Money Management ATTITUDES ABOUT MONEY Answer the questions below: 1. 2. 3. 4. 5. 6. If I could spend $1,000, I would………. Rich People………….. Saving Money …………………. Credit should be used …………………. Budgeting is ………………………….. The most important thing money does for me is…………………. Financial Planning: A process individuals engage in to achieve longterm financial success while having a quality standard of daily living. A spending plan is: A paper or electronic document used to record both planned and actual income through expenditures over a period of time. A goal: the end result of something a person intends to acquire, achieve, do, reach or accomplish in the near of distant future. A financial goal is: are specific objectives to be accomplished through financial planning. Income: Money earned Fixed Expense: May have a fixed amount due each month. Flexible Expenses: Can vary each month in the amount owed. WANT: Something unnecessary but desired. NEED: Something thought to be an essential for life. Value: A belief about what is desirable & important to an individual INCOME Payment for providing resources in the market. Wages – computed by X an hourly pay rate by the number of hours worked. Gross Earnings: Money earned before any deductions or taxes withheld. Form W-2 123-45-6789 XXXXXXXXXX ABC Mart 10 Washington St. Our Town, USA 12345 $3,598 $539.70 $3,598 $223.08 $3,598 $52.17 John a. Dough 123 Main St. Our Town, USA 12345 This form is used when reporting earnings for the entire year to the IRS. W-4 Federal Form- Determines what amount of income tax they should deduct from each employee’s paycheck based on that person’s situation. Methods Of Deposits Direct Deposit – employee’s paycheck is deposited into an authorized account electronically. * MOST secure way to pay employees. Paper paycheck – most common method of paying employees. * Must sign the back on designated line to cash or deposit. Payroll Credit – payment electronically loaded on to plastic card. Methods of Debits Checks – Paper receipt of payment to the one owed. Debit Card - A credit card that automatically debits your account upon placing a purchase. Making a DEPOSIT 1. Write the date of the deposit in this field. 2. If you are depositing currency (paper bills), write the total amount here. 3. If you are depositing coins, write the total amount here. 4. If you are depositing a check, write the bank transit number here, which is the top portion of the two-part number printed in the upper corner of the check. 5. Write the amount of the check here. 6. If you are depositing more checks than can be listed on the front, continue to list them on the back, and write the total amount of the checks on back here. 7. Write the total amount you are depositing here. 8. If you are making a deposit inside a bank with a teller and you want to receive cash back from your deposit, write the amount you want in this field. 9. Write the total amount (less cash back) of your deposit in this field. teens – lesson 6 - slide 6-D Writing a Check 1. Date Enter the date on which you are writing the check. 2. Payee Enter the name of the person or the company you are going to give the check to. 3. Amount of check in numerals Enter the amount of the check, in numbers. Don’t leave any space between the pre-printed dollar symbol ($) and the numbers indicating the amount of the check; there should be no room for someone to add in extra numbers. 4. Amount of check in words Enter the amount of the check in words. Start writing at the far left side of the line. Follow the dollar amount by the word “and,” then write the amount of cents over the number 100. Draw a line from the end of the 100 to the end of the line. teens – lesson 6 - slide 6-Fa EXPENSES Keeping a running BALANCE ! Check Date Number Description Deposit Amount 611 4/22 Chili’s 24.32 ATM 4/30 CASH 40.00 5/1 AEP 500.00 Withdraw Amount Why Use Banks ? Service – banks provide a place to keep money safe and accessible. Manageable – provide you with information that keeps checks/balances on your finances. Investment – provide you with tools to increase your overall worth. Lender – provide you with funds to make large purchases with the intent to repay. Savings accounts - keep your money safe and make it grow with interest. Checking accounts - allow for purchases and pay bills using paper checks instead of cash. Loans - help with purchase expensive items and then pay the money back over time, plus interest. Credit cards - can be a convenient way to buy things and pay for them over time, but the interest rate is frequently higher than with loans. Investment accounts - make their money grow over time, and be prepared for large expenses, for example college education. Reading A Bank Statement teens – lesson 6 - slide 6-H SHOW ME THE MONEY: Reaching Your Goals: What’s your goal? Timeline in reaching goal? Total needed to save ? What will be your monthly savings? What steps can you take to reach monthly goals? What “wants” can you cut to help with goal? Managing A Budget Budget Goals Actual Budget Savings $200 $0 Cell Phone $100 $150 Car Payment $100 $100 Gas $50 $80 Entertainment $50 $160 Clothes $60 $100 Total Net Income: $590 $560 $590 Fixed Expenses Variable Expenses Borrowing/Credit Cards Credit History Borrow only what you can repay. Establish a steady work record. Read and understand the credit contract. Pay all bills promptly. Pay debts promptly. Open a checking account and don’t bounce checks. Notify creditor if you cannot meet payments. Report lost or stolen credit cards promptly. Never give your card number over the phone unless you initiated the call or are certain of the caller’s identity. Open a savings account and make regular deposits. Apply for a local store credit card and make regular monthly payments. Get a co-signer on a loan and pay back the loan as agreed. CREDIT CARDS TYPES OF CREDIT CARDS 1. Bank Card a. Visa, MasterCard 2. Store Card a. Macy’s, Chevron 3. Travel and entertainment card a. American Express 1. 2. 3. 4. 5. 6. 7. PROTECTING YOURSELF Keep record credit card numbers Keep record of phone number to call if lost. Keep receipts of purchase until bill arrives. Limit giving card no. on telephone Report card lost or stolen immediately Shop on secure websites Destroy old credit cards 1. 2. 3. 4. 5. 6. SHOPPING FOR CREDIT CARD Schedule of payment (monthly) APR (annual percentage rate) Annual Fee Late Fee (timeline) Credit Limit How widely is card accepted CREDIT CARD STATEMENT SAVINGS • A little can add up! • • • • • • Save this each week … at % interest … in 10 years you’ll have $7.00 5% $4,720 14.00 5% $9,440 21.00 5% $14,160 28.00 5% $18,880 35.00 5% $23,600 • You can buy … two fast food meals or one movie ticket (and a candy bar) or save $7.00 this week. • You can buy … two small cheese pizzas or one large pepperoni pizza, delivered or one new CD or save $14.00 this week. • What can you give up to save for your financial goals? TYPES OF SAVINGS Money Market Savings Bonds Retirement Investment Real Estate Certificates of Deposit (CD) Mutual Funds Stocks College Fund Comparing Savings and Investment Plans instrument maturity risk yield minimum balance taxable? Savings Account Immediate None if insured Low $5 Yes 90 days or more None if insured Moderate Varies Yes Corporate 5–30 years Some Moderate $1,000 Yes Municipal 1–20 years Some Moderate $5,000 No federal, some states Stocks Immediate Low to high Low to high Varies Yes 1 year or less None Moderate $10,000 Federal only Notes 1–10 years None $1,000 Federal only Bonds 10–30 years None $1,000 Federal only Varies Low to high Moderate Varies Usually When buyer is 60 years old Low Moderate Varies At maturity Certificate of Deposit Bonds U.S. Treasury Bills Mutual Funds Retirement Funds Be Smart with Your MONEY !