I love the Boy Scout motto: Be Prepared.  I also love that the Boy Scouts have a personal finance merit badge.

The official Boy Scout motto traces back to a book published in 1908 titled Scouting for Boys.  The author was Baden Powell, who also founded the Boy Scouts Association in England that same year.  A short two years later the Boy Scouts of America were established and quickly grew to become the largest youth organization in America.

When Powell was later asked exactly what one should “Be Prepared” for, his answer was ‘Why, for any old thing.‘  He wasn’t kidding.

Personal Finance Merit Badge Requirements

When thinking of Boy Scouts you probably conjure up images of young men camping, hiking, fishing, and knot-tying, but the Boy Scout organization attempts to teach their Scouts so much more than that.  A Boy Scout should ‘Be Prepared’ for all walks of life, not just the outdoors.

Be Prepared.  There really is no aspect of your life in which this motto isn’t applicable.

There are currently about 135 merit badges that a Boy Scout can earn.  One of them that’s relevant for this blog is the Personal Finance merit badge (note: this particular badge was recently renamed the Personal Management merit badge).  All of the requirements to earn this merit badge are below, but requirements 1 – 7, and 10 are related to personal finance.  Here are the requirements a Scout, aged 10-17, must do to earn their personal finance merit badge.

Be Prepared To Do The Following

I. DO THE FOLLOWING:

     I-A.  Choose an item that your family might want to purchase that is considered a major expense.

     I-B. Write a plan that tells how your family would save money for the purchase identified in requirement I-A.

1. Discuss the plan with your merit badge counselor.
2. Talk about the plan with your family.
3. Consider how other family needs must be considered in this plan.

     I-C.  Develop a written shopping strategy for the purchase identified in requirement

1. Determine the quality of the item or service (using consumer publications or ratings systems).
2. Comparison shop for the item. Find out where you can buy the item for the best price. (Provide prices from at least two different price sources.) Call around; study ads. Look for a sale or discount coupon. Consider alternatives. Can you buy the item used? Should you wait for a sale?

II. DO THE FOLLOWING:

     II-A.  Prepare a budget reflecting your expected income (allowance, gifts, wages),expenses, and savings. Track and record your actual income, expenses, and savings for 13 consecutive weeks. (You may use the forms provided in this pamphlet, devise your own, or use a computer-generated version.) When complete, present the records showing the results to your merit badge counselor.

     II-B.  Compare expected income with expected expenses.

1. If expenses exceed income, determine steps to balance your budget.
2. If income exceeds expenses, state how you would use the excess money (new goal, savings).

III.  DISCUSS WITH YOUR MERIT BADGE COUNSELOR FIVE OF THE FOLLOWING CONCEPTS:

     III-A.  The emotions you feel when you receive money.

     III-B.  Your understanding of how the amount of money you have with you affects your spending habits.

     III-C.  Your thoughts when you buy something new and your thoughts about the same item three months later. Explain the concept of buyer’s remorse.

     III-D.  How hunger affects you when shopping for food items (snacks, groceries).

     III-E.  Your experience of an item you have purchased after seeing or hearing advertisements for it. Did the item work as well as advertised?

     III-F.  Your understanding of what happens when you put money into a savings account.

     III-G.  Charitable giving. Explain its purpose and your thoughts about it.

     III-H.  What you can do to better manage your money.

IV.  EXPLAIN THE FOLLOWING TO YOUR MERIT BADGE COUNSELOR:

     IV-A.  The differences between saving and investing, including reasons for using one over the other.

     IV-B.  The concepts of return on investment and risk.

     IV-C.  The concepts of simple interest and compound interest and how these affected the results of your investment exercise.

V. SELECT FIVE PUBLICLY TRADED STOCKS. EXPLAIN TO YOUR MERIT BADGE COUNSELOR THE IMPORTANCE OF THE FOLLOWING INFORMATION FOR EACH STOCK:

     V-A.  Current price

     V-B.  How much the price changed from the previous day

     V-C.  The 52-week high and the 52-week low prices

VI.  PRETEND YOU HAVE $1,000 TO SAVE, INVEST, AND HELP PREPARE YOURSELF FOR THE FUTURE.  EXPLAIN TO YOUR MERIT BADGE COUNSELOR THE ADVANTAGES OR DISADVANTAGES OF SAVING OR INVESTING IN EACH OF THE FOLLOWING:

     VI-A.  Common stocks

     VI-B.  Mutual funds

     VI-C.  Life insurance

     VI-D.  A certificate of deposit (CD)

     VI-E.  A savings account or U.S. savings bond

VII.  EXPLAIN TO YOUR MERIT BADGE COUNSELOR THE FOLLOWING:

     VII-A.  What a loan is, what interest is, and how the annual percentage rate (APR) measures the true cost of a loan.

     VII-B.  The different ways to borrow money.

     VII-C.  The differences between a charge card, debit card, and credit card. What are the costs and pitfalls of using these financial tools? Explain why it is unwise to make only the minimum payment on your credit card.

     VII-D.  Credit reports and how personal responsibility can affect your credit report.

     VII-E.  Ways to reduce or eliminate debt.

VIII. DEMONSTRATE TO YOUR MERIT BADGE COUNSELOR YOUR UNDERSTANDING OF TIME MANAGEMENT BY DOING THE FOLLOWING:

     VIII-A.  Write a “to do” list of tasks or activities, such as homework assignments, chores, and personal projects, that must be done in the coming week. List these in order of importance to you.

     VIII-B.  Make a seven-day calendar or schedule. Put in your set activities, such as school classes, sports practices or games, jobs or chores, and/or Scout or place of worship or club meetings, then plan when you will do all the tasks from your “to do” list between your set activities.

     VIII-C.  Follow the one-week schedule you planned. Keep a daily diary or journal during each of the seven days of this week’s activities, writing down when you completed each of the tasks on your “to do” list compared to when you scheduled them.

     VIII-D.  Review your “to do” list, one-week schedule, and diary/journal to understand when your schedule worked and when it did not work. With your merit badge counselor, discuss and understand what you learned from this requirement and what you might do differently the next time.

IX.  PREPARE A WRITTEN PROJECT PLAN DEMONSTRATING THE STEPS BELOW, INCLUDING THE DESIRED OUTCOME.

Note: This is a project on paper, not a real life project.  Examples could include planning a camping trip, developing a community service project or a school or religious event, or creating an annual patrol plan with additional activities not already included in the troop annual plan. Discuss your completed project plan with your merit badge counselor.

     IX-A.  Define the project. What is your goal?

     IX-B.  Develop a timeline for your project that shows the steps you must take from beginning to completion.

     IX-C.  Describe your project.

     IX-D.  Develop a list of resources. Identify how these resources will help you achieve your goal.

     IX-E.  Develop a budget for your project.

X.  DO THE FOLLOWING:

     X-A.  Choose a career you might want to enter after high school or college graduation.

     X-B.  Research your anticipated career and discuss with your merit badge counselor what you have learned about qualifications such as education, skills, and experience.

Don’t Forget The Girl Scouts!

A couple of comments below got me thinking about the Girl Scouts and if they offer a similar badge.  The answer is yes.  Yes they do and they put the Boy Scouts to shame!  Girl Scouts have the opportunity to earn THIRTEEN Financial Literacy badges through the different journeys a Girl Scout can take, starting with Daisy (age 5) all the way through Ambassador (age 17).

Girl Scout Financial Literacy Program and Badges

Here’s how the Girl Scout Financial Literacy Program looks:

Daisy

Daisies are the youngest Girl Scouts.  This journey is for kids in grades K-1.  These gals start their financial literacy journey by earning the following badges:

• 1. Money Counts
• 2. Making Choices

Brownie

Brownies are girls in second and third grade.  The FinLit badges they can earn are:

• 3. Money Manager
• 4. Philanthropist

Junior

The journey for girls in grades 4 and 5 is, in my opinion, where things start to get good!  Kids this age have a good idea of what money is, and how it’s used.  With this basic understanding, the education is on a new level.  The Girl Scout Financial Literacy badges for Juniors are:

• 5. Business Owner
• 6. Savvy Shopper

Cadette

Cadettes are Girl Scouts in grades 6 through 8 – the tough middle school years!  Here are the three badges kids in this particular journey can earn:

• 7. Budgeting
• 8. Comparison Shopping
• 9. Financing My Dreams (ooooh – I like this one!!)

Senior

It’s officially getting real.  The girls are officially young women know, and if they’ve completed their Financial Literacy journey this far, they’ve got some serious financial chops and probably have a better financial foundation than many adults!  Here are the badges that Seniors can get:

• 10. Financing My Future (man, that’s great as well!)
• 11. Buying Power

Ambassador

All journeys must come to and end.  For Girl Scouts, the Journey ends with Ambassadors.  Girls can earn two more FinLit badges before exiting the Girl Scout program altogether and taking the real world by storm!  Here are the final two badges:

• 12. Good Credit
• 13. On My Own

Look at the Girl Scouts swooping in and putting the Boy Scouts to shame with a 13 step financial literacy program!  Pass along the Thin Mints and Tagalongs and color me impressed!  Next time I’m buying a box several boxes of Girl Scout cookies I’ll be sure to ask these mini-entrepreneurs if they’re participating in the Financial Literacy Journey.

Chime In!

Whoa! That’s a lot of personal finance for young boys and girls to chew on, but any kid that took this seriously would come away with not only a Personal Finance merit badge (or 13 FinLit badges) but also a very solid financial foundation, and a better understanding of money than most Americans have.  So what do you think, could you earn the Personal Finance merit badge?  Could you complete the Financial Literacy Journey?