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Managing Your Money What You Need to Know About Budgets, Credit Cards and Paying For College

Learn essential financial skills: budgeting, credit management, college funding. Explore shocking US financial literacy stats. Start building wealth early for a secure future.

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Managing Your Money What You Need to Know About Budgets, Credit Cards and Paying For College

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  1. Managing Your MoneyWhat You Need to Know About Budgets, Credit Cards and Paying For College

  2. The State of Financial Literacy in the United States • For the first time since the Great Depression, the average personal savings rate of Americans is less than zero percent • This means that most Americans are spending more money than they earn, leaving no money to save -source: US News & World Report • According to a 2004 survey, the median credit card balance for the American family is $2,200–source: Federal Reserve’s 2004 Survey of Consumer Finance • In 2006 the Jump$tart Coalition surveyed high school seniors on financial literacy topics. The average score was 52.4% - a failing grade • The topics students answered incorrectly on most frequently were: understanding saving, loan and investment rates; understanding taxes; and health care coverage –source: Jump$tart Coalition 2006 Survey of Financial Literacy among High School Students

  3. Understanding the Impact of Income • When to spend vs. when to save • Have a checking account and keep it balanced • Set financial goals • Shop smart • Know the cost of credit • Tax time

  4. Making a BudgetWhere did all my money go? • Net Income • Fixed Expenses, Flexible Expenses and Discretionary Expenses • Keep track of monthly expenses

  5. Credit Cards • Know your interest rate • Have only one • Pay in full every month • Pay on time • Protect your credit history • Always review your statements • Don’t exceed your limit • Protect your personal information -AICPA

  6. Making College A Reality • Start saving now • Seek out scholarships • Government loans • Focus on in-state, public universities • Be aware of education tax deductions -AICPA

  7. Inve$ting Your Way to Wealth • Invest to beat the rate of inflation • The power of compounding interest • How to Invest • Patience and constant vigilance is key

  8. Start on Your First $1 Million … at age 16 • Have a summer job each summer for 4 years • Put $2,000 each summer into a Roth IRA • Don’t touch the money – it will grow tax-free • Assuming you receive the average compound annual rate of 10.7 %, you will have $9,378 at the end of the fourth year when you are 20 years old.

  9. Start on Your First $1 Million … at age 16 • Continue to invest this same amount, with no additional savings and your money will grow to: • $25,917 by the time you are 30 • $71,625 by the time you are 40 • $197,943 by the time you are 50 • $547,037 by the time you are 60 • $1,114,423 by the time you are 67 • This plan doesn’t require “investment brilliance,” just an early start and tenacity • Depending on the risk level of your investments, your money may grow more quickly -data from MSN Money

  10. Additional Financial Resources • www.tscpa.com/student • Financial Fitness page has articles to help you manage your money wisely and financial calculators to help you create a budget, plan for buying a car and assist in a host of other financial decisions • www.fool.com • The Motley Fool – great resource for investment advice

  11. Remember… Developing good money management skills today can mean big payoffs in the future!

  12. Questions?

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