1. Money Management 1-2-3 1 Getting a strong start 2 Achieving financial goals 3 Planning a secure future A project of Consumer Action | www.consumer-action.org Funded by Consumer Action’s Money Management Project © 2010 Rev. 2/16

2. Money Management 1: Getting a strong start Money Management 1-2-3 Getting a Strong Start

3. Pay stub Net vs. gross Withholding Voluntary deductions Earning income Money Management 1-2-3 Getting a Strong Start

5. Tax rates Money Management 1-2-3 Getting a Strong Start

7. Tax tips Stay organized and don’t wait until April Be aware of credits and deductions Plan for health insurance Money Management 1-2-3 Getting a Strong Start

8. Checking and savings accounts Money Management 1-2-3 Getting a Strong Start Bank vs. credit union Compare options Account opening requirements

9. Money Management 1-2-3 Getting a Strong Start

11. Budgeting Money Management 1-2-3 Getting a Strong Start

12. Budgeting tips Identify wants and needs Write it down (paper or electronic budget forms) Convert income/expenses to monthly amounts Track your spending Adjust as needed Money Management 1-2-3 Getting a Strong Start

13. Building your savings Money Management 1-2-3 Getting a Strong Start

14. Employment, insurance, home rental, utilities, wireless service Achieve goals Pay over time Emergencies Importance of good credit Money Management 1-2-3 Getting a Strong Start

15. Financial cost of bad credit 48-month car loan of $20,000 Credit score:650725 Interest rate:9.364%3.26% Monthly payment:$501 $445 Total interest paid:$4,056$1,359 Cost of a low credit score: $2,697 (almost $700 per year additional interest!) Source: http://www.myfico.com/crediteducation/calculators/loanrates.aspx. Scoring is on a scale of 350 to 850.http://www.myfico.com/crediteducation/calculators/loanrates.aspx Money Management 1-2-3 Getting a Strong Start

16. FICO score calculation

17. Establishing and building good credit Money Management 1-2-3 Getting a Strong Start

18. Installment vs. revolving Interest rate (APR) and type (fixed/variable) Repayment term (length of credit) Fees Money Management 1-2-3 Getting a Strong Start

19. Credit, debit and prepaid cards Money Management 1-2-3 Getting a Strong Start

21. Financing a vehicle

22. Congratulations! You’ve completed Part 1 of the Money Management 1-2-3 training. Money Management 1-2-3 Getting a Strong Start

23. Money Management Two: Achieving financial goals Money Management 1-2-3 Achieving Financial Goals

24. Updating your budget Money Management 1-2-3 Achieving Financial Goals

27. Saving for a purpose Goal Total needed Current savings Need to save Target date Savings/ month Savings/pa y period Buy a computer $800$240$56010 months$56$28 Pay off credit card $3,000$0$3,000 30 months (2½ yrs) $100$50 Home down- payment $30,000$0$30,000 60 months (5 yrs) $500$250 Money Management 1-2-3 Achieving Financial Goals

28. Savings vehicles Passbook or statement savings account Money market account (MMA) Certificate of deposit (CD) Individual development account (IDA) U.S. savings bond Money Management 1-2-3 Achieving Financial Goals

29. The power of starting early Investor:DwayneDan Monthly deposit:$50$100 Starting age:3050 Ending age:7070 Years of deposits:4020 Annual return*:8%8% Total invested:$24,000$24,000 Final balance:$174,575$58,907 Dan would have to save $300/month to achieve the same balance as Dwayne. *Compounded monthly Money Management 1-2-3 Achieving Financial Goals

30. Saving vs. investing Annual returnBalance in 10 yearsTypes of investments 1%*$11,051Savings accounts 3%$13,493Longer-term CDs 5%$16,470Certain bonds 7%$20,096Stocks 9%$24,513Stocks Value of $10,000 in 10 years at hypothetical rates of return * All rates are hypothetical; for example, interest rates on standard savings accounts and MMAs at the time of publication ranged from around.01% to around 1% Money Management 1-2-3 Achieving Financial Goals

31. Life stage investing Asset30s50s70s Cash5%10%20% Bonds10%20%45% Stocks85%70%35% Hypothetical asset allocation through life stages Money Management 1-2-3 Achieving Financial Goals

33. Individual retirement account (IRA) TraditionalRoth No income limits on contributionsIncome limits on contributions Tax-deductible contributions*After-tax contributions Tax-deferred growthTax-free growth Min. required distributions at 70½No required distributions Taxable withdrawalsTax-free withdrawals Money Management 1-2-3 Achieving Financial Goals *For those who meet requirements

34. Retirement plan advantages Targeted monthly savings:$125 Years until income needed:30 Hypothetical rate of return:8.00% Your current tax rate:15% After-tax value in 30 years:$125,327 Tax-deferred value in 30 years:$187,536 Assumes a 15 percent federal tax rate. Taxes must be paid on the earnings when you withdraw the money from the tax-deferred account. Source: Tax deferred investment calculator, http://www.advisorlinks.com Money Management 1-2-3 Achieving Financial Goals

36. Key considerations for investors Objective Time frame Expected return Risk tolerance Tax consequences Money Management 1-2-3 Achieving Financial Goals

38. Lenders Loan types Loan terms Loan approval Mortgages Money Management 1-2-3 Achieving Financial Goals

39. Successful homeownership Money Management 1-2-3 Achieving Financial Goals

40. Protecting your assets

41. Money Management 1-2-3 Achieving Financial Goals Be covered

42. Money Management 1-2-3 Achieving Financial Goals

43. Congratulations! You’ve completed Part 2 of the Money Management 1-2-3 training. Money Management 1-2-3 Achieving Financial Goals

44. Money Management Three: Planning a secure future Money Management 1-2-3 Planning a Secure Future

45. Retirement challenges

46. Funding your retirement Money Management 1-2-3 Planning a Secure Future

47. My Social Security www.ssa.gov/myaccount

48. Tapping home equity Home equity loan typeProsCons Home equity loan Lower interest rate Tax deductible Fixed payments Secured by home Interest on entire balance Home equity line of credit (HELOC) Lower interest rate Tax deductible Pay interest only on what you use Secured by home Fluctuating payments Money Management 1-2-3 Planning a Secure Future

49. Right for you? Money Management 1-2-3 Planning a Secure Future

50. Managing medical expenses Money Management 1-2-3 Planning a Secure Future

51. Long-term care insurance Money Management 1-2-3 Planning a Secure Future

52. Stay adequately insured Audit insurance coverage regularly Don’t be underinsured Consider “umbrella” policy Money Management 1-2-3 Planning a Secure Future

53. Raising grandchildren Money Management 1-2-3 Planning a Secure Future

55. Congratulations! You’ve completed Part 3 of the Money Management 1-2-3 training. Money Management 1-2-3 Planning a Secure Future