MONEY MANAGEMENT WORKSHOP. Learning Assistance Programs. Self-Assessment. Are you a good money manager? How can you improve your money management?. What’s Important?. Need to be conscious of your spending Need to be conscious of your income Manage your debt Interest rates
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MONEY MANAGEMENTWORKSHOP Learning Assistance Programs
Self-Assessment • Are you a good money manager? • How can you improve your money management?
What’s Important? • Need to be conscious of your spending • Need to be conscious of your income • Manage your debt • Interest rates • Make a budget = Prediction of income and expenses
Making a Budget • Set priorities for your spending • What is most important to me? • What can I do without? • Be aware that your priorities are realistic!!
Making a Budget • Consider a certain time frame • 1 year • 1 month • List income • List fixed and variable expenses
Making a Budget • Income • Salary from work • Savings • Money from parents, spouse, grandparents etc. • Financial aid • …
Fixed Expenses • College room and board or rent • Heat and water • Car payment and insurance • Health Insurance • Tuition • …
Variable Expenses • Books, tutoring • Snacks, drinks, groceries, restaurant meals • Movie tickets, concert tickets, sporting events • Transportation – parking, gas, car maintenance • Personal expenses – haircuts, toiletries, laundry • Healthcare – doctor or dentist fees, prescriptions • Other – gifts, …
Making a Budget • Does your income cover your expenses? • If yes – good, but don’t raise your spending • If no – how can you make your budget look better?
Increase Income • Get a job! • Look into the possibilities for financial aid • …
Decrease Expenses • Look to the big-ticket items • Use telephone to price investigation • Wait for sale • Try to wait one day with the purchase • Shop at second-hand stores • Be aware of quality • Use coupons!
Decrease Expenses • Cook your own meals – Eat on campus • Conserve energy • Keep housing down • Pay in cash – debit cards • Avoid carrying cash • Notice what you spend on fun • Shop on a full stomach
College Students and Debt • The average college student graduates with $10,000 in debt (includes students without debt) • 64% of college students graduated with debt in year 2000 • Of students with debt, the average debt by graduation is $16,000
College Students and Debt • 70% of college students have credit cards • Typically carry a balance of more than $2000 • 20% have balances exceeding $10,000
What is a Credit Card? • A contract based on your promise to pay in the future for goods and services your receive today • Helpful in emergencies • You become a better money manager when learning to use credit cards responsibly
Credit Cards • Access to credit cards as a college student • Useful when used appropriately • Temptation to overspend can ruin your budget • Credit record begins
Credit Rating • Your credit history is maintained by credit bureaus in the form of a credit report • Will be reviewed by employers, insurance companies, apartment managers, and businesses for consumer products • Credit rating will follow you and impact future ability to buy a house or a car
Types of Credit Cards • Secured • Product serves as collateral • Unsecured • Based on promise and signature • Most credit cards are unsecured
Cost of Credit • It is not free to have a credit card! • Pay interest • More interest with minimum payments • Pay other fees • up to $50 per year
Interest Rates • Example 1: • Interest: 18.5% • Purchase of furniture: $2000 • Years to pay off with minimum payment: 11 • Interest charges: 1934
Interest Rates • Example 2: • Interest: 18% • Purchase of clothing: $1000 • Years to pay off with minimum payment: 6.5 • Interest charges: 650 • Interest: 12% • Interest charges: 335
Interest Rates • Example 3: • Interest: 19.8% • Purchase of TV: $500 • Years to pay off with minimum payment: 2.5 • Interest charges: $150 • Interest: 12% • Interest charges: $78
Grace Period • A period in which you don’t pay interest on your purchases • Usually 25 days • Does not occur if you have an outstanding balance on your card • Does not occur if you want a cash advance
Advice about Credit Cards • Compare fees • Choose low interest cards • Know when grace period begins • Watch minimum monthly payments • Pay off debt with your saving
More Advice • Set a credit card limit and stick to it • Use your budget to determine how much you can spend each month • If possible, pay of credit card balances each month • Don’t use credit cards for things that will wear out before you finish paying for it
Do you want a credit card? • You may want to obtain at least one credit card while you are in college • Have a way to cover emergencies • Allow you to establish a credit history • Use credit as an effective tool instead of a financial trap • A positive credit history is useful in the future!
Alternatives to Credit Cards • Get a low interest loan instead • Choose charge cards instead • Debit Cards/ checking accounts on which money is deposited every month
Additional Information • Consumer Credit Counseling Service • 1301 N. Kingshighway • 573 334 7050 • Financial Aid Services • Academic Hall • 573 651 2253