Money Smart for Young Adults: Building Knowledge, Security, and Confidence in Setting Financial Goals with FDIC.

Slide1Building: Knowledge, Security, ConfidenceSetting Financial Goals FDIC  Money Smart for Young Adults

Slide22Purpose • Learn how to manage money by preparing a personal spending plan • Identify ways to decrease spending and increase income

Slide33Objectives • Track daily spending habits • Prepare a personal spending plan or budget to estimate monthly income and expenses • Identify ways to decrease spending and increase income • Identify budgeting tools that will help you manage your money By the end of this course, you will be able to:

Slide44To make a Budget or to NOT Make a Budget?

Slide55What is a Budget?  Budgeting is: • An important step to financial security • About choices – choosing how to make and spend money

Slide66Why Budget? Usually for 1 month Usually for 1 month

Slide77Preparing a Budget Budgeting is about: • Choosing how to use your money • Knowing what your income and expenses are every month

Slide88Four Steps to Preparing a Budget 1. Keep track of your daily spending 2. Determine what your monthly income and expenses are the month before they are due 3. Decrease spending 4. Increase income

Slide99Step 1: Keep Track of Daily Spending Many people spend all their money—Do you know where your money goes each month? • Have you ever had any money and then spent it? • Do you remember exactly what you bought? Control Your Money! • Know where your money goes • Keep a personal spending diary

Slide1010Set Your Goals Consider them when planning a budget: • Be realistic • Be specific • Have a time frame • Say what you want to do • Have milestones

Slide1111Daily Spending Diary Watch Spending Closely • Use a daily spending diary or log • Know where your money goes • Cut expenses to save for goals

Slide1212Activity 1: Daily Spending Diary – Write down what you spend in a typical day – Keep track of everything you spend Complete Activity 1 in your Participant Guide

Slide1313Step 2: Income Income  comes in the form of: • Allowances • Wages from a job • Miscellaneous work (like cutting grass) • Interest and dividends from investments

Slide1414Expenses :  items you pay for each month • Housing and car payments • Insurance • Food and clothing • Utility bills • Personal, child or pet care Step 2: Expenses • Eating out or other entertainment • Educational costs

Slide1515Activity 2: Monthly Income and Expense Worksheet – Your instructor will explain how to fill in the worksheet – You will fill it out as you go through the section Complete Activity 2 in your Participant Guide

Slide1616What You REALLY Earn: Income • Your employer must subtract certain taxes from your paycheck •   The time it takes     to meet goals for     saving may     increase

Slide1717Gross Income: Total income without deductions Net Income: Gross income after deductions or subtractions, such as Social Security and other taxes What You REALLY Earn: Income (continued)

Slide1818Social Security: Insurance for someone who works • Retirement • Disability • Family • Survivor • Medicare What You REALLY Earn: Income (continued)

Slide1919Expenses Expenses: Everything you pay for in a time period There are two types of expenses: – Fixed – Flexible

Slide2020Fixed Expenses  do not change • Car payment • Rent Flexible Expenses  might change • Electricity • Food • Clothing or entertainment Expenses (continued)

Slide2121Step 3: Find Ways to Decrease Spending

Slide2222• Carrying little cash and controlling your credit card use • Not shopping “for fun” • Remembering your savings goals • Buying only what you need • Paying your bills on time to avoid extra fees and charges You can decrease spending by: Step 3: Find Ways to Decrease Spending

Slide2323Step 4: Find Ways to Increase Income • Get a second job or a job that pays more to increase income • Use certain tax credits that can help you increase your income (or pay fewer taxes so that you get more in your paycheck)

Slide2424Budgeting Tools These help you manage your budget: • Monthly payment schedule • Monthly payment calendar • Computer system

Slide2525We will focus on two: • Monthly payment schedule • Monthly payment calendar These help you: • Record income in advance • Plan ahead to pay your bills Budgeting Tools (continued)

Slide2626Activity 3: Monthly Payment Schedule – Use the Income and Expenses Worksheet – Follow your instructor’s directions to complete the Schedule Complete Activity 3 in your Participant Guide

Slide2727Activity 4: Monthly Payment Calendar Use the Monthly Payment Schedule to fill in your calendar Complete Activity 4 in your Participant Guide

Slide2828Monthly Payment Calendar Month ________________________________ Sunday Monday Tuesday Wednesd ay Thursday Friday Saturday 1 2 $400 paycheck $25 savings $150 car $25personal $30 insurance 3 $16600 transportation 4 5 $25 interest (income) 6 $30 cell phone 7 8 9 10 11 12 13 14 15 16 $40 phone bill 17 18 19 20 $10 credit card/ loan 21 22 23 24 25 26 27 28 $40  entertain- ment 29 30

Slide2929Help! I Can’t Pay My Bills! Scenario:  You add up your bills and the total is $900, but your income is only $600…. What do you do? Think about the bills that would be the most important!

Slide3030Help! I Can’t Pay My Bills! (continued) If you have to choose, think of major obligations first: Pay your rent or mortgage Pay necessary household expenses Pay high- interest loans Talk to your creditors

Slide3131Activity 5: A Hole in Todd’s Pocket Read the scenario and think about what Todd did Complete Activity 5 in your Participant Guide

Slide3232CONCLUSION:  To make a Budget or to NOT Make a Budget?

Slide3333Setting Financial Goals • How to track what you spend each day • How to prepare a personal budget to estimate monthly income and expenses • Ways to decrease spending and increase income • About tools for better money management Congratulations!  You have completed the  Setting Financial Goals  module. You have learned:

Slide3434Assess Your Knowledge Don’t forget to complete the Knowledge Check in your Participant Guide