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

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Managing Your MoneyWhat You Need to Know About
Budgets, Credit Cards and Paying For College
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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 Reserves 2004 Survey of
  Consumer Finance
• In 2006 the Jumptart 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 Jumptart Coalition 2006
  Survey of Financial Literacy among High School
  Students

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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

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Making a BudgetWhere did all my money go?

• Net Income
• Fixed Expenses, Flexible Expenses and
  Discretionary Expenses
• Keep track of monthly expenses

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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
• Dont exceed your limit
• Protect your personal information
• -AICPA

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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

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Inveting 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

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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
• Dont 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.

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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 doesnt 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

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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

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Remember

• Developing good money management skills today can
  mean big payoffs in the future!

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Questions?