Managing Your Money What You Need to Know About Budgets, Credit Cards and Paying For College

The State of Financial Literacy in the United States  For the first time since the Great Depression, the average personal savings rate of Americans is less than zero percent This means that most Americans are spending more money than they earn, leaving no money to save -source: US News & World Report This means that most Americans are spending more money than they earn, leaving no money to save -source: US News & World Report  According to a 2004 survey, the median credit card balance for the American family is $2,200 –source: Federal Reserve’s 2004 Survey of Consumer Finance  In 2006 the Jump$tart Coalition surveyed high school seniors on financial literacy topics. The average score was 52.4% - a failing grade The topics students answered incorrectly on most frequently were: understanding saving, loan and investment rates; understanding taxes; and health care coverage –source: Jump$tart Coalition 2006 Survey of Financial Literacy among High School Students The topics students answered incorrectly on most frequently were: understanding saving, loan and investment rates; understanding taxes; and health care coverage –source: Jump$tart Coalition 2006 Survey of Financial Literacy among High School Students

Understanding the Impact of Income  When to spend vs. when to save  Have a checking account and keep it balanced  Set financial goals  Shop smart  Know the cost of credit  Tax time

Making a Budget Where did all my money go?  Net Income  Fixed Expenses, Flexible Expenses and Discretionary Expenses  Keep track of monthly expenses

Credit Cards  Know your interest rate  Have only one  Pay in full every month  Pay on time  Protect your credit history  Always review your statements  Don’t exceed your limit  Protect your personal information -AICPA

Making College A Reality  Start saving now  Seek out scholarships  Government loans  Focus on in-state, public universities  Be aware of education tax deductions -AICPA

Inve$ting Your Way to Wealth  Invest to beat the rate of inflation  The power of compounding interest  How to Invest  Patience and constant vigilance is key

Start on Your First $1 Million … at age 16  Have a summer job each summer for 4 years  Put $2,000 each summer into a Roth IRA  Don’t touch the money – it will grow tax- free  Assuming you receive the average compound annual rate of 10.7 %, you will have $9,378 at the end of the fourth year when you are 20 years old.

Start on Your First $1 Million … at age 16  Continue to invest this same amount, with no additional savings and your money will grow to: $25,917 by the time you are 30 $25,917 by the time you are 30 $71,625 by the time you are 40 $71,625 by the time you are 40 $197,943 by the time you are 50 $197,943 by the time you are 50 $547,037 by the time you are 60 $547,037 by the time you are 60 $1,114,423 by the time you are 67 $1,114,423 by the time you are 67  This plan doesn’t require “investment brilliance,” just an early start and tenacity  Depending on the risk level of your investments, your money may grow more quickly - data from MSN Money

Additional Financial Resources  Financial Fitness page has articles to help you manage your money wisely and financial calculators to help you create a budget, plan for buying a car and assist in a host of other financial decisions Financial Fitness page has articles to help you manage your money wisely and financial calculators to help you create a budget, plan for buying a car and assist in a host of other financial decisions  The Motley Fool – great resource for investment advice The Motley Fool – great resource for investment advice

Remember… Developing good money management skills today can mean big payoffs in the future!

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