1. National Association of Black Accountants, Inc. M ney $ense NABA - Money $ense

2. Money Mindsets “The only way to not think about money is to have a great deal of it.” Edith Wharton

3. Money Mindsets (cont’d) “The safest way to double your money is to fold it over and put it in your pocket.” Kin Hubbard

4. Money Mindsets (concluded) “We have become ninety-nine percent money mad. The method of living at home modestly and within our income, laying a little by systematically for the proverbial rainy day which is due to come, can almost be listed among the lost arts." George Washington Carver

5. How does money play into your life?  Have you thought about your relationship with money?  Money should not influence your self- esteem  Your value as a person does not come from money NABA - Money $ense

6. Financial Education Workshop Learning Objectives:  Four Pillars of Personal Finance  Keys to saving  Understand credit  Recognize good debt vs. bad debt  Learn to win the money game using a budget NABA - Money $ense

7. Four Pillars of Personal Finance 1. Savings You are worth every penny of your moneyYou are worth every penny of your money Pay Yourself First and Pay Yourself OftenPay Yourself First and Pay Yourself Often 2. Handling Credit and Debt Knowledge is PowerKnowledge is Power Know your credit score and how to raise itKnow your credit score and how to raise it Know the power and pitfalls of credit/debtKnow the power and pitfalls of credit/debt NABA - Money $ense

8. Four Pillars of Personal Finance 3.Budgeting Know where your money is going or it’s going to go places without youKnow where your money is going or it’s going to go places without you Know your budget, update your budget, be flexible with your budgetKnow your budget, update your budget, be flexible with your budget 4. Investing Know what you want and use patience to get thereKnow what you want and use patience to get there Invest based on your goals, risk tolerance, and timeInvest based on your goals, risk tolerance, and time

9. Pillar One: Savings

10. Pay Yourself – Savings is Key  Make a habit of paying yourself first Rule of thumb is 10% but the more the better Rule of thumb is 10% but the more the better  Save for 3 – 6 months living expenses Set-up high interest savings account Set-up high interest savings account  Nest egg savings Save for vacation, new car, expected expenditure Save for vacation, new car, expected expenditure NABA - Money $ense

11. Pillar Two: Managing Debt and Credit

12. Credit in a Nutshell Are You Trustworthy?

13.   If I lend you money, will you pay me back?   Will you pay me on schedule according to our agreement?   What happens when you don’t pay on time?   At what point do you violate my trust?   What will it cost you to regain my trust?   What should I tell others when they ask about your trustworthiness?

14. Types of Credit Accounts and Relationships   Mortgage loan (Countrywide, Quicken Loans, Bank of America)   Car loan (GMAC, Chrysler Financial, Ford Motor Credit)   Major credit card (Bank of America, Capital One, US Bank)   Dept. store credit (Macy’s, The Limited, Nordstrom)   Cell phone (AT&T, Sprint, Verizon)   Bank checking*

15. Type of CreditLenderAdvantagesDisadvantages HOME MORTGAGE Commercial bank Savings and loan Credit union Homes often increase in value. Interest rates for mortgages are relatively low The interest paid is tax- deductible. Mortgages are long-term commitments. Obtaining a home loan involves extensive credit checks. CAR LOANS Commercial bank Savings and loan Credit union Consumer finance company Cars can make it easier to work and earn an income. Cars lose their value relatively quickly. The car you purchase may have little value when the last payment is made. COLLEGE LOANS Commercial bank Savings and loan Credit union  Federal government A college education is a good borrow investment. necessary. Interest rates can be relatively low. Students sometimes borrow more than necessary. New graduates can face difficulty in repaying large loans. PERSONAL LOANS Commercial bank Savings and loan Credit union Consumer finance company Personal loans allow individuals to purchase today that boat or vacation they want. Personal loans have relatively high interest rates. Some young people may borrow more than their income allows. CREDIT CARDS Commercial bank Savings and loan Department store Oil companies Other financial institutions, e.g., American Express Credit cards are convenient to use and useful in an emergency. Credit cards provide a record of charges. Credit cards have relatively high interest rates. Some young people may borrow more than their income allows. NABA - Money $ense

16. Credit Cards, Credit Bureaus and Credit Reports How They Work Together + + = Your Credit Score

17. Credit Cards   Terminology you must know: APR – Annual Percentage Rate Finance Charge Grace Period Fees (annual, transaction, cash advance, late)

18. Credit Bureaus   Three credit bureaus (Equifax, Experian, TransUnion)   Role they play: Receive and report credit information from and to various entities who have established or look to establish a credit relationship with you. Maintain credit report

19. Credit Reports   What is reported? Name of creditor Length of credit history Amount of credit outstanding and borrowing capacity Status of payment on account: current or late Inquiries on account Other information Credit score*   How do you obtain a copy of report? FREE at www.annualcreditreport.comwww.annualcreditreport.com

20. Credit Score   Why is it important? Measurement of creditworthiness Basis for creditor’s lending decision Determines cost of borrowing (i.e. interest rate) Employers may pull it when evaluating potential candidates for hire   How is it calculated? Payment history – (35%) Payment history – (35%) Debt to credit limit – (30%) Debt to credit limit – (30%) Length of credit history – (15%) Length of credit history – (15%) New accounts and recent applications for credit – (10%) New accounts and recent applications for credit – (10%) Mix of credit cards and loans – (10%) Mix of credit cards and loans – (10%)

21. Credit Cards – Terms to Know APR: the amount it costs annually when you decide to carry a balance (not pay off your credit card in full) each month.   Can range from 0 to as high as 25% annually Finance Charge: Actual dollar cost of using credit Grace Period: the number of days you have to pay your bill in full before incurring finance charges (typically 25 days).   Beware of cards with no grace period! Interest accrues from the moment you charge an item.   You don’t get a grace period when you carry a balance. Annual Fee: the amount you pay annually as a credit cardholder for the privilege of using credit   If you pay your balance each month, you should avoid cards with an annual fee.   Some annual fee cards have lower interest rates, so if you carry a balance each month you may actually save money with an annual fee card. Transaction Fees: You may be charged additional fees for ATM cash advances, balance transfers, late charges and exceeding your credit limit.   Some cards also charge a monthly fee for not using the card! Late Fee: If your payment is not processed by the due date, you may be assessed a late fee of up to $35.   Avoid this expense by mailing timely payments.   Remember, creditors must receive a payment at least every 30 days. NABA - Money $ense

22. Debt: Friend or Foe?  Good Debt vs. Bad Debt Buying a home vs. buying an expensive vacation Buying a home vs. buying an expensive vacation  How much debt can you handle A conservative rule of thumb: the “20-10 Rule” A conservative rule of thumb: the “20-10 Rule” Total household debt including your housing payments shouldn’t exceed 20% of your net household incomeTotal household debt including your housing payments shouldn’t exceed 20% of your net household income  How to handle debt Have a plan Have a plan Know how much you owe, know the interest and repayment terms, set a plan, and stick to itKnow how much you owe, know the interest and repayment terms, set a plan, and stick to it NABA - Money $ense

23. Pillar Three: Budgeting Get in the Money Game!

24. The Money Game How Do You Play?

25. Three Ways to Play 1. 1. Getting Ahead – You make more money than you spend. Therefore, you have money at end of month that can be saved or invested. 2. 2. Breaking Even – You spent everything you had –no more, no less 3. 3. Falling Behind – You spent more than you had using borrowed funds.

26. BUDGET SCORECARD Category Getting Ahead Breaking Even Falling Behind Monthly INCOME: Wages/Income $1600 Interest Income $10 INCOME SUBTOTAL $1,610 $1610 Monthly EXPENSES: Taxes $250 Rent/Mortgage $500 $600 $750 Utilities $100 Groceries/Food $250 $300 $350 Clothing $100 $200 Shopping $75 $100 Entertainment $100 $160 $200 Miscellaneous/Other $25 $50 EXPENSES SUBTOTAL $1,400 $1610 $2000 NET INCOME (Income - Expenses) $210 $0 $(390) NABA - Money $ense

27. Benefits of Budgeting   Evaluate source (s) of income – explore ways to increase this amount   Evaluate expenditures and where money goes – identify opportunities to reduce this amount   Save, invest, pay down debt faster   Cash Flow Equation: (+) Revenue or Source of Income (-) Less: Expense or Use of Income _______________ (=) Net Cash Flow

28. Budgeting Basics 1. Save at least 10% of income through automatic payroll deduction (when available) 2. Create a contingency fund for unexpected expenditures (minimum 6 months of salary) 3. your spending 3. Track your spending Itemize necessities first and foremost Itemize necessities first and foremost Update your budget monthly Update your budget monthly Add new information timely Add new information timely Print it out and post it as a daily visual reminder Print it out and post it as a daily visual reminder 4. Pay down expensive / excessive debt. NABA - Money $ense

29. Pillar Four: Investing

30. Make Your Money Grow TIME NO INTEREST 5% DAILY COMPOUNDING Year 1 $ 365 $ 374 Year 5 $ 1,825 $ 2,073 Year 10 $ 3,650 $ 4,735 Year 30 $10,950$25,415 Money that is invested will grow! NABA - Money $ense What if you saved $1 per day for 30 years?

31. What Did You Learn?

32. New Mindset, New Habits  Take the First Step: Step 1 Step 1 I have taken control of my financial futureI have taken control of my financial future I am committed to achieving financial freedomI am committed to achieving financial freedom Step 2 Step 2 I have a budget and I review my budget regularlyI have a budget and I review my budget regularly I save 10% or more of my incomeI save 10% or more of my income I have 6-9 months of living expenses saved as an emergency fundI have 6-9 months of living expenses saved as an emergency fund I know how much debt I have and the related interest ratesI know how much debt I have and the related interest rates I know my credit scoreI know my credit score Step 3 Step 3 I have a 401(k) or similar retirement account that I contribute to regularlyI have a 401(k) or similar retirement account that I contribute to regularly I have an investment plan that considers my goals and risk toleranceI have an investment plan that considers my goals and risk tolerance NABA - Money $ense

33. Thank You! National Association of Black Accountants, Inc. M ney $ense For more information visit www.nabainc.org NABA - Money $ense