Managing Your MoneyManaging Your MoneyWhat You Need to Know About Budgets,What You Need to Know About Budgets,

Credit Cards and Paying For College Credit Cards and Paying For College

The State of Financial Literacy in the United StatesThe State of Financial Literacy in the United States

For the first time since the Great Depression, the average For the first time since the Great Depression, the average personal savings rate of Americans is less than zero percentpersonal savings rate of Americans is less than zero percent

This means that most Americans are spending more money than they This means that most Americans are spending more money than they earn, leaving no money to save earn, leaving no money to save -source: US News & World Report-source: US News & World Report

According to a 2004 survey, the median credit card balance According to a 2004 survey, the median credit card balance for the American family is $2,200for the American family is $2,200 –source: Federal Reserve’s 2004 Survey of –source: Federal Reserve’s 2004 Survey of

Consumer FinanceConsumer Finance

In 2006 the Jump$tart Coalition surveyed high school seniors In 2006 the Jump$tart Coalition surveyed high school seniors on financial literacy topics. The average score was 52.4% - a on financial literacy topics. The average score was 52.4% - a failing gradefailing grade

The topics students answered incorrectly on most frequently were: The topics students answered incorrectly on most frequently were: understanding saving, loan and investment rates; understanding taxes; understanding saving, loan and investment rates; understanding taxes; and health care coverage and health care coverage –source: Jump$tart Coalition 2006 Survey of Financial –source: Jump$tart Coalition 2006 Survey of Financial Literacy among High School StudentsLiteracy among High School Students

Understanding the Impact of IncomeUnderstanding the Impact of Income

When to spend vs. when to saveWhen to spend vs. when to save Have a checking account and Have a checking account and

keep it balancedkeep it balanced Set financial goalsSet financial goals Shop smartShop smart Know the cost of creditKnow the cost of credit Tax timeTax time

Making a BudgetMaking a BudgetWhere did all my money go?Where did all my money go?

Net Income Net Income Fixed Expenses, Flexible Expenses and Fixed Expenses, Flexible Expenses and

Discretionary ExpensesDiscretionary Expenses Keep track of monthly expensesKeep track of monthly expenses

Credit CardsCredit Cards

Know your interest rate Know your interest rate Have only one Have only one Pay in full every monthPay in full every month Pay on timePay on time Protect your credit historyProtect your credit history Always review your statementsAlways review your statements Don’t exceed your limitDon’t exceed your limit Protect your personal informationProtect your personal information

--AICPAAICPA

Making College A RealityMaking College A Reality

Start saving nowStart saving now Seek out scholarshipsSeek out scholarships Government loansGovernment loans Focus on in-state, public universitiesFocus on in-state, public universities Be aware of education tax deductionsBe aware of education tax deductions

-AICPA-AICPA

Inve$ting Your Way to WealthInve$ting Your Way to Wealth

Invest to beat the rate of inflationInvest to beat the rate of inflation The power of compounding interestThe power of compounding interest How to InvestHow to Invest Patience and constant vigilance is keyPatience and constant vigilance is key

Start on Your First $1 Million … at age 16Start on Your First $1 Million … at age 16

Have a summer job each summer for 4 Have a summer job each summer for 4 yearsyears

Put $2,000 each summer into a Roth IRAPut $2,000 each summer into a Roth IRA Don’t touch the money – it will grow tax-Don’t touch the money – it will grow tax-

freefree Assuming you receive the average Assuming you receive the average

compound annual rate of 10.7 %, you will compound annual rate of 10.7 %, you will have $9,378 at the end of the fourth year have $9,378 at the end of the fourth year when you are 20 years old.when you are 20 years old.

Start on Your First $1 Million … at age 16Start on Your First $1 Million … at age 16

Continue to invest this same amount, with no Continue to invest this same amount, with no additional savings and your money will grow to:additional savings and your money will grow to: $25,917 by the time you are 30$25,917 by the time you are 30 $71,625 by the time you are 40$71,625 by the time you are 40 $197,943 by the time you are 50$197,943 by the time you are 50 $547,037 by the time you are 60$547,037 by the time you are 60 $1,114,423 by the time you are 67$1,114,423 by the time you are 67

This plan doesn’t require “investment brilliance,” This plan doesn’t require “investment brilliance,” just an early start and tenacityjust an early start and tenacity

Depending on the risk level of your investments, Depending on the risk level of your investments, your money may grow more quicklyyour money may grow more quickly

--data from MSN Moneydata from MSN Money

Additional Financial ResourcesAdditional Financial Resources

www.tscpa.com/studentwww.tscpa.com/student Financial Fitness page has articles to help Financial Fitness page has articles to help

you manage your money wisely and financial you manage your money wisely and financial calculators to help you create a budget, plan calculators to help you create a budget, plan for buying a car and assist in a host of other for buying a car and assist in a host of other financial decisionsfinancial decisions

www.fool.comwww.fool.com The Motley Fool – great resource for The Motley Fool – great resource for

investment adviceinvestment advice

Remember…Remember…

Developing good money management skills Developing good money management skills today can mean big payoffs in the future!today can mean big payoffs in the future!

Questions?Questions?