Your Financial Education Guide The Basic
Transcript of Your Financial Education Guide The Basic
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Your Financial Education Guide
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The Basic ABC’s of Finance
• Income• Opening Accounts• Creating a Budget• Financial Goals
Money Management
Borrowing Money• Credit Cards• Loans• Debt Management
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Money Management
You Must Learn How To Manage Your Money Responsibly
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Income
1. Allowance
How Do You Generate Income?
• Paycheck• Gross / Net
2. A Job
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1. Gross: $452.43
3. Net: $273.85
2. Minus Deductions
• Fed. Income Tax• Social Security• State Income Tax• Medical
1.2.
3.
3.
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Income
Now That You Have Money….What Are You Going To Do With It?
SPEND IT!
SAVE IT!
MANAGE IT!
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Opening An Account
Types Of Accounts
Checking: Manage Day To Day Activity
Under 18? Joint Checking Account
Savings: Put Money Away For A “Rainy Day.”
Let Your Money Earn Money!
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Opening An Account
Where Do I Go?
• Financial Institutions
• Banks
• CREDIT UNIONS!
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Opening An Account
What Do I Need?2 Forms Of Identification:• License• Social Security Card• Birth Certificate• State ID Card
Minimum Deposits:• $50 For Checking• $5 For Savings
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Opening An Account
What Do I Get?
• Check Card (ATM, Debit, Point Of Sale)
• Check Book (Keep It Balanced)
• Online Account Access
• Monthly Statements
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1. Date - The Date the Check is Written2. Maker - Person / Business Who Writes the Check (The Name will be Printed on the Check) 3. Payee - Person / Business to Whom the Check is Written 4. Signature Line 5. Written Amount - The Amount Written in Numbers 6. Legal amount - The Amount Written in Words 7. Check number - Printed on the check and appears in the MICR line on the Bottom of the Check 8. Banking information - The Name of the Institution and The Association Number.9. Account and Routing Numbers - Appear on the Bottom of the Check in MICR Line.
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Keep Track of Your Balance
1. Day to Day 2. Monthly Statement
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Creating A Budget Vs.Income Expenses
Monthly Income Expenses Cost
$1,000
Food:Groceries
Dining
Car:PaymentInsurance
Gas
MISC:Clothing
Entertainment
Utilities:Gas
ElectricPhoneCable
Internet
$300$80
$120
$300$70
$20$20$60$60$40
$100$80
Rent:$3,000
Total: $2,250
Monthly Balance
+ $750
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Financial Goals
What Do I Want Or Need?
How Am I Going To Pay For Them?
AND
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Financial GoalsGoals to Aim For
● Rent ● Engagement Rings● College / School ● Wedding● Computer ● Home● Car ● Children● Entertainment ● Own Business● Travel ● Retirement
Short Term Long Term
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Borrowing Money
How Do I Borrow Money?
1. Go To A Financial Institution
2. Apply For The Following Loans:
• Credit Cards• Student Loan• Personal Loan (Used for Any Purpose)• Car Loan• Business Loan• Home Loan
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Credit CardsBe Careful Of Card Offers
(They’re Everywhere!)
• Mailers
• Department Stores
• Financial Institutions
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Credit Cards
What Effects My Score?
Credit Score:
You’re Not Borrowing Money! You’re Getting A Line of Credit!
• Establishing Credit (Put Bills In Your Name / Dept. Store Credit)• Paying Bills On Time• Maintaining Accounts• The Ratio Between Money Owed To Credit Limit.
The Higher the Score the Better:
• Effects Your Ability to Borrow
• Can Borrow More • Lower Interest Rate.
SCORE!800700600 500
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Credit Cards
Benefits Of Good Credit
1. Can Get A Higher Credit Limit!
2. Get A Lower Interest Rate!
YOU HAVE TO PAY THE CREDITORS BACK WITH YOUR MONEY!
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Credit Cards
What Is An Interest Rate?
The Increased Percentage Rate That You Have To PAY BACK To Creditors.
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Credit Cards
How It Works
• Apply For Card
• Get Card
• Use Card To Make Purchases
• Get Monthly Bill / Statement With Card Usage, Balance, Limit, Minimum Payment, Due Date
• Pay At Least The Minimum Requirement By Due Date
(Insert: Credit Card Statement)
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1. Account Number2. New Balance3. Due Date4. Minimum Payment5. Transactions6. Account Summary7. Finance Charges8. Percentage Rate
1.
2.3.
4.
5.
6.
7.
8.
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Credit CardsDO’S:
Do Make Your Payment On Time
Do Pay More Than Your Minimum
DON’TS:
Don’t Be Late On Your Payments ● You’ll Be Charged A Fee
● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score
Don’t Maximize Your Limit
THIS LEADS TO BAD CREDIT!
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LOANS
Applying For A Loan:
You Must Show That You’re A Qualified Borrower.
AND
Show You Have The Ability To Pay Back Your Loan!
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LOANS
YOU WANT!
1. A LOW Interest Rate
2. A Monthly Payment You Can Afford.
How Do I Get This?
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LOANS
To Get A Good Loan You’ll Need:
• Capital (Down Payment / Collateral)• Proof Of Income• Excellent Credit Score
Note: A Co-Signer (Parent / Spouse) Can Help YOU!
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LOANS
Look For:• First Time Borrower’s Programs
Watch OUT For:• Teaser Rate Programs
Example: No Money Down / 0% Interest.
Pay Attention To:• Terms And Conditions• Default Rates
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LOANSWARNING! WARNING! WARNING!
Adjustable Rate
Your Loan May Be Affected By Terms And Conditions!
Fixed Rate Vs.Interest Rate Doesn’t Change Interest Rate Starts Low
Adjusts To A Higher Rate
Monthly Payment Will Increase
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LOANSDO’S:
Do Make Your Payment On Time
Do Try To Pay More Than Your Minimum
DON’TS:
Don’t Be Late On Your Payments ● You’ll Be Charged A Fee
● It Will Increase Your Interest Rate ● It Will Lower Your Credit Score
Don’t Default On A Loan
THIS LEADS TO BAD CREDIT!
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DEBT MANAGEMENT
With Loans You Will Have Debt To Pay Back.
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DEBT MANAGEMENTTips To Manage Debt
• Pay More Then The Minimum Requirement
• Refinance Your Loan For A Better Rate
• Consolidate Your Loans Into One Payment
And Finally…
• Create A Repayment Plan (Payoff A Loan Before Taking on Another)
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DEBT MANAGEMENT
PAY FOR IT
IF YOU CAN AFFORD IT….
WITH CASH!