MoneyCounts: A Financial Literacy Series Financial Literacy Overview (FLO) 11-A Grange Building University Park, PA 16802 financialliteracy.psu.edu finlit@psu.edu 814-863-0214

Description The Pennsylvania State University is committed to provide students with the resources needed to make informed decisions regarding their money management But what is Financial Literacy? What are the main principles that a student should explore? And what is the purpose of becoming financially literate? Financial Literacy is not just about managing your money, it dives deep to help you question your attitudes and values toward money and guides you to reach a life full of financial security and freedom

Learning Outcome Identify the core competencies for financial literacy Explore the knowledge using the KAB concept Knowledge, Action, Behavior List practical strategies to becoming financially literate Discuss financial security and freedom goals

Why do we need financial literacy? For your future financial freedom!

KAB Principle Financial Literacy Knowledge Action Behavior

Core Competencies

Earning – Core Competency #1 Knowledge Action/Behavior Gross versus net paycheck Benefits and taxes Education is important Understand your paycheck Verify and adjust your exemptions and deductions on your W4 (withholding) Learn about potential benefits and taxes Invest in your future, plan for your career through education – search the market

Saving & Investing – Core Competency #2 Knowledge Action/Behavior Saved money grows Banking – saving and checking accounts Long-term financial planning Eliminate or reduce waste Start saving early, pay yourself first Comparison shopping for a financial institution – reconcile your accounts Plan for retirement, child education, renting versus owning a home Replace with saving

Spending – Core Competency #3 Knowledge Action/Behavior Difference between needs and wants Develop a quantitative awareness of your spending habits Get the most/best value for your money Develop a spending plan Track spending habits Live within your means Understand the social and environmental impact of your spending decisions

Borrowing – Core Competency #4 Knowledge Action/Behavior Distinguish net income from loans Cost of borrowing: Penalty, interest, late fee, surcharges (PILS) Amortization schedules Credit Score – FICO: Equifax, Experian, TransUnion Credit cards Borrow only what you need (rather than what you want) Avoid high cost loans, penalties, late fees, and surcharges Minimize interest payments Get your free annual report, check your financial grade, review and correct if necessary Shop for low interest cards, use only in emergencies, avoid paying PILS

Protecting – Core Competency #5 Knowledge Action/Behavior Risk management and insurance coverage Identity theft Fraud and scam Shop for insurance, review and update insurance, build up an emergency fund Watch for your social security number and cards, your date of birth, and your banking information It is too good to be true, it most certainly is

Budgeting

Increase income

Decrease Spending

Quick tips for students Find an app to help you create and stick to a budget Use bank accounts that offer free saving, checking, and ATM services & watch for overdrawing funds Avoid impulse buys Find free social activities on campus Use the free CATA Bus service Pack healthy snacks Establish an emergency fund Pay credit card balance in full and on time

Scholarships Scholarships are a form of gift aid that does not need to be re-paid. The Penn State scholarship awarding process is very de- centralized, with each College having its own awarding process. https://studentaid.psu.edu/types-of- aid/scholarships

Health Insurance Requirements Penn State requires all international students to have health insurance and will be implementing a University-wide health insurance requirement for all students during the 2019-2020 academic year. https://studentaffairs.psu.edu/health- wellness/health-insurance

Student Financial Responsibility Agreement Penn State students have to sign a financial responsibility agreement prior to enrolling in classes to certify their obligation to pay all outstanding balance, together with all fees and costs, due Penn State https://tutorials.lionpath.psu.edu/p ublic/Docs/FRA.pdf

Elements of financial well-being Present Future Security Control over day-to-day, month-to-month finances Capacity to absorb financial shock Freedom of choice Financial freedom to make choices to enjoy life On track to meet financial goals

MoneyCounts: A Financial Literacy Series Comments and questions 11A Grange Building University Park, PA 16802 financialliteracy.psu.edu finlit@psu.edu 814-863-0214