Making Money Work For You. Objectives Review & learn key financial and economic literacy concepts Understand the importance of budgeting in order to control.

Making Money Work For You

Objectives

Basics of Banking ServicesBank: A financial institution that handles

money, including keeping it for saving or commercial purposes, and exchanging and investing, and supplying it for loans.

Credit Union: A non-profit financial institution insured by NCUA that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending.

Savings Institution: A financial institution that accepts deposits from individuals, makes homes mortgage loans, and pay dividends.

Basics of Banking Services CHARACTERISTIC BANK, CREDIT

UNION OR SAVINGS INSTITUTION?

Insured by the National Credit Union Administration (NCUA)

Must have majority of their assets in housing –related loans

Governed by federal & state laws and regulations

Similar to a bank

Members only

Make loans, pay checks & accepts deposits

Created to promote homeownership

Benefits of Using Financial Institutions

Savings Accounts Why should you save your money?What are the benefits of saving &

savings accounts?Should you save for something that

you want or need?What are some reasons why you

might withdraw money from a savings account?

Paying Yourself First-Savings AccountKey Points

Allows you to deposit, withdraw, and earn interest on your money.

Allows you to put aside for a future goal or emergency fund.

Limits how often you can take your money out.

Checking Accounts

Check It Out – Checking AccountsA checking account is a great tool for

managing your money day-to-dayA checking account allows you to put money

in to make a deposit or take money out to make a withdrawal

You can get cash whenever you need itAllow you to have a record of how much you

spend and where.

Your Budget – Making Money MatterThree Basic Steps

Money Management Scenarios & Worksheet

Monthly Budget

NEEDS – WANTS = NET INCOME to SAVINGS

ATM & Debit Cards

Credit Cards Credit CARD Act of 2009

President Obama signed the Credit CARD Act of 2009 into law May 22, 2009, following passage days earlier in the Senate and the House.

Limited credit to young adults: Credit card issuers are banned from issuing credit cards to anyone under 21, unless they have adult co-signers on the accounts or can show proof they have enough income to repay the card debt. Credit card companies must stay at least 1,000 feet from college campuses if they are offering free pizza or other gifts to entice students to apply for credit cards.

Read more: http://www.creditcards.com/credit-card-news/help/what-the-new-credit-card-rules-mean-6000.php#ixzz1GyxpuKHA Compare credit cards here - CreditCards.com

Credit Cards???1) Is given to you on your credit worthiness.2) Must pay interest on any unpaid balances .3) May allow you to buy something today rather

than having to wait. But remember, you always have to pay the money back!!!

4) The items you purchase are typically insured.5) If you pay your bills on time and in full, you

build a good credit history and increase your ability to borrow in the future.

6) Be aware of the fees and interest rates associated with the credit card.

7) The card can be your best friend or your worst nightmare.

Credit – The Benefits & Risks BENEFITS RISKS

Option of buying something today and paying the money back over time, rather than having to wait

Overdoing it; borrowing more than you can afford to pay

Flexibility to act on major purchases and life opportunities that may require more money than you have on h and right now

If you don’t make your payments on time, you will damage your credit history

Easier to rent an apartment and to get service from local utility companies

Having to pay additional interest and fees

Easier to buy what you want, when you want

Difficulty getting loans in the future

Good Credit vs. Bad Credit GOOD CREDIT BAD CREDIT

•Paying at least the minimum required•Paying on time•Never missing a payment•Staying within your credit limit

•Paying too little•Paying too late•Missing payments•Going over your credit limit•Having too much debt

Result•Easier to borrow money•No additional penalty fees•More money you’ll keep in your pocket•Good deal on major purchases & cell phone•Decent apartment

Result•Difficult to borrow money•You lose money on late fees•More money spent on fees and interest•Not getting the job you want•Higher rates and fees on major purchases & cell phone

Your Credit Credit Report Credit Score

FICO ScoreA type of credit score that makes up a

substantial portion of the credit report that lenders use to assess an applicant's credit risk and whether to extend a loan. 

FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score.

What Determines your FICO Score?

Tips for improving YOUR Score

General Tips for Financial Success1) Set a monthly budget2) Always pay on time 3) Never borrow more than 20% of your yearly

net income.4) Keep your credit card debt low enough so

that your required payments are no more than 10% of your monthly income or avoid credit cards if possible.

5) Invest your earnings6) Budget and manage your cash7) Live within your means