Download - Freshman Experience: Managing Your Finances Georgia Gwinnett College October 15 & 17, 2007
Freshman Experience: Managing Your FinancesGeorgia Gwinnett CollegeOctober 15 & 17, 2007
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I. Money Management
II. Banking
III. Credit: Managing Debt
IV. Identity Theft
Table of Contents
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Money Management
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Not knowing what you have to spend Ignoring bills coming up next week or next month
Results: Living paycheck-to-paycheck Coming up short when the big bills come in
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
The #1 Money Trap
Budgets Help You To:
Money Management
Are you managing your money or is it managing you?
Importance of Budgeting
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Money Management
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
Step-by Step Budgeting
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Money Management
Budget Example January February March
Budget Actual Budget Actual Budget ActualIncome1. Money from Mom & Dad/ Family2. Financial Aid3. Part/ Full-Time Job Salary4. Total IncomeFixed Expenses5. Savings6. Mortgage/ Rent7. Auto Loan(s)8. Other Loan(s)9. Gas10. Credit11. Utilities12. Insurance13. Books & School Supplies14. Medical15. Parking16. Total Fixed Expenses17. Available for Variable ExpensesVariable Expenses18. Food19. Concerts20. Road Trips21. Spring Break22. Clothing23. Beverage Fund24. Personal Care25. Gym Membership26. Taxes27. Miscellaneous28. Total Variable ExpensesMonthly Result29. Monthly Surplus/ (Deficit)
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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?
1. The “latest and greatest” syndrome
2. Using credit instead of cash
3. Eating out every night
4. Borrowing from the future
5. Keeping up with the Joneses
Set Your Budget Every Year
10 Leading Causes of Overspending – Beware of These Habits!
Money Management
Now that you have created
your budget, stick with it!
Follow Through With Your Budgeting Plan
6. Being unaware of how much you have to spend
7. Money “burning a hole in your pocket”
8. Buying impulsively
9. Rationalizing spending = “need it because”
10. Not knowing on what or where you are spending your money
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Money Management
Saving Tips!
Saving Tip #1 Focus on number of dollars per day to
save
Saving Tip #2 Pay yourself first
Saving Tip #3 Save money from coupons and sales
Saving Tip #4 Look at lower-cost alternatives
Saving Tip #5 Shop around for the best price
Saving Tip #6 Organize your bills and financial records
Saving Tip #7 Pay installments to your savings account
Saving Tip #8 Live with roommates
Saving Tip #9 Avoid impulse buys
Saving Tip #10 Use public transportation or carpool
Saving Tip #11 Collect loose change
Saving Tip #12 Break a habit
Saving Tip #13 Dine in more than out
Saving Tip #13 Borrow books and movies, instead of
buying
Saving Tip #15 Have a “Buy Nothing” week
Stay on Track With These Money Management Tips
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Banking
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Think of Banking as a Journey
Keeping your money in a bank will provide you
with:
Safety
Convenience
Security
Financial Future
Checking AccountPayments made via check, online banking and debit card
Low or no interestHigh transaction volume
Money Market AccountChecks
Limited withdrawalsHigher interest earnings
Savings AccountWithdrawal Slip
Low transaction volumeMinimal interest earnings
Asset Management AccountHigh transaction volumeHigh interest earnings
Stocks
Banking
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Spending Money I Don’t Have
Reconciling My Account
Using Online Banking
Reading a Check
Endorsing a Check
Getting Help
What Do I Need to Know About My Checking Account?
Only 10% of high school students graduate with any kind of
instruction in personal finance
Banking
Routing Transit Number
Account Number
Check Number
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Reconciling Your Account
Banking
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An Account Statement
Banking
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In today’s virtual world, you can manage your
finances almost anywhere, anytime
Different Ways You Can Bank
Banking
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
Phone Online
ATM Branch
All of the above! Access cash Check account balances Make deposits
Check your account Transfer money Obtain account history Stop payment on check Obtain branch hours and locations Report a lost, stolen or damaged
card
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Credit 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
Usually VISA or MasterCard branded
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
Debit Card vs. Credit Card
Do you know the difference?
Debit Cards
Banking
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Credit: Managing Debt
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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
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
Importance of Credit
1 in 3 college students has 4 or more credit
cards!
Credit: Managing Debt
Students and Debt
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Your Credit Record
What Is a Credit Score?
Checking Your Credit Reports
How Do Creditors Use Your Credit
Report?
To determine how likely it is that you will repay a loan and make 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, 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
Like it or not, potential
employers and lending
institutions view your credit as an
extension of your character –
are you a responsible
person?
Credit: Managing Debt
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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
Credit: Managing Debt
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Identity Theft
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What is identity theft?
What is fraud?
Identity Theft
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
“Every 79 seconds, a thief steals someone’s identity, opens accounts and goes on a buying spree” - CBSnews.com
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
Identity Theft Facts
Definition
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What do I do if a become a victim?
Identity Theft
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
Contact all credit reporting agencies
Recover over 18 month time period
Explain, explain, explain
What Identity Theft Means to Me
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How could your identity be
stolen?
Identity Theft
Stolen purse or wallet
Stolen mail
Obtaining credit report by posing as a legitimate
person
Phishing emails
Dumpster Diving
Pretending to be a
reputable company and
ask for personal info
Obtaining personal info
from the internet
Shoulder Surfing
Account numbers stolen as cards are processed
Ways Your Identity Can Be Stolen
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How could someone use my
identity?
Identity Theft
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
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
Uses of a Stolen Identity
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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 purchaseHow do I know if
I have been a victim of identity
theft?
Watch Out for Signs of Identity Theft
Identity Theft
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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 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
Prevent Becoming a Victim
How can I prevent being a
victim?
Strategies to Prevent Becoming a Victim
Identity Theft