1. Financial Head Start

2. Why care? It’s Your MONEY 2

3. What would YOU like to start saving for? It’s never too early to plan ahead…

4. Where to begin Create a Budget and Goal with an Expense Worksheet An Expense Worksheet will keep track of: O Expenses O Actual Amount Spent O Savings and Losses 4

5. What is a Budget? An important step to Financial Security About choices – choosing how to make and spend money

6. Steps to Preparing a Budget Step 1: Review your income and expenses Step 2: Keep track of daily spending Step 3: Find ways to decrease spending

7. Step 1: Income… Income comes in the form of: Allowances Wages from a job Miscellaneous work Interest and dividends from investments

8. Step 1:...and Expenses Expenses: items you pay for each month: Housing and car payments Insurance Food and clothing Utility bills Personal, child or pet care Eating out or other entertainment Educational costs, etc.

9. Fixed Expenses: Do not change from month to month Flexible Expenses: Often change from month to month  You may have control over how much you pay  You may shop around for the best value before committing to any expense Classifying Expenses

10. Step 2: Keep Track of Daily Spending Do you know where your money goes each month? Have you ever had any money and then spent it? Do you remember exactly what you bought? Control Your Money! Know where your money goes Keep a personal spending diary Cut expenses to save for goals

11. Monthly Income and Expense Worksheet My Income My Expense Wages $ 1,500 Fixed Expenses: Public Assistance Rent/Mortgage $ 500 Allowance/ other income $ 200Property taxes/Insurance $ Interest/Dividends $ 20Water/Sewage $ 20 Social Security Electricity $ 50 Other Gas $ 100 Auto Loans/Bills/Misc. $ 200 Car Insurance/Health Insurance $ Gross Income $ 1,720Food/other household items $ 100 Less Taxes and other deductions (estimated) $ 220Children's pocket money $ Available Income $ 1,500 Flexible Expenses: Clothes $ 50 Pets $ 50 Telephone/Internet/Cable $ 20 Travel costs School meals $ 100 Laundry/other amenities $ 30 Newspaper Income available $ 1,500Outside meals $ 100 Less: Total Expenses $ 1,360Cell phone $ 40 Net Disposable Income $ 140Total Expenses $ 1,360

12. Step 3: Find Ways to Decrease Spending You can decrease spending by: Not shopping “for fun” Remembering your savings goals Buying only what you need Paying your bills on time to avoid extra fees and charges

13. It all adds up! o 1 Starbucks® drink @ $3.50 o $3.50 x 7 days = $24.50 o $3.50 x 365 days = $1,227.50 o 1 Sonic® burger @ $4.25 o $4.25 x 7 days = $29.75 o $4.25 x 365 days = $1,551.25 o 1 carton of cigarettes @ $32.00 o $32.00 x 12 months = $384.00 o $32.00 x 26 weeks = $832.00 13

14. Needs vs. Wants O Write down needs and wants, look carefully at what is written down. O Think about what’s really important to you and what has lasting value. O Do you really need or want everything on your list? O Are some needs really wants? 14

15. Now what? What do I do with the money I save? How do I pay bills?

16. O Checking accounts are used to pay bills and buy goods. O Saving accounts are used for saving money and earning interest. Types of Bank Accounts

17. Advantages of Maintaining a Bank Account O Money in a bank account is safe, secure, and convenient O Pay bills online O Earn interest – build your savings O Build credit (credit score) Make sure your banking institution is FDIC insured ! ((F (FDIC) Federal Deposit Insurance Corp

18. Banking Services Banks offer their customers many different ways to access their services: O A branch is a retail location where a bank offers face- to-face service to its customers. O ATM (automated teller machine) O Online banking allows you to conduct nearly all of your banking transactions. O Mobile banking allows you to use your cell phone to conduct simple banking transactions.

19. Checking Account A checking account can help you manage your daily finances and make sure you’re staying on track. Benefits of a checking account: O Writing checks or using a debit card is generally safer than carrying cash. O Making payments through a checking account is much less expensive than paying for money orders and cashier’s checks. O Direct deposit from your employer into your checking account is the easiest way to manage your paycheck. O Paper and/or online account statements help you track your income and expenses. O You can make purchases easily and access cash when you need it. O Most checking accounts come with ATM cards that allow you to get cash from ATMs.

20. Checking AND Saving Accounts Types of accounts O Basic checking O Interest-Bearing accounts O Money Market Accounts O Student and Senior Checking O Savings O Make sure to pay yourself first – don’t wait to save what is left over at the end of the month. You can do this easily by setting up an automatic transfer so that every month or with every paycheck, a certain amount of money goes directly to your savings account.

21. Important Terms O Deposit – To put money in the bank O Withdrawal – To take money out of the bank O Balance - How much money you have in the bank O Overdraft - Withdrawing more money than you have in your account O Fees - Money charged for services

22. Be Smart! O Establish financial goals O Develop a realistic budget O Prepare for the unexpected O Balancing your checkbook O Save, save, save. O Pay on time O Be smart about credit

23. Credit is your… O Reputation as a borrower O Tells others how likely you are to repay your loans based on information about your borrowing history O Information comes from your credit reports What is Credit?

24. FICO is the best-known and most widely used credit score model in the U.S. Fair Isaac Corporation – Risk Score FICO Score is made up of: What is FICO?

25. Establishing and Building Credit Credit Cards - Revolving credit “borrowed” to make purchases at most merchants/businesses. Monthly payment including interest must be paid back to creditor. Get a co-signer - Lenders will consider the co- signer’s existing credit when approving. Apply for a department store credit card - These types of cards are sometimes approved for people with no credit history. ALWAYS PAY ON TIME!

26. Questions?