Managing Money Chapter 13

Time is Money Money is a resource that carries high emotional charge. Money defines self-belief When people possess money it gives them a feeling or worth

MONEY, MONEY!!!!! How do your feel about money? Do you see money as making you a better person? 3. What are your short term goals? What do you want to buy today or tomorrow? 4. What are your long term goals? What do you want to do with your money in the future? Buy a house, live in Paris, vacation the world?

Basic cost of living What are they?

Budgeting for the Basics Income is money coming in. You may have one or multiple sources of income. Expenses are where the money goes. Fixed expenses are the same from month to month, quarterly, or yearly. Variable expenses differ from one period to another.

The Financial Pyramid Investing for the future Owning a home Savings, credit, and insurance Budgeting for basics Establishing your values and goals

Income and Expenses Income The amount of money coming in to you Salary Allowance Child support Welfare support Social Security payment Financial aid as a student Gifts Interest earned on savings Dividends earned on investments

Income Gross income Net income The amount of money from all your sources Net income The amount of money you actually receive after taxes and other deductions

Expenses The amount you spend Fixed expenses Variable expenses Month to month – car, mortgage, phone… Variable expenses Different each month – clothing, food, entertainment…

What happens when your expenses are greater than your income? Hmm?

The Four A’s of Budgeting Account for income and expenses. Keep track for a couple months to figure it out. Analyze your situation. Consider your expenses, income, and spending patterns. Allocate your income to meet your obligations and achieve your goals. Adjust your budget as your life changes.

Income & Expense Handout Take the time now and fill this information in. Take this home and complete the information by talking to your family.

Who here has a bank account? Savings Savings and banking Who here has a bank account? Checking or Savings?

Accounts Certificates of Deposit (CD’s) Offer the highest rate, but they tie up your money for a period of time. Individual Retirement Accounts (IRA’s) Put aside of retirement. If you withdraw the funds early you pay a pentalty.

Debit Cards 2/3 of American households use this form beyond cash and checks. The amount is subtracted from your balance immediately. Usually known as ATM cards (Automatic Teller Machines) You need a PIN (Personal Identification Number) to access the account

Credit Credit is a financial arragnement that gives you the right to defer payment on merchandise or services. You are using someone elses money to pay for something. And you pay INTEREST

Interest Anything you buy on credit will cost you more than if you pay cash. It is temping to use … until you get the monthly payments.

Credit Know the cost of credit: annual percentage rate (APR) and finance charges. Credit cards should be used cautiously. Interest and fees can be very high.

The Cost of Credit Finance Charges Credit Limit The total cost associated with the loan or credit card – fee, interest, service charges, insurance Credit Limit Allow you to buy merchandise and services and borrow cash up to a certain amount.

Get a Credit History Apply for a credit card with a low credit limit, or take out a small installment loan. Get a cosigner if necessary. Use a savings account as collateral for a loan. Sign up for utilities in your name Then, pay your bills on time!

Credit Records and Your Rights Credit bureaus Maintain your credit records You have the right to see your credit records

Your credit obligations You are obligated, legally and morally, to pay back what you have borrowed. If you think you may not be able to pay, call the creditor immediately. Most will work with you. You may also call a credit counseling organization.