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Fostering Financial Literacy for Youth
Workshop Series, Spring 2015
The Fostering Financial Literacy for Youth workshop series is designed to equip afterschool program staff
with the knowledge, tools and resources to teach their youth to become financially savvy and in control
of their financial futures.
The workshops in the 4-part series include:
College Financial Aid Packages, February 25, 2015
Presented by: Cris Mercado, GrantAnswers
http://www.grantanswers.com/
Budgeting and Saving, March 4, 2015
Presented by: Christine Scarfuto & Corey Ogilby, Futures and Options
http://www.futuresandoptions.org/fao/
Credit Cards, March 25, 2015 Presented by: Doug Young, National Center for Economic and Financial Education
http://www.councilforeconed.org/
Debts and Loans, April 1, 2015 Presented by: Robin Wilson, Urban Upbound http://urbanupbound.org/ Use of Materials
These materials are a part of the Fostering Financial Literacy for Youth Series provided by the
Partnership for After School Education. They serve as reference materials and can support your work
with youth around financial literacy.
Fostering Financial Literacy for youth is funded by Morgan Stanley.
The Five Plastic Money Cards:
The Good, Bad and UglyFinancial Fitness for Life
Doug Young
Director, National Center
122 East 42nd Street, Suite 2600
New York, New York 10168
212-827-3602
http://www.criticalcommons.org/Members/oroark/clips/i-cant-get-no-satisfaction.mp4
About CEE• Leading organization in U.S. that focuses on the economic and
financial education of students from kindergarten through high
school.
• For over 65 years, CEE’s mission has been to instill in young people
the fourth “R”—a real-world understanding of economics and
personal finance.
• Teach students how to make better choices for a life well lived
• We provide professional development to teachers and develop
resources which are aligned to national standards in economics,
personal finance, and other content areas.
• We deliver our programs locally, nationally, and online.
CEE Nationwide
Teacher Publication and Resources
• Print and online, ready-to-use lesson plans across
disciplines
Teacher Training
• In-person and webinar
Assessment
• Pre-tests, post-tests and other assessment tools
Standards
• Economics
• Personal finance
CEE in New York CitySeasonal schedule of teacher workshops
• @45 internal, over 55 external
• Specialized professional development and curriculum support
• Train more than 2,000 area teachers each year
Collaboration with community partners supporting after school programs
• YMCA
• Street Academy
• Children’s Aid Society
• CreditDo
Curriculum development
• National Content Standard de Economics (K-12)
• National Standards for Financial Literacy (K-12)
• Common Core
• C3 Frameworks (College, Career and Civic Life) for Social Studies Standards
When you hear the
word personal finance,
what do you think of?
But How Do You Make
Economics Interesting?
• The traditional way economics is taught:
http://www.youtube.com/watch?v=dxPVyieptwA
• Can teachers make economics and personal finance more interesting? I
think we can:
1. By showing students that economics is everywhere.
2. By demonstrating that personal finance is part of our everyday
life: from inception to finality.
Cost of raising a child from birth to age 18 averages over $280,000.
The cost of just having that child is: @$18,000 - $28,000
The average cost of a funeral is: $7,000 and $10,000.
What is the basic economic problem?
Scarcity: Unlimited human wants in a world of limited
resources.
Setting Financial Goals
Oh, Scarcity
Tune: Oh, Christmas Tree
Oh, scarcity! Oh, scarcity!
We can't have all the things we want.
Oh, scarcity! Oh, scarcity!
We cannot have it all.
We really want a lot of stuff.
But sometimes there's just not enough.
Oh, scarcity! Oh, scarcity!
We cannot have it all.
http://www.criticalcommons.org/Members/oroark/clips/barenakedladiesmillio
n-frame2012.mp4
Wants versus Needs• Glasses, glasses on my head, What monies will I need as I look ahead?
• Setting “Financial Goals”
– Long term
1)
2)
3)
– Mid term
1)
2)
3)
– Short term
1)
2)
3)
http://www.criticalcommons.org/Members/oroark/clips/billionaire-by-travie-mccoy-featuring-bruno-mars-1
The Devil
Conspicuous consumption is the spending of money on
and the acquiring of luxury goods and services to publicly
display economic
Shop! Goes the Consumer
Tune: Pop Goes the Weasel
Consumers want a lot of goods.
Consumers want to use them.
Mike wants to buy LeBron sneakers,
Shop! – Goes the consumer.
Consumers want some services.
Consumers want to use them.
Elizabeth wants to add new apps.
Shop! – Goes the consumer.
A New Class: The Asset Poor
Asset Poverty Rates by Race in the United States
African American Hispanic Native American Asian White
43.2% 39.0% 34.5% 23.1% 16.6%
An asset-poor household is one in which a sudden halt in income would have serious consequences immediately. Asset poverty is a measure of whether a household can support itself using savings or other available assets for 12 weeks at a poverty-level income.
Let’s Start Budgeting!
• Let’s find a jobhttp://www.careerinfonet.org/occupations/select_occupation.aspx?next=occ_rep&level=&optstatus=&i
d=1,11&nodeid=2&soccode=&stfips=&jobfam=&menumode=
• Gross Income - Taxes = Disposable income http://www.bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx
• Disposable income = consumption + saving
• Saving = disposable income − consumption
http://www.criticalcommons.org/Members/oroark/clips/cashm.mp4
The Five Plastic Money Cards:
The Good, Bad and Ugly
All Cards
Are Not The Same!
Gift Card
Costs:
Benefits:
Debit Cards: The Pay Now Card
Costs:
Benefits:
Store Cards
Costs:
Benefits:
Pre-Paid Money Cards
Costs: Benefits:
Terminology for Credit Card Users
Good, Bad and Ugly
• Triggerer – I racked up over $25,000 in credit card charges as a result of: (divorce, health issues,
loss of job).
• Surfers – I open up card after card, searching for cheaper fees. As a result, I now have 15 cards,
all with huge debt, and a very low credit score.
• Ponzi Schemer – I run up huge amounts of debt on my credit card and then open new accounts
to pay off the old debt. I have over $30,000 in credit card debt right now.
• Revolver – I carry balances, paying off those balances over time, thus "revolving" them.
• Zombie – I have old credit card debt that is beyond the statute of limitations, so a debt collector
cannot collect from me. However, they still harass me and my relatives for payment. So debts
don't die, they rise to live on and on. Like zombies.
• Dead Beat – Credit card companies don’t like me. I charge EVERYTHING and pay off my
balance each month. (Rack up those incentive points).
Credit Cards The Cornerstone of the U.S. Economy
Beware of “MAXING OUT”
Let’s hear from some credit card victims.
Types of Expenses Contributing to Credit Card Debt
The New and Improved Schumer BoxHow Credit Card Companies Make Their Money: “Let Me Count the Ways!”
What’s a Credit Report?
From age 18 on, agencies collect data about your spending habits.
Monitor your ability to handle risks (i.e. installment loans and revolving charge accounts)
Impacts: amount you can borrow and the interest rates on that loan.
Who Can Access Your Report?
Creditors
Collection agencies
Insurance companies
Employers
Landlords
Many others!!!
www.howmanyofme.com
What is in a Credit Report? Personal Data
Employment History
Public Records (liens, judgments, secured loans, foreclosures, bankruptcies, etc.)
Collection Accounts (defaults and lateness)
Credit Information (open accounts, date account was opened, payment status)
Inquiries (approved requests and others seeking credit information)
How Long Does the Information Remain On A Credit Report?
TYPE LIMITATIONSuits & Judgments 7 years
Tax Liens – Paid 7 years from payment
Tax Liens – Unpaid No limitation
Charged to Profit & Loss 7 years
Criminal Record Limitations No limitations
Other adverse information 7 Years
Late Payments 7 Years
Debt Collections 7 Years
Bankruptcy 10 Years
Improving Your
FICO Credit Score
http://www.whatsmyscore.org/estimator/
What is a Credit Score?
A tool created from your credit report which can assess your
financial status, history, and debt repayment record.
Credit rating is determined by three bureaus that all banks, employers,
companies you deal with check to see if you are a good risk.
Two most commonly used credit scores are the:
FICO (Fair Isaac Corp.), which ranges from 300 – 850.
Vantage (Experian), scores go from 501 - 990.
There are hundreds of credit scores which are used by mortgage
lenders; auto dealerships; and insurance companies for
homeowners, life and health policies.
What doesn’t Count in a Score.
race
sex
income
education
marital status
job or length of employment at your job
whether you've been turned down for credit
length of time at your current address
whether you own a home or rent
information not contained in your credit report
age
The scoring model doesn't look at:
Why is a Credit Score
Important?
A poor credit score can affect a person’s ability to: Obtain credit cards, car loans and mortgages
Receive favorable interest rates and preferred credit limits on cars and credit cards
Qualify for utility and cell phone services with no down payment
or substantial security deposit
Rent or lease a house or apartment
Obtain government-sponsored student loans
Obtain private student loans with low rates
It might also affect: Your car insurance rate
Life insurance rates
Health insurance premium
How Much Will My FICO Score Drop?
Alex Blanca
Current FICO Score 680 780
Score after one of these is added to the credit report
One inquiry for a new credit card 675 (5) 775 (5)
A new charge card (additional hit) 665 (15) 760 (20)
Maxing out credit card 660 (20) 745 (35)
A 30-day delinquency 610 (70) 680 (100)
Settling a debt 625 (55) 665 (115)
Foreclosure 585 (95) 630 (150)
Bankruptcy 540 (140) 550 (230)
An $18 million Lesson in Handling Credit Report Errors by Sara Siegel Bernard
http://www.nytimes.com/2013/08/03/your-money/credit-scores/credit-bureaus-willing-to-tolerate-errors-experts-say.html?pagewanted=all&_r=0
What Rate Will Your Score Get You?
FICOScore
30-yearfixed-rate mortgage
36-monthnew auto loan
15-yearhomeequity loan
CreditCard APR
740 5.0% 6.4% 8.1% 7.3%
720 5.2% 6.4% 8.4% 10.0%
700 5.2% 7.9% 8.9% 15.0%
680 5.4% 9.9% 9.7% 15.0%
660 5.6% 9.9% 11.2% 18.0%
What is APR? APR is the Annual Percentage Rate on a loan or a credit card.
It is interest rate that will determine how much you pay in interest each year.
How much will you pay?
A home theater system for $1,000, when purchased on
credit card and each month you pay minimum payment
will actually cost
FICOScore
CreditCard APR
You will pay off the balance in about
You will end up paying an interest of
You will end up paying an estimated total of
740 7.3% 5 years $196 $1,196
680 15.0% 7 years $580 $1,580
660 18.0% 8 years $863 $1,863
Instructional Strategies
• Have students DEBATE whether gift cards are a good gift using the
projected
• Have students CALCULATE the cost of paying the minimum
payment on a $10,0000 store card debt
• Have students EXPLORE “Ask CFPB” for various questions on debit
card fees.
• Have students use the Federal Reserve credit card tools to
COMPARE two different credit card solicitations.
• Have students RESEARCH how much money Justin Bieber
received to endorse his PrePaid Money Card.
• Have students SAVE in their phones a reminder on their 18th
birthday that repeats every year to go to annualcreditreport.com and
CHECK their credit score.
