resources The following resources were used to create your Money Handbook.
67
r e s o u r c e s
handbook:
American Association of
Retired Persons, “ID Theft:
What’s It All About?,” Federal
Trade Commission: 2003
Ansell, Dorothy I., The New
Making It on Your Own, Vir-ginia
Commonwealth University
School of Social Work: 1995
CNMoney.com, “How Fast Will
My Savings Grow?,” http://cgi.
money.cnn.com/tools/saving-scalc/
savingscalc.html: 2006
Identity Theft Resource Center,
“Fact Sheet 120: Identity Theft
and Children,” http://www.
idtheftcenter.org/artman2/
publish/v_fact_sheets/Fact_
Sheet_120.shtml
Identity Theft Resource Center,
“Fact Sheet 120: To Order a
Credit Report for a Child,”
http://www.idtheftcenter.org/
artman2/publish/v_fact_sheets/
Fact_Sheet_120_A-.shtml
Identity Theft Resource Center,
“Fact Sheet 120b: A Guide for
Parents Regarding Child Iden-tity
Theft Indicators,”
http://www.idtheftcenter.org/
artman2/publish/v_fact_sheets/
Fact_Sheet_120b_A_Guide_for_
Parents_-_Child_Identity_Theft_
Indicators.shtml
Latzko, Marian, B., I Can Do
It!: A Micropedia of Living on
Your Own, Microlife: 1996
Mannix, Darlene, Life Skills
Activities for Secondary Stu-dents
with Special Needs, John
Wiley & Sons, Inc.: 1995
Oklahoma Department
of Securities, “Personal
Finance for the Economics
Classroom: A Teaching
Guide for Econ Instructors,”
http://www.fl2010.org/
U.S. Census Bureau, “Three-
Year Average Median House-hold
Income by State: 2002
- 2004,” http://www.census.gov/
hhes/www/income/income04/
statemhi.html: 2005
additional
resources:
National Resource Center
for Youth Services
University of Oklahoma
On-line Catalog
www.nrcys.ou.edu/catalog
National Resource Center
for Youth Services
University of Oklahoma
Schusterman Center
4502 E. 41st Street, Bldg. 4W
Tulsa, OK 74135
Tel: (918) 660-3700
Fax: (918) 660-3737
www.nrcys.ou.edu
Jesus Salas
University of Oklahoma
Mr. Salas reviewed all sections
except “Investing Products”,
“Investing Risk”, and “Protect-ing
Your Money”. 2008
Investor Protec-tion
Trust (IPT)
Suite 300
919 Eighteen Street, NW
Washington, DC 20006-5517
www.investorprotection.org
Invest Edtm
Investor Educa-tion
Programs
Partnership:
Oklahoma Securities
Commission l University
of Oklahoma Outreach
Suite 860,
First National Center
120 N Robinson
OKC, OK 73102
Tel: (405) 280-7700
Fax: (405) 280-7742
www.investedok.org/links
Financial Industry Regula-tory
Authority (FINRA)
(301) 590-6500 l www.finra.org
North American Securities
Administration Association
(202) 737-0900
www.nasaa.org
U.S. Securities and
Exchange Commission
(202) 551-6551 l www.sec.gov
contacts CALL NOW! OPERATORS ARE STANDING BY!
In case you missed them the first time, here - on one handy page -
is a list of organizations you may find helpful...
pop quiz, hot shot
Remember that quiz from the front
of the book? Well here it is again and
something tells us that when you take
it this time, it is going to be a breeze!!
Well done!!
1 Which of the following is
NOT a deduction on a paycheck?
A. Social Security tax
B. Medicaid tax
C. State income tax
D. Medicare tax
2 Which investment product has the
potential for higher returns as well
as greater risk?
A. Savings bonds
B. Stocks
C. Treasury bills
D. Certificates of deposit
3 What does APR stand for?
A. Annual Percentage Rate
B. Approximate Percentage Rate
C. Applicable Payment Rate
D. Annual Payment Ratio
4 When will having bad credit
affect you most?
A. When cashing in credit card
rewards points
B. When applying for a loan
C. When applying for a job
D. When renewing your driver’s license
5 Which one is not considered
an investment tool?
A. Treasury bill
B. Savings bond
C. CD
D. Checking account
6 You have been asked to pay cash to
get in on a money making opportunity.
You will get money by getting others
to pay cash to get in on it, too.
This scam is an example of:
A. Penny stock fraud
B. A commission
C. Affinity fraud
D. A pyramid scheme
7 When someone uses your personal
information to obtain a credit card,
it’s called:
A. Declined card
B. Mail fraud
C. Identity theft
D. Credit crisis
y e s , aga in!
68
c o n c l u s i o n
69
c o n t a c t s + q u i z
Independent Living
Program Alumni:
Yes I Can
1-800-397-2945
If you need a copy of your
birth certificate or your Social
Security card:
Oklahoma State Department of
Health - Vital Records Service
(405) 271-4040
www.health.state.ok.us/program/vital/
brec.html
Social Security
1-800-772-1213
www.ssa.gov/dallas
Better Investing
1-877-275-6242
www.betterinvesting.org
Oklahoma Department
of Human Services
(405) 521-3778
If you need to request or
discuss a credit report:
AnnualCreditReport.com
www.annualcreditreport.com
Equifax
1-800-685-1111
www.equifax.com
Experian
1-888-EXPERIAN (397-3742)
www.experian.com
TransUnion
1-800-916-8800
www.transunion.com
If you need to report
a con artist:
Oklahoma Securities Commission
(405) 280-7700
www.securities.ok.gov
U.S. Securities and
Exchange Commission
(202) 551-6551
www.sec.gov
evaluation Wh at did you think? Pl e a s e he l p us out b y c omp l e t ing thi s e va luat i on.
answer key
70
c o n c l u s i o n
71
a n s w e r s + e v a l
1 D id you find the workbook helpful?
o Yes o No
Why / why not?____________________________
___________________________________________
2 W hat did you like most and least
about the workbook?
___________________________________________
___________________________________________
3 W hat did you like most and
least about the CD ?
___________________________________________
___________________________________________
4 D id you find the workbook easy to
read and follow? o Yes o No
Why / why not?____________________________
___________________________________________
5 W hich elements of My Money
Handbook did you use?
o Workbook o CD o Workbook + CD
Why / why not?____________________________
___________________________________________
6 W hich elements of My Money Hand-book
did you find most helpful
for learning?
o Workbook o CD o Workbook + CD
Why / why not?____________________________
___________________________________________
7 W ere the instructions clear?
o Yes o No
___________________________________________
___________________________________________
8 W ill you use My Money Handbook
in the future? o Yes o No
Why / why not?____________________________
___________________________________________
9 W hat topics would you like
to see added?
___________________________________________
___________________________________________
10 W hat topics would like to see taken out?
___________________________________________
___________________________________________
11 How would you change the handbook?
___________________________________________
___________________________________________
12 A ny other comments about the handbook
you would like to share?
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
PRE-QUIZ/
POST QUIZ
1. B
2. B
3. A
4. B
5. D
6. D
7. C
CHAPTER I:
money
management
Paycheck Exercise
(pg. 8)
1. $1,560.00
2. $234.99
3. 40
4. $6.50
5. $22.62
Chapter I Quiz
1. B
2. C
3. A
4. D
5. C
CHAPTER II:
banking basics
Banks: Overview
(pg. 22)
1. Credit union
2. Commercial bank
3. Savings and loan
Savings Products:
Crossword Puzzle
(pg. 40)
Credit Card Bill
(pg. 51)
1. 04/05
2. $24.12
3. $66.27
4. $20.00
5. 05/06/06
6. 19.8%
7. $500.00
8. $120.34
9. $120.34
Chapter II Quiz
1. C
2. D
3. B
4. A
5. B
CHAPTER III:
protection
Protecting your money:
Truth or Lines?
(pg. 63)
1. D
2. A
3. C
4. B
Chapter III Quiz
1. C
2. D
3. A
4. D
5. A
www.investedok.org v i s i t u s o n l i n e !