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Gregory Housel Money Smart Month Representative

UNDERSTANDING AND INCREASING WEALTH IN LOW AND MODERATE INCOME COMMUNITIES. Gregory Housel Money Smart Month Representative. PEW Video. http://www.pewstates.org/news-room/video-library/economic-mobility-and-the-american-dream-85899378857 http://www.youtube.com/watch?v=fTDhi12rqYc.

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Gregory Housel Money Smart Month Representative

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  1. UNDERSTANDING AND INCREASING WEALTH IN LOW AND MODERATE INCOME COMMUNITIES Gregory Housel Money Smart Month Representative

  2. PEW Video http://www.pewstates.org/news-room/video-library/economic-mobility-and-the-american-dream-85899378857 http://www.youtube.com/watch?v=fTDhi12rqYc

  3. Factors of Wealth Development • Good Credit • Health/Disability • Marriage • Hope and Confidence • Comparison Shopping • Inheritance Dependents Education (Level and school system) Income/Employment Homeownership Savings Retirement Contribution Criminal Records

  4. Why Financial Education For Youth? Children are in stores and retail venues an average of two to three times per week. Children ages 4 to 12 shell out an estimated $35.6 billion of their own cash annually, more than 4 times what they did a decade ago.

  5. Pay Day Loans Rent To Own Check Cashing Refund Anticipation Loans Money Orders Pawn Shops Alternative Financing Services = $11 Billion Dollars 4 to 12 Year Old Spending =$35.6 Billion Dollars

  6. Young Adults and Bank Accounts • Young adults are six times more likely to go to college if they open a bank account between the ages of 12 and 15.

  7. 529 College Plan A 529 plan is a savings plan for college. A parent or guardian can set up a 529 plan on his or her own, and it doesn’t need to go through the employer. These state-sponsored savings plans let you build up savings, tax-free, for tuition in any college or university in the country.

  8. Average Annual Income of a 15-17 year old is $4,023! Teens Spent Over $200,000,000,000 Last Year 79% Of Teens Employed 40% Of Teens Are Saving Top Categories For Saving: Clothes 57% College 54% Car 38%

  9. 1st Step: Stay In School United States graduation rate: 75.5% 1.3 million high school student dropouts per year. 2,500 dropouts per day 2008 dropouts will cost $319 billion in their lifetime. 59% of prison system population are High School dropouts

  10. Marketable Skill & Militarypayscale.com

  11. College Student Graduation Rates Approximately 10% of the population has an associate’s degree and 30% has a bachelor’s degree 2008 college graduation rates for a six-year timeframe: 4 Year Degree: 57.2% Graduation Rate 2 Year Degree: 30.5% Graduation Rate (National Center for Education Statistics)

  12. Student Savings Lead To HigherGraduation RatesFamilies With Less Than $50,000 Annual Income Even having a small amount of savings designated for school can have a positive effect on low- and moderate-income children’s persistence in college through graduation The Assets and Education Initiative (AEDI) Research Team University of Kansas School of Social Welfare

  13. Support System, Is It Needed To Build Wealth? Support System A network of personal or professional contacts available to a person or organization for practical or moral support when needed. In 2010, about 40 percent of full-time and 73 percent of part-time college students ages 16 to 24 were employed. Who helps low income students that RUN OUT OF MONEY???

  14. College Attainment By Race 52.4% Asian and Pacific Islander 30.3% White 19.8% Black 13.9% Hispanic 29.9% Total Source: U.S. Census Bureau

  15. Getting a college degree is a ticket to economic mobility! For those raised at the bottom of the income ladder, nearly one-half of children were stuck there as adults if they didn't go to college. But only 10% of those with a college degree remained at the bottom. Some 41% of students who come from families in the lowest income ranks move up to the highest two rungs if they earned a college degree. (Pew Economic Mobility Project)

  16. More Education = More Money Earnings of persons over age 25 2012 Annual Earnings Lifetime Some High School $24,492 $1,846,728 High School graduate $33,904 $2,556,404 Some College $37,804 $2,850,469 Associate’s degree $40,820 $3,077,879 Bachelor’s degree $55,432 $4,179,643 Master’s degree $67,600 $5,097,125 Professional Degree $90,220$6,802,702 *Lifetime defined as 40 years of full-time work with a 3% annual cost-of-living increase of annual earnings. Statistics reflect 2012 fulltime workers. (Bureau of Labor Statistics, Current Population Study)

  17. Is a College Education Worth The Debt??? 2012 Student Loan Balances Average debt 2012: $24,218 Median debt 2012: $13,662 Source: Federal Reserve Bank of New York Consumer Credit Panel / Equifax

  18. Conceptual Framework Many times people make bad financial decisions because they do not know enough to make good financial decisions. 75% of the population is 18 years or older and out of school. (Kansas City Federal Reserve Bank)

  19. Having Money Helps, Having Education Helps More Bankruptcy records indicate that even though the median winner of a large cash prize could have paid off all of his unsecured debt or increased equity in new or existing assets, he chose not to do either. (The Ticket to Easy Street? The Financial Consequences of Winning the Lottery)

  20. Money Without A Plan Nearly one third of multimillion dollar lottery winners become bankrupt in just a few short years after their big win. (Associated Content)

  21. Understanding Financial Terms Asset: A valuable item that is owned Wealth: What you own minus what you owe Income: Amount of money received for doing work

  22. Understanding What Builds Wealth Retirement Savings Savings Small Business House Asset Job

  23. Household in 2011 MEDIAN 2011 Family Income $50,054 Federal poverty level reached 15% in 2011. Almost 46,200,000 lived below the poverty level. (Census Bureau 2011)

  24. Literacy in the United States 15% of adults lack basic literacy skills. Approximately 33 million adults (Census Bureau)

  25. Quantitative Literacy Quantitative literacy is knowledge of and confidence with basic mathematical/analytical concepts and operations required for problem-solving, decision-making, economic productivity and real-world applications; this entails the ability to: competently perform basic computational/arithmetic operations; demonstrate skills at estimating and approximating results; perform basic algebraic and/or logical operations that involve levels of abstraction; demonstrate basic problem-solving skills; and show competence in applied analytical skills.

  26. Quantitative Literacy 22% of adults lack even basicquantitative literacy skills (48,000,000 adults). 33% of adults have onlybasic quantitative literacy skill levels (72,000,000 adults). 120 million American adults may be vulnerable to predatory lending practices or make seemingly small mistakes with major financial consequences. (National Center for Education Statistics)

  27. U.S Personal Savings Rate For Every Dollar Earned, Americans Saved: 1982 11.3 cents 1992 7.6 cents 2002 4.3 cents 2012 3.9 cents

  28. Underbanked and Unbanked Households 17,000,000 Unbanked In the United States 43,000,000 Underbanked in the United States

  29. Total Percentage of Underbanked and Unbanked Households 54% of African American households are unbanked or underbanked. 44.5% of American Indian/Alaskan households are unbanked or underbanked. 43.3% of Hispanic households are unbanked or underbanked. 10.5% of White households are unbanked or underbanked (FDIC Economic Inclusion Study)

  30. Alternative Financing Services Utilized by the Underbanked The number one reason for utilizing AFS products was convenience. 81.1% use money orders(34,873,000) 30% use check cashing(12,900,000) 16.2% use pay day loans (6,966,000) 15.8% use Pawn Shops(6,794,000) 13.2% use Refund Anticipation Loans(5,676,000) 13% use rent-to-own services(5,590,000)

  31. Mobile and Underbanked Underbanked U.S. Consumers Have mobile phone 91% 87% Have smartphone 57% 44% Used mobile banking in the 29% 21% past 12 months Used mobile payments 17% 12% Pay bills using mobile phone 62% 47% —Source: Federal Reserve Board Survey: Consumers and Mobile Financial Services, March 2012

  32. Fair Isaac Corporation (FICO) Three Companies Reporting Credit Scores: Equifax Experian TransUnion Receive a free credit report at: www.annualcreditreport.com

  33. Credit Reports – FICO Scores A total of 59.5 million Americans have a credit score of 649 or below. Subprime is generally defined as scores 640 or below. 25.5 percent of consumers -- nearly 43.4 million people - now have a credit score of 599 or below. The typical consumer has access to approximately $19,000 on all credit cards and 1 in 7 are using 80% or more of their credit card limit. (www.myfico.com and Newsweek)

  34. Why Have A Good Credit Score? Finance a car Rent an apartment Get a home mortgage Set up utility accounts Obtain employment Purchase insurance

  35. Why do you pay more if you have a lower credit score??? 60,000 car loans study 2006-2010 Credit Rating Loan Default  600- 640 9% 640-670 5% 670-700 3% 700 – 740 1.5% 740 and over .5%

  36. Credit Site to Help You Understand Your Credit

  37. Building Assets Through Homeownership Income: $30,000 to $49,999Owners' average net worth: $126,500 Renters' average net worth: $10,600 Income: $16,000 to $29,999Owners' average net worth: $112,600 Renters' average net worth: $4,240 Income: Under $16,000Owners' average net worth: $73,000 Renters' average net worth: $500 (Federal Reserve’s Survey of Consumer Finances)

  38. Homeownership Rates United States Average 2010 66.9% White 74.9% Black 45.4% Hispanic 47.5% Asian 58.9% 82.2% Homeownership rate above the median family income and 51.5% below the median family income (United States Census Bureau 2010)

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