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Financial Literacy

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by

Kyle Rubin

on 22 August 2015

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Transcript of Financial Literacy

Financial Literacy
Budgeting
Credit Cards
Financial Aid
Budgeting
Setting a Budget
Financial Literacy
Keep Good Financial Records
Impossible to set a budget without good financial records
You never know when a random charge will pop up!
This is the best way to evaluate whether or not you've met your budget for the month
Let technology manage your records
Mint.com
In the end, budgeting comes down to......
What you need vs. what you want
Determine if your financial path is sustainable
Actively manage and track your finances
Gives you an idea of what it takes to live the life you want
What is it?
Any money from outside
of the family that pays for
college expenses
What kind of aid is it?
Grants
Loans
Scholarships
Employment
Determined by financial need
as determined by the FAFSA or
need based.
Do not have to be paid back.
Awarded on the basis
of merit or a unique
characteristic
Don't have to be paid back!
Sources:
Federal Government
State Government
Colleges and Universities
Private Sources
Considered Self-Help Aid
Must be paid back. Will go into repayment anytime that you are enrolled in less than 6 credits for period of 6 months.
Many different types of loans
from different lenders such as
the federal government, private
lenders or your college.
A reasonable form of
financial aid. A good investment
in your future. Borrow responsibly.
A form of self-help
financial aid
Have to work before
receive earnings to help
to pay for college costs.
Can be direct employment
thru your college or federal work
study monies.
How do I keep it?
How do I get it?
Satisfactory Academic Progress
Maintain a minimum pace of
completion of attempted credits
of 67% credits started are
completed.
Stay within the maximum time
frame for degree completion. A student
may not exceed 150% of the required number
of credits required to complete their degree.
Minimum satisfaction requirements
vary for scholarships. Be sure to review
the satisfactory progress guidelines for
all scholarhips you receive.
Federal and State Aid Progess Requirements
Free Application for Federal Student Aid
FAFSA
Search and apply
for scholarships
Ask colleges if
any other
forms
are
required
Credit: A double-edged sword
How to make it work for you
What is it?
Credit is a contract between a borrower and a lender. The lender provides cash, goods, or services now and the borrower pays for them later, with interest.
Convenient-Don't have to carry cash
Make large purchases now
Rewards for making purchases that you'd make anyway
Available in an emergency
Build a positive credit history
Positive credit history will allow you to use credit to make large purchases such as vehicles or a home
Can be difficult to pay back
Can be difficult to make regular payments
Can hinder your ability to save
Will be expensive if you don't pay back or keep up with payments
Credit card companies are not as forgiving as student loan providers
Credit card companies' business models are built on the notion that they will make an income on their customers. They make money from the interest that you pay.
What kind of credit
is there?
Open Ended
Also called "revolving"
Specific limit
Can be borrowed again once credit is repaid
Use anywhere credit card accepted
For any use
Examples are credit cards, home equity lines of credit, store-specific credit cards
Closed Ended
Also known as "installment"
Fixed payments at regular intervals
Only for specific purpose
Requires payment in full at a set time in the future
Common closed-end credit is for a student loan, home or vehicle
Credit Cards
Understand Terms and Conditions
Using a credit card is like taking out a loan.
If you don't pay it off every month...you will pay
interest on the amount that you charge.
What can you be charged for using
a credit card?
Annual Percentage Rates
Fixed or variable percentage rates
Late and over-limit fees
What other conditions are there?
Credit limit
Grace period before interest begins
accruing on balance not paid in full
Rewards for using credit on the card
Understand the true cost of using credit
For example:

$4000 balance on card

14.00% interest rate
$140 monthly minimum payment
36 payments
$981.33 paid in interest

$200 per month payments
24 payments
$633.56 paid in interest

$300 per month payments
15 payments (paid off one and ¾ years faster!)
$404.93 paid in interest ($576.40 in savings over minimum payment)

Pay off balance every month
1 payment
$0 paid in interest
How do I maintain
good credit?
Credit History
In the land of credit scores; FICO is king!
FICO scores are used to decide whether to offer credit to potential borrowers, and if so, at what interest rate. Inverse relationship:
FICO
Interest Rate
FICO
Interest Rate




www.annualcreditreport.com
How is a FICO score determined?
3 main reporting agencies:
1)Transunion
2)Equifax
3) Experian
Sound credit management
5 main components of a FICO score:

1) 35% is payment history
2) 30% is total amount of debt
3) 15% is how long you have had a credit history
4) 10% new credit
5) 10% credit mix
Negative reports stay on your credit history for 7 years.

Bankruptcy and bank foreclosures remain on your record for 10 years.
Use your records to determine where you spend your money
Determine how much you spend in each category
Evaluate whether that's reasonable or not
Set an aggresive goal for yourself in each category
Don't forget to add in some "fun money"
Your ending balance should be a positive, not zero
Evaluate Monthly
Change The Way You Think
Bought a bike
Too many packages of Oreos
Balance That Budget Monthly
http://www.cashcourse.org
A company for credit scoring started in 1956 by
2 men named Fairchild and Isaac. Rebranded to FICO in 2003.
http://studentaid.ed.gov/repay-loans/understand/plans
www.fafsa.gov
Finlandia University
evaluates your satisfactory academic progress status at the end of each semester!

You can submit an appeal if you are not making satisfactory academic progress
Budget
Review Satisfactory Academic Progress Guidelines at www.finlandia.edu/financialaid
Cindy Cowell
Director TRIO Student Support Services
Nikander 11
cindy.cowell@finlandia.edu
Full transcript