Personal Financial Literacy

Income Disposable Income: Money after all taxes have been paid Discretionary Income: Money after all necessities have been paid for (can be used on wants)

Creating a Budget What do you want to save each month? Set it aside as soon as you get paid! Determine FIXED expenses: Do not change from month to month (Examples??) Estimate/Plan VARIABLE expenses: Can be adjusted by lifestyle (Examples??) Plan for large expenses/purchases that may be approaching (Examples??)

Smart Buying Strategies Gather information - use consumer magazines, ask friends, etc. Use advertising, but be careful! Comparison shop - visit stores, check flyers, magazines, ads, etc. Utilize coupons and store specials! Compare brand name with identical generic products Look at “unit price” (price/volume) Consider used products Beware of “impulse buying”

Consumer Rights/Protections Consumer Bill of Rights: Right to a safe product - cause no harm Right to be informed - no fraud or misleading information Right to choose - variety of products Right to be heard - listened to when laws are written Right to redress - payment of product caused damage or financial strain Protect Yourself: Keep records/receipts of purchase Consider buying a warranty (protection against a defective product…company will fix/replace)

Bankruptcy Bankruptcy: Inability to pay debts Options to Try First: - Try to work out a payment plan with different creditors - Consolidate debts (new loan to pay old debts) Last Resort: File Bankruptcy – new payment agreement with creditors; stays on your credit for 7-10 years; some assets could be liquidated Bankruptcy: Inability to pay debts

Insurance – Key Terms Insurance: A practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment. Insurance Agent: Person who sells and manages insurance policies Claim: A demand for payment of the benefits as provided by the policy. Deductible: Amount of money that you pay out of pocket before the insurance kicks in.

Insurance – Types Health Insurance – Helps pay for routine doctor bills, prescriptions, and major medical procedures Life Insurance – Pays to a benefactor to help cover deceased persons’ debts and burial costs as well as replace lost income

Insurance – Types Auto Insurance – Provides money in the case of accidents (damage and personal injury) “liability insurance” (pays for damage to others that you inflict) “collision insurance” (pays for your own car’s damages) Homeowner/Renter’s Insurance – Pays for damage to home or property due to accidents, burglary, etc.