Financial Fitness for Life Training Conference Becoming a Smart Money Manager University of Illinois at Urbana-Champaign College of Agricultural, Consumer and Environmental Sciences United States Department of Agriculture Local Extension Councils Cooperating University of Illinois Extension provides equal opportunities in programs and employment.

Funding for this workshop is provided by: National Council on Economic Education US Dept of Education University of Illinois Extension

Instructors Dr. Angela Lyons, Assistant Professor, University of Illinois Urbana-Champaign (217) ; Debra Bartman, Extension Educator, Quad Cities Center (309) (x217); Patricia Hildebrand, Extension Educator, Effingham Extension Center (217) ;

Anecdotal Stories from Real Students

Objectives Introduce: (1) Financial Fitness for Life (2) Saving and Investing (3) Budgeting (4) Credit Reports and Credit Scores (5) NEFE HSFPP Experience activities to use in the classroom Answer questions about curriculum and other resources

You will receive… Curricula with lessons and activities to use in the classroom 6 CPDU’s Network of colleagues to share experiences Resources available at U of I Extension

Financial Fitness for Life Overview: Teacher Guide Student Workouts Parents’ Guide CD-Rom and web links

5 Themes and 22 Lessons: The Economic Way of Thinking Earning Income Saving Spending and Using Credit Money Management

Each lesson includes: Fitness Focus (lesson description and objectives) Workout (warm-up, exercise, cool down) Visuals Student Exercises Family Activities

Meets national and most state content standards in 4 critical areas: Economics Language Arts Mathematics Personal Finance

FFFL Part 1 (Lessons 1, 3, 8, 10, and 14) How to Really Be a Millionaire

The Millionaire Game The Rules: For each statement, answer “TRUE” or “FALSE.” For each correct answer, give yourself 5 points. For each incorrect answer, take away 5 points. For any 5 statements, you may use your “Millionaire” card. If you answer correctly, you receive 10 points. If not, you lose 10 points.

Question 1: Most millionaires are college graduates. Let’s Get Started….

Answer 1: TRUE

Question 2: Most millionaires work fewer than 40 hours a week.

Answer 2: FALSE

Question 3: More than half of all millionaires never received money from a trust fund or estate.

Answer 3: TRUE

Question 4: More millionaires have American Express Gold Cards than Sears cards.

Answer 4: FALSE

Question 5: More millionaires drive Fords than Cadillacs.

Answer 5: TRUE

Question 6: Most millionaires work in glamorous jobs, such as sports, entertainment, or high tech.

Answer 6: FALSE

Question 7: Most millionaires work for big Fortune 500 companies.

Answer 7: FALSE

Question 8: Many poor people become millionaires by winning the lottery.

Answer 8: FALSE

Question 9: College graduates earn about 65% more than high school graduates earn.

Answer 9: TRUE

Question 10: If an average 18-year-old high school graduate spends as much as an average high school dropout until both are 67 years old, but the high school graduate invests the difference in his or her earnings at 8% annual interest, the high school graduate would have $5,500,000.

Answer 10: TRUE

Question 11: Day traders usually beat the stock market and many of them become millionaires.

Answer 11: FALSE

Question 12: If you want to be a millionaire, avoid the risky stock market.

Answer 12: FALSE

Question 13: At age 18, you decide not to smoke and save $1.50 a day. You invest this $1.50 a day at 8% annual interest until you are 67. At age 67, your savings from not smoking are almost $300,000.

Answer 13: TRUE

Question 14: If you save $2,000 a year from age 22 to age 65 at 8% annual interest, your savings will be over $700,000 at age 65.

Answer 14: TRUE

Question 15: Single people are more often millionaires than married people.

Answer 15: FALSE

Lesson 8: Spending vs. Saving begins with saving, then investing. The road to wealth….

Managing money well means taking things one step at a time.

The factors that affect how much savings grow are: Time The earlier or longer you save, the more savings you will have. Investment Size The more you save each year from your income, the more savings you will have. Rate of Return The higher the interest rate or rate of return, the more savings you will have.

Time Value of Money The earlier you save, the more $$’s you will have. Exercise 8.2 A Tale of Two Savers

Cool Million calculator: Calculators/Millionaire.aspx

Other Calculators: Mortgage Auto Loan Debit and Credit Cards Saving Personal Finance Investment Retirement

Exercise 8.3 Why It Pays to Save Early and Often Or, how long it takes for savings to grow to double your money Divide 72 by the interest rate. Example: 72  6%  12 years Rule of 72:

Activity (Exercise 10.1): Investment Bingo Free Lunch

FFFL Lessons Grades 9-12: Lesson 1, How to Really Be a Millionaire Lesson 3, Decision Making Lesson 8, What’s the Cost of Spending and Saving? Lesson 10, Investment Bingo Lesson 14, All About Interest Grades 6-8: Lesson 7, p , Types of Savings Lesson 8, p , Simple and Compound Interest

FFFL Part 2 (Lesson 20) Budgets are Beautiful!

Creating a Spending Plan (“Your Financial Plan”) Identify your financial goals. Determine the time frame for your budget: annual, by academic term, monthly. Take stock of where you’re currently at. Estimate your available financial resources. Calculate your expenses. Do the math.

Subtract expenses from resources. Decide how much to borrow. Borrow only what you can afford to pay back. Note that your loans will be repaid with your FUTURE income.

Set Your Financial Goals Types of goals Short-term (1 year or less) Medium term (1-5 years) Long-term (5 years or more) Identify goals and write them down. Prioritize your goals. Develop strategies to achieve your goals. Reassess your goals periodically. ACTIVITY: Financial Goal Worksheets

Identify and Prioritize Your Goals What do you want to buy after you graduate? How soon do you hope to pay off any student loan or other education-related debt you have incurred? What kind of lifestyle do you want? Where do you want to live? What are your hopes for a family? Where do you want to work? Where do you want to retire? What kind of lifestyle do you want in retirement?

When creating a spending plan…. Set limits and prioritize. Know your limits. Learn by doing! Get some practical experience.

When estimating your resources…. REMEMBER: Borrowed funds are NOT your resources!!!

When calculating expenses…. Be honest and realistic. Distinguish between “needs” and “wants.” Consider fixed and variable (flexible) expenses. Pay yourself first (PYF)

Can you cut expenses? Find one or more roommates to share living expenses. Eat at cheaper places when dining out; cook at home. Have only one phone. Dress for less. Clip and use coupons. Don’t buy a new car. Beware of buying for convenience. Avoid credit card debt.

Saving Dollars When You Don’t Have a Dime to Spare Break a habit! Do without! Don’t buy! ItemHow OftenPrice of EachSavings/Year Eating Out5 days/week$ 6.50$ Magazine1/week Soft drink/candy bar/chips1/day Tank of gas1/week Lottery ticket2/week Cigarettes1 pack/day Alcoholic Beverage1/day Cable1/month Phone extras (call waiting, caller ID, voice mail, etc.)1/month Gifts (charity/family/friends)2/month Total $

Budgeting Really Does Work A successful budget should: Help increase savings Inhibit impulsive spending Determine what you can afford Identify expenses that can be reduced Repay debt EVIDENCE: BYU Financial Path to Graduation

It’s not all about finances…. Emotions and decision making Family communication Purpose and value of money Financial habits and financial socialization

Methods for Tracking Spending Personal financial software programs (Quicken or Microsoft Money have built-in budget- making tools that can create your budget for you.) PowerPay (Utah State University) Worksheets / spreadsheets Online budget planning calculators Envelope method

PowerPay Spending Plan PowerSave Calculators Education Center

Basic Spending Plan Extended Spending Plan

PowerSave

Calculators

Education Center

Access Group, Inc.

Calculators Interest Rate Comparison Calculator In-School Budget Calculator Loan Repayment Calculator Out-of-School Budget Calculator

Money 101: Making a Budget

College Cost Projector Savings Plan Designer Expected Family Contribution and Financial Aid Calculator Loan Calculators Budgeting Calculators

FFFL Lessons Grades 9-12: Lesson 20, p , Managing Your Money Grades 6-8: Lesson 15, p , Managing Cash

An Activity The Bean Game! A simulation game where you learn how to prioritize and make spending choices based on what’s important to you.

Iowa State University Extension Spending Game Allowance Game

Credit Reports and Credit Scores FFFL Part 3 (Lessons 11, 12, 13)

How credit can affect your everyday life… Getting a job Renting an apartment Getting a loan Buying a car Paying insurance Getting married!!!

Take the Credit Challenge! Myths and Realities of Credit The Rules: For each statement, answer “TRUE” or “FALSE.” For each correct answer, give yourself 5 points. For each incorrect answer, take away 5 points. For any 5 statements, you may use your “CREDIT” card. If you answer correctly, you receive 10 points. If not, you lose 10 points.

Question 1: Credit card companies only approve credit limits that an individual is able to afford. Let’s Get Started….

Answer 1: FALSE

Question 2: After you take out a loan, a lender is not required to provide information to credit reporting agencies about the loan and your history of paying it back.

Answer 2: TRUE

Question 3: Approximately 10% of an individual’s credit score is determined by their payment history.

Answer 3: FALSE

Question 4: Individuals are eligible to receive a free credit report once a year from each of the three credit reporting agencies.

Answer 4: TRUE

Question 5: Credit reports contain information on where an individual has lived, past employers, and annual income.

Answer 5: FALSE

Question 6: A potential employer is permitted to see an individual’s credit report without his/her consent.

Answer 6: FALSE

Question 7: Requesting a copy of your own credit report can negatively affect your credit score.

Answer 7: FALSE

Question 8: Negative information, such as filing for bankruptcy, can remain on a credit report for up to 10 years.

Answer 8: TRUE

Question 9: By law, if an individual is unable to resolve a disputed item with a credit reporting agency, they have the right to delete the information from their credit report.

Answer 9: FALSE

Question 10: If an individual resolves an error on their credit report with one credit reporting agency, the same error will automatically be corrected by the other credit reporting agencies.

Answer 10: FALSE

What is a credit report? An evaluation of your credit experience. Similar to a report card. Your credit record includes: Personal information Open lines of credit Payment history Inquiries Public record and collection items (bankruptcies, foreclosures, financial judgements)

What info is not in your credit report? Race Religion Medical history Political affiliation Criminal records Annual income Checking or savings accounts

Who has access to your credit report? Creditors Employers Insurance companies Certain professional organizations Courts IRS Collection agencies (i.e., CCCS)

What is a credit score? A number that summarizes your level of creditworthiness. Your score depends on the credit scoring model used. FICO scores are the most common. Scores range from Averages are between 690 and 740. Visit for more information.

FICO Score Ranges 20% are above % are between % are between % are between % are below 619

FICO Credit Score Estimator:

Your credit score is used to set the “price” of your loan. Based on:

FICO Score Simulator: Pay Bills on Time Pay Down Balances on Credit Cards Pay Down Delinquent Balances First Seek New Credit Transfer Credit Card Balances Miss Payments Max Out Credit Cards

Other Calculators: Mortgage Auto Loan Debit and Credit Cards Saving Personal Finance Investment Retirement

Understanding Your Credit Score

Checking Your Credit Report 3 major credit bureaus: Equifax (Beacon score) ( ) Experian (PLUS score) ( ) TransUnion (Empirica score) ( )

Obtaining a *FREE* Credit Report

Annual Credit Report Frequently Asked Questions Contact Us About Us Fraud Alert

An Activity Reading a Credit Report

Sample Credit Report: samplecreditreport1.pdf

FFFL: Evaluating Credit Reports Grades 9-12: Ex. 13.1, p. 76 Ex. 13.2, p. 79 Illustration 13.1, p Grades 6-8: Lesson 13, p Ex. 13.1A E, p

Grades 9-12: Ex. 13.3, p Ex. 12.1, p Grades 6-8: Lesson 13, p Ex. 13.1A E, p FFFL: Evaluating Credit Applications

Helpful Resources University of Illinois Extension Consumer and Family Economics National Council on Economic Education Illinois Council on Economic Education

University of Illinois Extension Consumer and Family Economics

NCEE

Contact Information Dr. Angela Lyons, Assistant Professor, University of Illinois Urbana-Champaign (217) ; Debra Bartman, Extension Educator, Quad Cities Center (309) (x217); Patricia Hildebrand, Extension Educator, Effingham Extension Center (217) ;

Questions