If you’re preparing to earn the Eagle-required Personal Management merit badge, you’re in the right place! In this guide, I’ll be providing you with all of the answers that you’ll need to complete your merit badge worksheet and build a solid understanding of personal finance.
You’ve reached part 2 of my ultimate guide to the Personal Management merit badge! If you’re new to ScoutSmarts, you should first check out part 1 for the answers to requirements 1-5 of the Personal Management merit badge.
If you’ve come over from part one, congratulations! You’re halfway done with one of the most difficult badges in Scouting. Give yourself a big pat on the back. 🙂 Let’s get back into it! Take the time to closely review and think through requirements 6-10 of the Personal Management merit badge:
Before we get into the different types of insurance, let’s first clarify what insurance actually is. Basically, insurance involves paying a monthly amount (premium) so that if an emergency ever arises, the insurance company will financially compensate you with enough money to handle the situation.
Whenever you need to use your insurance, typically you first must pay an amount called a deductible. This can vary based on your insurance plan, but essentially this means that the insurance company does not cover the entire cost of your losses. Instead, your insurance will pay for all costs exceeding the amount of your deductible, up to the total value of your insurance plan.
You’ll most likely never need to use your insurance. However, if the case arises that you do need financial aid, insurance could mean the difference between manageable healthcare/lawsuit costs and bankruptcy. Insurance is a smart way of managing risk and being prepared for the worst. As a Scout, I’m sure you can understand the value of having insurance.
Let’s use automobile insurance as an example. Say you’re behind the wheel and are hit by another car. Suddenly, you need emergency medical attention. However, you live in the United States where the cost of a hospital bill could be in the tens of thousands of dollars.
For the sake of this example, let’s say that there’s no way you would be able to pay the bill. Lucky for you though, you have insurance. Because you’ve paid your monthly premiums, you’re insured for any sort of automobile accident.
Automobile insurance is insurance for all vehicles driven on a road. This includes cars, trucks, buses, and motorcycles. This insurance will cover the costs of both damage and injuries resulting from traffic collisions. It will also cover costs if you are liable for any injuries in any accidents where you may have been at fault.
By opting to pay a higher premium, you can also be insured against theft, natural disasters, and other sorts of damage to your vehicle.
Back to the earlier case where you are hypothetically hit by another driver. There are two possible situations:
Note that if you do file an insurance claim from your own company, your premiums will likely rise. This is because you are seen as a more risky driver. Therefore, under most circumstances, you should avoid making a claim unless there are significant costs to repair your vehicle.
Health insurance will cover your medical expenses. This can include anything from the cost of surgeries, hospital stays, medicine, or psychiatric treatment.
Typically, health insurance is included in most employers’ benefits packages. However, if you were to pay for health insurance coverage yourself, it would cost you around $300-$500 per month.
Typically, the cost of your health insurance can vary based on a few of your own risk factors including:
Not only will health insurance provide you with peace of mind, as is the case with any other kind of insurance, you’ll also be able to seek treatment early on so that you can avoid your condition worsening.
Prevention is always better than treatment, and with health insurance, you’ll be able to visit physicians for routine checkups, rather than only in case of an emergency. Additionally, most people in their early 20s and younger can remain on their parent’s health insurance plans.
Homeowner’s or renter’s insurance can protect your personal property in the case it is destroyed, damaged, lost, or stolen. Oftentimes, these policies even encompass injuries towards guests stemming from accidents occurring on your property.
Renter’s insurance is relatively inexpensive, with the average policy costing around $200 per year. Again, this will vary based on your amount of coverage, as well as your location and prior risk history.
Note that homeowners and renters insurance will not cover damages caused by floods, war, neglect, or intentional destruction of your own property. However, it is generally a good idea to get homeowner’s or renter’s insurance.
If you are robbed or your property is destroyed, you will need to file a claim with all of the missing items included. You will need to create an itemized list of the items as well as their actual cash value.
Actual cash value is also known as replacement cost coverage. This means that the insurance company will pay you the estimated cost to replace your item, rather than the cost you originally purchased it at.
These are two different types of life insurance, with ‘term’ being for a set duration and ‘whole life’ being for the entirety of one’s life. ‘Whole life’ has the same premium costs throughout one’s life, whereas ‘term’ will typically cost more the older you are.
When person A gives money to person B with the expectation that they will be paid back, person A is loaning person B money. In most situations though, person A isn’t really a person, it’s a bank or credit union that is loaning individuals or businesses money.
When a bank or credit union loans out money, they will also charge a percentage on top of the full amount being paid back. This extra charge is called an interest rate and is basically the cost of taking out a loan. Given that you’ll need to pay an interest rate, the longer you take to pay back a loan, the more money you’ll need to pay.
Interest rate example: If you borrow $100 and pay it back a year later with an interest rate of 5%, you’ll need to pay a total of $105 when you finally pay off the loan. Essentially, this is because the banks could be investing the money, so it costs them more than the total dollar amount ($100) to loan the money to you.
Oftentimes, interest rates are not the only fees that you pay on loans. There are often other charges such as closing costs, insurance, and loan fees. Keeping track of these costs would be difficult if not given your loan’s annual percentage rate (APR).
A loan APR is an easy way to understand the annual cost of a loan. Your APR includes fees and any extra charges included in the total amount you’ll need to pay back. Basically, your APR represents the actual percentage, each year, that you’ll need to pay, on top of the total amount borrowed.
Therefore, you should always check a loan’s APR before its interest rate, as some lending institutions have low rates but high fees. By choosing the lowest rates when borrowing large amounts of money, you’ll be able to save enormous amounts in the long run. Typical APRs are around 20%, so know that it isn’t cheap to borrow money.
There are many ways of borrowing money. Here are 4 quick examples:
Before we dive into the meat of different card types, you’ll likely need a briefer. First, watch this quick video (2:40) to get an intro on the differences between credit and debit cards:
Let’s say, for this example, you would like to become a doctor. To become a doctor, you’ll need to complete the following steps:
Obviously, this is a lot, and probably much more than you’ll need to do for the profession you’ve chosen. However, by examining what current professionals doing in your own chosen field, and then working backward to see what they’ve done to get there, you’ll better understand what you’ll need to do to work in their profession!
Given our earlier example, if you’re wanting to become a doctor you’ll need to pay for university and medical school, along with various supplies, housing, and the tools that you’ll be using during the 8 to 10 years that you’re being educated prior to entering the profession.
In the case of becoming a doctor, you’ll need to pay well over $200,000 for university and med school costs, as well as for room and board. Obviously, you most likely don’t have that kind of money right now. That’s why it’s so important to begin preparing, planning, and budgeting beforehand.
You’ll most likely need to take out loans to pay for your education. If you’re committed, this might not be so bad of a deal, as the typical doctor’s salary exceeds $100,000. This means that you could pay for the cost of your education within 2 to 5 years. However, some professions cost around the same amount of money to enter into, while the average pay rate is considerably less.
Life is short, and you shouldn’t choose a profession just because it will make you money. However, most problems in life come from stress related to personal finances, so it’s important to choose a career that provides you with some security. By making this calculation beforehand, you’ll be able to see if a career path is worth pursuing in the long run!
You did it!! Awesome work, you’re now one giant step closer to earning your Eagle Scout award. Personal management is one the hardest Eagle-required merit badges, so you definitely deserve some time to celebrate for learning the answers to these difficult requirements!
If you have other Eagle-required merit badges to earn, I’d recommend checking out my Difficulty Ranking Guide to Every Eagle-required Badge. There, you’ll also find the links to my other merit badge guides, as well as a description and summary of each badge’s requirements. I’m certain this resource will be helpful to Scouts on their road to Eagle!
I personally love this merit badge (in spite of these 2 articles being almost 10k words long and taking at least 12 hours to write). The reason? Personal Management teaches you some of the most valuable skills you’ll need to know in the real world. Be sure to use the financial skills you’ve learned, and I have no doubt that you’ll go far in life!
Hopefully, you’ve learned a ton from my ultimate guide and feel much more confident in managing your own personal finances. If you thought this walkthrough was useful, be sure to bookmark ScoutSmarts because I’m constantly coming out with new articles and merit badge guides for you.
Until next time, best of luck on your Scouting journey! 🙂
I'm constantly writing new content because I believe in Scouts like you! Thanks so much for reading, and for making our world a better place. Until next time, I'm wishing you all the best on your journey to Eagle and beyond!
Being a BSA Scout isn't just an extracurricular activity; it's a incredible journey that transforms young people into leaders, adventurers, and compassionate citizens. For some, Scouting is a.
If you're a Scout with a lot of school smarts (or would like to become one ;) ), Scholarship is the perfect badge for you to earn next! The Scholarship merit badge not only teaches you how to.
Hey there, reader! I'm Cole, the guy behind ScoutSmarts. I earned my Eagle back in 2014, and along the way, learned how to be a dependable leader. Although I didn't realize it at the time, Scouting helped shape my life! While I can't tell my past self what I know now, I can teach you all the smart Scouting knowledge that I wish I'd known when just starting out. Start reading! Hopefully, you'll learn a few things along the way and make the best of your time in Scouting. :)
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