1. Chapter 13
Managing Money

2. The Financial Pyramid Investing for the future Owning a home
Savings, credit, and insurance
Budgeting for basics
Establishing your values and goals

3. Budgeting for the Basics
Income is money coming in. You may have one or multiple sources of income.
Expenses are where the money goes.
Fixed expenses are the same from month to month, quarterly, or yearly.
Variable expenses differ from one period to another.

4. The Four A’s of Budgeting
Account for income and expenses. Keep track for a couple months to figure it out.
Analyze your situation. Consider your expenses, income, and spending patterns.
Allocate your income to meet your obligations and achieve your goals.
Adjust your budget as your life changes.

5. Savings Accounts Passbook accounts. Less interest, more flexibility.
Money market accounts. Variable interest, minimum balance or limited access.
Certificates of deposit. Highest interest, tie up your money for a specified period.
Individual retirement accounts. Stiff penalty for withdrawal before retirement.

6. Credit
Know the cost of credit: annual percentage rate (APR) and finance charges.
Credit cards should be used cautiously. Interest and fees can be very high.
Student loans offer subsidized interest rates for education.
Installment loans are paid back in equal monthly payments over a fixed period.

7. Get a Credit History
Apply for a credit card with a low credit limit, or take out a small installment loan. Get a cosigner if necessary.
Use a savings account as collateral for a loan.
Sign up for utilities in your name
Then, pay your bills on time!

8. Insurance
Medical coverage protects you financially. Most people get it through their employer.
Traditional insurance is the most expensive.
Managed care plans usually cost less but provide less choice.
Medicaid and Medicare are available for low-income and disabled people.

9. Insurance Auto insurance protects car owners.
Liability coverage protects you against the claims of others.
Collision coverage pays to repair your vehicle.
Comprehensive coverage pays if your car is stolen or damaged by fire or flood.
Medical coverage pays medical bills.
Uninsured motorist coverage pays if you are hurt or killed by an uninsured motorist.

10. Investing for the Future
Stocks may pay dividends and can be sold at a profit if the price goes up.
Bonds offer less risk, less profit than stocks.
Mutual funds pool the money of a group.
IRAs, SEPs, and 401(k) plans help people invest for retirement.
Education savings accounts let money grow tax-free for education.