Scoring with Money: Achieving Goals on a Shoestring

1. Scoring with Money: Achieving Goals on a Shoestring Use limitations: These materials may be used only for nonprofit, noncommercial educational purposes. These materials may not be used in connection with any sale, advertisement, endorsement, or promotion of any service, product, person, or business and may not be sold or offered for sale. 1

2. Welcome Introductions 2

3. Objectives • Understand how to set realistic goals. • Choose safe places to keep money. • Make a plan to meet expenses and achieve goals. • Avoid financial stumbles. 3

4. Congratulations! • Congratulations on having a job. This is a major step, especially in tough times. • With a steady paycheck, you can: • Move toward financial stability. • Set and achieve goals. 4

5. Workshop Objectives • Understand how to set realistic goals. • Choose safe places to keep money. • Make a plan to meet expenses and achieve goals. • Avoid financial stumbles. 5

6. Dreams vs. Goals • Dreams are not reality. (Winning the lottery probably isn’t going to happen, so it is considered a dream.) • Goals can be reached over time and with effort. 6

7. Converting Dreams to Goals • Make the goal specific. • Example: If a laptop is the goal, what kind of laptop? What features are “must haves”? What is the cost? (Let’s say the laptop costs $500.) • Set a deadline for the goal. • The laptop is wanted in eight months. • Make a path for the goal. • Set aside $15 per week ($60 per month) from each paycheck for the laptop ($480). Perform odd jobs to earn the balance of the laptop cost. 7

8. Why Specific Goal Setting is Necessary • Few things are achieved without a plan. • Goals give you a clear direction. • What you want. • When you want it. • What actions you will take to reach the goal. • Goals keep you focused. • I want “this” more than “that,” even if “this” is down the road. 8

9. Become an All-Star Goal Setter 9

10. Protecting Goals by Protecting Paychecks • Credit unions, banks, or a savings and loan are safer choices. 10

11. Choosing the Right Place • Is it close to where I live, work, or shop? • How much will I be charged to keep my money there? • How much is charged for common services, such as printing checks, using an automated teller machine (ATM), or seeing a teller? • What places do my trusted family members, friends, and staff members recommend? 11

12. Main Types of Accounts • Checking account • Used to pay bills. • Savings account • Used to save for goals. 12

13. How Checking Accounts Work • You deposit your paycheck and the bank holds the money for you. • You write checks or take money from an ATM to pay bills. 13

14. How Checking Accounts Work (continued) • The bank provides a little book, called a register, so you can record every check you write and any cash you withdraw. • Subtract the amounts spent and withdrawn from what is in your bank account. • If you write a check for more than what is in the account, the bank will charge you a fee, probably a large fee ($30 or more). 14

15. Balancing a checkbook 15

16. Don’t Want a Checking Account? • Many grocery stores and major retail stores will cash paychecks for a small fee. • As soon as possible after getting paid, complete money orders to pay bills. • Keep other cash in a locked box that is kept in a place only known to you. • Remember that a fee is charged for each money order. 16

17. Don’t Want a Checking Account? (continued) • Avoid check-cashing stores. Their fees are higher than the fees charged by grocery stores and major retail stores. • Many check-cashing stores charge up to 5 percent of the check amount. • A $250 check could cost $12.50 to cash. 17

18. How Savings Accounts Work • A savings account is a place to set aside money for short-term goals, long-term goals, and an emergency fund. • The money in a savings account earns a small amount of interest. • Some banks charge a fee on savings accounts with small balances. 18

19. Tips for Savings Accounts • Look for a bank or credit union that does not charge a fee on accounts with small balances. • Ask if the bank or credit union will combine savings and checking account balances together to qualify for no fee. 19

20. Other Savings Options: Individual Development Account • Money saved in an Individual Development Account (IDA) can be used to further an education, buy a first home, or start a small business. • For every $1 you save, the matching amount could be $2 or $3. 20

21. Individual Development Account (continued) • Organizations matching your dollar could be nonprofit groups, faith-based groups, schools, employers, or financial institutions. • To learn more about IDAs, visit www.cfed.org(click Programs and then Individual Development Accounts). 21

22. Other Savings Options: American Dream Match Fund • A way to save for higher education, homeownership, or starting a small business. • Also a matched savings program. • Individual donors partner with nonprofit organizations to match the funds you save. • Nonprofit groups select the low-wage individuals to participate in the program. 22

23. American Dream Match Funds (continued) • Savers get help with planning for their goals as well as budgeting and savings skills. • After six months in the program, savers can start investing in their goal. • To learn more about this program, visit www.savetogether.org. 23

24. Spending Plan = Game Plan for Reaching Goals • Three components: • List income. • List expenses. • Compare income to expenses and make changes, if needed. • Consider tracking every purchase for a week or two before creating your spending plan. 24

25. Income vs. Expenses • Be prepared to revise your spending plan. • If you have money left over, increase your savings. • If you come up short, review your spending habits and make adjustments. • What are some of the ways to decrease some expenses and cut others? 25

26. Reducing and Avoiding Debt • Follow your spending plan, including reviewing and revising it on a monthly basis. • If you still have serious debt, you need to create a debt reduction plan. 26

27. Debt Recovery Plan • Experts suggest you organize your debts from the highest interest rates to the lowest. • Pay the minimum amounts due on all your debts. • Each month, pay any extra money towards your debt with the highest interest rate. • When the debt is paid off, move on to the next debt on your list. • In time, you will be debt free. 27

28. Avoiding Financial Stumbles • Distinguish between a “need” and a “want.” • Avoid same-as-cash offers: • A late or missed payment could change the same-as-cash program into a high-interest loan. • Paying late or not paying off within the time period often means the interest that started accruing from the purchase date will be charged. 28

29. Avoiding Financial Stumbles (continued) • Be wary of buying from catalogs or out-of-town online stores: • If you return the item, you must pay for shipping. • You may have to prove you returned the item (a receipt showing the item was delivered). • There is likely a deadline to return the item. • The catalog company may charge a restocking fee (or other fees). 29

30. Avoiding Financial Stumbles (continued) • Avoid loaning money to family or friends: • One person’s “loan” is another person’s “gift.” (Plus, the person you lend money to may decide not to pay you back.) • Bad feelings are common when friends loan money to each other. • Remember that you have a right to reach your goals! 30

31. Review • Understand how to set realistic goals. • Choose safe places to keep money. • Make a plan to meet expenses and achieve goals. • Avoid financial stumbles. 31

32. Any Additional Questions 32