Financial Literacy Workshop: Planning, Budgeting, and Managing Student Loans

1. Financial Literacy WorkshopDevelop Program Content Module 3 of 4 DRAFT

2. Workshop Objectives • Discuss key content of a successful program • Planning • Budgeting • Banking • Managing student loans • Managing credit • Identify resources for valuable program content

3. Planning Discuss importance of planning & setting goals • Academic • Financial When setting goals • Be realistic • Be specific • Make them measurable! • Have a timeframe

4. Budgeting Recognize the importance of creating and sticking to a budget • Enables you to stay on the path to reach your financial goals • Makes it easier to plan and save • Reduces stress • Helps improve your credit and live within your means • Discuss consequences of poor budgeting while in school

5. What is a Budget? • Income: money that comes from a job, loans, family, or other sources • Expenses: items and services you spend money on such as bills, tuition, transportation, and entertainment • Budget: the estimate of expected income and expenses Income – Expenses = Budget

6. Expenses Monthly and recurring expenses • Tuition and fees • Books • Food (meal plan may be included in tuition) • Housing (dorm may be included in tuition) • Utilities (phone, internet, electric, gas, etc.) • Transportation • Insurance – Health and Auto • Others

7. Needs Vs. Wants in a Budget Differentiate between things you want and things you need when creating a budget: • Eating out vs. dining hall or cooking • New phone vs. current serviceable phone • Size of data usage plan for cell phone/tablet • Going to movie vs. renting movies • Spring break trip vs. staying in place • Expensive clothes & shoes vs. sale shopping

8. Living Within Your Means • Track your daily spending • Determine your monthly expenses • Estimate your monthly income • FSA Budget Calculator Expenses > Income = Living Over Your Means

9. Benefits of Using Financial Institutions • Convenience • Safety • Cost • Financial future

10. Detriments of Being Unbanked • High transaction fees to access money • Inconvenient to cash checks – takes time & energy to access your own money • Inability to earn interest on money saved • No easy access to cash in emergency • Diminished opportunity to manage money, build investments, and plan for future financial success

11. Financial Institutions • Types of institutions • Bank • Credit Union • Types of accounts • Checking • Savings • Emergency funds • Fees & requirements • Minimum balances • Service fees • Overdraft fees • Detriments of being unbanked

12. Types of Institutions Bank: • Make loans, pay checks, accept deposits and provide other financial services • Anyone can use their services • Subject to federal and state laws to protect consumers Credit Union: • Same services as bank • Non-profit owned by people who have something in common • Must be a member of the credit union to use services

13. Types of Accounts Checking • Allows you to pay bills and buy goods with the money you have deposited • Pay for things using a check, an ATM or debit card, on online banking • Money spent comes directly from your account Savings • Often earns interest • Usually no used like a checking account • May allow use of an ATM or debit card

14. Emergency Fund • Savings should be used for short-term and long-term goals • Emergency funds should be a separate amount used for unexpected expenses, such as: • Car and home repairs • Loss of job • Other unexpected expenses or accidents

15. Fees and Requirements Some accounts may have: • Monthly maintenance fees • Penalty fees • Overdraft fees Required to open an account: • Prove your identity (driver’s license or ID card) • Provide Social Security number

16. Things to Know About the Bank • What are the fees and what options are free? • ATM and debit cards • Withdrawal limits per month • Requirements for opening & maintaining account? • Overdraft protection and low balance alerts? • Are the locations, hours and ATMs convenient? • Is it insured by FDIC/NCUA? • Mobile/online banking options? • Annual percentage yield (APY)? • Do the employees speak my language?

17. Sources of Funding for Education • Grants • Scholarships • Loans • Family contributions • Employment • Work study • Private

18. Managing Student Loans • Loan Terminology • Principal • Interest rate – fixed vs. variable • Grace period • Identify types of loans & pros and cons of each • Understanding Financial Aid Award letters • Impact of paying interest while in school

19. Managing Student Loans, Continued Describe repayment process: • Grace period actions • How to contact servicer • What to do if you have difficulty repaying • Loan consolidation • Repayment options • Consequences of default

20. FSA Loan Counseling Resources • Office of Federal Student Aid counseling resources • Entrance Counseling • PLUS Counseling • Financial Awareness Counseling • Exit Counseling • StudentLoans.gov provides ALL Federal Student Aid electronic loan counseling, in one location.

21. Student Loans: Impact on Your Future Demonstrate relationship between graduating on time, minimizing loans and future financial success • Completing school • Strategies for successful transition into workforce • Income-based repayment options • How to avoid scams

22. Managing Credit • Increased debt impacts school performance • Borrowing impacts future financial success • What is credit • Credit score • Employers check credit history • Poor credit limits your ability to rent and buy housing • Debt and worry lead to anxiety and may affect health

23. Search Toolkit by Topic

24. Search Toolkit by Delivery Type, Then Topic

25. Summary • Students have different needs when it comes to financial literacy • A successful program offers something for each need • Program should discuss: • Planning for the financial future • Budgeting • Managing student loans • Managing credit

26. What to Expect Next The last module will discuss program implementation