Where Does The Money Go

1
Where Does The Money Go?
This is an overview of this presentation

• Ways to earn money
• How to think about expenses
• How to track spending
• How to set up a budget
• When to use credit when not to!
• Thinking about the importance
• of savings / retirement / investing
• Money Tips

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Where Does The Money Go?

• Ways to earn money
• - Jobs for Parents (Allowance Based Income)
• - Get a job working for a company
• (McDonalds, Newspaper Delivery)
• - Birthday Money or Holiday Money (Gifts)
• - Working for Other Adults in the
  neighborhood
  
• -Mowing grass
• -Shoveling
• -Raking leaves
• -Cleaning houses
• - Having more than one job

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Where Does The Money Go?

• Expenses
• Decide Cash or Credit
• Decide What type of bills or expenses you want
  or have
  
• Decide Will any of this income earned be used
  towards
  
• a future purchase (savings?)
• Decide When will you get more money?
• Can you make it on the money you have until
  that time?
  
• Will you have enough left over to pay for
• --- gas in the car
• --- going out to eat
• --- necessities or wants ? ? ?

4
Where Does The Money Go?

• Track your spending
• -Do you currently have a checking account?
• -Can you list your bills that you have amounts
  ??
  
• -Where does your money go? to get real figures
  look at
  
• a checking account or save your
  receipts.
  
• -Record your daily expenses in a notebook or
  on paper
  
• -Keep track of your entire debt not just monthly
  debt
  
• -How do spend chunks of money? Do you make a
  plan?
  
• -Do you like to buy things for other? Think
  about why!
  
• Homemade gifts usually mean more.
• (Friends and Relatives)

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Where Does The Money Go?

• Budget Time
• How to set up a budget?
• Who has ever done a budget?
• 1. List the amount of money coming in (all
  income)
  
• 2. List the expenses you have on one sheet of
  paper
  
• 3. List the money you have left over
  (Discretionary )
  
• 4. List your goals Things you cant purchase
  yet but might want to buy in the future
  
• Time to do a practice budget

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Where Does The Money Go?

• List all of your income
• Include any income that is regularly has been
  received for over 3 months. (Some might have to
  include child support to live)
  
• List all of your expenses CHOICES
• Even expenses only paid periodically (once every
  other month, or once a year)
  
• Think about your financial goals
• (include savings as an
• expense to help save)

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Where Does The Money Go?

• Write down any income you receive/will use
• Birthday Party Money
• Money from a job (earnings)
• Money from a second job
• Investment money you receive
• Savings you are going to apply towards bills
• Gift of money from relatives including parents

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List all of your ExpensesBills each month and
dont forget the bills that are due every 3
months, 6 months or every year.
Total Bill Payments (Add all payments
together)_________ Total Debt (Add all bills) _
__________________________
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What did I forget to include on my bills?

• Other bills paid every few months only?
• Car Repairs or Car Insurance?
• Savings?
• Retirement?
• Health Insurance Premiums?
• Dental Bills?
• Saving for a New Car?
• Saving for a Boat or a House?

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Where Does The Money Go?

• Look at your expenses
• Do you have enough income to pay all your bills?
  
  
• (Subtract your income from your
• total bills amount)
• If you do have extra income (discretionary
  income) what will you do with it?
  
• Will you start another savings category?
• Invest the income? Retirement Account
  (IRA)?
  

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Where Does The Money Go?

• Budgets have to be flexible.
• Unexpected things happen
• -Cars break down
• -Medical Expenses (Cold/Ear Infection)
• -Emergency Dental Expenses
• Try to have extra income. It can be helpful to
  plan for the unexpected emergencies.
  
• It can reduce financial stress!

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• There are several ways to do a budget.
• The only wrong way is not to do a budget!
• These are a few ways
• Written method where you record everything on a
  sheet of paper or on a computer program (as we
  just did)
  
• Envelope method allows you to really visually
  see how many bills you have and the categories
  you spend your money on.
  
• Handout explaining this method

Wrap up for first class
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Where Does The Money Go?

• Now think about these answers.
• How much money do you have access to?
• Do you have cash in your pocket/purse?
• Do you have a credit card in your pocket/purse?
• Do you even have credit cards?
• Do you know much about credit cards?
• Did you know that a credit card is a loan that is
  paid back with interest?

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Where Does The Money Go?

• http//www.myfico.com/

Valuable Website http//www.myfico.com/ has
great information about credit and credit scores
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Where Does The Money Go?
Teens and Money

• Credit
• When to use it
• When you need to establish credit history -
  use responsibly (key)
  
• Interested in purchasing a larger item (car)
• If you know you can pay the entire bill off
• Emergencies (car breaks down)
• Reservations or protect purchases
• When not to use it
• If you cannot afford to purchase that item
  with cash
  
• If you are already behind on your bill
  payments
  
• If you earn less than you are spending!
• To purchase food or gas and still cannot pay
  it off when you
  
• receive your bill
• Just because something is on sale!
• IT IS NOT A SALE IF INTEREST IS ADDED TO IT!

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Where Does The Money Go?

• Think about this
• Justin budgeted his bills for the month. He only
  has a few dollars left until the end of the month
  (a week away). Justins friends invites him to
  go out with them to dinner and a movie. Justin
  knew that he would not have enough money to go
  with but then remembered he had a credit card
  with cash advance available.

- Would this be a good idea?
- What are his other options?
- Should he skip going out this time?
- Could he suggest something more affordable?
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• What does Justin need to think about before he
  makes that decision?
  
• -Additional interest charge because cash advance
  is at a higher interest rate
  
• -Can Justin afford to pay this additional amount
  off with his next check?
  
• Is Justin using his credit card as income?
• -It is not uncommon for people to use credit
  cards as an extra source of income be careful!
  
• -This can lead to Justin relying on credit cards
  as income at other times.
  
• -This can lead to other negative financial
  decisions (not having the income to pay charges
  back)

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Where Does The Money Go?

• Credit Cards can be tempting to use
• They allow you to purchase items that you
  financially might not be able to afford
  otherwise.
  
• They are a quick loan without the approval
  process each time when making purchases easy to
  use.
  
• It is important to be a smart consumer with
  credit cards because of all the variables
  interest rates, credit limits, penalties, late
  fees and other fees that might not be disclosed
  in large print.
• Handout on Being Credit Wise

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Where Does The Money Go?

• Where can you turn - to get more money?
• - Borrow from relatives or friends
• - Pay Day Loans 300 a year (most)
• - Take out money through cash advanced
• (checking or credit card- high and last to
  repay on a credit card)
  
• - Sell something quick pawn shop or to
  friends
  
• (low value low price)
• - Have a savings account to fall back on easy
  access
  
• - Have an IRA to borrow from or cash in an
  investment
  
• - Get another job for more income

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• Investments can be in various forms
• Stocks Bonds be willing to loose what you
  invest
  
• Money Market Account interest paid for having
  funds in this account yearly
  
• Savings Account Certificates of Deposits
  (CDs) interest paid yearly
  
• IRAs Some you can borrow against at a low
  interest rate
  
• Cash under the pillow or freezer allows money
  to accumulate (down side no added interest)
  
• Investment in real estate
• (Usually required to be 18 yrs old)
• Education is one of the largest debts for young
  people but is seen as a positive debt to bankers.
  This is not a debt that will hold you back
  unless you forget to repay it.
• Credit cards are a loan! Not an investment!

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• Be money smart
• -Have goals with your finances
• - Dont spend what you dont have
• - Find a way to increase your income when you
  find your bills increase (second job is ok!)
  
• - Track your spending do a budget
• - Have a strategy on how to reduce your entire
  debt
  
• - Think about your choices (bills) are they
  really what you want to spend money on?
  
• - Are you working all the time without any time
  for life?
  
• - Is this what you want?
• - Learn more about money! Great books, videos,
  and more are available-get educated!

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• Books
• Kiplingers Money Smart Kids (and parents, too)
  by Janet Bodnar (1993)
  
• Investing for Dummies 3rd Edition by Eric Tyson,
  MBA (2003)
  
• Money skills 101 ways to teach your child about
  money by Bonnie Drew (1992)
  
• The complete idiots guide to Money for Teens by
  Susan Shelly (2001)
  
• Are you normal about Money? (Do you behave like
  everyone else?) by Bernice Kanner (2001)
  
• Family Money Leave the Things You Own to the
  People You love by Silver Lake Publishing (2002)
  
• Savings on a shoestring How to cut expenses,
  reduce debt, and stash more cash by Barbara
  ONeill, CFP, Ph.D. (1999)
  

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Website Resources

• Ready, Set, Credit for Young People
  www.ftc.gov/bcp/conline/pubs/young/readycrdt.pdf
  
• Cost of Paying Minimum Balance Calculator
  www.bankrate.com/brm/calc/minPayment.asp
  
• Knee Deep in Debt www.ftc.gov/bcp/conline/pubs/cre
  dit/kneedeep.pdf
  
• Building a Better Credit Record
• ww.ftc.gov/bcp/conline/pubs/credit/bbcr.pdf

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Money Tips

• Save a small amount each week for a large expense
  set a goal
  
• Look for sale items almost everything goes on
  sale at one time or another
  
• Create a two week spending plan budget
• Look at the value, not just the cost, of products
  items that last longer but cost a little bit
  more might be a better bargain.
  
• Be aware of how peer pressure affects your
  spending
  
• Keep a money diary expense report for budget
• Trends change - can you afford that? Choices

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• MONEY TIPS continued
• Uses envelopes to separate into categories to
  match your budget breakdown. Evaluate each
  envelope.
  
• Compare prices when shopping-use coupons when you
  can.
  
• Look for ways to earn extra money for special
  goals
  
• Recognize advertisement is targeting you the
  consumer (a cool commercial for something doesnt
  mean you need it now or that it is even a
  purchase you need to make)
• Remember you choose your bills
• The amounts you spend-what you buy
• Spending your money is a choice made
  by you!
  
• How do you make that choice?

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Where Does The Money Go?
This is an area where education
can be very profitable! Make Cents?

• Presented by
• Brenda Jacobson