11111 Youth Money Management Learning Good Spending Habits

2 Checking vs. Savings Savings Account Interest bearing Limited withdrawal potential Back-up for unexpected expenses Checking Account Convenience of Debit Card Used for every day expenses Limit spending to only what you can afford Keeping track of your balance to avoid overdraft fees

3 The Budget Process

4 Needs vs. Wants Needs are items that you must have for basic survival. Wants are items that you desire – that make life more fun – but you can live without.

5 So How Do You Spend? How much money do you spend today for: Meals Snacks Gasoline Music Movies ???

6 Preparing a Budget Income Key Terms Gross Income Net Income Bi-weekly pay Weekly Expenses Key Terms Fixed expense (car payment, or rent) Flexible expense (food, cell phone, entertainment) Variable expense (car insurance)

7 Ways to Control Spending Write down your savings goal Pay your bills on time to avoid late fees Carry small amounts of cash Use Direct Deposit Control the use of Credit Cards Use Coupons to save money Use a grocery list Shop for the best deals

8 Saving - The Right Choice Live within your means Pay your savings account Plan for your future!

9 10 Ways to Save Money Don’t shop as a form of entertainment. If you really need something, go buy it. Live within your means. Paying cash eliminates extra interest charges, which lowers the price. Forces you to use and enjoy what you now have. Take care of what you have. Wear it out. Use the parts.

10 10 Ways to Save Money Do it or make it yourself. Anticipate needs. Eliminates impulse buying. Can take advantage of sales. Research value, quality, durability and multiple uses before buying. Get it for less — look for discounts. Buy it used. Borrow it, rent it, or share it

11 Step 1: Budget Analysis - Where your Money Goes Jane Doe: Single, No Kids, Gross Annual Income: $22,000 Average Monthly Expenses Partner’s Take Home Pay-0- Average Monthly Income Monthly Take Home Pay$1,465 Total Monthly Income $1,785 Monthly Income $1,785 Less Monthly Expenses -1,450 Other Income - roommate320 (include child support, alimony, Social Security, direct deposits for savings Amount Available for debt$335

12 Basic Rules of Money Management Plan! Set financial goals Determine if it is a need or want Know your financial situation Keep a record of your daily expenditures Develop a realistic spending plan Expenses can not exceed income Save! Pay bills on time Use credit wisely

13 Borrowing Basics What Can I Really Afford to Borrow?

14 Credit vs. Debit Credit Card Revolving line of credit Borrowed Funds Expensive rates Monthly payments Late fees Over limit fees Credit building

15 Credit vs. Debit Debit Card Comes out automatically from your checking account Limit spending to only what you have available on hand Avoid interest charges Can be used as credit – Allowing you to use it anywhere Mastercard or Visa is accepted Access to overdraft protection Courtesy Pay fees involved Gives you access to your savings account at an ATM Forces good judgment and balancing techniques

16 Credit & Debt In 2008, the total amount of US consumer debt was $57 trillion dollars = $186,717 per person The annual personal savings rate of Americans continues to decline – below a minus 1%. The lowest since the Great Depression. Average college students leave college with $20,000 in student loans. Nearly 10% of undergraduates owe more than $7000 in credit card debt. On average, each US Consumer has 4 credit cards with a $11,950 balance

17 Checklist for Credit Decisions Three Cs: Capacity Present Future Capital Savings Assets Collateral Character How you pay Credit Accounts

18 Credit – it is not free! Interest Fees Annual maintenance fees Services charges Late fees

19 Things to Consider Before You Borrow Do I need this? Do I need it now? Can I wait until I have cash to pay for it? Can I get credit? How much more will I pay if I buy on credit? Can I afford the monthly payments? What is the total cost of credit? Are there any fees? What is the annual percentage rate

20 Your Credit History Good Credit Make your payments on time Pay back the money you owe Easier to borrow money in the future Bad Credit Late payments Default Difficult to borrow in the future

21 Loan Payoff Decisions Pay off loans with high interest rates Talk to your creditors Consider debt consolidation Get professional advice

22 Monitor Your Credit Report FACT Act Effective Dec 1, free credit report annually Free Annual Credit Report

23 Mi Consumers Products & Services Geared towards the Gen Y Easy credit card approvals for college Local checking and savings Instant issue debit cards Text Banking/Mobile Banking Product bundle

24 Questions?