Freshman Experience: Managing Your Finances
Georgia Gwinnett College
October 15 & 17, 2007
Table of Contents
I.
Money Management
II.
Banking
III.
Credit: Managing Debt
IV.
Identity Theft
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Money Management
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Money Management
Importance of Budgeting
The #1 Money Trap
 Not knowing what you have to spend
 Ignoring bills coming up next week or next month

Are you managing
your money or is it
managing you?
Results:
 Living paycheck-to-paycheck
 Coming up short when the big bills come in
Budgets Help You To:
 Know where you spend your money
 Reach your long and short term goals
 Keep your focus
 Show where you need additional help and if you have a borrowing need
 Include your spouse and/or family in money management issues
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Money Management
Step-by Step Budgeting
Step 1
Estimate Your
Income
Step 2
Estimate Your
Fixed Expenses
Step 3
Determine
Amount Available
for Variable
Expenses
Step 4
Estimate Your
Variable
Expenses
Step 5
Determine Your
Surplus or Deficit
Budget Guidelines and Suggestions
Keep it simple
Tailor your budget to specific goals
Be consistent
Restrict debt payments to no more than 20% of your income
Try to save 10% of your income
Establish an emergency fund equal to 6 months of expenses
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Money Management
Budget Example
Budget
January
Actual
Budget
February
Actual
Budget
March
Actual
Income
1. Money from Mom & Dad/ Family
2. Financial Aid
3. Part/ Full-Time Job Salary
4. Total Income
Fixed Expenses
5. Savings
6. Mortgage/ Rent
7. Auto Loan(s)
8. Other Loan(s)
9. Gas
10. Credit
11. Utilities
12. Insurance
13. Books & School Supplies
14. Medical
15. Parking
16. Total Fixed Expenses
17. Available for Variable Expenses
Variable Expenses
18. Food
19. Concerts
20. Road Trips
21. Spring Break
22. Clothing
23. Beverage Fund
24. Personal Care
25. Gym Membership
26. Taxes
27. Miscellaneous
28. Total Variable Expenses
Monthly Result
29. Monthly Surplus/ (Deficit)
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Money Management
Follow Through With Your Budgeting Plan
Set Your Budget Every Year
 Review your budget every month
 Are you over or under on your budget items?
 Are your variable expenses in line?
 What are your “budget busters”?
 Are any expenses out of control?
 Will you make your planned surplus by year end?
Now that you have
created your budget,
stick with it!
10 Leading Causes of Overspending – Beware of These Habits!
1. The “latest and greatest” syndrome
6. Being unaware of how much you have to spend
2. Using credit instead of cash
7. Money “burning a hole in your pocket”
3. Eating out every night
8. Buying impulsively
4. Borrowing from the future
9. Rationalizing spending = “need it because”
5. Keeping up with the Joneses
10. Not knowing on what or where you are
spending your money
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Money Management
Stay on Track With These Money Management Tips
Saving Tips!
 Saving Tip #1
 Focus on number of dollars per day to save
 Saving Tip #9
 Avoid impulse buys
 Saving Tip #2
 Pay yourself first
 Saving Tip #10
 Use public transportation or carpool
 Saving Tip #3
 Save money from coupons and sales
 Saving Tip #11
 Collect loose change
 Saving Tip #4
 Look at lower-cost alternatives
 Saving Tip #12
 Break a habit
 Saving Tip #5
 Shop around for the best price
 Saving Tip #13
 Dine in more than out
 Saving Tip #6
 Organize your bills and financial records
 Saving Tip #13
 Borrow books and movies, instead of buying
 Saving Tip #7
 Pay installments to your savings account
 Saving Tip #15
 Have a “Buy Nothing” week
 Saving Tip #8
 Live with roommates
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Banking
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Banking
Think of Banking as a Journey
Checking Account
Payments made via check, online banking and debit card
Low or no interest
High transaction volume
Keeping your money in a bank
will provide you with:
Savings Account
Withdrawal Slip
Low transaction volume
Minimal interest earnings
Safety
Convenience
Security
Financial Future
Money Market Account
Checks
Limited withdrawals
Higher interest earnings
Asset Management Account
High transaction volume
High interest earnings
Stocks
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Banking
What Do I Need to Know About My Checking Account?
 Spending Money I Don’t Have
 Reconciling My Account
 Using Online Banking
 Reading a Check
Only 10% of high
school students
graduate with any
kind of instruction in
personal finance
 Endorsing a Check
 Getting Help
Routing Transit
Number
Account Number
Check Number
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Banking
Reconciling Your Account
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Banking
An Account Statement
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Banking
Different Ways You Can Bank
Phone
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



In today’s virtual world, you can
manage your finances almost
anywhere, anytime
Check your account
Transfer money
Obtain account history
Stop payment on check
Obtain branch hours and locations
Report a lost, stolen or damaged card
ATM
 Access cash
 Check account balances
 Make deposits
Online
 Check your account
 Transfer money between accounts within





your bank
Obtain account history
Stop payment on check
Obtain branch hours and locations
Set up balance alerts
Pay bills online
Branch
 All of the above!
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Banking
Debit Card vs. Credit Card
Debit Cards
 Purchase amounts are
automatically deducted from your
checking account
 May approve into overdraft
 May also be used as an ATM card
to access cash
Do you know the
difference?
 Usually VISA or MasterCard
Credit Cards
 Buy now, pay later
 Interest charges on unpaid balances
 May incur late fees if the minimum
payment is not paid on time
 If establishing credit:
 Pay on time, in full each month
branded
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Credit: Managing Debt
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Credit: Managing Debt
Importance of Credit
 Your credit score will be the single most important factor in determining your approval for a
mortgage, car loan, credit card and insurance
 You have a file with a credit bureau if you have ever applied for a credit card, loan, or a job
 Lenders use your credit score and the following factors to decide whether to lend you money
 your income
 your other debts
 job stability
Students and Debt
1 in 3 college students has 4
or more credit cards!
 College students mostly use credit cards on lifestyle purchases
 76% of all undergraduate college students have at least one credit card and carry an average
balance of $2,169
 10% of college card holders owe $7,000 or more, and most do not pay off the balances each
month
 For every $1,000 you charge and do not pay off, you will be
charged $180 to $210 a year
 Best Practice: charge no more than you can pay off each
month
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Credit: Managing Debt
Your Credit Record
 To determine how likely it is that you will repay a loan and make
How Do Creditors
Use Your Credit
Report?
Like it or not, potential
employers and lending
institutions view your credit
as an extension of your
character – are you a
responsible person?
What Is a Credit
Score?
payments on time based on information contained in your credit report,
including the following:
 bill paying history (late payments, collections, outstanding debt)
 income (and amount of debt you have)
 types of credit accounts
 arrests
 Numeric score (3 digits) that summarizes your credit history
 Provided to lenders by credit reporting companies
 Also known as your “FICO” score, or Fair Isaac (company that
created the credit score)
 Scores range from 300’s to 800’s, and you should aim for a 720 or
higher
 You can order free credit reports online annually from Equifax,
Checking Your
Credit Reports
Experian and Transunion by accessing www.annualcreditreport.com
 It is important to know your credit score and check it annually
 Unexpected change in your credit score may be a sign of identity theft
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Credit: Managing Debt
Tips for Good Credit
 Pay your bills on time and in full
 Credit card companies are now checking your report every month
 Under new “universal default” clauses, if you’re late on 1 card payment, another credit company can hike your interest rate on their
card by up to 30%!
 Establish credit history – keep only 3 cards; short credit history can negatively affect credit score
 Reduce your total amount of credit card debt, and watch your debt in relation to your credit limit
 Close unneeded accounts; excessive credit card accounts may have a negative effect on your credit score
 Apply for new credit cautiously; too many credit inquiries can negatively affect your score
 Reduce the urge to sign up for new cards: Stop 90% of mail solicitations by calling the national OPT OUT number (888-5-OPT-OUT)
 Get copies of all three credit reports every year
 Equifax
 Experion
 Transunion
 Pay online if possible, that way you have proof that you paid on time
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Identity Theft
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Identity Theft
Definition
 Identity Theft is when someone uses your personal information to assume your identity and
open accounts with the intent of committing theft, fraud or crime
 Fraud occurs when someone steals information to transact on an account that is already open
and the owner of the account is unaware of these transactions
Identity Theft Facts
 “Every 79 seconds, a thief steals someone’s identity, opens accounts and goes on a buying
spree” - CBSnews.com
What is identity theft?
What is fraud?
 Identity theft is one of the fastest growing crimes in the United States
 According to the Federal Trade Commission (FTC), 10 million people became victims of
identity theft in 2006
 FTC predicts 1 in 3 people will be identity theft victims sometime in their lives
 A typical victim spends $500-$1,500 and 30-170 hours to repair the damage of theft to existing
accounts
 Nearly 75% of victims who discover the theft in the first month spend no money and less than
10 hours to resolve the issues
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Identity Theft
What Identity Theft Means to Me
 File a police report
 Contact your bank to cancel debit cards and close bank accounts
 Call your credit card company to report fraudulent charges and close credit card accounts
 Report fraudulent use of your identification information to the Social Security
Administration’s Fraud Assistance Hotline
 Change all electronic deposits and payments, credit cards and checking accounts
What do I do if a become a
victim?
 Contact all credit reporting agencies
 Recover over 18 month time period
 Explain, explain, explain
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Identity Theft
Ways Your Identity Can Be Stolen
Phishing
emails
Obtaining
personal info
from the internet
Stolen purse
or wallet
How could your identity be
stolen?
Pretending to be
a reputable
company and ask
for personal info
Dumpster
Diving
Obtaining credit
report by posing
as a legitimate
person
Account numbers
stolen as cards are
processed
Stolen mail
Shoulder
Surfing
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Identity Theft
Uses of a Stolen Identity
 Make counterfeit identification, checks and bank cards and use them to drain your bank
accounts
 Purchase larger items, including cars, boats and homes, by obtaining loans in your name
 Establish phone or wireless service in your name
 Call your bank or creditors pretending to be you and request an address change and another
credit or debit card on your account
 The imposter then makes charges using the card sent to the incorrect address
How could someone use my
identity?
 Intercept a check written to you, forge your endorsement and cash it
 File for bankruptcy under your name to avoid paying debts they have incurred under your
name, or to avoid eviction
 Commit crimes in your name
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Identity Theft
Watch Out for Signs of Identity Theft
 Unexplained charges to or withdrawals from your financial accounts
 Receipt of credit cards for which you did not apply
 Credit denial for no apparent reason
 Unexplained negative credit score
 Calls or letters from debt collectors or businesses about merchandise or services you did not
purchase
How do I know if I have been
a victim of identity theft?
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Identity Theft
Strategies to Prevent Becoming a Victim
Prevent Becoming a Victim
 Buy a cross cut shedder and use it!
 Shed unsolicited credit card and loan applications, account statements and receipts
 Destroy all cancelled checks, old statements, excess checks and deposit slips for closed accounts
and credit card receipts
 Avoid printing your driver’s license number or your social security number on your checks –
only supply information to reputable companies
 Review your credit report at least once a year from various credit bureaus – it may be months
How can I prevent being a
victim?
before you become aware of unauthorized activity, and it can take years to clear up!
 Know with whom you are sharing your personal, confidential information
 Are they reputable?
 Do they truly need the information?
 Protect – do not write down or share – account information, pin numbers or passwords with
others
 Run anti-virus software on your computer and avoid storing personal information on your laptop
 Access secure browsers and exit online applications as soon as you finish using them – If doing
business over the internet, only use https://
 Use debit card in place of checks
 Keep pin number separate from debit card
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