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Financial Literacy

Financial Literacy. 11 th grade- Budget and Savings. “It’s not what you make, it’s what you keep.” James Henson, Sr. Objectives for today. Demonstrate a method to analyze your income and expenses How much do you really cost? Understand the basics of a budget

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Financial Literacy

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  1. Financial Literacy 11th grade- Budget and Savings “It’s not what you make, it’s what you keep.” James Henson, Sr.

  2. Objectives for today • Demonstrate a method to analyze your income and expenses • How much do you really cost? • Understand the basics of a budget • Evaluate choices you can make now for a successful future

  3. What is Financial Literacy? • Understanding how to manage money effectively • Acquiring knowledge and skills to make informed decisions regarding money matters • Helping individuals fulfill personal, family, social and governmental responsibilities

  4. Why do I need to be financially Savvy? • People who are financially literate are more likely to achieve a better quality of life and reach their lifetime goals. • Being financially savvy can: • Help you buy something you need or want (car, computer, etc.) • Save money for emergencies • Afford college tuition • Start a business • Live comfortably in retirement • Lead to financial independence

  5. Financial Literacy: Budgeting • A budget is an estimated list of your income and expenses over a given period of time. • Developing a budget helps you control your money and limit your spending. • Creating a budget plan is an important step every student can take to assess his or her financial wellness.

  6. Financial Literacy: Budgeting How much do you cost?

  7. Financial Literacy: Budgeting Use the steps below to help you create your first student budget plan. • Step One: Assess Your Finances • List all your sources of monthly income- job earnings, savings, parental support, gifts, internships

  8. Financial Literacy: Budgeting • Step two: Determine Your Expenses List all your monthly expenses. Consider: • Meals • Entertainment • Personal care items • Laundry • Telephone • Include money for emergencies. It is recommended to budget 10% of your income. • Examples: lost phone, damaged iPad, book obligations, etc. • Try to keep at least one month of total expenses in savings. • Car expenses, gas, insurance • Clothes • Technology • College classes • School supplies

  9. Financial Literacy: Budgeting • Step three: Total your income and expenses. • If your expenses are greater than your income, you need to find ways to increase your income stream or reduce your spending. • Think about the little things you can cut back on to save dollars here and there. • Consider needs verses wants. • Examples: • Rent an on-demand movie or use Netflix instead of going to the movie theater • Skip the Starbucks and make a coffee at home • Borrow an outfit for a formal event • Walk instead of driving your car

  10. Financial Literacy: BudgetingStep four: Set your financial goals • Start by making a list of your short, medium, and long-term goals and set monetary figures that will help you achieve them: Short-term goals: • Trying a new restaurant • Buying a new game • Taking a weekend ski trip Medium-term goals: • Summer trip with your friends • Studying abroad next year, • Paying for AP exams Long-term goals: • Paying off your student loans • Investing in the stock market • Saving for a down payment for a home • Starting your own business

  11. Financial Literacy: Budgeting • Step five: Track your budget over time • Compare your actual income and expenses with your budget to make sure you’re on target to meet your goals. • You’ll need to monitor your budget periodically in order to make changes when necessary. • Be prepared for the unexpected. (e.g., car repairs, broken cell phone)

  12. Financial Literacy: Budgeting • Start Saving Early • Savings Account • Roth IRA’s • Mutual Funds • Stocks/ Bonds • Pay yourself first • Let your money work for you • Pay your expenses • Read biographies of financially successful people

  13. Financial Literacy: Budgeting Compound Interest-Save and Watch it Grow Thanks to compound interest, small regular savings can add up over time. With compound interest, it is not just your money that earns interest – your interest earns interest as well – creating a snowball effect.

  14. Cost of Waiting

  15. Financial Literacy: Budgeting • Budgeting your money is an important part of financial literacy. • The bottom line is that you are in control of your financial health. • A budget will keep you on track and help you realize your goals.

  16. What can I do now to become financially literate? • 1. Get a good education. • 2. Work smart. • 3. Learn money management skills. • 4. Living below your means. • 5. Save early and often. • 6. Gather information before making decisions. • 7. Have a budget plan. • 8. Ask questions and attend financial seminars • Financial Fitness For Life Council For Economic Education

  17. What can I do now to become financially literate? • For more information go to: • www.360financialliteracy.org • www.macpa.org • www.mdfinancialskills.org • www.mymoney.gov • This information brought to you by the Severna Park High School Business Advisory Board www.sphsbab.org

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