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PBL PERSONAL FINANCE
Competency: The Personal Financial Planning Process
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Define and discuss the relationship between “Standard of Living” and “Quality of Life”.
Define average propensity to consume, wealth, Financial Assets, Tangible Assets.
Define money, utility, opportunity cost
Determining your long-term, intermediate and short-term financial goals.
Relate the different stages of the adult life cycle to your financial planning process.
Discuss the environmental factors that affect the personal financial planning process (government, business, and
consumers)
Identify and discuss the economic cycles and how it affects the personal financial planning process (expansion,
peak, contraction, trough, inflation, rule of 72, Consumer Price Index, purchasing power.)
Discuss how personal financial planning affects your career planning.
Competency: Time Value of Money Principles and Calculations (Present Value, Future Value)
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Explain the concept of time value of money.
Calculate interest rates and interest earned over a period of time.
Calculate present values and future values of a single amount and of annuities (ordinary, compound, and annuity
due).
Define annuity, compounding, and discounting.
Apply the Rule of 72 to determine how long it takes to double an investment’s value.
Explain amortized loans and be able to calculate payment amounts.
Competency: Personal Financial Statements (Balance Sheet, Budgets, Income & Expense Statement)
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Explain the steps to preparing personal financial statements and what is included on each, including a cash budget,
a cash flow statement, a balance sheet, and an income and expense statement.
Define and list liabilities (current and long term), assets (fixed, liquid), net worth, income, expenses (fixed and
variable), sunk costs.
Compute ratios including: debt ratio, current ratio and liquidity ratio.
Define take-home pay, discretionary income, insolvency, budget, deficit, surplus and sunk costs.
Competency: Individual Income Tax Principles, Calculation, and Filing
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Identify and discuss the different types of taxes, including: excise tax, property taxes (personal property and real
estate), estate tax, social security tax, income tax, gift tax, inheritance tax and sales tax.
Identify and discuss the different types of income: earned income, investment income, passive income, taxable
income.
Define and identify exclusions, deductions, the standard deduction, itemized deductions, exemptions, tax credits
and capital gain or loss.
Identify the different tax forms and filing statuses. (1040EZ, 1040, 1040A and single, married filing jointly, married
filing separately, head of household. Etc.)
Discuss the differences in tax avoidance and tax evasion.
Identify sources of assistance with filing taxes.
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PBL PERSONAL FINANCE
Competency: Financial Services and Saving options
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Identify and define types of financial services. (Savings accounts, payment services, borrowing alternatives, etc.)
Identify services provided by financial institutions. (Direct deposit, automatic payments, ATM, debit card, etc.)
Discuss the differences among commercial banks, saving and loan associations, mutual savings banks, credit unions,
insurance companies, investment companies, finance companies and mortgage companies.
Compare saving plans. (Regular saving accounts, CDs, interest-earning checking, money markets, U.S. savings
bonds, etc.)
Define and calculate rate of return, compounding and annual percentage yield.
Define and explain the FDIC.
Be able to do a bank reconciliation.
Competency: Making Housing and Automobile Purchase Decisions
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Identify wise buying techniques. (Compare brands, compare sources, read and evaluate label information, etc.)
Compare leasing or renting versus buying.
Determine the actual cost of ownership – purchase price, financing, insurance, license, registration, taxes, closing
costs and depreciation.
Discuss the process of determining what you can afford.
Discuss the different housing options. (Apartments, condominiums, cooperative, single-family, multifamily and
manufactured homes.
Discuss factors related to financing a home mortgage. (Interest rates, points, term, appraisals, title insurance, etc.)
Competency: The Basic Concept of Credit and How to Manage It
Tasks
1. Identify and discuss uses and misuses of credit and the advantages and disadvantages of using credit.
2. Compare open-end versus closed-end credit.
3. Identify and discuss sources of consumer credit. (Commercial banks, consumer finance companies, credit unions, life
insurance companies, federal savings banks, etc.)
4. Identify and discuss the different types of loans and credit cards.
5. Explain the “Five Cs of credit.” (Character, capacity, capital, collateral, and conditions)
6. Name the three major credit reporting agencies. (Experian, Trans Union, and Equifax)
7. Understand the cost of credit. (annual percentage rates, interest)
8. Discuss the implications of identity on credit and how do you protect yourself.
9. Identify the different types of bankruptcies.
Competency: Basic Insurance Concepts (Life, Health, Property, Disability)
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Discuss why people need and purchase insurance.
Define, insurer, policy, policy-holder, premium, coverage, insured, risk, peril, hazard and negligence.
Discuss risk management. (Risk avoidance, risk reduction, risk assumption, risk shifting)
Discuss how to determine your insurance coverage needs and factors that affect rates.
Discuss liability issues as they relate to insurance claims. (Who pays for what in case of an accident or claim)
Determine the different types of insurance. (HMO, PPO, vision, dental, COBRA, long-term care, home owners,
etc.)
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PBL PERSONAL FINANCE
Competency: Basic Investment Planning (Stocks, Bonds, Mutual Funds)
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Identify basic investment alternatives.
Understand the nature of securities, markets, distinguishing between organized exchanges and the over-the-counter
market.
3. Identify legislation that protects investors.
4. Identify various sources of investment information.
5. Describe how safety, risk, income, growth, and liquidity affect your investment portfolio.
6. Identify factors that can reduce investment risk.
7. Evaluate and compare bonds and other debt investment options. Calculate a bond’s current yield, yield to maturity,
and present value.
8. Identify and compare the features of common and preferred stock. Identify basic shareholder rights and the means
by which corporations make distributions to shareholders.
9. Describe how stocks are bought and sold.
10. Discuss the importance of diversification and how it reduces investment risk.
11. Identify and evaluate the characteristics of mutual fund investments.
Competency: Retirement and Estate Planning
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Analyze current assets and liabilities for retirement and estimate retirement living costs.
Determined planned retirement income and develop a balanced budget based on that income.
Identify the personal and legal aspects of estate planning.
Compare various types of wills and trusts.
Identify and discuss what (if any) Social Security benefits will be available at retirement.
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PBL PERSONAL FINANCE
References:
PFIN2. 2012. Mason, OH: South-Western, Cengage Learning.
Personal Finance: Turning Money into Wealth. 3rd Edition. 2003. Upper Saddle River, NJ: Pearson Education, Inc.
Focus on Personal Finance: An Active Approach to Help You Develop Successful Financial Skills. 2006. New York, NY: McGrawHill Irwin
Personal Finance. 7th Edition. 2004. New York, NY: McGraw-Hill Irwin
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