Chapter 13 Money Matters

P.O.W.E.R. Plan Prepare: Identifying Your Financial GoalsPrepare: Identifying Your Financial Goals Organize: Determining Your Expenditures and IncomeOrganize: Determining Your Expenditures and Income Work: Making a Budget That Adds UpWork: Making a Budget That Adds Up Evaluate: Reviewing Your BudgetEvaluate: Reviewing Your Budget Rethink: Reconsidering Your Financial OptionsRethink: Reconsidering Your Financial Options

Money Management Why have a budget? How can I pay for my college education? What is the value of a college education? Where does all my money go?

Develop a Budget Formal plan that accounts and plans for expenditures and income Based on income Provides security Keeps track of spending

Prepare Determine short-term goals Identify long-term financial goals

Organize Keep track of your money Record expenditures in a notebook Make a list of financial needs

Work-Budgeting Personal Necessities Food Clothing Shelter Household Supplies Transportation Loans Medical Expenses Other

Budget Educational Necessities Tuition and Fees Books Tools Computer costs Other Social Needs Relationships Clubs and teams Charitable contributions Other Entertainment Movies and shows Trips Recreation and sports Lifestyle Improvements Educational Living space Computer Transportation Clothing Other

Estimate Your Income Wages Family Support Financial Aid –Tuition reductions, loans, scholarships Interest and Dividends Gifts

Save Money Control impulse buying Make your own lunch Read newspapers and magazines at the library instead of buying subscriptions Check bills for errors Cut up credit cards and pay cash

Make major purchases only during sales Share and trade resources with friends Live more simply Get good grades (re-taking classes costs money) Saving Money

Evaluate It is important to review and evaluate your budget monthly and make appropriate changes

Rethink When problems occur, assess the problem Contact your creditors See a credit counselor Stick to a plan

Credit Cards Average credit card debt of college students is $3,000 About 10% of college students owe move than $7,000 After graduating from college, do you still want to be paying for a slice of pizza you bought the first week of college?

Do I Need a Credit Card? Is there an annual fee? What is the interest rate? Is the interest rate fixed or variable? Do I need a credit card, REALLY?

Advantages of Credit Cards Establishing a good credit history Emergency use Convenience

Disadvantages of Credit Cards Interest costs can be high It’s easy to spend too much money Late payments damage credit rating

Cost of College Figure how much college is costing you. –Divide by the number of hours you attend class. –How much is each class worth? Isn’t it important to get your money’s worth?  ATTEND CLASS

Funds for College Loans Grants Scholarships

Loans Principal: amount of loan Interest rate: percentage Term of loan National Loans –Stafford Loans-Subsidized and Unsubsidized –Plus Loans –Perkins Loans

Grants Money that does not have to be repaid Pell Grants: based on need Federal Supplemental Educational Opportunity Grants-limited supply Work-study Grants-jobs for students in need

Scholarships Does not have to be repaid Hope scholarships-tax credit 100% on first $1000 and 50% credit on 2 nd $1000 paid on tuition and fees Lifetime learning tax credit-20% tax credit for first $5000 for older students or juniors and seniors

Financial Aid Speak with a financial aid counselor Decide how much aid is needed Fill out application for aid Complete the FAFSA Be patient and wait for results

Evaluate Evaluate your financial aid package Speak with a counselor if aid is not adequate

Rethink Money spent on education gives us a better understanding of the world and its people, insight into who we are, and better job opportunities

PREPARE ORGANIZE WORK EVALUATE RETHINK Identify financial goals Determine expenditures and income Make a budget that adds up Review the budget Rethink financial options P.O.W.E.R. Plan

Resources The Student Guide (U.S. Department of Education, 2005) Paying for College Without Going Broke by Kalman Chany and Geoff Martz (princeton Review, 2005)

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