1. FINANCIAL LITERACY INDEPENDENT LIVING Carroll County Advisement Program

2. Think about how much the following items cost your parents per month!

3. These are just a few things you have to think about when you live independently!!!

4. INSURANCE  People pay premiums to insurance companies to cover potential losses associated with their belongings. The insurance company takes those premiums and pulls them together in one pool of money. Those funds are available to pay for the losses suffered by members of the pool.

5. INSURANCE  TYPES OF INSURANCE  Car - limits financial loss due to damage or a car accident  Health - also called medical insurance, helps protect you and your family from expensive or unexpected health care-related expenses  Renters - protects renters from theft or damage of personal items— furniture, TV, computer, clothing, etc.—in their apartments or their cars.  Life - insures against loss of income due to death and can also be used for retirement planning and investing

6. INSURANCE- What do you remember?  The money you pay for the insurance is called the ____________.  _________ insurance protects you from a loss due to theft or damage in an apartment.  Health insurance is also called ____________ insurance.  Automobile insurance limits your financial loss due to a _______________.  The purpose of _______ insurance is to insure loss of income due to death.

7. CREDIT  Credit is about borrowing money from a lender with the intent, or promise, to pay the money back.  Credit is a privilege! It’s granted only to those who have demonstrated their ability to manage their money over time. This is called your credit history  Building good credit or a good credit score is the key to getting the things you want – a car, college education, or a house. It’s important to maintain a good credit history.

8. CREDIT  It is important that you begin building up a good credit history!  When you open an account or take out a loan, make sure to make your payments promptly!  DON’T GET BEHIND!!

9. CREDIT  Amy is a recent college graduate who earns about $1,500 in take-home pay. She has an apartment on which she pays $500 in rent and utilities. She makes two monthly loan payments: $120 for her student loans and $150 for her car. She is also paying about $20 on her credit cards. She has just seen some furniture that she thinks is stunning. She could buy the pieces by paying $50 a month over three years. She wonders whether she should do so.

10. CREDIT  1. Is Amy developing a credit rating?  2. Do you think that Amy should buy the furniture on credit at the present time?  3. How do credit decisions affect your life for many years?

11. LOANS  Loans are usually used for large purchases such as houses, cars, appliances, or education  You borrow all the money you need and pay it back monthly. With loans, you also have to pay interest.  Financial institutions are more likely to make loans to borrowers who have a good credit history!

12. LOANS  A parent took out a loan for $5000 to help pay for her daughter’s college tuition. If she repays the loan over 24 months, she will pay $223.96 a month. If she repays the loan over 48 months, the monthly payments will be $45.96 less.  1. What is the total amount that this parent will pay if she repays the loan over 24 months?  2. What is the total amount that this parent will pay if she repays the loan over 48 months?  3. How much more will the loan cost this parent if she chooses to repay the loan over 48 months than over 24 months?  4. Why might the parent choose to take the 24-month loan? Why might the parent choose to take the 48-month loan?

13. IN SUMMARY….  It is important to build a good credit history by establishing lines of credit and paying on time -- every time!  You will probably need to take out a loan sometime in your life! A good credit score is the key to getting the loan that you need.  Insurance is a necessary expense! It helps to cover the costs of accidents, sickness, and property damage in the event that something happens.