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Your Financial Education Guide
The Basic ABC’s of Finance
• Income• Opening Accounts• Creating a Budget• Financial Goals
Money Management
Borrowing Money• Credit Cards• Loans• Debt Management
Money Management
You Must Learn How To Manage Your Money Responsibly
Income
1. Allowance
How Do You Generate Income?
• Paycheck• Gross / Net
2. A Job
1. Gross: $452.43
3. Net: $273.85
2. Minus Deductions
• Fed. Income Tax• Social Security• State Income Tax• Medical
1.2.
3.
3.
Income
Now That You Have Money….What Are You Going To Do With It?
SPEND IT!
SAVE IT!
MANAGE IT!
Opening An Account
Types Of Accounts
Checking: Manage Day To Day Activity
Under 18? Joint Checking Account
Savings: Put Money Away For A “Rainy Day.”
Let Your Money Earn Money!
Opening An Account
Where Do I Go?
• Financial Institutions
• Banks
• CREDIT UNIONS!
Opening An Account
What Do I Need?2 Forms Of Identification:• License• Social Security Card• Birth Certificate• State ID Card
Minimum Deposits:• $50 For Checking• $5 For Savings
Opening An Account
What Do I Get?
• Check Card (ATM, Debit, Point Of Sale)
• Check Book (Keep It Balanced)
• Online Account Access
• Monthly Statements
1. Date - The Date the Check is Written2. Maker - Person / Business Who Writes the Check (The Name will be Printed on the Check) 3. Payee - Person / Business to Whom the Check is Written 4. Signature Line 5. Written Amount - The Amount Written in Numbers 6. Legal amount - The Amount Written in Words 7. Check number - Printed on the check and appears in the MICR line on the Bottom of the Check 8. Banking information - The Name of the Institution and The Association Number.9. Account and Routing Numbers - Appear on the Bottom of the Check in MICR Line.
Keep Track of Your Balance
1. Day to Day 2. Monthly Statement
Creating A Budget Vs.Income Expenses
Monthly Income Expenses Cost
$1,000
Food:Groceries
Dining
Car:PaymentInsurance
Gas
MISC:Clothing
Entertainment
Utilities:Gas
ElectricPhoneCable
Internet
$300$80
$120
$300$70
$20$20$60$60$40
$100$80
Rent:$3,000
Total: $2,250
Monthly Balance
+ $750
Financial Goals
What Do I Want Or Need?
How Am I Going To Pay For Them?
AND
Financial GoalsGoals to Aim For
● Rent ● Engagement Rings● College / School ● Wedding● Computer ● Home● Car ● Children● Entertainment ● Own Business● Travel ● Retirement
Short Term Long Term
Borrowing Money
How Do I Borrow Money?
1. Go To A Financial Institution
2. Apply For The Following Loans:
• Credit Cards• Student Loan• Personal Loan (Used for Any Purpose)• Car Loan• Business Loan• Home Loan
Credit CardsBe Careful Of Card Offers
(They’re Everywhere!)
• Mailers
• Department Stores
• Financial Institutions
Credit Cards
What Effects My Score?
Credit Score:
You’re Not Borrowing Money! You’re Getting A Line of Credit!
• Establishing Credit (Put Bills In Your Name / Dept. Store Credit)• Paying Bills On Time• Maintaining Accounts• The Ratio Between Money Owed To Credit Limit.
The Higher the Score the Better:
• Effects Your Ability to Borrow
• Can Borrow More • Lower Interest Rate.
SCORE!800700600 500
Credit Cards
Benefits Of Good Credit
1. Can Get A Higher Credit Limit!
2. Get A Lower Interest Rate!
YOU HAVE TO PAY THE CREDITORS BACK WITH YOUR MONEY!
Credit Cards
What Is An Interest Rate?
The Increased Percentage Rate That You Have To PAY BACK To Creditors.
Credit Cards
How It Works
• Apply For Card
• Get Card
• Use Card To Make Purchases
• Get Monthly Bill / Statement With Card Usage, Balance, Limit, Minimum Payment, Due Date
• Pay At Least The Minimum Requirement By Due Date
(Insert: Credit Card Statement)
1. Account Number2. New Balance3. Due Date4. Minimum Payment5. Transactions6. Account Summary7. Finance Charges8. Percentage Rate
1.
2.3.
4.
5.
6.
7.
8.
Credit CardsDO’S:
Do Make Your Payment On Time
Do Pay More Than Your Minimum
DON’TS:
Don’t Be Late On Your Payments ● You’ll Be Charged A Fee
● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score
Don’t Maximize Your Limit
THIS LEADS TO BAD CREDIT!
LOANS
Applying For A Loan:
You Must Show That You’re A Qualified Borrower.
AND
Show You Have The Ability To Pay Back Your Loan!
LOANS
YOU WANT!
1. A LOW Interest Rate
2. A Monthly Payment You Can Afford.
How Do I Get This?
LOANS
To Get A Good Loan You’ll Need:
• Capital (Down Payment / Collateral)• Proof Of Income• Excellent Credit Score
Note: A Co-Signer (Parent / Spouse) Can Help YOU!
LOANS
Look For:• First Time Borrower’s Programs
Watch OUT For:• Teaser Rate Programs
Example: No Money Down / 0% Interest.
Pay Attention To:• Terms And Conditions• Default Rates
LOANSWARNING! WARNING! WARNING!
Adjustable Rate
Your Loan May Be Affected By Terms And Conditions!
Fixed Rate Vs.Interest Rate Doesn’t Change Interest Rate Starts Low
Adjusts To A Higher Rate
Monthly Payment Will Increase
LOANSDO’S:
Do Make Your Payment On Time
Do Try To Pay More Than Your Minimum
DON’TS:
Don’t Be Late On Your Payments ● You’ll Be Charged A Fee
● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score
Don’t Default On A Loan
THIS LEADS TO BAD CREDIT!
DEBT MANAGEMENT
With Loans You Will Have Debt To Pay Back.
DEBT MANAGEMENTTips To Manage Debt
• Pay More Then The Minimum Requirement
• Refinance Your Loan For A Better Rate
• Consolidate Your Loans Into One Payment
And Finally…
• Create A Repayment Plan (Payoff A Loan Before Taking on Another)
DEBT MANAGEMENT
PAY FOR IT
IF YOU CAN AFFORD IT….
WITH CASH!