Your Financial Education Guide The Basic

Your Financial Education Guide

The Basic ABC’s of Finance

• Income• Opening Accounts• Creating a Budget• Financial Goals

Money Management

Borrowing Money• Credit Cards• Loans• Debt Management

Money Management

You Must Learn How To Manage Your Money Responsibly

Income

1. Allowance

How Do You Generate Income?

• Paycheck• Gross / Net

2. A Job

1. Gross: $452.43

3. Net: $273.85

2. Minus Deductions

• Fed. Income Tax• Social Security• State Income Tax• Medical

1.2.

3.

3.

Income

Now That You Have Money….What Are You Going To Do With It?

SPEND IT!

SAVE IT!

MANAGE IT!

Opening An Account

Types Of Accounts

Checking: Manage Day To Day Activity

Under 18? Joint Checking Account

Savings: Put Money Away For A “Rainy Day.”

Let Your Money Earn Money!

Opening An Account

Where Do I Go?

• Financial Institutions

• Banks

• CREDIT UNIONS!

Opening An Account

What Do I Need?2 Forms Of Identification:• License• Social Security Card• Birth Certificate• State ID Card

Minimum Deposits:• $50 For Checking• $5 For Savings

Opening An Account

What Do I Get?

• Check Card (ATM, Debit, Point Of Sale)

• Check Book (Keep It Balanced)

• Online Account Access

• Monthly Statements

1. Date - The Date the Check is Written2. Maker - Person / Business Who Writes the Check (The Name will be Printed on the Check) 3. Payee - Person / Business to Whom the Check is Written 4. Signature Line 5. Written Amount - The Amount Written in Numbers 6. Legal amount - The Amount Written in Words 7. Check number - Printed on the check and appears in the MICR line on the Bottom of the Check 8. Banking information - The Name of the Institution and The Association Number.9. Account and Routing Numbers - Appear on the Bottom of the Check in MICR Line.

Keep Track of Your Balance

1. Day to Day 2. Monthly Statement

Creating A Budget Vs.Income Expenses

Monthly Income Expenses Cost

$1,000

Food:Groceries

Dining

Car:PaymentInsurance

Gas

MISC:Clothing

Entertainment

Utilities:Gas

ElectricPhoneCable

Internet

$300$80

$120

$300$70

$20$20$60$60$40

$100$80

Rent:$3,000

Total: $2,250

Monthly Balance

+ $750

Financial Goals

What Do I Want Or Need?

How Am I Going To Pay For Them?

AND

Financial GoalsGoals to Aim For

● Rent ● Engagement Rings● College / School ● Wedding● Computer ● Home● Car ● Children● Entertainment ● Own Business● Travel ● Retirement

Short Term Long Term

Borrowing Money

How Do I Borrow Money?

1. Go To A Financial Institution

2. Apply For The Following Loans:

• Credit Cards• Student Loan• Personal Loan (Used for Any Purpose)• Car Loan• Business Loan• Home Loan

Credit CardsBe Careful Of Card Offers

(They’re Everywhere!)

• Mailers

• Department Stores

• Financial Institutions

Credit Cards

What Effects My Score?

Credit Score:

You’re Not Borrowing Money! You’re Getting A Line of Credit!

• Establishing Credit (Put Bills In Your Name / Dept. Store Credit)• Paying Bills On Time• Maintaining Accounts• The Ratio Between Money Owed To Credit Limit.

The Higher the Score the Better:

• Effects Your Ability to Borrow

• Can Borrow More • Lower Interest Rate.

SCORE!800700600 500

Credit Cards

Benefits Of Good Credit

1. Can Get A Higher Credit Limit!

2. Get A Lower Interest Rate!

YOU HAVE TO PAY THE CREDITORS BACK WITH YOUR MONEY!

Credit Cards

What Is An Interest Rate?

The Increased Percentage Rate That You Have To PAY BACK To Creditors.

Credit Cards

How It Works

• Apply For Card

• Get Card

• Use Card To Make Purchases

• Get Monthly Bill / Statement With Card Usage, Balance, Limit, Minimum Payment, Due Date

• Pay At Least The Minimum Requirement By Due Date

(Insert: Credit Card Statement)

1. Account Number2. New Balance3. Due Date4. Minimum Payment5. Transactions6. Account Summary7. Finance Charges8. Percentage Rate

1.

2.3.

4.

5.

6.

7.

8.

Credit CardsDO’S:

Do Make Your Payment On Time

Do Pay More Than Your Minimum

DON’TS:

Don’t Be Late On Your Payments ● You’ll Be Charged A Fee

● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score

Don’t Maximize Your Limit

THIS LEADS TO BAD CREDIT!

LOANS

Applying For A Loan:

You Must Show That You’re A Qualified Borrower.

AND

Show You Have The Ability To Pay Back Your Loan!

LOANS

YOU WANT!

1. A LOW Interest Rate

2. A Monthly Payment You Can Afford.

How Do I Get This?

LOANS

To Get A Good Loan You’ll Need:

• Capital (Down Payment / Collateral)• Proof Of Income• Excellent Credit Score

Note: A Co-Signer (Parent / Spouse) Can Help YOU!

LOANS

Look For:• First Time Borrower’s Programs

Watch OUT For:• Teaser Rate Programs

Example: No Money Down / 0% Interest.

Pay Attention To:• Terms And Conditions• Default Rates

LOANSWARNING! WARNING! WARNING!

Adjustable Rate

Your Loan May Be Affected By Terms And Conditions!

Fixed Rate Vs.Interest Rate Doesn’t Change Interest Rate Starts Low

Adjusts To A Higher Rate

Monthly Payment Will Increase

LOANSDO’S:

Do Make Your Payment On Time

Do Try To Pay More Than Your Minimum

DON’TS:

Don’t Be Late On Your Payments ● You’ll Be Charged A Fee

● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score

Don’t Default On A Loan

THIS LEADS TO BAD CREDIT!

DEBT MANAGEMENT

With Loans You Will Have Debt To Pay Back.

DEBT MANAGEMENTTips To Manage Debt

• Pay More Then The Minimum Requirement

• Refinance Your Loan For A Better Rate

• Consolidate Your Loans Into One Payment

And Finally…

• Create A Repayment Plan (Payoff A Loan Before Taking on Another)

DEBT MANAGEMENT

PAY FOR IT

IF YOU CAN AFFORD IT….

WITH CASH!