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Transcript of Financial Literacy
Many are unable to balance a checkbook & most simply have no insight into the basic survival principles involved with earning, spending, saving & investing
source: Jumpstart Coalition 76% of college students wish they had more help preparing for their financial future. (Hartford Financial Services Group, 2007).
53% of parents agree that their child thinks “money grows on trees”. (Building Teen Personal Finance Skills a Top Worry for Parents, Visa).
Only 1 in 5 students claim to have been “very well prepared” for managing their money on campus. (Key Bank and Harris Interactive, August 2006). 2008 National Freshman Attitudes Report from Noel-Levitz:
“I have financial problems that are very distracting and troublesome.” (28.7%)
“I am in a bad financial position, and the pressure to earn extra money will probably interfere with my studies.” (18.2%) Develop a financial plan – Set realistic goals for financing and completing your education.
Make a budget and stick to it.
Borrow only what you need.
Pay yourself first (put money in your savings account), after expenses. Make smart choices about spending and saving Needs: Necessities for everyday living and goal attainment.
What are your everyday needs (not wants)?
What are your educational needs?
Wants: Things that are nice to have, things that gratify some desire or urge.
What things do you want (not need)?
What do you need to survive while in school versus what might you merely want or desire? Develop a financial game plan Financial Fact 1: Getting an education is expensive.
Financial Fact 2: Know what you’re financing. Estimate your income in your chosen career.
Financial Fact 3: Whatever you borrow, you have to pay back.
Financial Fact 4: Your credit history stays with you for a very long time. Borrow only what you need for school Pay off your credit balances in full every month.
If you can’t pay your balance in full, make at least the minimum payment.
Pay your bills on time.
Undercharge. Don’t charge as much as your limit allows. How do I establish good credit? Making late payments.
Exceeding the credit limit on your credit card.
Writing bad checks.
Defaulting on a loan.
Filing for bankruptcy. How do I lose good credit? You may receive a free copy of your credit report from each of the three major credit reporting agencies each year.
Credit reports from:
Experian. How do I access my credit report? You may not be able to rent an apartment.
You won’t be able to buy a house.
You may not be able to purchase or lease a car.
You may not be able to obtain other forms of credit.
If you are able to get credit, you will pay very high interest rates.
You can be turned down for a job.
It’s like getting a bad grade – it stays on your permanent record. What happens when I have a bad credit report? Buying Choices. Life issues: education, housing, employment, children, medical, etc. Some Statistics What is a credit score and what does it say about me as a consumer?
Teens spend $175 billion dollars a year. 70% is their own money.
Teenage Research Unlimited
Last year girls spent $37 billion on clothes, cosmetics, and accessories.
Rand youth poll Power vs. Pawn
“Once teenagers enroll in college they receive an average of 11 credit card solicitations a month and run up an average monthly debt of almost $3,000.”
“Credit card companies reel them in with free water bottles and teaser rates of 2.9%, which jump to 16.5% and soar to 24.5 % after a few late payments.”
Dr. Lewis Mandell, SUNY/Buffalo Head
of nationwide survey of financial literacy Credit cont.
Women earn 80 cents for every dollar a man earns
- Bureau of Labor Statistics Financial competency is, in the best sense, a vehicle for kids to manifest their values, their character, and their substance. It’s a means of demonstrating self-reliance and discipline-in short, a way of playing out the essence of who they are and who they will become.
-Independent Means, Inc Conclusion Set up a system for paying bills on time to establish a strong credit score
Keep track of income and expenses
Maintain a standard of living and save for goals with a budget
Start while it’s simple: taxes, insurance, borrowing, real estate, investing, retirement and estate planning are to come. Keep track of spending and establish a budget Less than 5% of high school and college students learn basic financial skills such as saving, budgeting and investing.
It amazes me that a person can go through twelve years of school, four years of college and then on to graduate study, and nowhere along the way were they required to take a single class on personal finance.
-Suze Orman, Women & Money Some Realities Simple Monthly Budget Keep track of income, expenses on a monthly basis.
Income: money earned, allowance,
Expenses: rent, food, school supplies, clothing, entertainment etc.
Income-expenses= what you can spend or save
Software resources for keeping a budget or use a notebook.
Read personal finance books by financial planners, such as Suze Orman. Financial Literacy Quiz
Keep an eye on your purse, wallet and backpack.
Don’t carry your social security card.
Never share PIN, passwords or mother’s maiden name.
Memorize important numbers as if they were passwords.
(PIN, SS#, Student ID)
Use your own bank.
Write checks with gel pens.
When the money’s gone, go home! Be safe Campus Trends Save early, save often.
If you get a tax refund or a raise, save some of it.
Pay off your credit card balances.
Shop with a list and stick to it.
Don't buy any new clothes until you've paid off your current wardrobe.
Eat more meals at home.
Shop for less expensive insurance.
Drop subscriptions to publications you don't read.
Other ways to save money? Ways to Start Saving Ask about student discounts.
Use coupons/preferred cards.
Consider a roommate.
Purchase private label.
Brown bag your lunch/avoid vending machines.
Go to an office supply store vs. campus bookstore.
Look for end-of-term bargains on used dorm furniture or graduating seniors.
Check out websites like half.com for deep discounts on new and used textbooks.
Look for free or inexpensive entertainment.
Ride your bike or walk. Every Penny Counts! Debit Card
Operates like cash or personal check.
Withdrawn next business day.
Does not affect credit score.
Never use on-line.
Borrowing money that be will paid back.
Does affect credit score.
Shop on-line. Credit Cards Designed for people with income.
Why solicit students?
Higher risk = higher rates & fees= more profit for card issuer.
Students pay higher interest rate to establish credit.
Minimum payment increase- pay more than min.
Look for cards with low interest rates Intended for short-term borrowing.
Not for carrying a balance long-term.
Have a repayment plan in mind beforehand.
Always pay more than the minimum!
Pay off every month when possible.
Pay at least 2x the minimum.
Always pay on time!
Avoid late fees.
Pay online for convenience. Guidelines for using credit cards: Look for the lowest Annual Percentage Rate.
Understand pre-approved and low introductory offers.
An annual fee is charged to your card once a year whether you use the card or not.
The average late fee is $29
Finance charges apply for late payments & exceeding monthly balances.
Perks Choosing your first card The Minimum Payment Trap Numerical expression based on a statistical analysis of a person's credit files.
Likelihood that the person will pay his or her debts.
Fair, Isaac & Company (FICO®)
300 - 850 What is a Credit Score? Payment History (35%) Amounts Owed (30%) Length of Credit History (15%) Type of Credit Used (10%) New Credit (10%) What Factors Affect a FICO® Score?
Delinquencies (late payments) reduce your credit score.
A defaulted student loan (270 days delinquent) will stay on your credit report for ten years! How does my student loan affect my credit? Create fraud alerts on credit reports.
Blocks information that is a result of identity theft.
Obtain information about transactions that resulted from identity theft.
One free disclosure every twelve months. Identity Theft Rights Summary Create a credit fraud alert on your report
Never give your card number to unfamiliar companies or on-line sites without a security feature (phishing).
Don’t leave receipts, statements or other account information lying out for everyone to see.
Be careful when disposing of mail order catalogs that include a customer number.
Shred anything containing personal information.
Use a secure mailbox.
Use virus and security protection on your computer.
Sign your card as soon as you receive it.
Limit the number of credit cards you carry.
Report a lost or stolen card or billing error immediately.
Transactional Theft vs. Identity Theft
It is estimated that $2-3 billion of the more than $1 trillion U.S. consumer credit card debt is due to credit card fraud losses – Experian General Personal Finance Information
Financial Aid Information and Budget information
Scholarships (Reduce loan debt)
Get your credit report
www.annualcreditreport.com Relevant Web Sites Tips to Reduce Credit Fraud Debit card vs. Credit card Review Be safe with your information and identity.
Plan a budget (income-expenses= what you can spend/save)
Open a savings account.
Know when to use debit vs. credit cards.
Pay your bills on time.
Low interest rates on any loans, credit cards, etc.
KNOW the interest rates for all loans, credit cards. Credits 1. Mrs. Tighe
2. Ms. Gergen
3. Illinois Student Assistance Commission
6. igrad.com presented by Ms. Zapata