Money Counts A Financial Literacy Series Making Sense

  • Slides: 20
Download presentation
Money. Counts: A Financial Literacy Series Making Sense of your Dollars and Cents Dr.

Money. Counts: A Financial Literacy Series Making Sense of your Dollars and Cents Dr. Daad A. Rizk Financial Literacy Manager Money. Counts: A Financial Literacy Series 240 D Outreach Building University Park PA 16802 dar 39@psu. edu 814 -863 -0214

Description/Learning Objectives – A Young person starting out his/her future needs to know the

Description/Learning Objectives – A Young person starting out his/her future needs to know the basics of personal Financial Literacy, this workshop is to arm you with ten (10) principles of personal financial literacy that should guide you throughout your life. – Understand the ten (10) “must-know” personal finance principles – Be able to apply these principles to one’s life – Assess your relationship with money management (KAB) • Knowledge/Theory • Action • Behavior Money. Counts: A Financial Literacy Series

What is Financial Literacy? What is a Financial Literacy? Financial Literacy is the ability

What is Financial Literacy? What is a Financial Literacy? Financial Literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing The foundation for Money Management The Knowledge behind Personal and Consumer Finance Deals with budgeting, saving, investing, debts and risk management Money. Counts: A Financial Literacy Series

Principles of Financial Literacy Ten (10) Principles of Financial Literacy Money. Counts: A Financial

Principles of Financial Literacy Ten (10) Principles of Financial Literacy Money. Counts: A Financial Literacy Series

Map Your Financial Future Money. Counts: A Financial Literacy Series

Map Your Financial Future Money. Counts: A Financial Literacy Series

Know Your Take Home NET PAY Money. Counts: A Financial Literacy Series

Know Your Take Home NET PAY Money. Counts: A Financial Literacy Series

Budget Your Money. Counts: A Financial Literacy Series

Budget Your Money. Counts: A Financial Literacy Series

A Healthy Budget Sample Money. Counts: A Financial Literacy Series

A Healthy Budget Sample Money. Counts: A Financial Literacy Series

Pay Yourself First Money. Counts: A Financial Literacy Series

Pay Yourself First Money. Counts: A Financial Literacy Series

Save and Invest at early AGE Money. Counts: A Financial Literacy Series

Save and Invest at early AGE Money. Counts: A Financial Literacy Series

Needs Versus Wants Money. Counts: A Financial Literacy Series

Needs Versus Wants Money. Counts: A Financial Literacy Series

Don’t Borrow What you Can’t Pay Back Money. Counts: A Financial Literacy Series

Don’t Borrow What you Can’t Pay Back Money. Counts: A Financial Literacy Series

Know the Rules • Rule of 20/10 – Total Debts excluding mortgage should not

Know the Rules • Rule of 20/10 – Total Debts excluding mortgage should not exceed 20% of net yearly income – Monthly payment should not exceed 10% of monthly net income – Example: Your net yearly income is $60, 000 your total debts should not exceed $12, 000. Your net monthly income is $5, 000, your monthly payment should not exceed $500 • Rule of 72 – To determine how long it will take for your money to double, divide the interest rate into 72 • Example: an account earning 6% interest will double in twelve years • (72 divided by 6 equals 12) Money. Counts: A Financial Literacy Series

Protect your credit history Money. Counts: A Financial Literacy Series

Protect your credit history Money. Counts: A Financial Literacy Series

FICO Scores Understanding the Crossroads that Lead to Explaining the Score What makes up

FICO Scores Understanding the Crossroads that Lead to Explaining the Score What makes up the score? • 35% = Payment History • 30% = Capacity (Capacity is King) • 15% = Length of Credit • 10% = Search & Acquisition for New Credit • 10% = Type of Credit What actions will hurt the score? • Missing payments (regardless of dollar amounts…It will take 24 mo. to restore credit with one late payment). • Credit cards at capacity (i. e. , maxing out credit cards). • Opening up numerous trades in a short time period. • Having more revolving loans in relation to installment loans. • Loans at finance companies What does not Affect the Score? • Income • Length of residence • Length of employment Approximate Credit Weight for each Year • 40% = current to 12 months • 30% = 13 -24 months • 20% = 25 -36 months • 10% = 37+ months How to Improve the Score • Pay down on credit cards • Do not close credit cards because capacity will decrease. • Continue to make payments on time (old late pays will become less significant with time). • • • Slow down getting new loans. Acquire a solid credit history with years of experience. Move revolving debt to installment debt. Money. Counts: A Financial Literacy Series

Get your free credit report Ø Keep tabs on your credit report – get

Get your free credit report Ø Keep tabs on your credit report – get your free copy every 12 months from the 3 nationwide credit reporting agencies Ø Equifax, Experian and Trans. Union Ø https: //www. Annualcreditreport. com/ Ø Call 877 -322 -8228 • Note: You get a free report not FICO Score! You have to pay a fee to get FICO Money. Counts: A Financial Literacy Series

Stay Insured Money. Counts: A Financial Literacy Series

Stay Insured Money. Counts: A Financial Literacy Series

Healthy Relationship with Money • In summary, financial well-being can be defined as a

Healthy Relationship with Money • In summary, financial well-being can be defined as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life. The four elements of financial well being (cfpb) Security Freedom of Choice Present Future Control over day-to-day Month to month finances Financial freedom to make Choices to enjoy life Capacity to absorb financial shock On track to meet financial goals Consumer Financial Protection Bureau (Jan 2015) Money. Counts: A Financial Literacy Series

Additional Resources • https: //financialliteracy. psu. edu • finlit@psu. edu • Student Financial Education

Additional Resources • https: //financialliteracy. psu. edu • finlit@psu. edu • Student Financial Education Center (SFEC) – https: //www. libraries. psu. edu/psul/business/sfec. html Money. Counts: A Financial Literacy Series

Money. Counts: A Financial Literacy Series Thank You! Comments and Questions Dr. Daad A.

Money. Counts: A Financial Literacy Series Thank You! Comments and Questions Dr. Daad A. Rizk Financial Literacy Manager Money. Counts: A Financial Literacy Series 240 D Outreach Building University Park PA 16802 dar 39@psu. edu 814 -863 -0214