MANAGING MONEY

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MANAGING MONEY

10.01 Identify sources of

income and types of

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You’ve all heard the phrase “Money

doesn’t grow on trees…”



_{Well, where does it grow? In your bank}

account money earns interest and grows.

You can invest and your money will grow.

You can make a budget and save and

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Money is a

material resource



_{Budgets can help you achieve short and}

long term goals.

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Budget Example



_{Income is the}

amount brought

home.



_{Expenses are the}

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Earning an Income



_{Hourly Wage}

_{– Amount of money earned}

per hour of work. Can vary based on

number of hours worked.



_Salary

_{– Set amount of money paid for a}

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Hourly Wage Overtime



_{If someone works more than 40 hours a}

week or holidays, they can earn

OVERTIME which is usually their normal

hourly rate plus 50%.



_{So if they normally make $6.50 an hour,}

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Paycheck Deductions

Deduct means to reduce or take away from.

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Gross Income vs. Net Income



_{Total amount of money before deductions}

is your gross income.



_{Total amount of money after deductions is}

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Deductions

Federal and State Income Taxes –

Government’s main source of income and

is used to provide services, programs, and

facilities to citizens.

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Basics of Budgeting

Establish financial goals.

Determine sources of income

Estimate expenses

Compare income and expenses

Write budget and keep records

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10.02 Factors that influence

spending

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A. Advertising

 Is a paid public message communicated through various media that promotes the sale of goods and services.

 Causes people to impulse buy (buy without thought)

 Manufactures know their ad worked if you buy their product.

 Ads are to convince you to buy something.

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Jingles and Slogans

 _{Are to make you}_remember_{the product.}

 Let’s see how much YOU remember!  Have it your way

Taste the rainbow Eat Fresh

Think outside the bun Is it in you?

Every kiss begins with… Are you gellin?

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B. Purchasing practices

Decide where to shop, when to buy, and what to buy.

_{Comparison shopping}

means comparing products and prices in different

stores before buying.

_{Have you ever impulse}

bought?

 Impulse buying can be

prevented by following a shopping list.

 Advertisers are sneaky! They use cartoon

characters to convince

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Deciding WHAT to buy:

 Judge quality – Not just price! Judge the quality. Sometimes lower price is still good quality!

 Suitability – Know what product you need before you go shopping for it.

 Use and Care – Read labels. Would you want to buy a whole wardrobe of dry clean only?

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D. Consumer rights and responsibilities

1. Right to be informed – 515

2. Right to redress/recourse – 518

3. Right to safety – 517

4. Right to choose/selection - 516

5. Right to Performance – 516

6. Fraud – 515

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Money!

► A teenager lost a contact lens while playing A teenager lost a contact lens while playing

basketball in his driveway. After a fruitless search,

he went inside and told his mother the lens was

nowhere to be found and they needed to order

more lens. Undaunted, she went outside and in a

few minutes, returned with the lens in her hand.

"How did you manage to find it, Mom?" the

teenager asked. "We weren't looking for the same

thing," she replied. "You were looking for a small

piece of plastic. I was looking for $150."

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10.03 Check Writing

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ALL STUDENTS STAND UP!!!

 If you can not go the rest of your life without spending money on the following, sit down.

Opening day for movies Manicure/pedicure

Golfing/club memberships

Hairstyles that have expensive treatments (color, perms, etc.) Cell phones

Going out to dinner 2 or 3x a week Vacations in high seasons

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Check Writing

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Check Writing

 DATE: Include the month, day and year you

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Check Writing

 PAYEE: Write the name of the person or

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Check Writing

 AMOUNT IN NUMBERS: Write the amount of

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Check Writing

 AMOUNT IN WORDS: Write the amount of

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Check Writing

 SIGNATURE: Sign all checks the way you

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Check Writing

 MEMO: Use the memo area to note the

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Check Writing

 ROUTING NUMBERS: The nine-digit string of

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Check Writing

 ACCOUNT NUMBER: The number used to

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Check Writing

 CHECK NUMBER: The number used to

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Check Writing

 TRANSIT NUMBER: Used to list checks for

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Check Writing

 Check Register: Don’t forget to balance your

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Check Writing

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12 Rules About Checking

1)

Only write checks when you have

enough money in your account.

2)

Write checks legibly.

3)

Write the check amount as far to the

left as possible.

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12 Rules About Checking

5)

Don’t erase mistakes on a check.

6)

Don’t sign blank checks.

7)

Use restrictive endorsements.

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12 Rules About Checking

9)

Always keep checks in a safe place.

10)

Destroy voided or unused checks and

deposit slips.

11)

Record every transaction in the

checkbook register.

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Check Writing

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How to Cash a Check

 BLANK ENDORSEMENT: Sign your name the

same way it is written on the front of the check.

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How to Cash a Check

 SPECIAL ENDORSEMENT: Do this when you

want to give someone else the money. Write “pay to the order of” and that person’s name. Then sign it. Now that person is the only one that can cash the check.

William J. Doe

Pay to the order of

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How to Cash a Check

 RESTRICTIVE: When you want your check to

be very safe, like when you send it by mail to your bank, use this type of endorsement.

Then , it can only be deposited into your account.

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Did You Know

$ _{The percentage of undergraduate students}

carrying at least 1 credit card has risen 24% since 1998

$ 92% of college students have a credit card by their sophomore year

$ Almost half (47%) of all college students carry four or more credit cards

$ 21% of undergrads owed between $3000 & $7000 on their credit card – a 61% increase from 2000

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What are Credit Cards?

Pre-approved credit which can be used

for the purchase of items now and

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Are Debit Cards a type of

Credit Card?

NO!

Debit=Credit

Debit cards allow payment and

purchase

to happen simultaneously

Debit Cards are:

$ Not the same as credit cards

$ Not a form of credit at all

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Why Use a Credit Card?

$ Proper use can help establish good credit rating

$ Conveniently accepted across United States and abroad

$ Emergency buying power

$ Additional form of identification

$ Record of purchases on bill statement

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Why Not Use a Credit Card?

$ Improper use can damage credit rating

$ Higher risk for impulsive buying and overspending

$ Debt trap when used unwisely

$ Expensive way to borrow due to high interest rates

$ Less to spend in the future due to paying off purchases from past

$ Possible hidden fees & surcharges

$ Privacy is an increasing concern

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Types of Credit Cards

Cards where purchases can be made

in many locations

$

Bank Credit Cards

¢ Card issued by financial institution

$

_{Retail Credit Cards}

¢ Credit and card issued by particular

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Obtaining a Credit Card

$ Comparison shop when choosing the right card

$ Know the facts

¢Terms and conditions of credit card accounts differ

¢Be aware of “hidden” costs of card(s)

$ Federal Truth in Lending Act

¢Requires card issuer to display the cost of credit card

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A Schumer Box

you May Expect To See

Annual Percentage Rate for purchases and balance transfers*

2.99% APR (.00819% daily periodic rate) on purchases and balance transfers until the first day of the billing cycle that includes the six (6) month anniversary date of the opening of your account. In the absence of the introductory rate, 12.99%

APR(.03559% daily periodic rate) on purchases and balance transfers.**

Grace period for repayment of the balance for purchases

You will have a minimum of 25 days without a finance charge on new

purchases if the total New Balance is paid in full each month by the statement closing date.

Method of computing the balance used in calculating finance charges for purchases

Average daily balance (including new purchases)

Annual fee $25

Minimum finance charge For each Billing Period that your Account is subject to a finance charge, a minimum total Finance Charge of $0.50 will be imposed.

Miscellaneous fees Cash advance fee: 2.5% of amount of the cash advance, but not less than $2.50.

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$ Annual Percentage Rate (APR): interest rate charged for amount borrowed in terms of percentage per year

$ Grace Period: amount of time allowed before finance charges (interest or cost of credit) are applied

Annual Percenta ge Rate for Purchase s Grace Period for Purchase s Minimum Finance Charges Balance Calculati on Method for Purchase s Annual

Fees Transaction Fees for Cash Advances Late Payment Fees 19.9% Not less than 25 days $.50 when a finance charge at a periodic rate is charged Average daily balance method (including new purchases ) $20 per year

2% with a minimum

fee of $3

$29

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$ _{Minimum Finance Charge}: minimum amount charged for card use

$ Balance Calculation Method: method used to determine balance including finance charges

Fees Transaction Fees for Cash Advances Late Payment Fees 19.9% Not less than 25 days $.50 when a finance charge at a periodic rate is charged Average daily balance method (includin g new purchase s) $20 per year

2% with a minimum

fee of $3

$29

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$ Annual Fees: yearly charge for credit card ownership

$ Cash Advance Transaction Fees: cash withdrawal fees

$ Late Payment Fees: penalty fee for payments not made by the due date

Fees Transaction Fees for Cash Advances Late Payment Fees 19.9% Not less than 25 days $.50 when a finance charge at a periodic rate is charged Average daily balance method (including new purchases ) $20 per year

2% with a

minimum fee of $3

$29

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Opening a Credit Account

1. Applicant completes a credit application 2. Lender conducts a credit investigation 3. Applicant is given a credit rating

4. Lender accepts or denies the credit request 5. If accepted, applicant evaluates the credit

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Understanding the Bill

$ Minimum Payment Due: minimum amount to be paid

¢ If this amount is paid and a balance is left on the account, additional finance charges will be included in the following month’s balance

$ Past Due Amount: the previous amount due which was not paid before the due date

$ Due Date: the day by which the company requires a payment to be made

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Understanding the Bill

(continued)

$

Credit Line

: the maximum amount

of charges allowed to an account

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 _{Sign card with signature}_and_“Please

See ID”

 _{Do not leave cards lying around}

 _{Close unused accounts in writing and by}

phone, then cut up the card

 _{Do not give out account number unless}

making purchases

 _{Keep a list of all cards, account}

numbers, and phone numbers separate from cards

 _{Report lost or stolen cards promptly}