Financial Literacy 101 Back to the Basics

Transcript:Financial Literacy 101 Back to the Basics:
Financial Literacy 101 Back to the Basics Budgeting Tracking Income and Expenses Reducing Expenses Credit as a Consumer Credit Reports Credit Scores Improving Credit Power Pay Debt Budgeting 101 Benefits: maximize assets, minimize debt Step 1: Calculating Income Step 2: Calculating Expenses Tracking Step 3: Develop a Spending Plan Step 4: Minimize Expenses Distinguish: necessities and luxuries Calculating Income, Basics Always underestimate income Include subsidies (insurance, housing, food) Income fluctuates by # hours or days worked Include financial aid, but deposit into draw account Deposit lump sum into account and withdraw monthly “pay” Miscellaneous income: VA payments, child support, disability payments Tracking Expenses, Basics Determine where the money goes Goal: get your money to last longer Methods: Keep receipts Balancing a checkbook Notebook or ledger Calendar Software or websites Envelops with Money Tracking Necessity Expenses Tracking Luxury Expenses Ways to Reduce Spending Standard of living expectations Live large now with debt, live smaller later and longer Eliminate or reducing eating out Studio apt v. 1-bedroom apt Living with roommates Smart phone v. cellphone Shop with Lists Increasing Income for Students Full-time students: work 20 hours or less FT: 12 credits or more On-campus or off-campus Part-time students: work 40 hours or less PT: 11 credits or less Downside: May add time to graduation Benefits: Time for more work experience for resume Earning income to reduce need for financial aid debt Lower cost per credit at 11 credits Credit Reports Purpose: to determine whether you will pay your debts in the future by looking at your past and current debt and payment history *** Created by Creditors for Creditors*** Credit Report v. Credit Score Credit Reports: list of debt obligations with new obligations fist Free from www.annualcreditreport.com Transunion (Midwest), Experian (west coast), Equifax (east coast) Used to calculate credit score Credit Score: numerical value of your credit risk the higher the number, the less risk you are Utilizes 45 data points from credit report Making the Most of Your Credit Report Information includes: Employment & Address History Number & Types of Inquiries Payment History on All Debt Amount, Age, and Types of Debts Public Records: evictions, bankruptcies, court judgments Negative information lasts 7 or 10 years Improving Credit # 1 Correct Errors Send updates on addresses to credit bureaus Contact credit for errors in payment history # 2 Pay Off Debts or Collections Get payment plans or settlements in writing Payments