your financial future a guide to managing your finances
TRANSCRIPT
YOUR FINANCIAL FUTURE
A GUIDE TO MANAGING YOUR FINANCES
LET’S DISCUSS…
• Saving
• Checking/Controlled Spending Accounts
• Budgeting
• Obtaining Credit and Credit Score
• Safeguarding Your Identity
BEFORE WE GET STARTED…
Does anyone know where to go for help with basic financial services?
(ex. savings accounts, checking accounts, loans)
SAVING
• Saving is setting money aside for the future, usually in an account for safekeeping.
• Savings accounts generally earn a small amount of interest, so you can even make money on the money you save.
SAVING
• Saving is like paying yourself – when you pay your bills, think of your savings as another bill!• Saving gives you money for
unexpected expenses, emergencies, future purchases (car or home), etc.
SAVING
CHECKING & CONTROLLED SPENDING ACCOUNTS
CHECKING ACCOUNTS
• Paper checks • Debit card• Register to track credits & debits• Monthly Statement• Beware of NSFs• Overdraft protection available
CONTROLLED SPENDING ACCOUNTS• Debit card – no paper checks• Purchases strictly limited to
funds on the card• No risk of NSFs• No overdraft protection needed• Great for students!
BUDGETING
IMPORTANCE OF BUDGETING• Helps you determine where you
will spend your money. • Allows you to have enough money
to pay your bills each month.• Allows you to save for expensive
items without the use of credit cards or loans.
BUDGET COMPONENTSIncome (Money Coming In)
Expenses (Money Going Out)• Fixed• Variable• Periodic
BUDGETING STEPS
1) Calculate your income (money coming in)
Let’s discuss Gross and Net Pay!
Gross pay is the amount you’re paid before deductions like taxes and Social Security.
Net pay is after the deductions. So….
BUDGETING STEPSIf your salary is $8.00 per hour and you work 10 hours per week, your gross income is $80.00 per week.
But, your take home pay (net) will be less because of deductions!
Base your budget on what you get – net.
BUDGETING STEPS
2. Determine your expenses - monthly bills/payments (don’t forget to pay yourself!)
3. Compare money coming in to money going out (which is more???)
BUDGETING STEPS
4. Put your budget in print, so you can review it and make adjustments as your income and expenses change.
Now let’s look at standard budget guidelines to help with the future…
BUDGET GUIDELINES
EXAMPLE BUDGETNet Income
Paycheck/Allowance $600.00
Total Income $600.00
Fixed Expenses
Savings Account $115.00
Auto Loan $150.00
School Expenses $50.00
Variable Expenses
Cell Phone $60.00
Miscellaneous (gas, food, movies, activities, other expenses)
$150.00
Periodic Expenses
Car Insurance 75.00
Total Expenses $600.00
BUDGETING RESOURCES
• Money Management Workbooks
• Computer Software
• Cell Phone Applications
CREDIT
WHAT IS CREDIT?• Money loaned, for a fee (interest),
that must be repaid. • Allows you to buy now and pay
later.• Includes credit cards, installment
loans, student loans, and mortgages.
CREDIT EXAMPLEYou purchase a $900 television using your credit
card.
Purchase: $900Interest Rate: 15%Minimum Monthly Payment: $27Total Interest: $436.49Total Paid: $1,336.49Time needed to pay off debt: approx. 4 years!
CREDIT REPORT• The credit report contains your credit score, which is
compiled by lenders to rate your creditworthiness.
• The higher your score, the less amount of risk you pose to potential lenders (average ranges: 300-900).
• The credit report shows how well you repay your debt.
• Credit bureaus sell credit report information to businesses.
Account Type Company Account #
Balance Negative Items
Installment SECU XXXXXX $25,000.00
No
Revolving SECU XXXXXX $1,250.00
No
Name John Doe
Date of Birth January 1, 1989
Social Security Number XXX-XX-XXXX
Current Address 123 Credit Union LaneRaleigh, NC 27609
CREDIT REPORT INFORMATION
2. Accounts Summary
1.Personal Information
Account Type
Company Status Delinquency Description
Revolving Credit Union
Pays as agreed
60 days past due
No
Date Company requesting credit record
09/01/2010 Credit Union
10/08/2010 Cell Phone Company
CREDIT REPORT INFORMATION
4. Negative Items
3. Inquiries
MORE CREDIT REPORT INFORMATION• Negative information: 7 years• Bankruptcy information: 10 years• Default on student loans: 7 years after
guarantor actions• Judgment or lawsuit: up to 10 years &
can be renewed
THREE MAJOR CREDIT BUREAUSEquifax• Phone: (800) 685-1111• Website: www.equifax.com
Experian• Phone: (888) 397-3742• Website: www.experian.com
TransUnion• Phone: (800) 888-4213• Website: www.transunion.com
FREE CREDIT REPORT
Web: www.annualcreditreport.com
Toll Free Number: 1-877-322-8228
Annual Credit Report Request Service
PO Box 105281Atlanta, GA 30348
SAFEGUARDING YOUR IDENTITY
IDENTITY THEFT When someone uses your name, Social Security number, card number or other personal information without your permission.
What can a thief do with your information?
•Open a credit card in your name.•Take out a loan in your name.•Forge your signature on documents, checks, etc.•Give your name to the police when arrested.
POTENTIAL DANGERS OF ID THEFT • Lost and damaged credit.• Difficulty opening a savings account at
some financial institutions.• Difficulty applying for a driver’s license.• Difficulty getting accepted into college.• Inability to secure a job.
SAFE PRACTICESFOR YOUR PERSONAL INFORMATION
• Make sure personal information is secure where you live, at school (and work, if applicable) and do not share your passwords.• You should never share personal
account information.
• When you provide personal information to a company, your information may be shared with others; however, many let you “opt out” of having information shared.
• Insist that creditors safeguard your personal information and do not share with others.
SAFE PRACTICESFOR YOUR PERSONAL INFORMATION
IF YOU ARE A VICTIM…
You Have Rights,
Take Action Immediately!
QUESTIONS?