1. Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

3. True or False? Most millionaires inherited their wealth. Most millionaires earn more than $500,000 per year. College graduates earn about twice what high school graduates earn over a 40-year work life. People who are self-employed rarely become millionaires. All millionaires wear expensive clothes. Millionaires usually drive new cars. Many millionaires drop out of college to start work. It is impossible to save enough to be a millionaire.

4. Wealth is…

5. Assets Anything an individual or business owns that has commercial or exchange value Liabilities Money an individual or organization owes; same as debt Net Worth The difference between the total assets and total liabilities of an individual

6. Sandra’s Balance Sheet DescriptionAmount Owed to her mother for extra cell phone charges$250 Present value of a savings bond that her uncle gave her$150 Balance on a car loan$1,500 Savings account from summer job$750 DVD collection$200 1999 car$3,500 Balance due on prom dress$200

7. Sandra’s Balance Sheet AssetsLiabilities Present value of a savings bond that her uncle gave her $150 Owed to her mother for extra cell phone charges $250 Savings account from summer job $750 Balance on a car loan $1500 DVD collection $200 Balance due on prom dress $200 1999 car $3500 Total assets $4600 Total liabilities $1950 Sandra’s net worth = $2650

8. Using Credit Wisely Think about your balance sheet… Debt increases your liabilities – does it increase your assets? Think about your budget… How will the payments affect your budget? What other spending will you sacrifice to pay off the debt?

10. Goals You might have a goal to simply increase your net worth, but most people have a more specific goal in mind. Once you set a goal, you have to evaluate the saving and the income required to achieve the goal.

11. Goals Buy a new car Go to college Buy a used car Go to the senior prom Rent an apartment Take a trip Buy a house Buy a new HDTV

12. Financial Personality Types

13. Sam’s Two-Week Budget Spending CategoriesExpensesChangesNew Eating out at lunch60 Movie night with friends40 Dinner with friends20 Football game and snacks10 New CD20 New item of clothing50 Gas70 Soft drink from vending machine10 Total Expenses$280

14. Sam’s Two-Week Budget Spending CategoriesExpensesChangesNew Eating out at lunch60Take his lunch24 Movie night with friends40 Every other week 20 Dinner with friends20Eat out once10 Football game and snacks10 Music downloads20Reduce10 New item of clothing50Only one25 Gas70 Soft drink from vending machine10Only one1 Total Expenses$280$170

16. Save and Invest Build a strong financial foundation first. How much risk are you willing to take? Think about your time horizon and other factors. The sooner you start, the better (and easier)!

18. Applying for Credit Read the fine print! Look for: –Finance charges the dollar amount you pay to use credit –Annual percentage rate (APR) the percentage cost of credit on a yearly basis –Fees can include loan fees, annual fees, late- payment fees, etc.

19. Credit Reports Credit reporting company Credit report Credit score

20. Reviewing Your Credit Report Three major credit reporting companies –Equifax –Experian –Trans Union One website for free credit reports www.annualcreditreport.com www.annualcreditreport.com

21. Identity Theft It's not too early to pull your credit report! Carefully review the report and correct any inaccuracies. Don't carry your Social Security card in your wallet! Shred any papers that contain personal information before throwing them away.