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Financial Head Start
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Why care?
It’s Your MONEY
What would YOU like to start saving for?
It’s never too early to plan ahead…
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Where to begin
Create a Budget and Goal with an Expense Worksheet
An Expense Worksheet will keep track of:OExpensesOActual Amount SpentOSavings and Losses
What is a Budget?
• An important step to Financial Security
• About choices – choosing how to make and spend money
Steps to Preparing a BudgetStep 1: Review your income and expensesStep 2: Keep track of daily spendingStep 3: Find ways to decrease spending
Step 1: Income…
Income comes in the form of:
• Allowances• Wages from a job• Miscellaneous work • Interest and dividends from investments
Step 1: ...and ExpensesExpenses: items you pay for each month:
• Housing and car payments• Insurance• Food and clothing• Utility bills• Personal, child or pet care• Eating out or other entertainment• Educational costs, etc.
Fixed Expenses:Do not change from month to month
Flexible Expenses: Often change from month to month
You may have control over how much you pay You may shop around for the best value before committing to any expense
Classifying Expenses
Step 2: Keep Track of Daily Spending
Do you know where your money goes each month?
Have you ever had any money and then spent it?
Do you remember exactly what you bought?
Control Your Money!
• Know where your money goes• Keep a personal spending diary• Cut expenses to save for goals
Monthly Income and Expense WorksheetMy Income My Expense
Wages $ 1,500 Fixed Expenses:
Public Assistance Rent/Mortgage $ 500
Allowance/ other income $ 200 Property taxes/Insurance $
Interest/Dividends $ 20 Water/Sewage $ 20
Social Security Electricity $ 50
Other Gas $ 100
Auto Loans/Bills/Misc. $ 200
Car Insurance/Health Insurance $
Gross Income $ 1,720 Food/other household items $ 100
Less Taxes and other deductions (estimated) $ 220 Children's pocket money $
Available Income $ 1,500
Flexible Expenses:
Clothes $ 50
Pets $ 50
Telephone/Internet/Cable $ 20
Travel costs
School meals $ 100
Laundry/other amenities $ 30
Newspaper
Income available $ 1,500 Outside meals $ 100
Less: Total Expenses $ 1,360 Cell phone $ 40
Net Disposable Income $ 140 Total Expenses $ 1,360
Step 3: Find Ways to Decrease Spending
You can decrease spending by:
• Not shopping “for fun”
• Remembering your savings goals
• Buying only what you need
• Paying your bills on time to avoid extra fees and charges
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It all adds up!o 1 Starbucks® drink @ $3.50
o $3.50 x 7 days = $24.50o $3.50 x 365 days = $1,227.50
o 1 Sonic® burger @ $4.25o $4.25 x 7 days = $29.75o $4.25 x 365 days = $1,551.25
o 1 carton of cigarettes @ $32.00 o $32.00 x 12 months = $384.00o $32.00 x 26 weeks = $832.00
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Needs vs. WantsO Write down needs and wants, look carefully at what
is written down.
O Think about what’s really important to you and what has lasting value.
O Do you really need or want everything on your list?
O Are some needs really wants?
Now what?
What do I do with the money I save?
How do I pay bills?
O Checking accounts are used to pay bills and buy goods.
O Saving accounts are used for saving money and earning interest.
Types of Bank Accounts
Advantages of Maintaining a Bank AccountO Money in a bank account is safe, secure, and
convenient O Pay bills onlineO Earn interest – build your savingsO Build credit (credit score)
Make sure your banking institution is FDIC insured
!((F
(FDIC) Federal Deposit Insurance Corp
Banking ServicesBanks offer their customers many different ways to access their services:
O A branch is a retail location where a bank offers face-to-face service to its customers.
O ATM (automated teller machine)
O Online banking allows you to conduct nearly all of your banking transactions.
O Mobile banking allows you to use your cell phone to conduct simple banking transactions.
Checking AccountA checking account can help you manage your daily finances and make sure you’re staying on track.Benefits of a checking account:O Writing checks or using a debit card is generally safer than carrying cash.O Making payments through a checking account is much less expensive than paying
for money orders and cashier’s checks.O Direct deposit from your employer into your checking account is the easiest way to
manage your paycheck.O Paper and/or online account statements help you track your income and expenses.O You can make purchases easily and access cash when you need it.O Most checking accounts come with ATM cards that allow you to get cash from
ATMs.
Checking AND Saving AccountsTypes of accounts
O Basic checkingO Interest-Bearing accountsO Money Market AccountsO Student and Senior CheckingO SavingsO Make sure to pay yourself first – don’t wait to save what is left over at
the end of the month. You can do this easily by setting up an automatic transfer so that every month or with every paycheck, a certain amount of money goes directly to your savings account.
Important TermsO Deposit – To put money in the bankO Withdrawal – To take money out of the bankO Balance - How much money you have in the
bankO Overdraft - Withdrawing more money than
you have in your accountO Fees - Money charged for services
Be Smart!O Establish financial goals
O Develop a realistic budget
O Prepare for the unexpected
O Balancing your checkbook
O Save, save, save.
O Pay on time
O Be smart about credit
Credit is your…
O Reputation as a borrowerO Tells others how likely you are to repay your
loans based on information about your borrowing history
O Information comes from your credit reports
What is Credit?
FICO is the best-known and most widely used credit score model in the U.S.
Fair Isaac Corporation – Risk ScoreFICO Score is made up of:
What is FICO?
Establishing and Building Credit
Credit Cards - Revolving credit “borrowed” to make purchases at most merchants/businesses. Monthly payment including interest must be paid back to creditor. Get a co-signer - Lenders will consider the co-signer’s existing credit when approving.Apply for a department store credit card - These types of cards are sometimes approved for people with no credit history.
ALWAYS PAY ON TIME!
Questions?
