YMM/HS-09/12 Yur Mney Matters a guide t yur persnal finances
Make Yur Mney Matter Cash, cin, dugh, mlah n matter what yu call it, mney matters. Think abut the feeling yu get when yu pen up yur birthday card frm Grandma and find a crisp $50 bill. What s ging thrugh yur mind? Prbably the many things yu can buy with yur new gift. N matter hw much mney yu, yur parents r even the gvernment has, we all have ne thing in cmmn: we must decide the best way t spend it. That s called managing yur mney. Want t knw secrets t making the mst f yur mney? Here are a few tips. Dn t try t keep up with everyne else. If yur friends always seem t get the httest new gaming system r designer purse, it s hard nt t feel jealus. Instead f fcusing n what yu dn t have, think abut making the mst f what yu d have. Keeping up with thers is a never-ending battle; smene will always have smething newer, faster and shinier than yu. Identify yur wants and needs. Fd, shelter and clthing are basic necessities, but we have ther needs, t. T sme, a cellphne is a must; it s necessary t stay cnnected with family and friends. Hwever, a phne with Internet access, a YuTube app and GPS is a want, nt a need. Yu need clthes t wear t schl, but expensive brands aren t a necessity. See the difference? Save sme fr a rainy day. Dn t spend every penny yu have; set sme mney aside, preferably 10% f each paycheck, t use at a later date. It s gd t be prepared fr emergencies. Yu never knw when yur car will need new tires. Set gals fr big-ticket items. Nw that yu re saving fr unexpected expenses, yu ll als want t save fr expected expenses, like a car, prm r graduatin items. Keep a prtin f yur incme t meet these savings gals. Skip buying smething yu dn t need tday s yu can have smething better in the future. Develp a spending plan. Mney can burn a hle in yur pcket if yu dn t have a plan fr it. Creating a spending plan als called a budget helps yu decide where and hw t spend yur mney. Learn mre n the next page. Dn t spend mney yu dn t have. It sunds simple, but using credit t buy items nw rather than waiting until yu can pay with cash can be disastrus. Save yurself the headache f paying ff debt by purchasing items with mney yu have nw nt mney yu hpe t have later.
Spending Plan Wrksheet Creating a spending plan helps yu spend yur mney wisely. Yu like t spend, right? Wh desn t? Basically, there s a three-step prcess t setting up a realistic budget. Once yu ve walked thrugh these steps, check ut the sample budget n this page r visit OklahmaMneyMatters.rg fr inspiratin t create yur wn spending plan. 1 2 3 Knw what s cming in. Simply put, knw hw much mney yu have t wrk with each mnth. Incme can include mney frm jbs, allwance frm yur parents and unexpected cash, like birthday r graduatin gifts. Knw what s ging ut. Keep receipts s yu can track hw and where yu spend yur mney. Pay clse attentin t what yu purchase each day and decide what spending habits can stay and what shuld g. Assign categries. Once yu knw what yu buy and where yu spend yur mney, assign categries t yur budget. D yu eat lunch ff campus three times a week? If s, create a budget categry called dining ut. Get yur nails dne? Add a manicure categry. At the end f the mnth, subtract the actual amunt yu spent in each categry frm the amunt yu expected t spend. If yu find yurself spending mre r less, adjust yur categries (r spending!) accrdingly. INCOME Jb Allwance Gifts/Misc. Ttal Savings ttal Shrt-term savings Lng-term savings Car payment Fuel Car insurance Entertainment Cellphne Clthes Dining ut Schl activities Ttal Expected Actual Difference EXPENSES Expected Actual Difference 3
Saving Secrets Save early, save ften. If yu want t be wealthy, the way t get there is t invest in yurself. The earlier yu start saving, the mre mney yu ll have later in life. Make savings a habit! Check ut the chart n the next page t see just hw quickly yur mney can grw. Fcus n the prize. Whether yur gal is a new cellphne, a lim fr prm r a spring break trip, regularly remind yurself why yu re saving. Setting shrt-term and lng-term gals can inspire yu t keep track f yur savings and make it easier t spend yur mney wisely. My Future Put away gift mney. When yu get birthday cash r any ther unexpected mney, put it in yur savings accunt. Yu knw yu can get by withut it, s put it t wrk fr yu. Plan ahead. Frm flat tires t a brken MP3 player, we all have unexpected expenses. Reserve part f yur savings fr emergencies. Yu ll have peace f mind, and yur emergency fund will earn interest. Reduce expenses. Mnthly fees can add up t hundreds f dllars per year. If yu rutinely g ver yur texting limit, pay fr nline services like pht r Web hsting, r hit the drive-thru mre ften than yu shuld, cnsider revamping yur spending and plug the extra mney int yur savings. Dn t cunt n credit. What did peple d befre they had credit cards? They saved up t buy what they wanted. Credit cards can be a great tl fr handling unexpected expenses. Hwever, charging smething yu want but can t affrd can cst yu much mre in the lng run. Want t save, but dn t knw where t start? Here are sme simple ways t meet yur savings gals. Save $5 a week by skipping the drive-thru ne r tw days per week r limiting vending machine purchases. Save $10 a week by bringing yur lunch t schl ne r tw days per week instead f eating ut, r g t a matinee mvie instead f an evening shwing. Save $25 a week by brrwing mvies frm a friend r checking ut bks and magazines frm the library instead f buying them. Save $50 a week by swapping clthes with yur friends instead f hitting the mall r lking fr free events (cncerts, art galleries, ball games) in yur neighbrhd. 4
Savings Grwth Chart The mre mney yu save and the earlier yu begin saving, the mre yur mney will grw. The chart belw shws hw large yur accunt can grw by age 65, depending n the age yu begin saving and the amunt saved weekly. On the flip side, check ut hw much yu ll lse if yu wait just ne year t start saving! Age Savings Begins 20 $10 $25 $50 $100 amunt cntributed each week ttal savings at age 65 $85,143 $212,859 $425,176 $851,432 -$4,562 -$11,406 -$22,811 -$45,622 ttal amunt lst by waiting a year (age 21) t start saving ttal savings at age 65 30 $48,154 $120,385 $240,768 $481,537 -$2,801 -$7,002 -$14,003 -$28,008 ttal amunt lst by waiting a year (age 31) t start saving ttal savings at age 65 40 $25,445 $63,614 $127,227 $254,454 -$1,719 -$4,299 -$8,597 -$17,194 ttal amunt lst by waiting a year (age 41) t start saving ttal savings at age 65 50 $11,504 $28,761 $57,522 $115,045 -$1,055 -$2,639 -$5,278 -$10,556 ttal amunt lst by waiting a year (age 51) t start saving This chart assumes a 5 percent return, cmpunded annually. 5
Cllege, Here Yu Cme! A cllege educatin is a great investment in yur future. On average, smene with a bachelr s degree will make significantly mre during their lifetime than smene with nly a high schl diplma. Check ut the fllwing tips t learn hw t prepare fr cllege while still in high schl. Junirs Take cre classes that meet cllege entrance requirements. Explre pprtunities t earn cllege credit while still in high schl, like cncurrent enrllment and AP curses. Prepare t take ACT/SAT exams. Yu may want t take these mre than nce t raise yur scre. Visit OKcllegestart.rg t take free practice exams. Attend cllege fairs in yur area. When yu narrw the list f schls yu re interested in, schedule campus visits. Senirs In additin t the steps abve, talk t yur family and schl cunselr abut yur gals after high schl. Research grants and schlarships available thrugh yur schl, business cmmunity and lcal civic rganizatins. Cmplete the Free Applicatin fr Federal Student Aid (FAFSA) as sn as pssible after Jan. 1 f the year yu plan t start cllege. The FAFSA is used t determine yur eligibility fr mst federal financial aid, including federal (and sme state!) grants and schlarships. Visit FAFSA.gv t request a persnal identificatin number (PIN) and submit yur FAFSA nline. Submit admissin and financial aid applicatins t the cllege(s) f yur chice; pay clse attentin t deadlines. Review yur Student Aid Reprt (SAR) frm the cllege(s) f yur chice t make sure yur infrmatin is crrect; quickly return the frm with any crrectins. Respnd quickly t any requests fr additinal infrmatin. Want t knw mre? Visit OKcllegestart.rg t create an nline prfile, track yur classes and grades, learn abut paying fr cllege, prep fr the ACT/SAT, explre career ptins and research Oklahma clleges and universities t discver which ne is right fr yu. 6
Whether yu ll be enrlling in cllege fr the first time r yu re a returning student, yu may need t lk fr ways t help pay fr yur educatin. Here are sme helpful tips t pint yu in the right directin. Befre enrlling Yur first step is cmpleting the FAFSA. Fill ut the FAFSA every year, even if yu think yu wn t qualify fr financial aid. Yu may qualify fr federal wrk-study r ther prgrams t help yu pay fr schl. Then... G fr free mney first. Apply fr as many grants and schlarships - als called gift aid - as pssible. If gift aid desn t fulfill yur need, tap int any cllege savings available t yu. Fcus n federal. T bridge the gap between gift aid and the cst f schl, yu may need a student lan. Be sure t exhaust all federal lan ptins befre cnsidering private r alternative lans. Federal lans usually have lwer interest rates and ffer flexible repayment ptins. Visit StudentAid.ED.gv t learn mre abut federal student lan prgrams. Brrw nly what yu need. Yu may be ffered mre lan funds than yu actually need t pay schl expenses, but lans must be repaid, s dn t brrw mre than necessary. Get the facts frm yur financial aid cunselr when cnsidering which lan ffers t accept. Keep yur future career in mind. When it cmes t student lans, a gd rule f thumb is t make sure yur ttal amunt brrwed is less than yur expected starting salary, and sme experts recmmend that the mnthly lan payment shuld be n mre than 8 percent f expected mnthly incme after graduatin. Infrmatin abut average starting salaries in Oklahma is available at www.esc.k.gv, and yu can estimate mnthly lan payment amunts using the debt/salary calculatr at OCAP.rg. Get a jb. The mre mney yu can earn t pay fr cllege, the less mney yu ll have t brrw and pay back later, plus interest. During schl Visit UCanG2.rg t learn mre abut paying fr cllege. Mnitr yur needs. Examine yur financial aid needs each semester. Are yu struggling t make ends meet, r d yu have mre student lan mney than yu need? Adjust yur brrwing accrdingly. Decide each time t brrw nly what yu need t pay schl expenses. Keep seeking free mney. Grants and schlarships aren t nly fr freshmen. Eligibility requirements fr schlarship prgrams change, and new prgrams are added every year! Talk t yur financial aid ffice r use a schlarship search engine like Fastweb.cm. Pay attentin t interest. If given the ptin t pay interest accrued n unsubsidized lans while in schl, d it! Quarterly interest payments are usually affrdable, even n a tight budget, and can save yu hundreds f dllars ver the life f yur lan. 7
Bank On It A checking accunt is essential fr handling yur mney. It s safe, secure and, thanks t a variety f tls, easy t access and manage. With a checking accunt, yu can write a check, use an ATM card t get cash r use a debit card t make purchases. It s imprtant t shp arund when pening a checking accunt. Different banks and credit unins have different plicies fr accunt requirements, charges and fees, such as the nes listed belw. Minimum balances. Sme institutins may require yu t keep a minimum amunt in yur accunt, such as $200. If yur balance falls belw this amunt, the bank may charge a small fee r clse yur accunt within a certain time perid. Annual r mnthly fees. Sme institutins may charge a fee just fr husing yur accunt. Insufficient funds charge. If yu spend mre than is in yur accunt, sme financial institutins will allw the purchase and charge yu an insufficient funds fee, usually $15 t $30 per purchase! These fees can quickly add up, but they re easy t avid if yu keep tabs n yur checking accunt balance. ATM fees. If yu use an ATM that s wned by yur bank r credit unin, there may be n cst. Hwever, if yu use a freign ATM (ne nt wned by yur bank) yu may be charged a $1 t $2 service fee. And, yur bank may als charge yu a fee fr using a machine utside the netwrk! All these extra fees can quickly take a tll n yur accunt balance, s d yur best t avid them. When selecting a financial institutin, it s imprtant t make sure that yur mney is prperly insured by the Federal Depsit Insurance Crpratin (FDIC) r Natinal Credit Unin Administratin (NCUA). Bth are federal agencies that prtect cnsumers in the event a bank r credit unin fails. Once yu pen an accunt, it s imprtant t stay n tp f yur finances. Check ut these must-knw facts abut using yur checking accunt. A debit card differs frm a credit card. Debit cards are actually cnnected t yur bank accunt, which means when yu use yur debit card t purchase an item, mney is remved frm yur accunt, much like writing a check. On the ther hand, credit cards are actually lans. The transactin is charged t yur accunt and by using the card, yu agree t pay the amunt charged at a later date, plus interest. An ATM wn t give yu the mst accurate accunt balance. It s imprtant t keep track f checks yu ve written, debit card transactins and varius accunt fees t find yur true balance. Mst ATMs allw yu t check yur accunt balance, but the balance shwn desn t reflect charges that haven t cleared yur accunt. Fr the mst up-tdate infrmatin, keep a clse eye n yur spending and update yur checkbk register daily. 8
Check Out Checking Accunts Use this wrksheet t cmpare financial institutins (banks and credit unins), paying clse attentin t plicies fr charges and fees. Features Cnvenient Lcatins? Hurs f Operatin Financial Financial Institutin #1 Institutin #2 Financial Institutin #3 FDIC r NCUA Insured? Annual r Mnthly Fee Minimum Balance Requirement Cst f Student Checks Overdraft Fee Free Online Banking? ATM Fees Is Direct Depsit Required? Other Features r Requirements 9
Crash Curse in Credit Ever been shrt n cash and asked a buddy t spt yu? Well, simply put, that s the rle f credit: t use funds tday that must be repaid at a later date. Unlike brrwing frm yur pals, hwever, yu ll pay in the frm f interest fr the privilege f using ther types f credit. Building a slid credit rating and maintaining a psitive payment histry will ensure yur ability t get credit in the future and qualify fr perks, like a lwer interest rate. This will cme in handy if yu re ever in the market t buy a vehicle, huse r ther big-ticket item. Building a Gd Credit Histry First, yu must demnstrate that yu re a gd risk s lenders will extend credit t yu. If yu re under 21 yu must have an adult c-signer t pen an accunt r be able t prve yu have enugh incme t pay ff credit debt. Talk t yur parent(s) r guardian(s) abut the best way t build yur credit. Here are sme ptins yu may want t cnsider tgether. Ask smene with an established credit histry perhaps a parent r ther relative t c-sign yur credit accunt. By c-signing, this individual cmmits t repay the debt if yu dn t. Apply fr a credit card issued by a lcal stre. Often, lcal businesses are mre willing t give credit t smene with n credit histry. Apply fr a secured credit card. This type f card requires yu t save the mney first as cllateral fr yur line f credit. Yur credit line will be a percentage f yur depsit, typically frm 50 t 100% f yur accunt balance. Bear in mind that sme secured credit cards charge applicatin and prcessing fees, and many carry a higher interest rate than traditinal, nn-secured cards. Once yu demnstrate that yu re a respnsible credit manager, banks, credit unins and majr credit card issuers may be mre willing t extend credit t yu. Managing Yur Credit What s the easiest way t manage yur credit? Dn t spend mney yu dn t have! It s that simple. The fastest way t get in truble with credit is t spend wildly with the attitude, I ll pay it ff later. If yu dn t have the mney nw, what are the chances yu ll have enugh t pay the bill when it cmes? It s best t pay ff yur credit card balance at the end f each mnth befre interest can accrue. T make this easier, keep yur credit limit lw. Fr big-ticket items, it s nt always pssible t pay yur balance in full, s make sure yu have a repayment plan in place befre yu charge it. Remember that making nly the minimum required mnthly payment isn t an ideal repayment plan. If yu paid nly the minimum due n a $1,000 balance at 18% interest, it wuld take yu eight years t pay ff the debt! Always pay mre than the minimum payment t stay n tp f yur credit card debt. 10
Maintaining a Gd Credit Scre Yur credit scre is the tl lenders use t figure ut if yu re likely t repay mney yu brrw. The FICO scre, develped by the Fair Isaac Crpratin, is the mst widely used credit evaluatin system. Scres range frm 300-850; a higher scre means yu ll pay less interest and gain access t mre credit. Yur credit rating is based n five categries, and yur payment histry has the mst impact n yur scre. That s why it s imprtant fr yu t pay yur bills n time, every time! T learn mre, check ut MyFICO.cm. Mnitring Yur Credit Reprt Yur credit reprt is similar t a reprt card; it grades yur experience handling credit. Just like yu clsely mnitr yur grades during a semester, yu ll want t keep tabs n yur credit reprt t make sure nthing is falsely reprted r new credit isn t taken ut in yur name withut yur knwledge. Many experts recmmend viewing yur reprt at least nce per year. T mnitr yur credit histry, wrk with yur parent(s) r guardian(s) t cntact the three majr cnsumer reprting agencies fr a cpy f yur credit reprt. Equifax: 800.685.1111 (Equifax.cm) Experian: 888.397.3742 (Experian.cm) TransUnin: 800.888.4213 (TransUnin.cm) The Annual Credit Reprt Service (877.322.8228, AnnualCreditReprt.cm) will prvide ne free cpy f yur credit reprt per year as required by the Fair Credit Reprting Act. Equifax, Experian and TransUnin will prvide additinal cpies f yur credit reprt fr a small fee. Equifax and TransUnin will prvide yur credit scre fr a small fee, t. Instructins fr rdering yur reprt and addressing any errrs are available n the website. 11
Chse the Right Card Yur family may decide it s time fr yu t cnsider applying fr a credit card frm a majr credit card issuer. Dn t chse a prduct simply because yu like that cmpany s cmmercials r because they ll give yu a free T-shirt! Fr the best deal, chse a credit card that: Desn t charge an annual fee. Offers a lw fixed nt variable interest rate. Prvides a clear explanatin f fees fr late payments and curtesy services, like cash advances and balance transfers. With help frm yur parent(s) r guardian(s), use the frm belw t cmpare cards. There are a variety f websites t help yu cmpare credit card interest rates. T start, check ut Bankrate.cm, CreditCards.cm and CardRatings.cm. Cmpany Name Address Phne Number Web Address Annual Fee (if any) Grace Perid Annual Percentage Rate (APR) Finance Charge Calculatin Methd Credit Limit Minimum Payment Other Fees: Late Payment Cash Advance Balance Transfer Card One Card Tw Other Features 12
Avid an Identity Crisis Identity theft ccurs when smene uses yur persnal infrmatin, like yur name, Scial Security number (SSN) r credit card infrmatin, withut yur knwledge t cmmit fraud r ther crimes. A thief wh steals yur persnal infrmatin culd clean ut yur bank accunt, max ut yur credit cards, apply fr new credit r cash bad checks, all f which culd ruin yur credit. If that happens, it culd take years t clear yur gd name. Put these tips int practice t help keep identity thieves at bay. Be careful what yu put nline. Scial netwrking sites like Facebk and Twitter are ppular places t cnnect with friends, but beware what yu share. Listing yur birth date, hbbies r even yur pet s name can give identity thieves imprtant infrmatin. Think befre yu thrw. Never tss papers that include persnal infrmatin, like yur user IDs, passwrds, accunt numbers, birth date r SSN, in a trash can. This culd include ATM receipts, pay stubs, credit card ffers, ld bank statements r unused depsit slips. Talk t yur family abut investing in a crss-cut paper shredder, s yu can destry all unnecessary dcuments that cntain such infrmatin. Prtect yur SSN. Never carry yur Scial Security card in yur purse r wallet and dn t use yur SSN as an identificatin number r have it printed n yur checks. Keep it t yurself. Dn t leave yur checks, debit card r credit card lying arund fr peple t see. If smene gets access t yur accunt numbers, they can rder new checks in their name r shp nline with yur card numbers. Never attach yur PIN numbers t yur cards. Mind yur business. Dn t give ut yur persnal infrmatin ver the phne, thrugh email r n the Internet unless yu initiated the inquiry. Banks and credit card cmpanies will never ask yu t verify yur infrmatin by email; be leery f any attempt t verify yur accunt infrmatin. Keep an eye n yur credit. Visit AnnualCreditReprt.cm t rder a free credit reprt frm each f the three largest cnsumer reprting agencies: Equifax, Experian and TransUnin. Dn t share pa sswrds Be passwrd savvy. When creating passwrds never use yur birth date, name r phne number. Chse a passwrd with a mix f characters and numbers that wuld be hard t guess. Use nline passwrd checkers, like the ne fund at Micrsft.cm, t test the strength f yur passwrds. Shp secure. If yu shp nline, make sure the Web address starts with https://. The s is very imprtant; it signifies that the site is secure. If yu dn t see the s, dn t shp n the site. 13
Handy Resurces 8 UCanG2.rg Educatin beynd high schl is pssible fr everyne. UCanG2 can help yu prepare, plan and pay fr yur higher educatin. Visit the website t view and dwnlad publicatins and ther resurces. 8 OCAP.rg An perating divisin f the Oklahma State Regents fr Higher Educatin, OCAP prvides cllege access, aid awareness, financial literacy and student lan management prgrams and services fr students, parents, schls, and cmmunity partners. 8 OKhighered.rg The State Regents are the crdinating bard fr Oklahma public higher educatin. They set academic standards, grant degrees and manage numerus schlarships and special prgrams. 8 Okcllegestart.rg The state s fficial cllege planning website, which prvides infrmatin t Oklahma students, cunselrs, and parents abut explring clleges, cmparing careers, and planning and paying fr educatin beynd high schl. 14
Yur Mney Matters! 8Visit OklahmaMneyMatters.rg t: Learn abut basic mney management, cnsumer credit, saving and managing student lans Take advantage f persnal finance tls, like budgeting wrksheets, self-paced learning mdules, an nline resurce clearinghuse and Mney Talks pdcasts Ask us yur mney management questins thrugh Ask OKMM, ur nline Q&A frum Read abut relevant cnsumer news and lcal events Access links t ther persnal finance service rganizatins, instructinal materials and helpful resurces 15
D yu manage yur mney, r des it manage yu? TM Oklahma Mney Matters 405.234.4365 800.970.OKMM (tll free) OklahmaMneyMatters@cap.rg OklahmaMneyMatters.rg the financial literacy initiative f the Oklahma Cllege Assistance Prgram, an perating divisin f the Oklahma State Regents fr Higher Educatin Like Us n Facebk! Facebk.cm/OklahmaMneyMatters Fllw Us n Twitter! Twitter.cm/OKMneyMatters