1. 12
Money Matters

2. Key Questions
How can I budget my money to stop feeling constantly stressed about running out of money?
What can I do to deal with my growing credit card debt?
Even if I could save a little, would it be enough to make a difference?
How does having money relate to being happy and feeling satisfied with life?

3. Objectives Explain the ABCs of money management
Create and implement a plan for financial fitness
Set financial goals to reduce money- related stress
Discuss how doodads and credit cards contribute to financial stress

4. Objectives (cont’d.)
Investigate what the research says about the relationship between money and satisfaction in life

5. FYI: There’s a Reason Loan Sounds Like Moan
Two-thirds of college seniors who graduated in 2011 had student loan debt, with an average of $26,600 per borrower
Meanwhile, unemployment for young college graduates remained high at 8.8 percent in 2011
Source: Student Debt and the Class of Retrieved March 10, 2014 from

6. Money Matters Money is a leading source of stress for college students
Financial problems rank with poor grades as the major reason for dropping out of college

7. Research Highlight: Financial Worries Top Stressor List
47% of respondents in a national survey currently feel more stress than they did six months ago
Finances are most common source of stress
Younger people are more stressed than older people
Coping strategies
Exercise
Breathing and meditation
Vacations

8. Sources of Stress Figure 12.1 Sources of Stress.
Of the following, which would you say is the biggest source of stress for you?
Source: “New Poll Shows American's Stress Levels Rising” by M. Moyad, retrieved March 10, 2014 from

9. The ABCs of Money Management – Part I
Assessment
Look at where you are now
Evaluate how you got there
Exercise 1
Track every penny you spend for a week

10. FYI: What Matters Most
According to the Financial Planning Association, the three most valuable steps people can take to improve their financial lives are:
Establishing goals
Paying yourself first
Sticking to a budget
Source: “Financial Diet Tip #1: Carve Up Your Expenses,” by M. Fetterman, USA Today, April 22, 2005, 1B.

11. The ABCs of Money Management – Part II
Assessment
Consider your thoughts and emotions that are linked to money
Exercise 2
As you track your spending for Exercise 1, analyze the thoughts and emotions attached to your spending
Consider the roles of stress and boredom

12. The ABCs of Money Management – Part III
Budget
A plan you develop to manage your money to have what is most important to you and accomplish your financial goals
Exercise 3
Write your financial goals and develop a plan to reach them
SMART goals: specific, measurable, action- oriented, realistic, time-based

13. The ABCs of Money Management – Part IV
Budget
Review your expenditures (Exercise 1) in light of your goals (Exercise 3) and cross out those that do not contribute to your goals
Exercise 4
Calculate your expected income for the next year
Include all sources of money
Calculate your expected expenditures for the next year

14. The ABCs of Money Management – Part V
Budget
With your expected income and expenditures, you are ready to develop a budget
Consider using software if it will be easier
Exercise 5
Create your budget
Categorize and total your expenditures
Compare your total expenditures to your income
Make adjustments as necessary
Making adjustments can be the hard part

15. The ABCs of Money Management – Control
Some expenditures are fixed
Tuition, rent, car payments
Others are flexible
Budgets can help manage them
Learn to distinguish between needs and wants

16. Time Tip: Two Credit Cards
Using one credit card for needs and another for wants can help you track your spending

17. Doodads and Credit Cards
Small but steady expenses that can drain away cash
Lattes, cigarettes, ATM fees, 411 fees
Exercise 6
Identify a doodad in your expenditures
Determine its cost
Calculate your costs over a month, year, 5 years, 10 years

18. Strategies for Saving
Eliminate a doodad and put the money into savings
Pay yourself first and put a portion of each paycheck into savings
Save up loose change and deposit it
Save your tax refund
Save one hour per day of your income

19. FYI: Who Gets Credit Cards?
Half of all college students have four or more credit cards
30% of students put tuition on their cards
Freshmen carry a median debt of $939
Seniors graduate with an average credit card debt of $4,100
45% of students say they feel a lot of anxiety about being able to pay their monthly credit card debt
Source: “Study Finds Rising Number of College Students Using Credit Cards for Tuition” by P. Christel and E. Eriksdotter, retrieved March 10, 2014 from

20. Managing Credit Credit cards Tips for managing credit
Financial advisors estimate that we would spend about 20% less by switching to cash- only payments
Tips for managing credit
Use credit cards only for emergencies or carefully planned-in-advance purchases
Pay off your balance every month
If you cannot pay off your balance, pay more than the minimum

21. Debit vs. Credit Remember credit is a debt, not an income supplement
Use a debit card rather than a credit card
Learn to defer gratification
Be aware that student credit card offers may not be a good deal
Try to get a lower interest rate

22. Credit Cards – Pros and Cons
Exercise 7
List the pros and cons of credit cards
Consider whether the cons outweigh the pros

23. Stress on the Job
Job stress is estimated to cost American companies more than $300 billion a year
Tips for preventing job stress
Meet with your manager at least once a year to talk about your job and performance
Get organized and keep track of your projects and deadlines
Don’t put things off
Learn to say “no”

24. Good Habits on the Job Focus Concentrate Delegate Unplug Be realistic
Reward yourself
Schedule time for fun
Practice breathing/relaxation techniques

25. Setting Goals to Reduce Stress
Identify what causes you stress
Think about why you want to reduce stress
Set a goal that involves reducing your stress
Think about what might get in the way of your goal and how you would overcome it
Get support from others

26. Additional Tips for Managing Money
Look for activities that do not require money
Make and stick to a budget
Find inexpensive alternatives and ways to save
Find scholarships
Manage your credit carefully

27. FYI: Consequences of Credit
A typical minimum monthly credit card payment is broken down into 90% interest and 10% principal
By paying the minimum (2%) each month on a card with an 18% annual percentage rate (APR), paying off a $2,000 purchase will take more than 19 years
Source: Climbing the Steps to Financial Success, by F. Williams (Lafayette, IN: Arolf Publishers, 2004).

28. Can Money Make You Happy?
Happiness tends to increase as income rises to $50,000 a year
After that, more income does not have a dramatic effect
Affluenza
Disease-like epidemic that is causing our society to have more and more material possessions and to spend money we don’t have, leading to more debt

29. FYI: Who Wants to Be a Millionaire?
A study of lottery winners found that they did not wind up significantly happier than a control group
Source: “The New Science of Happiness,” by C. Wallis, Time, 165(3) (2005): 2A.

30. Research Highlight: Can Money Make Us Happy?
Once your basic needs are met, additional income does little to raise your sense of satisfaction with life
Source: “The New Science of Happiness,” by C. Wallis, Time 165(3) (2005): 2A.

31. Reference Anxiety
People judge their possessions in comparison with others, not based on what they need
In nations with high levels of income equality, well-being is reported to be higher than in nations with unequal wealth distribution

32. Complaints Between Partners with Financial Issues
Figure 12.2 Complaints Between Partners with Financial Issues.
Source: “Money and Relationships,” by D. Haralson and S. Parker, USA Today, March 15, 2005

33. Culture Connection: The Haves and the Have-Nots
International survey of college students in the mid-1990s compared national differences in positivity (positive feelings) and subjective well-being
Relatively poor locales had the highest levels of cheerfulness
Surprising if we equate money and material possessions with high spirits
Not so surprising if we consider cultural norms
Source: “It’s a Glad, Sad, Mad World,” by W. Kirn, N. Mustarfa, and E. Coady, Time, 165(3), (2005): 65-A.

34. Putting It All Together: What the Experts Say
The most important financial principal is contentment
Fun can be bought; happiness cannot
STUFF does not equal contentment

35. Conclusion
Even though changing how you spend and save money can be challenging, it can bring a lifetime of financial freedom

36. Lab 12.1: Spending Habits and Emotions
Track your spending for a week
Analyze your spending
Look for patterns of spending, emotions associated with spending, and how spending contributes to stress
Set SMART goals