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Transcript of Financial Responsibility
How to be Money Smart
What is Finance?
Why is it important?
Cash is printed by the government
How does a Bank work?
The government sends the money to banks to distribute
Banks can distribute cash to individuals and businesses
We use cash between businesses and other people, and then we or businesses deposit it back in the bank
Let's talk about the how's and why's of keeping a budget
Checks can be used instead of cash, but are more secure than carrying around cash.
Checks/Debit Cards/Credit Cards
Don't ever forget to sign a check, and always fill in both number and written forms of the check amount completely and accurately.
Balancing a checkbook is really important if you don't want to spend more money than you have.
Balancing Your Checkbook/
Start by knowing how much you have in your account
Add any credits (income, paychecks, or any increase)
Subtract any debits (payments or any money used)
Keep a running total
Sometimes payments take a few days to process, but you don't want to forget about them and keep spending money, so keep track of them on a regular basis by balancing your checkbook
Budgets help you make limits on what you purchase LIKE:
A budget is a list of incomes and expenses to help you keep track of how much money you have to spend, and what you want to spend it on
Lets make a list of each on the board
Necessities and Non-Necessities
The key to a good budget is saving... why?
Now that you know some good finance techniques, let's discuss some dangers:
Getting into debt can be helpful, but it can also be really dangerous if you don't know how to use it
Good or Bad?
Good or Bad?
Good or Bad??
Small Loans: Payday, Auto, and Quick
Choose low interest rates (2%-5% on loans, 8%-12% on credit cards)
Pay credit card off completely each month or ->
Make regular, large payments (not just the minimum) and never miss a payment
Limit the type and number of debt you have
Never go into more debt to pay off current debt
AVOID ALL DEBT IF POSSIBLE
Any type of Debt can be good or bad,
you just have to know how to use it.
Insurance can keep your finances and assests safe in case of a disaster.
“The American Bar Association has indicated that 89 percent of all divorces can be traced to quarrels and accusations over money. Others have estimated that 75 percent of all divorces result from clashes over finances. Some professional counselors indicate that four out of five families are strapped with serious money problems.”
Using your money to get more money
When the company does well, you either get paid, or the value of your stock increases and you will make a profit when or if sell it.
Example: Investing in my neighbors lemonade stand
The company pays you interest
(5%-7%) regularly for a set period of time and at the end gives you your money back as well.
Investing by pooling your money with others and buying a mixture of stocks or bonds.
the management of revenues; the conduct or transaction of money matters of individuals, companies, or governments
The Good, The Bad, and What You Need to Know
Credit is important to have, but not necessary in all situations
Most of us need to build good credit if we ever want to
buy a car or a home (you need credit to get credit)
The best way to get credit is actually to get in debt!
But how can you do that safely?
Or $11,500 a year each.
Children cost money,
Some people start saving in high school, others start preparing for scholarships, still others pay for school by getting a part-time job or taking out student loans.
It takes a lot of preparation
to go to college
Making career goals will help you achieve your lifestyle goals, and ensure that you have a fulfilling career (you don't want to get stuck doing something you don't like, even if the pay is great)
Will that be easier to pay for now,
or after you or your spouse/partner has a career?
Times 4 kids, that's $46,000 a year
If you decide now what type of education you need, you will be able to better prepare for how you will achieve it and what financial goals you need to set now to pay for it.
What is credit?
How do you get it?
What is a credit score?
Most Americans at some point get a credit card. This is a fairly simple way to get credit.
If you pay off your credit card on time, or make your payments on time, this is not a bad idea.
If you don't pay it off, and don't pay your schedule payments, or credit score will go down.
Banks like to give credit or loans, because they can make money on it through interest. If a customer is not going to repay the loan, however, banks don't want to loan to them. All banks have access to credit scores, through which they can tell if the person requesting credit is likely to pay it back on time.
Buying part of a company.
Giving a personal loan to a company.
Requires smaller initial investment, but gets you a smaller return, too.
So, how can you keep your finances from becoming a major stressor in your life?
How have you seen financial stress affect the lives of people around you?
Affects your health, relationships, family life, job performance, and more
No money= no home, food, clothes, etc. Those are basic necessities!
Why are finances so stressful?
increased blood pressure
Financial Stress affects your health, including:
work time use
Financial Stress affects work performance:
Make a budget?
Start a savings plan?
Get a new job?
Get more education?
Figure out what needs to change:
A checking account is one of the most common types of account to have.
Checking accounts are simple to open and usually only require:
A minimum initial deposit (i.e. $100)
Identification and/or proof of address
Debit cards can be used instead of cash as well, but unlike checks, the funds are immediately withdrawn from your account. They require a pin number as security.
Credit cards do not use funds from your checking or savings account. Instead a bank agrees to loan you a certain amount of money. You must pay back any charge to your account with interest to the bank.
Savings accounts are similarly easy to start. Note that savings accounts cannot be linked to a debit card, but that you do get paid interest on money saved in the account.
What types of fees do they charge?
(i,e, account minimum fees, ATM fees, and overdraft fees)
What is their interest rate?
www.bankrate.com allows you to easily compare fees and interest rates..
Some things to consider when opening a bank account:
Credit Unions offer many of the same benefits as a bank, but often offer better interest rates on loans, and sometimes lower fees.
What do finance goals have to do with pregnancy and STD prevention?
Talking Circle: What have you learned or what goals will you make?
Making a decision now to behave in a certain way can help you prevent making dangerous or unhealthy decisions.
www.youtube.com, "Dr Huxtable and Theo Lets Talk Money"
Brought to you by the ¡Adelante! program at Centro Hispano, supported in part by the Personal Responsibility Education Program from the U.S. Department of Health of Human Services, Administration on Children, Youth and Families
How does having a baby as a teenager
interfere with financial goals?
What affect might that have on the child?
What is a credit score? Why is it important?
35% Payment History
30% Amounts Owed
15% Length of Credit History
10% New Credit
10% Types of Credit Used
Credit is important if you want to :
Get a credit card
Buy a car
Get a loan
Buy a house
Start a business
How can you build credit?
You will ruin your credit if:
You apply too often for too much
You max out your credit cards
You don't pay your bills on time
You don't resolve issues before they get too big
How to get out of debt
Start by paying off a maximum on small accounts and the minimum on large accounts.
When small accounts are paid off, put the money you were paying towards those accounts towards the next biggest account.
(Consider interest rates on accounts as well)
If you haven't budgeted for a one-time or emergency expense, where will you find the money to pay for it and your other expenses?
You must have a separate pool to draw from.
Insurance saves you from having to safe for every possible type of mishap regarding your home, car, and health
What does it mean to be financially responsible?
Spending money wisely
Making spending goals and considering cost- comparisons and options
Making 'money-making' goals that fit your spending goals
Avoiding decisions that lead to debt, bad credit, and financial stress
Being financially literate
Was your last purchase a need or a necessity?
clothing and food vs lattes and designer jeans
The Web/The Moon Trip Activity
Start Budget Activity
(Game of Life/ Financing Auction)
Start Balloon Activity/ Object Lesson
on average $241,080 each!