1. Chapter 1A Lecture Focus On: Improving Your Financial Health © 2015 Pearson Education, Inc.

2. Learning Outcomes Discuss how finances impact health. Learn to create a realistic budget. Understand the different types of student loans and other financial aid options. Explain credit cards, credit scores, and best practices for using credit wisely. Describe common types of identity theft and ways to avoid or resolve them. © 2015 Pearson Education, Inc.

3. The Links between Health and Wealth People in wealthy, developed countries have longer life expectancies than do those in poorer countries. The lower the personal income, the greater the chances are for being overweight or obese. Median income for those with a B.A. degree is $50,360 compared to $29,423 for those with a high school diploma. © 2015 Pearson Education, Inc.

4. Life Expectancy at Birth and GDP per capita, 2009 (or nearest year) © 2015 Pearson Education, Inc.

5. Making a Budget A budget is an estimate of spending and income over a set period of time. Discretionary spending involves goods and services that are not life essentials. Budget surplus refers to money left over for savings after expenses have been paid. Budget deficit results from spending more than your income. © 2015 Pearson Education, Inc.

6. Making a Budget (cont.) Set Goals: Avoid as much debt as possible. Track Expenses: –Rent, mortgages, utilities, car loan payments, insurance premiums, phone plans. –Tuition, books, supplies, other school fees. Make a list of what you spend on food, clothing, entertainment, and personal products and services. –These items may be discretionary spending. © 2015 Pearson Education, Inc.

7. Making a Budget (cont.) Track income: wages, interest from investments, financial aid, stipends and other financial gifts. Make the numbers add up: both income and expenses may be concentrated at the beginning of an academic term Track spending accurately. © 2015 Pearson Education, Inc.

8. Creative Ways to Cut Spending Cut back on the cappuccinos. Add 2 more weeks between haircuts. Drive less. Cook more. Use your phone on WiFi. Carry cash instead of credit cards. © 2015 Pearson Education, Inc.

9. How Families Cut Costs to Make College More Affordable © 2015 Pearson Education, Inc.

10. Debt and Credit Basics Debt is owing money for something purchased. Credit is the ability to purchase things in advance of paying for them. It is a loan. –The original amount is the principle. –Loans include interest and charges. © 2015 Pearson Education, Inc.

11. Debt and Credit Basics (cont.) Student loans: aid options that require repayment –Another type of aid is a grant, which does not require repayment. –Federal Work-Study is another type of aid in which part-time jobs help pay for education. –Private student loans are issued by lending agencies. –Federal student loans are funded by the federal government. © 2015 Pearson Education, Inc.

12. Differences in Federal and Private Student Loans © 2015 Pearson Education, Inc.

13. Debt and Credit Basics (cont.) Credit cards are unsecured loans. –Credit cards incur interest and fees –The annual percentage rates (APR) vary greatly. –Initial credit cards generally have a small credit limit. –A grace period is the time between a purchase and when a payment is due. © 2015 Pearson Education, Inc.

14. Debt and Credit Basics (cont.) Credit scores are a calculation that reflects how likely you are to default on a debt. –Scores are based on credit history, current debt, total credit available, and how often you apply for credit. –General payment history is also factored in, as is age. –Scores range from 300 to 850, where the higher the score, the better the rating. © 2015 Pearson Education, Inc.

15. Debt and Credit Basics (cont.) Credit score accuracy can be reviewed by seeing a credit report. Equifax, Experian, and TransUnion keep credit report records. Free copies are available once a year: –1-877-322-8228 –The Fair Credit Reporting Agency gives you the right to buy your own credit score. © 2015 Pearson Education, Inc.

16. Debt and Credit Basics (cont.) Know Your Consumer Credit Rights –If you are rejected for a credit card, you have the right to find out why. Credit card issuers can't give students gifts for applying for cards. Colleges must publicly disclose marketing contracts with credit card companies. Those under age 21 must provide proof of ability to repay charges, or the card must be cosigned. –If a card is cosigned, credit limit cannot be raised without signature of cosigner. © 2015 Pearson Education, Inc.

17. ABC News Video: Money Mistakes College Grads Make Discussion Questions Discuss good types of debt. How is not having a credit history detrimental to financial success? How can people demonstrate responsibility for making payments? How can college students invest in themselves now in order to have a fruitful career? What tips can college grads utilize in order to develop a habit of saving money? It is important to look at the whole picture in considering employment opportunities. What factors are negotiable and what should you take into consideration beyond salary? © 2015 Pearson Education, Inc.

18. Protection against Fraud and Identity Theft Identity theft occurs when someone steals personal information such as an address, social security number, credit card and bank account numbers. Credit card theft occurs when unfamiliar charges appear on a statement. –Worse than credit card theft is when a thief sets up new bank accounts and credit cards in your name that bill to a different address and never pays the bills. © 2015 Pearson Education, Inc.

19. Protection against Fraud and Identity Theft (cont.) Debit card theft occurs when an ATM or debit card is stolen and used. –If you report the theft of an ATM or debit card before any charges occur, you will not be liable for charges. Reporting a theft within 2 business days only costs you $50, but reporting 2 to 60 days after a crime results in up to $500 liability. –After 60 days, you will be unable to recover any lost money. © 2015 Pearson Education, Inc.

20. Protection against Fraud and Identity Theft (cont.) Medical account theft occurs when thieves steal medical insurance numbers. –Your account is sold to someone who uses it to pay for medical care. –Incorrect medical records could endanger your own health when you seek treatment. © 2015 Pearson Education, Inc.

21. Protection against Fraud and Identity Theft (cont.) Protecting Personal Information and Avoiding Scams –Accounts may be compromised due to data breaches. –Monitor your credit report for signs of identity theft after a data breach. –You don't have control over breaches, but you can help prevent other types of fraud. © 2015 Pearson Education, Inc.

22. Protection against Fraud and Identity Theft (cont.) Protecting against fraud includes: –Steering clear of phishers –Updating smart phone operating systems and computer software regularly –Removing key information from social media accounts –Getting a smart card –Password locking your smart phone and PC –Shredding anything with your credit card number on it. © 2015 Pearson Education, Inc.

23. Protection against Fraud and Identity Theft (cont.) Cleaning Up Identity Theft Messes –Place a fraud alert on your credit cards –Close accounts that were misused or set up fraudulently –File a police report to document the crime –File a complaint with the Federal Trade Commission © 2015 Pearson Education, Inc.