1. Financial Fitness for Life Training Conference Becoming a Smart Money Manager University of Illinois at Urbana-Champaign College of Agricultural, Consumer and Environmental Sciences United States Department of Agriculture Local Extension Councils Cooperating University of Illinois Extension provides equal opportunities in programs and employment.

2. Funding for this workshop is provided by: National Council on Economic Education US Dept of Education University of Illinois Extension

3. Instructors Dr. Angela Lyons, Assistant Professor, University of Illinois Urbana-Champaign (217) 244-2612; anglyons@uiuc.edu Debra Bartman, Extension Educator, Quad Cities Center (309) 792-2500 (x217); dbartman@uiuc.edu Patricia Hildebrand, Extension Educator, Effingham Extension Center (217) 347-5126; phildebr@uiuc.edu

4. Anecdotal Stories from Real Students

5. Objectives Introduce: (1) Financial Fitness for Life (2) Saving and Investing (3) Budgeting (4) Credit Reports and Credit Scores (5) NEFE HSFPP Experience activities to use in the classroom Answer questions about curriculum and other resources

6. You will receive… Curricula with lessons and activities to use in the classroom 6 CPDU’s Network of colleagues to share experiences Resources available at U of I Extension

7. Financial Fitness for Life Overview: Teacher Guide Student Workouts Parents’ Guide CD-Rom and web links

8. http://fffl.ncee.net

9. 5 Themes and 22 Lessons: The Economic Way of Thinking Earning Income Saving Spending and Using Credit Money Management

10. Each lesson includes: Fitness Focus (lesson description and objectives) Workout (warm-up, exercise, cool down) Visuals Student Exercises Family Activities

11. Meets national and most state content standards in 4 critical areas: Economics Language Arts Mathematics Personal Finance

12. FFFL Part 1 (Lessons 1, 3, 8, 10, and 14) How to Really Be a Millionaire

13. The Millionaire Game The Rules: For each statement, answer “TRUE” or “FALSE.” For each correct answer, give yourself 5 points. For each incorrect answer, take away 5 points. For any 5 statements, you may use your “Millionaire” card. If you answer correctly, you receive 10 points. If not, you lose 10 points.

14. Question 1: Most millionaires are college graduates. Let’s Get Started….

15. Answer 1: TRUE

16. Question 2: Most millionaires work fewer than 40 hours a week.

17. Answer 2: FALSE

18. Question 3: More than half of all millionaires never received money from a trust fund or estate.

19. Answer 3: TRUE

20. Question 4: More millionaires have American Express Gold Cards than Sears cards.

21. Answer 4: FALSE

22. Question 5: More millionaires drive Fords than Cadillacs.

23. Answer 5: TRUE

24. Question 6: Most millionaires work in glamorous jobs, such as sports, entertainment, or high tech.

25. Answer 6: FALSE

26. Question 7: Most millionaires work for big Fortune 500 companies.

27. Answer 7: FALSE

28. Question 8: Many poor people become millionaires by winning the lottery.

29. Answer 8: FALSE

30. Question 9: College graduates earn about 65% more than high school graduates earn.

31. Answer 9: TRUE

32. Question 10: If an average 18-year-old high school graduate spends as much as an average high school dropout until both are 67 years old, but the high school graduate invests the difference in his or her earnings at 8% annual interest, the high school graduate would have $5,500,000.

33. Answer 10: TRUE

34. Question 11: Day traders usually beat the stock market and many of them become millionaires.

35. Answer 11: FALSE

36. Question 12: If you want to be a millionaire, avoid the risky stock market.

37. Answer 12: FALSE

38. Question 13: At age 18, you decide not to smoke and save $1.50 a day. You invest this $1.50 a day at 8% annual interest until you are 67. At age 67, your savings from not smoking are almost $300,000.

39. Answer 13: TRUE

40. Question 14: If you save $2,000 a year from age 22 to age 65 at 8% annual interest, your savings will be over $700,000 at age 65.

41. Answer 14: TRUE

42. Question 15: Single people are more often millionaires than married people.

43. Answer 15: FALSE

44. Lesson 8: Spending vs. Saving begins with saving, then investing. The road to wealth….

45. Managing money well means taking things one step at a time.

46. The factors that affect how much savings grow are: Time The earlier or longer you save, the more savings you will have. Investment Size The more you save each year from your income, the more savings you will have. Rate of Return The higher the interest rate or rate of return, the more savings you will have.

47. Time Value of Money The earlier you save, the more $$’s you will have. Exercise 8.2 A Tale of Two Savers

48. Cool Million calculator: www.myfico.com/CreditEducation/ Calculators/Millionaire.aspx

49. Other Calculators: Mortgage Auto Loan Debit and Credit Cards Saving Personal Finance Investment Retirement

50. Exercise 8.3 Why It Pays to Save Early and Often Or, how long it takes for savings to grow to double your money Divide 72 by the interest rate. Example: 72  6%  12 years Rule of 72:

51. Activity (Exercise 10.1): Investment Bingo Free Lunch

52. FFFL Lessons Grades 9-12: Lesson 1, How to Really Be a Millionaire Lesson 3, Decision Making Lesson 8, What’s the Cost of Spending and Saving? Lesson 10, Investment Bingo Lesson 14, All About Interest Grades 6-8: Lesson 7, p. 61-64, Types of Savings Lesson 8, p. 65-81, Simple and Compound Interest

53. FFFL Part 2 (Lesson 20) Budgets are Beautiful!

54. Creating a Spending Plan (“Your Financial Plan”) Identify your financial goals. Determine the time frame for your budget: annual, by academic term, monthly. Take stock of where you’re currently at. Estimate your available financial resources. Calculate your expenses. Do the math.

55. Subtract expenses from resources. Decide how much to borrow. Borrow only what you can afford to pay back. Note that your loans will be repaid with your FUTURE income.

57. Set Your Financial Goals Types of goals Short-term (1 year or less) Medium term (1-5 years) Long-term (5 years or more) Identify goals and write them down. Prioritize your goals. Develop strategies to achieve your goals. Reassess your goals periodically. ACTIVITY: Financial Goal Worksheets

58. Identify and Prioritize Your Goals What do you want to buy after you graduate? How soon do you hope to pay off any student loan or other education-related debt you have incurred? What kind of lifestyle do you want? Where do you want to live? What are your hopes for a family? Where do you want to work? Where do you want to retire? What kind of lifestyle do you want in retirement?

59. When creating a spending plan…. Set limits and prioritize. Know your limits. Learn by doing! Get some practical experience.

60. When estimating your resources…. REMEMBER: Borrowed funds are NOT your resources!!!

61. When calculating expenses…. Be honest and realistic. Distinguish between “needs” and “wants.” Consider fixed and variable (flexible) expenses. Pay yourself first (PYF)

62. Can you cut expenses? Find one or more roommates to share living expenses. Eat at cheaper places when dining out; cook at home. Have only one phone. Dress for less. Clip and use coupons. Don’t buy a new car. Beware of buying for convenience. Avoid credit card debt.

63. Saving Dollars When You Don’t Have a Dime to Spare Break a habit! Do without! Don’t buy! ItemHow OftenPrice of EachSavings/Year Eating Out5 days/week$ 6.50$ 1690.00 Magazine1/week4.00208.00 Soft drink/candy bar/chips1/day1.00365.00 Tank of gas1/week24.001248.00 Lottery ticket2/week2.00208.00 Cigarettes1 pack/day4.001460.00 Alcoholic Beverage1/day2.00730.00 Cable1/month45.00540.00 Phone extras (call waiting, caller ID, voice mail, etc.)1/month11.00132.00 Gifts (charity/family/friends)2/month20.00480.00 Total $7061.00

64. Budgeting Really Does Work A successful budget should: Help increase savings Inhibit impulsive spending Determine what you can afford Identify expenses that can be reduced Repay debt EVIDENCE: BYU Financial Path to Graduation

65. It’s not all about finances…. Emotions and decision making Family communication Purpose and value of money Financial habits and financial socialization

66. Methods for Tracking Spending Personal financial software programs (Quicken or Microsoft Money have built-in budget- making tools that can create your budget for you.) PowerPay (Utah State University) Worksheets / spreadsheets Online budget planning calculators Envelope method

67. www.powerpay.org

68. PowerPay Spending Plan PowerSave Calculators Education Center

69. Basic Spending Plan Extended Spending Plan

70. PowerSave

71. Calculators

72. Education Center

73. Access Group, Inc. http://www.accessgroup.org/Student-Loans/learn-about-loans/wise-borrower-tutorial.htm

75. Calculators Interest Rate Comparison Calculator In-School Budget Calculator Loan Repayment Calculator Out-of-School Budget Calculator

76. Money 101: Making a Budget http://cgi.money.cnn.com/tools/instantbudget/instantbudget_101.jsp

77. www.finaid.org/calculators College Cost Projector Savings Plan Designer Expected Family Contribution and Financial Aid Calculator Loan Calculators Budgeting Calculators

78. FFFL Lessons Grades 9-12: Lesson 20, p. 98-101, Managing Your Money Grades 6-8: Lesson 15, p. 128-134, Managing Cash

79. An Activity The Bean Game! A simulation game where you learn how to prioritize and make spending choices based on what’s important to you.

80. Iowa State University Extension http://www.extension.iastate.edu/finances/personal/childrenmoney/Youth.htm Spending Game Allowance Game

81. http://www.extension.iastate.edu/Publications/PM1103.pdf

83. http://www.extension.iastate.edu/Publications/PM1776.pdf

85. Credit Reports and Credit Scores FFFL Part 3 (Lessons 11, 12, 13)

86. How credit can affect your everyday life… Getting a job Renting an apartment Getting a loan Buying a car Paying insurance Getting married!!!

87. Take the Credit Challenge! Myths and Realities of Credit The Rules: For each statement, answer “TRUE” or “FALSE.” For each correct answer, give yourself 5 points. For each incorrect answer, take away 5 points. For any 5 statements, you may use your “CREDIT” card. If you answer correctly, you receive 10 points. If not, you lose 10 points.

88. Question 1: Credit card companies only approve credit limits that an individual is able to afford. Let’s Get Started….

89. Answer 1: FALSE

90. Question 2: After you take out a loan, a lender is not required to provide information to credit reporting agencies about the loan and your history of paying it back.

91. Answer 2: TRUE

92. Question 3: Approximately 10% of an individual’s credit score is determined by their payment history.

93. Answer 3: FALSE

94. Question 4: Individuals are eligible to receive a free credit report once a year from each of the three credit reporting agencies.

95. Answer 4: TRUE

96. Question 5: Credit reports contain information on where an individual has lived, past employers, and annual income.

97. Answer 5: FALSE

98. Question 6: A potential employer is permitted to see an individual’s credit report without his/her consent.

99. Answer 6: FALSE

100. Question 7: Requesting a copy of your own credit report can negatively affect your credit score.

101. Answer 7: FALSE

102. Question 8: Negative information, such as filing for bankruptcy, can remain on a credit report for up to 10 years.

103. Answer 8: TRUE

104. Question 9: By law, if an individual is unable to resolve a disputed item with a credit reporting agency, they have the right to delete the information from their credit report.

105. Answer 9: FALSE

106. Question 10: If an individual resolves an error on their credit report with one credit reporting agency, the same error will automatically be corrected by the other credit reporting agencies.

107. Answer 10: FALSE

108. What is a credit report? An evaluation of your credit experience. Similar to a report card. Your credit record includes: Personal information Open lines of credit Payment history Inquiries Public record and collection items (bankruptcies, foreclosures, financial judgements)

109. What info is not in your credit report? Race Religion Medical history Political affiliation Criminal records Annual income Checking or savings accounts

110. Who has access to your credit report? Creditors Employers Insurance companies Certain professional organizations Courts IRS Collection agencies (i.e., CCCS)

111. What is a credit score? A number that summarizes your level of creditworthiness. Your score depends on the credit scoring model used. FICO scores are the most common. Scores range from 300-850. Averages are between 690 and 740. Visit www.myfico.com for more information.www.myfico.com

112. FICO Score Ranges 20% are above 780 20% are between 740-780 20% are between 690-740 20% are between 620-690 20% are below 619

113. FICO Credit Score Estimator: www.myfico.com/ficocreditscoreestimator

114. Your credit score is used to set the “price” of your loan. Based on:

115. FICO Score Simulator: Pay Bills on Time Pay Down Balances on Credit Cards Pay Down Delinquent Balances First Seek New Credit Transfer Credit Card Balances Miss Payments Max Out Credit Cards

116. Other Calculators: Mortgage Auto Loan Debit and Credit Cards Saving Personal Finance Investment Retirement

117. Understanding Your Credit Score www.myfico.com

119. Checking Your Credit Report 3 major credit bureaus: Equifax (Beacon score) (www.equifax.com, 1-800-685-1111)www.equifax.com Experian (PLUS score) (www.experian.com, 1-888-397-3742)www.experian.com TransUnion (Empirica score) (www.transunion.com, 1-800-888-4213)www.transunion.com

120. Obtaining a *FREE* Credit Report www.annualcreditreport.com

121. Annual Credit Report Frequently Asked Questions Contact Us About Us Fraud Alert

122. An Activity Reading a Credit Report

123. Sample Credit Report: http://experian.com/credit_report_basics/pdf/ samplecreditreport1.pdf

124. FFFL: Evaluating Credit Reports Grades 9-12: Ex. 13.1, p. 76 Ex. 13.2, p. 79 Illustration 13.1, p. 80-83 Grades 6-8: Lesson 13, p. 115-118 Ex. 13.1A - 13.1E, p. 123-131

125. Grades 9-12: Ex. 13.3, p. 84-85 Ex. 12.1, p. 74-75 Grades 6-8: Lesson 13, p. 115-118 Ex. 13.1A - 13.1E, p. 123-131 FFFL: Evaluating Credit Applications

126. Helpful Resources University of Illinois Extension Consumer and Family Economics www.ace.uiuc.edu/cfe National Council on Economic Education www.ncee.net Illinois Council on Economic Education www.econed-il.org

127. University of Illinois Extension Consumer and Family Economics www.ace.uiuc.edu/cfe

128. NCEE www.ncee.net

129. Contact Information Dr. Angela Lyons, Assistant Professor, University of Illinois Urbana-Champaign (217) 244-2612; anglyons@uiuc.edu Debra Bartman, Extension Educator, Quad Cities Center (309) 792-2500 (x217); dbartman@uiuc.edu Patricia Hildebrand, Extension Educator, Effingham Extension Center (217) 347-5126; phildebr@uiuc.edu

130. Questions