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MISSOURI STATE BOARD OF EDUCATION AGENDA ITEM: September 2017

CONSIDERATION OF PERSONAL FINANCE LEARNING STANDARDS

STATUTORY AUTHORITY:

Sections 160.514 and 161.092, RSMo Consent

Item Action Item

Report Item

STRATEGIC PRIORITY

Access, Opportunity, Equity – Provide all students access to a broad range of high-quality educational opportunities from early learning into post-high school engagement.

SUMMARY

Section 160.514, RSMo addresses academic performance standards for Missouri’s students and outlines a process which must be followed whenever the State Board of Education develops, evaluates, modifies, or revises academic performance standards or learning standards. In accordance with the law, the State Board convened a work group to develop and recommend new learning standards for Personal Finance. The work group submitted its recommendations to the State Board of Education in June 2017.

The law also states that the State Board of Education shall solicit comments and feedback on the academic performance standards or learning standards from the Joint Committee on Education and from academic researchers. The Department received many comments from these sources, as well as from educators and the general public which have been incorporated into the work group product where appropriate.

PRESENTERS

Blaine Henningsen, Assistant Commissioner; Lori Brewer, Director, Business, Marketing and Information Technology; and Dixie Grupe, Director, Personal Finance-Curriculum, Office of College and Career Readiness, will assist with the presentation and discussion of this agenda item.

RECOMMENDATION

The Department recommends that the State Board of Education approve the Personal Finance Learning Standards as presented.

Personal Finance Standards

Update/Recommendation

Presentation for State Board of Education

September 19, 2017

Update 2

• In 2006, the State Board of Education revised graduation requirements for Missouri’s students to include one-half credit of Personal Finance.

• Personal Finance standards have not changed over the last 11 years.

• The State Board of Education authorized the organization of a work group to review, and possibly revise Personal Finance learning standards at its June 14, 2016 Board meeting.

Public Comment

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• Three public hearings were held: January 10, 2017, May 16, 2017 and June 13, 2017.

• Proposed standards were posted on Department of Elementary and Secondary Education (DESE) website.

• Comments and feedback from the Joint Committee on Education - posted at https://dese.mo.gov/college-career-readiness/assessment/personal-finance

• Comments and feedback from academic researchers

through the Missouri Department of Higher Education– posted on website.

Public Comment (cont’d)

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• Comments and feedback from public survey through DESE-posted on website. The comment period was open from June 13 – July 17, 2017.

• In June, emails soliciting comments and feedback were sent to

o every school administrator, Personal Finance teacher, and school public information officer listed in DESE’s Core Data system;

o Administrator Update weekly; and o DESE Mailbag weekly

Public Survey Responses 5

• A total of 18 people (14 educators) responded from

locations across Missouri.

• DESE received 19 total comments.

• All comments are posted on the DESE website.

Comments Summary

Standard Comments

Resulted in Edited

Standard

Addressed In FAQ

Did Not Require

Response 1. Financial Decision-making

3 2 0 1

2. Earning Income 4 3 1 0

3. Buying Goods and Services 5 2 1 2

4. Saving 1 1 0 0

5. Using Credit 3 3 0 0

6. Protecting and Insuring 0 0 0 0

7. Financial Investing 3 2 0 1

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Response to Public Comments 7

• Comments shared with work group members

• Met with work group chair to amend work group submitted standards

o Reconciled the public comments o Revised based on work group reflection o Edited for clarity and uniformity

• Produced documents: https://goo.gl/rxW1Pf o Personal Finance Course Level Expectations o CW Work Group Submitted/Amended Work Group/Rationale o Cross Walk Current Standards/Work Group

Amended/New Code

Recommendation 8

We recommend the State Board of Education approve the proposed Personal Finance Learning Standards as presented.

Personal Finance Work Group Members

NAME NOMINATED BY David Bethel Missouri School Boards’ Association

Lonzo Boles Missouri National Education Association

Amanda Bradbury Missouri Council of Education Deans

Bonne Cannon Missouri House of Representatives

Christine Ellinger Missouri Senate

Stephanie Embry Missouri House of Representatives

Lana Hagar Future Business Leaders of America

Julie Holland Missouri House of Representatives

Eva Johnston Governor of Missouri

Susan Lidholm Missouri Association of School Administrators

Jon Lindquist Missouri Senate

Gina McLachlan Missouri Senate

Linda Minnigerode Lieutenant Governor of Missouri

Patricia Palmer Missouri House of Representatives

Traci Pattison Missouri Council of Career and Technical Administrators

James Schuls Missouri Senate

Valdis Zalite Missouri Department of Higher Education

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Next Steps 10

• FAQ document will be provided and professional learning opportunities for teachers will be offered in support of the new learning standards.

• Districts should begin preparing local curriculum based on the new standards for implementation in the 2018-2019 school year.

• Development of a new online assessment tool aligned to the new standards will begin immediately for implementation in the 2019-2020 school year.

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Personal Finance Course Level Expectations Grades 9-12

Missouri Department of Elementary and Secondary Education

Summer 2017

Personal Finance – Financial Decision Making

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I. Financial Decision Making: Choice is the central principle of financial decision making for individuals, businesses and government. People make many choices every day in markets where buyers and sellers interact. This interaction determines market prices and allocates scarce goods and services based on supply and demand. Every decision incurs an opportunity cost. Opportunity cost is the next-best alternative when a decision is made; it is what is given up. Concept 1 Unlimited Wants and Limited Resources

A. Evaluate the role of choice in decision making.

B. Apply a rational decision making process to satisfy wants.

Concept 2 Choice and Decision Making

A. Explain how today’s choices have future consequences.

B. Explain the causal relationship between choice and opportunity cost.

C. Analyze how choices can result in unintended consequences.

Personal Finance – Income

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II. Earning Income: For most people, income is determined by their work ethic, their education and the market value of their labor paid as wages and salaries. People can increase their income and job opportunities by performing well and choosing to acquire more education, skill building and work experience. The decision to undertake an activity that increases income or job opportunities is affected by the expected benefits and costs of such an activity. Income is also obtained from other sources such as interest, rents, capital gains, dividends and profits. Concept 1 Career Choices and Consequences

A. Evaluate how career choices impact income and quality of life.

B. Analyze the relationship between education, skill development and earning potential.

C. Describe how wages and salaries are determined in labor markets.

D. Analyze how changes in economic conditions and/or in labor markets can cause changes in a person’s income or employment status.

E. Describe how entrepreneurs see problems as opportunities for creating new or innovative goods or services.

Concept 2 Forms of Compensation

A. Examine how workers are paid through wages, salaries and commissions.

B. Analyze why benefits such as health insurance, paid vacation, retirement plan, family leave, tuition reimbursement and flexible scheduling are considered forms of compensation.

C. Identify sources for earning income in addition to wages and salaries such as rent, interest, gifts, dividends, profits and capital gains.

Concept 3 Taxes and Other Deductions

A. Compare gross and net income.

B. Explain the purpose of standard deductions such as income taxes, social security (FICA), Medicare, deductions for health care and retirement savings plans.

C. Explain how taxes provide public goods and services.

Personal Finance – Buying Goods and Services

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III. Buying Goods and Services: People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed spending decisions, which entails collecting information, planning and budgeting. Concept 1 Creating a Budget

A. Differentiate between income and expenses.

B. Analyze spending habits to recognize current spending and saving trends.

C. Create a budget that includes savings goals, emergency funds, fixed expenses and variable expenses.

D. Explain how budgeting for charitable giving may have tax benefits.

E. Prioritize expenses and payment due dates.

Concept 2 Purchasing Items of High Value

A. Conduct research on product options to plan future purchases such as phone, car, home or vacation.

B. Evaluate product information for price, quality, service and features.

C. Describe effective responses to deceptive or fraudulent sales practices.

D. Identify payment methods.

E. Analyze the costs and benefits of different payment options.

Concept 3 Considering Alternative Goods and Services

A. Evaluate substitutes when the price of goods or services exceeds your budget.

B. Compare the features, durability and maintenance costs of goods.

Personal Finance – Buying Goods and Services

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Concept 4 Selecting Financial Institutions

A. Compare the services, service fees and requirements of various financial institutions such as banks, savings and loans, credit unions and virtual banks.

B. Calculate an account balance by recording deposits, withdrawals and debit transactions.

C. Analyze the costs and benefits of using or not using financial institutions and virtual exchanges.

D. Explain the importance of FDIC, NCUA and other security regulations to protect one’s wealth in financial institutions.

Personal Finance – Saving

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IV. Saving: Saving is the part of income that people choose to set aside for future uses. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates and inflation affect the value of savings. Concept 1 Reasons for Saving

A. Identify short, medium and long-term savings goals including saving for high value purchases, postsecondary education/training and retirement.

B. Develop a savings plan.

C. Explain the importance of a rainy day fund for unexpected expenses.

D. Compare retirement savings options.

Concept 2 Interest on Savings

A. Compare simple and compound interest.

B. Use the Rule of 72 to calculate how long it takes money to double.

C. Explain how the time value of money, i.e. money in hand today, is worth more than money promised in the future, influences financial decision-making.

Concept 3 Saving Instruments

A. Identify saving instruments such as certificates of deposit and savings accounts.

B. Compare the liquidity, interest payment or penalty of various savings instruments.

Personal Finance – Using Credit

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V. Using Credit: Credit allows people to purchase goods and services they can use today and pay for those in the future. People choose among different credit options that have different costs. Lenders approve or deny applications for loans based on an evaluation of the borrower’s past credit history and expected ability to pay in the future. Higher-risk borrowers are charged higher interest rates; lower-risk borrowers are charged lower interest rates. The responsibility for debt belongs to the borrower. Concept 1 Facets of Credit

A. Analyze the difference between a credit and a debit account

B. Compare sources of consumer credit such as credit cards, consumer loans, rent-to own, title and payday loans.

C. Evaluate the options for financing higher education.

D. Analyze various terms and conditions of credit cards and consumer loans.

E. Explain the purpose, functions and costs of a mortgage.

Concept 2 Interest on Credit

A. Compare the cost of credit between financial institutions based on the Annual Percentage Rate (APR), initial fees charged and fees for late or missed payment.

B. Calculate the total purchase price of a good or service including interest paid.

C. Explain the relationship between risk and interest including credit worthiness and down payment.

D. Differentiate between secured and unsecured loans.

Personal Finance – Using Credit

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Concept 3 Credit Worthiness

A. Evaluate factors that affect creditworthiness including paying on time and payment history.

B. Explain the purpose and components of credit records and credit history as provided by credit bureaus.

C. Identify ways to avoid and/or correct credit problems.

D. Analyze why credit scores may be used by entities such as employers, landlords and insurance companies.

E. Evaluate a credit report to verify accuracy.

F. Explain the importance of annually verifying one’s credit report.

G. Explain the value of consumer credit protection laws.

H. Explain responsibilities associated with the use of credit.

Personal Finance – Protecting and Insuring

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VI. Protecting and Insuring: People make choices to protect themselves from the financial risk such as lost income, assets, health or identity. They can choose to accept risk, reduce risk or share the risk with others. Insurance allows people to transfer risk by paying a fee now to avoid the possibility of a larger loss later. The price of insurance is influenced by an individual’s circumstances and behavior. Concept 1 Protecting Against Financial Risk by Insuring

A. Analyze the personal financial risks that can occur when unexpected events damage health, home, property, wealth or future opportunities.

B. Explain how and why insurance companies create policies and determine premiums.

C. Analyze factors people use to choose insurance coverage.

D. Explain how personal behavior and risk impact insurance premiums.

E. Analyze health insurance options to provide funds in the event of illness and/or to pay for the cost of preventive care.

Concept 2 Protecting Personal Identity

A. Analyze federal and state regulations which provide some remedies and assistance for identity theft.

B. Analyze how individuals can protect themselves from others misusing personal information and from identity theft while online.

C. Discuss current ways to counter cyber-attacks and protect personal information.

Personal Finance – Financial Investing

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VII. Financial Investing: Financial investment is the purchase of financial assets to increase income or wealth in the future. Investors choose among investments that have different risks and expected rates of return. Investments with higher expected rates of return tend to have greater risk. Diversification of investment among a number of choices can lower investment risk. Concept 1 Investment Instruments

A. Compare various financial assets for their risk and rewards such as stocks, bonds, mutual funds, real estate and commodities.

B. Explain the impact of capital gains, dividends, risk and stock value on corporate stock ownership.

C. Explain how the price of a financial asset is determined by the interaction of buyers and sellers in a financial market.

Concept 2 The Relationship between Risk and Reward

A. Explain how the rate of return earned from investments will vary according to the amount of risk.

B. Explain how the rates of return on financial assets are influenced by buyers and sellers in financial markets.

C. Explain why an investment with greater risk, such as a penny stock, will commonly have a lower market price, but an uncertain rate of return.

D. Explain the risks and rewards of short term and long-term investments.

E. Describe how diversification can lower investment risk.

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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Code Workgroup Submitted Amended Workgroup Rationale/Comments Strand I. Financial Decision-Making: Choice is the central principle of financial decision making for individuals, businesses and government. People make many choices every day in markets where buyers and sellers interact. This interaction determines market prices and allocates scarce goods and services based on supply and demand. Every decision incurs an opportunity cost. Opportunity cost is the next-best alternative when a decision is made; it is what is given up. Concept 1: Unlimited Wants and Limited Resources I.1.A Evaluate the role of choice in decision-making.

I.1.B Apply a rational decision making process to satisfy needs. Apply a rational decision-making process to satisfy wants.

Editing: Accepted economic concept

Concept 2: Choice and Decision-Making

I.2.A Recognize that today’s choices have consequences in the future. Explain how today’s choices have future consequences.

Increased rigor Clarity Response to PC

I.2.B Demonstrate that making a choice results in an Opportunity Cost. Explain the causal relationship between choice and opportunity cost.

Clarity Response to PC

I.2.C Interpret the unintended consequences that result from choices made. Analyze how choices can result in unintended consequences.

Clarity

Strand II. Earning Income: Income for most people For most people, income is determined by their work ethic, their education and the market value of their labor paid as wages and salaries. People can increase their income and job opportunities by performing well and choosing to acquire more education, skill building and work experience. The decision to undertake an activity that increases income or job opportunities is affected by the expected benefits and costs of such an activity. Income also is Income is also obtained from other sources such as interest, rents, capital gains, dividends and profits. (Rationale: Editing) Concept 1: Career Choices and Consequences (Rationale: Added to follow the same pattern as the other strands: explanation and categorization and parallel structure.) II.1.A Evaluate how career choices impact income and quality of life. II.1.B Analyze the relationship between education/skill development and

earning potential. Analyze the relationship between education, skill development and earning potential

Editing

II.1.C Recognize that wages or salaries are determined in the labor markets. Describe how wages and salaries are determined in labor markets.

Increased rigor Response to PC

II.1.D Recognize that economic conditions or changes in labor markets can cause changes in a worker’s income or may cause unemployment.

Analyze how changes in economic conditions and/or in labor markets can cause changes in a person’s income or employment status.

Increased rigor Response to PC

II.1.E Explain that entrepreneurs recognize problems that provide opportunities for creating new or innovative goods or services.

Describe how entrepreneurs see problems as opportunities for creating new or innovative goods or services.

Response to PC Clarity

Concept 2: Forms of Compensation II.2.A Examine how workers are paid (wages, salaries, commissions). Examine how workers are paid through

wages, salaries and commissions. Clarity

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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II.2.B Analyze benefits such as health insurance, paid vacation, etc. as a form of compensation.

Analyze why benefits such as health insurance, paid vacation, retirement plan, family leave, tuition reimbursement and flexible scheduling are considered forms of compensation.

Clarity Response to PC

II.2.C Identify sources for deriving income outside wages and salaries (rent, interest, gifts, dividends, profits, capital gains).

Identify sources for earning income in addition to wages and salaries such as rent, interest, gifts, dividends, profits and capital gains.

Clarity

Concept 3: Taxes and Other Deductions

II.3.A Compare the difference between gross and net income. Compare gross and net income. Edited II.3.B Recognize standard deductions – income taxes, social security (FICA),

Medicare, deductions for health care, retirement savings (401K, 403b). Explain the purpose of standard deductions such as income taxes, social security (FICA), Medicare, deductions for health care and retirement savings plans.

Response to PC Clarity

II.3.C Explain that taxes provide public goods and services. Explain how taxes provide public goods and services.

Rigor Clarity

Strand III. Buying Goods and Services: People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed spending decisions, which entails collecting information, planning and budgeting. Concept 1: Creating a Budget

III.1.A List income and expenses. Differentiate between income and expenses.

Rigor and clarity

III.1.B Analyze spending habits to recognize current spending and saving trends.

III.1.C Create a budget including savings goals, emergency funds, fixed and variable expenses.

Create a budget that includes savings goals, emergency funds, fixed expenses and variable expenses.

Editing

III.1.D Recognize charitable giving as a budget item which may have tax benefits.

Explain how budgeting for charitable giving may have tax benefits.

Response to PC Rigor

III.1.E Prioritize expenses and payment due dates.

Concept 2: Purchasing Items of High Value

III.2.A Conduct research on product options to plan future purchases (phone, car, laptop, vacation).

Conduct research on product options to plan future purchases such as phone, car, home or vacation.

Added home as high value item students may acquire in their lifetime. Edited

III.2.B Evaluate product information for price, quality, service and features.

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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III.2.C Recognize deceptive or fraudulent sales practices. Describe effective responses to deceptive or fraudulent sales practices.

Rigor Response to PC

III.2.D Identify payment methods.

III.2.E Analyze the costs and benefits of different payment options.

Concept 3: Considering Alternative Goods and Services III.3.A Evaluate substitutes when the price of goods or services exceeds your

budget.

III.3.B Compare the features, durability and maintenance costs of goods.

Concept 4: Selecting Financial Institutions III.4.A Compare the services, service fees, and requirements of various financial

institutions (bank, savings and loan, credit union). Compare the services, service fees, and requirements of various financial institutions such as banks, savings and loans, credit unions, and virtual banks.

Edited Additional example needed

III.4.B Demonstrate the ability to record deposits, withdrawals, debit transactions. and maintain a bank balance.

Calculate an account balance by recording deposits, withdrawals and debit transactions.

Clarified task

III.4.C Analyze the costs and benefits of using or not using financial institutions and virtual exchanges.

This addition reflects current financial practices.

III.4.D Evaluate security measures for your chosen institution (FDIC, NCUA). Explain the importance of FDIC, NCUA and other security regulations to protect one’s wealth in financial institutions.

Clarity

Strand IV. Saving: Saving is the part of income that people choose to set aside for future uses. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates and inflation affect the value of savings. Concept 1: Reasons for Saving IV.1.A Identify short, medium and long-term savings goals (saving for

retirement and post-secondary education and training). Identify short, medium and long-term savings goals including saving for high value purchases, postsecondary education/training and retirement.

Edited

IV.1.B Develop a savings plan. IV.1.C Recognize the importance of a rainy day fund for unexpected expenses. Explain the importance of a rainy day fund

for unexpected expenses. Rigor and clarity Response to PC

IV.1.D Identify retirement saving options [401(k), 403(b), Roth IRA, Roth 401(k), and my RA].

Compare retirement savings options. Clarified task

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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Concept 2: Interest on Savings

IV.2.A Compare simple and compound interest.

IV.2.B Use the rule of 72. Use the Rule of 72 to calculate how long it takes money to double.

Clarity

IV.2.C Explain time value of money. Explain how the time value of money, i.e. money in hand today is worth more than money promised in the future, influences financial decision-making.

Clarity and essential information

Concept 3: Saving Instruments

IV.3.A Identify saving instruments (certificate of deposit, savings accounts) Identify saving instruments such as certificate of deposit and savings accounts.

Edited

IV.3.B Compare the liquidity, interest payment or penalty of various savings instruments.

Strand V. Using Credit: Credit allows people to purchase goods and services that they can use today and pay interest on for those in the future. with interest. People choose among different credit options that have different costs. Lenders approve or deny applications for loans based on an evaluation of the borrower’s past credit history and expected ability to pay in the future. Higher-risk borrowers are charged higher interest rates; lower-risk borrowers are charged lower interest rates. The responsibility for debt belongs to the borrower.

Concept 1: Facets of Credit

V.1.A Recognize the difference between a credit and a debit account. Analyze the difference between a credit and a debit account.

Rigor Response to PC

V.1.B Compare sources of consumer credit (credit cards, consumer loans, auto loans).

Compare sources of consumer credit such as credit cards, consumer loans, rent-to own, title and payday loans.

Response to PC

V.1.C Evaluate the options for financing higher education.

V.1.D Analyze the terms and conditions of credit cards and consumer loans. Analyze various terms and conditions of credit cards and consumer loans

V.1.E Explain a mortgage. Explain the purpose, functions and costs of a mortgage.

Response to PC

Concept 2: Interest on Credit

V.2.A Compare the cost of credit using the Annual Percentage Rate (APR), initial fees charged and fees for late or missed payment.

Compare the cost of credit between financial institutions based on the Annual Percentage Rate (APR), initial fees charged and fees for late or missed payment.

V.2.B Calculate the total purchase price including interest paid.

V.2.C Recognize the relationship between risk and interest (credit worthiness, Explain the relationship between risk and Rigor

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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down payment). interest including credit worthiness, and down payment.

Edited Response to PC

V.2.D Differentiate between secured and unsecured loans.

Concept 3: Credit Worthiness

V.3.A Evaluate factors that affect creditworthiness (paying on time, payment history).

Evaluate factors that affect creditworthiness including paying on time, and payment history.

Edited

V.3.B Explain the purpose and components of credit records and credit history as provided by credit bureaus.

V.3.C Propose ways to avoid or correct credit problems. Identify ways to avoid and/or correct credit problems.

Clarity

V.3.D Recognize that credit scores may be used by employers in hiring decisions, by landlords when deciding to rent an apartment and by insurance companies for charging premiums.

Analyze why credit scores may be used by entities such as employers, landlords and insurance companies.

Rigor Clarity Response to PC

V.3.E Evaluate a free copy of their credit report annually to verify that there are no errors that might affect their credit score.

Evaluate a credit report to verify accuracy.

Response to PC

V.3.F Explain the importance of annually verifying one’s credit report.

Added in response to PC

V.3.G Recognize that there are consumer credit protection laws. Explain the value of consumer credit protection laws.

Rigor and purpose Response to PC

V.3.H Explain responsibilities associated with the use of credit. Strand VI. Protecting and Insuring: People make choices to protect themselves from the financial risk such as lost income, assets, health or identity. They can choose to accept risk, reduce risk or share the risk with others. Insurance allows people to transfer risk by paying a fee now to avoid the possibility of a larger loss later. The price of insurance is influenced by an individual’s circumstances and behavior. Concept 1: Protecting Against Financial Risk by Insuring VI.1.A Recognize that personal financial risk exists when unexpected events can

damage health, income, property, wealth or future opportunities. Analyze the personal financial risks that can occur when unexpected events damage health, home, property, wealth or future opportunities.

Rigor Response to PC

VI.1.B Explain that insurance companies analyze the outcomes of individuals who face similar types of risks to create insurance contracts (policies) and collect a relatively small amount of money ( a premium) from each policyholder on a regular basis to create a pool of funds to compensate those individuals who experience a large loss.

Explain how and why insurance companies create policies and determine premiums.

Edited for clarity

VI.1.C Discuss why people choose different amounts of insurance coverage based on several factors (willingness to accept risk, occupation, lifestyle,

Analyze factors people use to choose insurance coverage.

Edited for clarity

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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age, financial profile, price). VI.1.D Explain how people lower their insurance premiums by behaving in ways

that show they pose a lower risk. Explain how personal behavior and risk impact insurance premiums.

Edited for clarity

VI.1.E Analyze health insurance options to provide funds to pay for health care in the event of illness and/or pay for the cost of preventive care.

Analyze health insurance options to provide funds in the event of illness and/or to pay for the cost of preventive care.

Edited for clarity

Concept 2: Protecting Personal Identity VI.2.A Explain that there are federal and state regulations that provide some

remedies and assistance for identity theft. Analyze federal and state regulations which provide some remedies and assistance for identity theft.

Clarity of purpose

VI.2.B Analyze how individuals can protect themselves when using social networking and other online activity from misuse of personal information and identity theft.

Analyze how individuals can protect themselves from others misusing personal information and from identity theft while online.

Clarity

VI.2.C Discuss current ways to counter cyber-attacks and protect personal information.

Strand VII. Financial Investing: Financial investment is the purchase of financial assets to increase income or wealth in the future. Investors must choose among investments that have different risks and expected rates of return. Investments with higher expected rates of return tend to have greater risk. Diversification of investment among a number of choices can lower investment risk. Concept 1: Investment Instruments VII.1.A Compare various financial assets for their risk and rewards (stocks,

bonds, mutual funds, real estate, and commodities). Compare various financial assets for their risk and rewards such as stocks, bonds, mutual funds, real estate and commodities.

Edited

VII.1.B Explain that people buy corporate stock ownership in a business to receive income in the form of dividends and/or the increase in the stock’s value (if the business is successful). The increase in the value of an asset is called a capital gain. If the business is not profitable, investors could lose the money they invested.

Explain the impact of capital gains, dividends, risk and stock value on corporate stock ownership

Clarity Response to PC

VII.1.C Recognize the price of a financial asset is determined by the interaction of buyers and sellers in a financial market.

Explain how the price of a financial asset is determined by the interaction of buyers and sellers in a financial market.

Rigor and clarity Response to PC

Concept 2: The Relationship between Risk and Reward VII.2.A Explain how the rate of return earned from investments will vary

according to the amount of risk.

VII.2.B Recognize that buyers and sellers in financial markets determine prices of financial assets and therefore influence the rates of return on those assets.

Explain how the rates of return on financial assets are influenced by buyers and sellers in financial markets.

Rigor and clarity Response to PC

VII.2.C Explain how a greater risk investment will commonly have a lower Explain why an investment with greater Clarity

Personal Finance: CW Workgroup Submitted/ Amended Workgroup/ Rationale

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market price and a higher rate of return (penny stock). risk, such as a penny stock, will commonly have a lower market price, but an uncertain rate of return.

Response to PC

VII.2.D Differentiate the rate of return between shorter-term investments and longer-term investments.

Explain the risks and rewards of short term and long-term investments.

Clarity

VII.2.E Describe how diversification by investing in different types of financial assets can lower investment risk.

Describe how diversification can lower investment risk.

Edited for clarity

Personal Finance Standards: Current Standards/Workgroup Amended/New Code

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CURRENT WORK GROUP AMENDED 2017 NEW CODE

Strand I: Income (I) 1. Identify components and sources of income.

Examine how workers are paid through wages, salaries and commissions. II.2.A Analyze why benefits such as health insurance, paid vacation, retirement plan, family leave, tuition reimbursement and flexible scheduling are considered forms of compensation

II.2.B

Identify sources for earning income in addition to wages and salaries such as rent, interest, gifts, dividends, profits and capital gains.

11.2.C

2. Analyze how career choice, education, skills and economic conditions affect income and goal attainment.

Evaluate how career choices impact income and quality of life. II.1.A Analyze the relationship between education, skill development and earning potential. II.1.B

Describe how wages and salaries are determined in labor markets. II.1.C Analyze how changes in economic conditions and/or in labor markets can cause changes in a person’s income or employment status.

II.1.D

Describe how entrepreneurs see problems as opportunities for creating new or innovative goods or services.

II.1.E

3. Relate taxes, government transfer payments and employee benefits to disposable income.

Compare gross and net income. II.3.A Explain the purpose of standard deductions such as income taxes, social security (FICA), Medicare, deductions for health care and retirement savings plans.

II.3.B

Explain how taxes provide public goods and services. II.3.C

Strand II: Money Management (MM) 1. Explain how limited personal financial resources affect the choices people make.

Evaluate the role of choice in decision making. I.1.A

2. Interpret the opportunity costs of financial decisions.

Explain the causal relationship between choice and opportunity cost. I.2.B

3. Evaluate the consequences of personal financial decisions.

Explain how today’s choices have future consequences. I.2.A Analyze how choices can result in unintended consequences. I.2.C Analyze the costs and benefits of using or not using financial institutions and virtual exchanges.

III.4.C

4. Apply a decision-making process to personal financial choices.

Differentiate between income and expenses. III.1.A Create a budget that includes savings goals, emergency funds, fixed expenses and III.1.C

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variable expenses. Explain how budgeting for charitable giving may have tax benefits. III.1.D Prioritize expenses and payment due dates. III.1.E

5. Summarize how inflation affects spending and saving decisions.

Analyze spending habits to recognize current spending and saving trends. III.1.B Explain how the time value of money, i.e. money in hand today is worth more than money promised in the future, influences financial decision-making.

IV.2.C

6. Evaluate how insurance protects against financial loss (auto, home, life, medical, long-term health).

Analyze the personal financial risks that can occur when unexpected events damage health, home, property, wealth or future opportunities.

VI.1.A

Explain how and why insurance companies create policies and determine premiums. VI.1.B Analyze factors people use to choose insurance coverage. VI.1.C Explain how personal behavior and risk impact insurance premiums. VI.1.D Analyze health insurance options to provide funds in the event of illness and/or to pay for the cost of preventive care.

VI.1.E

7. Design a financial plan (budget) for earning, spending, saving and investing.

Identify short, medium and long-term savings goals including saving for high value purchases, postsecondary education/training and retirement.

IV.1.A

Develop a savings plan. IV.1.B Explain the importance of a rainy day fund for unexpected expenses. IV.1.C

Calculate an account balance by recording deposits, withdrawals and debit transactions.

III.4.B

8. Demonstrate how to use the services available from financial institutions.

Identify saving instruments such as certificate of deposit and savings accounts. IV.3.A Compare the liquidity, interest payment or penalty of various savings instruments. IV.3.B Compare the services, service fees, and requirements of various financial institutions such as banks, savings and loans, credit unions, and virtual banks.

III.4.A

9. Analyze the role of the Federal Reserve in controlling the money supply.

Strand III: Spending and Credit (SC) 1. Compare the benefits and costs of alternatives in spending decisions.

Evaluate substitutes when the price of goods or services exceeds your budget. III.3.A Compare the features, durability and maintenance costs of goods. III.3.B

2. Evaluate information about products and services.

Conduct research on product options to plan future purchases such as phone, car, home or vacation.

III.2.A

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Evaluate product information for price, quality, service and features. III.2.B

3. Compare the advantages and disadvantages of different payment methods.

Analyze the difference between a credit and a debit account V.1.A Compare sources of consumer credit such as credit cards, consumer loans, rent-to own, title and payday loans.

V.1.B

Evaluate the options for financing higher education. V.1.C Analyze various terms and conditions of credit cards and consumer loans. V.1.D Explain the purpose, functions and costs of a mortgage. V.1.E

4. Analyze the benefits and cost of consumer credit.

Compare the cost of credit between financial institutions based on the Annual Percentage Rate (APR), initial fees charged and fees for late or missed payment.

V.2.A

Calculate the total purchase price of a good or service including interest paid. V.2.B Explain the relationship between risk and interest including credit worthiness, and down payment.

V.2.C

5. Compare sources of consumer credit (credit cards, consumer loans, auto loans, student loans).

Differentiate between secured and unsecured loans. V.2.D Identify payment methods. III.2.D Analyze the costs and benefits of different payment options. III.2.E

6. Evaluate the terms and conditions of credit cards and consumer loans.

Identify ways to avoid and/or correct credit problems. V.3.C

7. Evaluate factors that affect creditworthiness. Evaluate factors that affect creditworthiness including paying on time, and payment history.

V.3.A

Evaluate a credit report to verify accuracy. V.3.E 8. Explain the purpose and components of credit records.

Explain the purpose and components of credit records and credit history as provided by credit bureaus.

V.3.B

Analyze why credit scores may be used by entities such as employers, landlords and insurance companies.

V.3.D

9. Demonstrate awareness of consumer protection and information (identity theft, phishing, scams).

Analyze federal and state regulations which provide some remedies and assistance for identity theft.

VI.2.A

Analyze how individuals can protect themselves from others misusing personal information and from identity theft while online.

VI.2.B

Discuss current ways to counter cyber-attacks and protect personal information. VI.2.C Describe effective responses to deceptive or fraudulent sales practices. III.2.C

10. Propose ways to avoid or correct credit problems.

Explain responsibilities associated with the use of credit. V.3.H Explain the importance of annually verifying one’s credit report. V.3.F

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11. Describe the rights and responsibilities of buyers and sellers under consumer protection laws.

Explain the value of consumer credit protection laws. V.3.G

Strand IV: Saving and Investing (SI) 1. Compare consumer choices for saving and investing.

Explain the risks and rewards of short term and long-term investments. VII.2.D

Explain the impact of capital gains, dividends, risk and stock value on corporate stock ownership.

VII.1.B

2. Explain the relationship between saving and investing.

Compare retirement savings options. IV.1.D

3. Examine reasons for saving and investing (time value of money).

Explain the importance of a rainy day fund for unexpected expenses. IV.1.C Explain how the time value of money, i.e. money in hand today is worth more than money promised in the future, influences financial decision-making.

IV.2.C

4. Compare the risk, return, liquidity, manageability and tax aspects of investment alternatives.

Compare various financial assets for their risk and rewards such as stocks, bonds, mutual funds, real estate and commodities

VII.I.A

Explain how the rate of return earned from investments will vary according to the amount of risk.

VII.2.A

Describe how diversification can lower investment risk. VII.2.E 5. Demonstrate how to buy and sell investments. Explain how the price of a financial asset is determined by the interaction of buyers

and sellers in a financial market. VII.1.C

Explain how the rates of return on financial assets are influenced by buyers and sellers in financial markets.

VII.2.B

6. Analyze factors affecting the rate of return on investments (Rule of 72, simple interest, compound interest).

Compare simple and compound interest. IV.2.A Use the Rule of 72 to calculate how long it takes money to double. IV.2.B Explain why an investment with greater risk, such as a penny stock, will commonly have a lower market price, but an uncertain rate of return.

VII.2.C

7. Evaluate sources of investment information. 8. Examine how agencies that regulate financial markets protect investors.

Explain the importance of FDIC, NCUA and other security regulations to protect one’s wealth in financial institutions.

III.4.D

9. Demonstrate how to evaluate advisors and how to select them (credentials, services).

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