1. Financial Literacy Michael Bernard, CFP, ChFC, EA

2. Budgets

3. Budget O What is a budget? O A list of all planned revenues and all planned expenses O A budget organizes your income and expenses so that you can track, monitor, and control your financial life A budget helps you spend only the money that you have.

4. Budget - uses O Monitor your current income / expenses O Determine where you are going to spend your money each week, month, or year. O Categorize your expenses to help you know how much you’re spending in certain areas. O Forecast the future or upcoming income / expenses O Project how you expect to spend and save your money in the future. O Compare your actual expenses to what you forecasted to see how well you did

5. What are the components of a budget? Income The amount of money you’ve earned in a given month, and you have control over how it’s used. Income is a positive number in your budget

6. What are the components of a budget? Expense When your money is used or spent. Expenses are negative numbers in your budget, meaning they are subtracted from your income reducing the money you have.

7. Sample Categories of Expenses O Medical O Transportation O Lifestyle O House O Food

8. What are the components of a budget? Discretionary Money The excess money left over after each month that you can use anyway you want. Discretionary Money should be a positive number, showing that you aren’t spending more money than you have.

9. What are the components of a budget? Income Expense Discretionary Money

10. Case Study

11. Meet Antonio

12. Credit and Credit Cards

13. Credit Definition: The amount of money available to be borrowed by an individual is referred to as credit. It must be paid back to the lender at some point in the future. Example: When you make a purchase at the mall with your VISA card it is considered credit because you are buying goods with the understanding that you’ll need to pay for them later. In other words, your credit is your “trustworthiness” of being able to pay back money that you borrow.

14. Credit Score What Is A Credit Score? - Investopedia Videos Your credit is often represented by a numerical number between 300 and 800 called a Credit Score or FICO Score. The Higher your score = the more trustworthy you are The Lower your score = the less trustworthy you are

15. What Impacts Credit Score Your financial behavior impacts your credit score The decisions you make with money will prove whether you are trustworthy and responsible with more of it or not. This will impact your credit score and your creditworthiness.

16. What Impacts Credit Score O Opening a Checking Account O When you have a cell phone bill O When you open a credit card O Whether you use it, how much you use it, when you pay it back… O When you get Student Loans or Car Loans, etc.

17. What Impacts Credit Score O Your payment history O The amount you owe on a loan O How long you’ve used credit O How often you apply for credit O The types of credit you use

18. Let’s examine Antonio’s credit

19. Credit Cards O A way to build credit… O A way to destroy credit

20. Credit Cards O Definition: O A card issued by a financial company giving the holder an option to borrow money, usually at the point of sale. O Credit cards charge interest on the money borrowed on the card, and your must make a monthly payment to the credit card company to pay back the money you borrowed.

21. Credit Cards: Interest O Each credit card has an interest rate O Also known as APR or “Annual Percentage Rate” O This is the amount of money you will be charged by the credit card company to borrow that money, calculated over a years time. O Credit Card Basics Credit Card Basics

22. Credit Cards O Interest on credit cards is typically between 10% and 29.99% O What’s it mean to be charged interest? O Assume you have a 20% interest credit card O If you charge something that cost $100… O The interest the credit company would charge you over a year would be $20 O That means you’re paying more than what it’s worth!

23. Credit Cards Principles O Pay off your balance every month O Always pay your bill on time O Never have more than 3 credit cards O Never charge something on a credit card that you know you cannot afford O Never use more than half of your credit limit O Check your credit report regularly to ensure there are no errors