I’LL DO IT IF…5 HABITS FOR FINANCIAL HEALTH OHCE STATE LESSON

ICEBREAKER Break into small groups of 3-4 Discuss a habit you have tried to develop (or break) to reduce spending and increase savings As a group decide the best tips and report back to the group

OBJECTIVES Five strategies to help provide more control over finances Tracking Budgeting Setting Money Aside Checking your Credit Report Knowing what’s in your report

TRACKING A method for keeping up with actual spending Useful when you find there might be some spending “holes” Notepad, check register, phone app Whatever works

TRACKING CONTINUED Use categories that match those on the budget sheet Always consider periodic payments Usually requires a month or two to get accurate tracking

BUDGETING A written plan for how we spend money There is a sample budget sheet in your packet of information

BUDGET COMPONENTS Fixed expenses – those that are set Mortgage Car payment Variable expenses – those that can be controlled Groceries, eating out, utilities Periodic expenses – those that come up at various times throughout the year Gifts, vacation, school expenses

PERIODIC EXPENSES Because these are not due every month, they are often ignored or overlooked Can lead to overuse of credit if no money is set aside Can use calendar or worksheet to determine amount that needs to be set aside monthly Set aside into a separate account Use this account to pay those expenses when they come due

SETTING MONEY ASIDE We just discussed one reason to set money aside Other reasons include a major purchase, down payment or other goal Decide on exact amount and time frame Begin setting aside amounts

EXAMPLE Financial Planners recommend an emergency fund of months of living expenses Nancy is widowed but still working With only one salary, she needs 6 months Living expenses $1,235 per month times 6 months = $7,410 Over one year she needs to set aside $ into savings each month

ORDERING A CREDIT REPORT All consumers have the right to 3 free per year From 3 major Credit Reporting Agencies (CRA) Equifax Experian TransUnion Order online, by mail, on the phone

KNOW WHAT’S IN YOUR REPORT The report is a compilation of information Your creditors send the info to the Credit Reporting Agencies The report is divided into sections

PERSONAL INFORMATION Name Aliases Current address Previous addresses

PUBLIC RECORDS Civil claims Bankruptcy Collections Liens Some of this information can remain on your report for a long time. Bankruptcy (7 – 10 years), liens can be renewed and stay on indefinitely

CREDIT ITEMS (HISTORY) List of credit accounts Account numbers, type of account, payment history, months reviewed, total amount of debts… This information stays on your report for seven years from date of last activity Payment history has the largest affect upon your credit score (a measure of credit risk that affects how much you pay for loans, interest, and even insurance.

INQUIRIES List of requests for you credit information Creditor that you do business with Someone who wants to offer you credit (promotional) Your personal request for your report A creditor where you have filled out an application This is the only one that affects your score These inquiries stay on your report for two years

RESOURCES Excellent information on ordering, reviewing and correcting mistakes on your credit history Information on how your report affects your score