Transcript Money Management - Center for Academic Programs

Making Money Work For You
Objectives
Review & learn key financial and economic literacy
concepts
Understand the importance of budgeting in order to
control spending and meet expenses
Teach students how to effectively utilize cash, debit
cards, and credit cards to purchase goods and services
Basics of Banking Services
 Bank: A financial institution that handles money,
including keeping it for saving or commercial
purposes, and exchanging and investing, and
supplying it for loans.
 Credit Union: A non-profit financial institution
insured by NCUA that is owned and operated entirely
by its members. Credit unions provide financial
services for their members, including savings and
lending.
 Savings Institution: A financial institution that
accepts deposits from individuals, makes homes
mortgage loans, and pay dividends.
Basics of Banking Services
CHARACTERISTIC
Insured by the National Credit
Union Administration (NCUA)
Must have majority of their assets in
housing –related loans
Governed by federal & state laws and
regulations
Similar to a bank
Members only
Make loans, pay checks & accepts
deposits
Created to promote homeownership
BANK, CREDIT UNION
OR SAVINGS
INSTITUTION?
Benefits of Using Financial Institutions
Safety
Financial
Future
Convenience
Security
Money Saver
Savings Accounts
 Why should you save your money?
 What are the benefits of saving & savings
accounts?
 Should you save for something that you
want or need?
 What are some reasons why you might
withdraw money from a savings account?
Paying Yourself First-Savings Account
Key Points
 Allows you to deposit, withdraw, and earn
interest on your money.
 Allows you to put
aside for a future
goal or emergency fund.
 Limits how often you can take your money
out.
Checking Accounts
Why would you
open a checking
account?
What are some
reasons that
someone might
want to pay by
check rather
than using cash?
What sorts of
things can you
write a check
for?
Check It Out – Checking Accounts
 A checking account is a great tool for managing your
money day-to-day
 A checking account allows you to put money in to
make a deposit or take money out to make a
withdrawal
 You can get cash whenever you need it
 Allow you to have a record of how much you spend and
where.
Your Budget – Making Money Matter
 Three Basic Steps
 Money Management Scenarios & Worksheet
Monthly Budget
NEEDS – WANTS
= NET INCOME
to SAVINGS
ATM & Debit Cards
Automated Teller
Machine (ATM)
Be AWARE of the fees
that are associated with
your debit card.
ATMs are safe and
convenient ways to
manage your money
A PIN is your password
to using an ATM.
A debit card is not a
credit card.
• Do not tell anyone your PIN
number
Stay alert and aware
while using an ATM.
Credit Cards
 Credit CARD Act of 2009
 President Obama signed the Credit CARD Act of 2009 into
law May 22, 2009, following passage days earlier in the Senate
and the House.

Limited credit to young adults: Credit card issuers are
banned from issuing credit cards to anyone under 21, unless
they have adult co-signers on the accounts or can show proof
they have enough income to repay the card debt. Credit card
companies must stay at least 1,000 feet from college campuses
if they are offering free pizza or other gifts to entice students to
apply for credit cards.
Read more: http://www.creditcards.com/credit-card-news/help/what-the-new-credit-card-rules-mean6000.php#ixzz1GyxpuKHA
Compare credit cards here - CreditCards.com
Credit Cards???
1)
2)
3)
4)
5)
6)
7)
Is given to you on your credit worthiness.
Must pay interest on any unpaid balances .
May allow you to buy something today rather than having
to wait. But remember, you always have to pay the money
back!!!
The items you purchase are typically insured.
If you pay your bills on time and in full, you build a good
credit history and increase your ability to borrow in the
future.
Be aware of the fees and interest rates associated with the
credit card.
The card can be your best friend or your worst nightmare.
Credit – The Benefits & Risks
BENEFITS
RISKS
Option of buying something
today and paying the money
back over time, rather than
having to wait
Overdoing it; borrowing
more than you can afford to
pay
Flexibility to act on major
purchases and life
opportunities that may
require more money than
you have on h and right now
If you don’t make your
payments on time, you will
damage your credit history
Easier to rent an apartment
and to get service from local
utility companies
Having to pay additional
interest and fees
Easier to buy what you want,
when you want
Difficulty getting loans in
the future
Good Credit vs. Bad Credit
GOOD CREDIT
BAD CREDIT
•Paying at least the minimum
required
•Paying on time
•Never missing a payment
•Staying within your credit limit
•Paying too little
•Paying too late
•Missing payments
•Going over your credit limit
•Having too much debt
Result
•Easier to borrow money
•No additional penalty fees
•More money you’ll keep in your
pocket
•Good deal on major purchases &
cell phone
•Decent apartment
Result
•Difficult to borrow money
•You lose money on late fees
•More money spent on fees and
interest
•Not getting the job you want
•Higher rates and fees on major
purchases & cell phone
Your Credit
Credit Report
Credit Score
FICO Score
 A type of credit score that makes up a substantial
portion of the credit report that lenders use to assess
an applicant's credit risk and whether to extend a
loan.
 FICO is an acronym for the Fair Isaac Corporation, the
creators of the FICO score.
What Determines your FICO Score?
Tips for improving YOUR Score
Monitor your credit report
Consistently pay your bills on time
Keep your balances low (no more
than 30%, ideally 10%)
Limit your amount of new credit
Do not close out old accounts
Be cautious about consolidating
balances and moving credit around
General Tips for Financial Success
1) Set a monthly budget
2) Always pay on time
3) Never borrow more than 20% of your yearly net
4)
5)
6)
7)
income.
Keep your credit card debt low enough so that your
required payments are no more than 10% of your
monthly income or avoid credit cards if possible.
Invest your earnings
Budget and manage your cash
Live within your means