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Mastering Personal Finance: Budgeting, Credit, and Financial Wellness

Learn about personal budgeting, credit options, the impact of debt, and bankruptcy. Discover benefits and risks of credit cards while gaining insights on managing finances effectively.

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Mastering Personal Finance: Budgeting, Credit, and Financial Wellness

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  1. Personal Budget

  2. Vocabulary • Check: a note that gives bank permission to make a payment • Debit Card: Make a payment electronically. Money comes out of an account immediately

  3. What are some benefits of producing a personal budget…? • How do you know how much money you have…? • What are different ways in which you can obtain money…?

  4. Forms of Credit • Credit Card: allows consumers the privilege of buying something now and paying for it later • Lines of Credit: bank extends a specified amount of unsecuredcredit to a specified borrower for a specified time period

  5. Forms of Credit • Mortgages:a legal agreement by which a sum of money is lent for the purpose of buying buildings, land, homes, etc. • Personal Loans:a loan that establishes consumer credit that is granted for personal use • Auto Loan: a personal loan to purchase an automobile

  6. Total Cards in U.S. Circulation • American Express credit: 48.9 million (Source: AmericanExpress.com) • MasterCard credit: 171 million (Source: MasterCard) • MasterCard debit: 123 million (Source: MasterCard) • Visa credit: 269 million, as of Sept. 30, 2010 (Source: Visa) • Visa debit: 397 million, as of Sept. 30, 2010 (Source: Visa) • Discover cards: Unavailable

  7. Question • Is it always a good thing to live “beyond your means” by paying later? • Can this system be abused?

  8. Benefits of Credit • Convenience • Use for Emergencies • Establish good credit history

  9. Question • What happens if you do not pay off your credit card on time?

  10. Credit Scores

  11. Costs of Credit • Costs more if unpaid balance is not paid monthly • Tempts one to overspend • Decreases future buying power

  12. Question • Can your fix that “decreased buying power”?

  13. Did you know… • the average credit card holder has more than 9 credit and charge cards • In 2003, 1.6 million people filed Bankrupt • In 2004, the credit card fees were $60 billion dollars

  14. Question • What is bankruptcy? • What is the penalty for it? • Can this be fixed?

  15. Total bankruptcy filings in 2009 reached 1.4 million in 2009, up from 1.09 million in 2008. The vast majority were personal bankruptcies (Source: AACER, the American Bankruptcy Institute, January 2010) • Young Americans now have the second highest rate of bankruptcy, just after those aged 35 to 44. The rate among 25- to 34-year-olds increased between 1991 and 2001, indicating that this generation is more likely to file bankruptcy as young adults than were young boomers at the same age. (Source: "Generation Broke: Growth of Debt Among Young Americans")

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