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Chapter 13

Chapter 13. Money Matters. P.O.W.E.R. Plan. P repare : Identifying Your Financial Goals O rganize : Determining Your Expenditures and Income W ork : Making a Budget That Adds Up E valuate : Reviewing Your Budget R ethink : Reconsidering Your Financial Options. Money Management.

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Chapter 13

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  1. Chapter 13 Money Matters

  2. P.O.W.E.R. Plan • Prepare: Identifying Your Financial Goals • Organize: DeterminingYour Expenditures and Income • Work: Making a Budget That Adds Up • Evaluate: Reviewing Your Budget • Rethink: Reconsidering Your Financial Options

  3. Money Management • Why have a budget? • How can I pay for my college education? • What is the value of a college education? • Where does all my money go?

  4. Develop a Budget • Formal plan that accounts and plans for expenditures and income • Based on income • Provides security • Keeps track of spending

  5. Prepare • Determine short-term goals • Identify long-term financial goals

  6. Organize • Keep track of your money • Record expenditures in a notebook • Make a list of financial needs

  7. Work-Budgeting Personal Necessities • Food • Clothing • Shelter • Household Supplies • Transportation • Loans • Medical Expenses • Other

  8. Educational Necessities Tuition and Fees Books Tools Computer costs Other Social Needs Relationships Clubs and teams Charitable contributions Other Budget Entertainment • Movies and shows • Trips • Recreation and sports Lifestyle Improvements • Educational • Living space • Computer • Transportation • Clothing • Other

  9. Estimate Your Income • Wages • Family Support • Financial Aid • Tuition reductions, loans, scholarships • Interest and Dividends • Gifts

  10. Save Money • Control impulse buying • Make your own lunch • Read newspapers and magazines at the library instead of buying subscriptions • Check bills for errors • Cut up credit cards and pay cash

  11. Saving Money • Make major purchases only during sales • Share and trade resources with friends • Live more simply • Get good grades (re-taking classes costs money)

  12. Evaluate • It is important to review and evaluate your budget monthly and make appropriate changes

  13. Rethink • When problems occur, assess the problem • Contact your creditors • See a credit counselor • Stick to a plan

  14. Credit Cards • Average credit card debt of college students is $3,000 • About 10% of college students owe move than $7,000 After graduating from college, do you still want to be paying for a slice of pizza you bought the first week of college?

  15. Do I Need a Credit Card? • Is there an annual fee? • What is the interest rate? • Is the interest rate fixed or variable? • Do I need a credit card, REALLY?

  16. Advantages of Credit Cards • Establishing a good credit history • Emergency use • Convenience

  17. Disadvantages of Credit Cards • Interest costs can be high • It’s easy to spend too much money • Late payments damage credit rating

  18. Cost of College Figure how much college is costing you. • Divide by the number of hours you attend class. • How much is each class worth? • Isn’t it important to get your money’s worth?ATTEND CLASS

  19. Funds for College • Loans • Grants • Scholarships

  20. Loans • Principal: amount of loan • Interest rate: percentage • Term of loan • National Loans • Stafford Loans-Subsidized and Unsubsidized • Plus Loans • Perkins Loans

  21. Grants • Money that does not have to be repaid • Pell Grants: based on need • Federal Supplemental Educational Opportunity Grants-limited supply • Work-study Grants-jobs for students in need

  22. Scholarships • Does not have to be repaid • Hope scholarships-tax credit 100% on first $1000 and 50% credit on 2nd $1000 paid on tuition and fees • Lifetime learning tax credit-20% tax credit for first $5000 for older students or juniors and seniors

  23. Financial Aid • Speak with a financial aid counselor • Decide how much aid is needed • Fill out application for aid • Complete the FAFSA • Be patient and wait for results

  24. Evaluate • Evaluate your financial aid package • Speak with a counselor if aid is not adequate

  25. Rethink Money spent on education gives us a better understanding of the world and its people, insight into who we are, and better job opportunities

  26. P.O.W.E.R. Plan PREPARE Identify financial goals ORGANIZE Determine expenditures and income WORK Make a budget that adds up EVALUATE Review the budget RETHINK Rethink financial options

  27. Resources The Student Guide (U.S. Department of Education, 2005) Paying for College Without Going Broke by Kalman Chany and Geoff Martz (princeton Review, 2005)

  28. Web Links • www.collegeanswer.com/index.jsp • www.fafsa.ed.gov

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