1. Balancing Your Budget

2. Paying For College Financial Aid FAFSA: pay attention to deadlines! –Usually due by end of June –Priority –Numerous types of loans/grants Loans: must pay back, accrue interest Grants: don’t have to pay back

3. Paying For College Scholarships NIU Scholarship Office –Help find scholarships (NIU & private) –Provides computers and assistance Find you own! Not Financial Aid

4. Paying For College Parents/Relatives Private Loans Employment Last options: consider less hours or take semester off

5. What is a Budget? A budget is itemizing your income against your expenses for a given period. A budget allows you to better visualize your financial picture.

6. How does a Budget Help Me? Stay out of debt Save for the future Attain goals Trim spending Relieve Stress Lifelong money management skills

7. BUDGETING 101 The first step is to know how much money is coming in so you know how much money you can spend.

8. Budgeting Basics Determine WANTS vs. NEEDS Determine your goals –Short term –Long term Do the Math

9. Budgeting: Easy as 123 Step 1: Add up all of your income Step 2: Add up all of your expenses Step 3: Calculate the difference

10. Common Budgeting Questions Converting Annual expenses/income to monthly amounts –Divide the annual income or expense by the number of months –Ex/ Car insurance paid every 6 months: Divide that amount by 6 to get monthly expense –Ex/ Receive graduation gifts of $500, spread it out over school year: Divide $500 by 9 months

11. Common Budgeting Questions Converting monthly expenses/income to annual/semester amounts –Multiply the monthly expense income by the number of months –Ex/ $70/month for cable and internet. Multiply $70 by number of months

12. Common Budgeting Questions Income and Expenses change during the summer –Create a separate summer budget –Spread out savings from summer job throughout the school year Ex/ Save up $3000 during the summer: Divide by 9 months to get monthly budget –When calculating yearly budget, don’t multiply monthly expenses by 12 if you will not have those expenses year round Ex/ $70/month for cable and internet, but cancelling for summer months: only multiply $70 by 9 months

13. Budgeting Tips Everyone’s budget is going to be unique, so add, remove, or change any of the budget categories Be conservative with your estimates When in doubt: »Overestimate expenses »Underestimate income Start an emergency fund

14. Assess Goals and Expenditures Do your expenses exceed your income? –Bridge the gap by trimming down your spending –Pick up a part-time job –Take out more loans –Use credit card to cover any short term gaps Do you have money left over after covering your expenditures? –Attain goals faster, make new goals –Start paying off student loans, invest for the future, save for a summer trip

15. Money Munchers ATM FeesComputerware Home PartiesCosmetics Online Services Beauty Parlor Over the limit fees Cell phonesDatingIce CreamParking Fees GiftsOverage Fees Bottled WaterBounced ChecksClubs CigarettesGreeting Cards TanningHaircuts Movies Cable TVLate Payment Fees Dinners OutBar Night Books Fast Food Attacks Dry CleaningCar Wash Lottery Tickets MagazinesMovie RentalsSports Lunches Out Gambling CD’s/Music Downloads Prescriptions Household Items Pet Costs Licenses Speeding Tickets Cash Advance Fees Munchies GiftsSouvenirs

16. Track Spending Track your spending each month Compare to budgeted amounts

17. Importance of Saving Money Short-Term: –Emergency cushion: experts recommend 3-6 months worth of living expenses –Short Term goals: trips/vacations, household purchases, new clothes, etc. Long-Term: Attain Financial Goals –Financing a college education –Buying a house –Buying a car –Retirement

18. Saving Money and Investing Always consult with a professional financial planner to determine your investing goals The value of your savings/investments is determined by 3 basic factors: –Amount of money you put in –Interest Rate –Time Hard to control interest rate on your investments, so focus on the amount of money you are putting in and start investing for your future early

19. Importance of Time Started saving for retirement at age 20: Initial investment: $2,000 Annual contribution: $500 Interest rate: 10% Years until age 65: 45 Value of investment at 65: $541,178.63 Waiting ten years could cost you hundreds of thousands of $ Started saving for retirement at age 30: Initial investment: 2,000 Annual contribution: $500 Interest rate 10% Years until age 65: 35 Value of investment at 65: $205,268.28

20. Saving Money First – Make a goal Understand the sacrifices needed to attain that goal Develop a timeframe

21. Saving Money Add your saving goal to your budget How to add to your monthly budget: 1. How much do you want to save? 2. How long is the timeframe in months? 3. Saving Amount ÷ # Months = monthly budget amount 4. Treat this monthly amount as an expense towards your goal

22. Money Saving Tips Try generic brands Master the ten second rule Take public transportation Go to a matinee Make your own coffee Save your coins! Start emergency fund Use ebay/craigslist/freecycle

23. Credit WHAT IS CREDIT? $ It is a loan $ It is an agreement $ It comes with fees, interests & other charges Credit is a debt; it is NOT income!!!

24. Build Your Credit Credit is called “your second resume” Information stays on your credit report for seven years Your credit rating is your reputation

25. FICO Score FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

26. FICO Score / Credit Score Like your GPA, the higher your FICO score, the better! FICO Scores range from 300-850 –680 and higher = prime borrower –550 and below = lots of work to do!

27. Getting a Good Credit Score Keep account balances well below 50% of your available credit Think twice about co- signing Avoid Excessive inquiries Pay your bills on time  A good FICO score of 750+ can mean your interest rate on a home loan will be 4 percentage points lower than somebody with a 500 score. This can mean over $200,000 in saved interest on a house.

28. Debit Cards Allow access to checking account via ATMs Amount is deducted from checking account Not a charge card, must have the funds available NOW

29. Charge cards vs Credit Cards Charge Cards must be paid in full every month (AMEX) provides convenience of not having to pay for purchases with cash, but balance may not be carried over month-to-month Credit Cards operate on a credit limit and revolving basis if not paid-in-full within grace period, interest is charged on the remaining balance

30. Paper or Plastic? Credit Cards Interest rate fees--17% - 21% for students Annual fee Over the limit fees Late payment fees Transaction fees

31. Adding it all up… Interest savings between lowest/highest payment = $1,570; time saved = 75 months or 6.25 years!

32. Signs of High Risk Credit Card Use Average credit card balances over $1,000 Owning four or more credit cards Carrying a balance each month Using credit cards to charge tuition or fees

33. Credit Card Don’ts Don’t get more than one Don’t use them for cash advances Don’t use them to pay for basics: rent, groceries, etc. Don’t charge more than you can pay off in a month Don’t let banks increase you credit limit

34. Credit Card Do’s Use a debit card vs a credit card Use a card with no annual fee and low interest rates Know all of your card’s hidden fees Always pay more than the minimum each month Pay on time, all the time

35. Good vs Bad Debt Good debt is debt that returns something of long term value Bad debt is often categorized as short-term “feel good” debt and may be unwise purchases that you can’t afford and don’t really need.

36. Debt Warning Signs Living from paycheck to paycheck Making late, minimum, or skipping payments Having credit cards at or near your credit limit Arguing with family or friends over your spending habits Being unsure of how much you really owe Using cash advances to pay your bills Having your credit card declined Having increasingly more of your income paying for debts each month

37. Relationship-Secured Support FAMILY & FRIENDS Keep open lines of communication Treat family members and financial members w/ great respect

38. bankruptcy Goes on your record for 10 years May hurt parent’s credit rating if co-signed Can keep you from getting a mortgage for a house, credit at reasonable rates, a job, or from being promoted It does not discharge student loans, child support, secured debt, or income taxes

39. Solutions Develop a budget & live within your means Redefine the good life your own way List your short-term financial obligations and goals for each month, for the year, and future 5 years Focus on paying on the balance with the highest interest rate Lose the credit cards Consolidate student loans

40. Become a Peer educator! What is Financial Cents? Opportunities to Get Involved -Marketing Team, Collaboration Team, Junior Achievement Why Get Involved? –Enhance your leadership skills –Build teamwork –Build your resume –Help the NIU community