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MoneyCounts: A Financial Literacy Series

MoneyCounts: A Financial Literacy Series. Making Sense of your Dollars and Cents. Dr. Daad A. Rizk Financial Literacy Manager MoneyCounts: A Financial Literacy Series 240 D Outreach Building University Park PA 16802 dar39@psu.edu 814-863-0214. Description/Learning Objectives.

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MoneyCounts: A Financial Literacy Series

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  1. MoneyCounts: A Financial Literacy Series Making Sense of your Dollars and Cents Dr. Daad A. Rizk Financial Literacy Manager MoneyCounts: A Financial Literacy Series 240 D Outreach Building University Park PA 16802 dar39@psu.edu 814-863-0214

  2. Description/Learning Objectives • A Young person starting out his/her future needs to know the basics of personal Financial Literacy, this workshop is to arm you with ten (10) principles of personal financial literacy that should guide you throughout your life. • Understand the ten (10) “must-know” personal finance principles • Be able to apply these principles to one’s life • Assess your relationship with money management (KAB) • Knowledge/Theory • Action • Behavior

  3. What is Financial Literacy? What is a Financial Literacy? Financial Literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing The foundation for Money Management The Knowledge behind Personal and Consumer Finance Deals with budgeting, saving, investing, debts and risk management

  4. Principles of Financial Literacy Ten (10) Principles of Financial Literacy

  5. Map Your Financial Future

  6. Know Your Take Home NET PAY

  7. Budget Your Money

  8. A Healthy Budget Sample

  9. Pay Yourself First

  10. Save and Invest at early AGE

  11. Needs Versus Wants

  12. Don’t Borrow What you Can’t Pay Back

  13. Know the Rules • Rule of 20/10 • Total Debts excluding mortgage should not exceed 20% of net yearly income • Monthly payment should not exceed 10% of monthly net income • Example: Your net yearly income is $60,000 your total debts should not exceed $12,000. Your net monthly income is $5,000, your monthly payment should not exceed $500 • Rule of 72 • To determine how long it will take for your money to double, divide the interest rate into 72 • Example: an account earning 6% interest will double in twelve years • (72 divided by 6 equals 12)

  14. Protect your credit history

  15. FICO ScoresUnderstanding the Crossroads that Lead to Explaining the Score What makes up the score? • 35% = Payment History • 30% = Capacity (Capacity is King) • 15% = Length of Credit • 10% = Search & Acquisition for New Credit • 10% = Type of Credit What actions will hurt the score? • Missing payments (regardless of dollar amounts…It will take 24mo. to restore credit with one late payment). • Credit cards at capacity (i.e., maxing out credit cards). • Opening up numerous trades in a short time period. • Having more revolving loans in relation to installment loans. • Loans at finance companies What does not Affect the Score? • Income • Length of residence • Length of employment Approximate Credit Weight for each Year • 40% = current to 12 months • 30% = 13-24 months • 20% = 25-36 months • 10% = 37+ months How to Improve the Score • Pay down on credit cards • Do not close credit cards because capacity will decrease. • Continue to make payments on time (old late pays will become less significant with time). • Slow down getting new loans. • Acquire a solid credit history with years of experience. • Move revolving debt to installment debt.

  16. Get your free credit report • Keep tabs on your credit report – get your free copy every 12 months from the 3 nationwide credit reporting agencies • Equifax, Experian and TransUnion • https://www.Annualcreditreport.com/ • Call 877-322-8228 • Note: You get a free report not FICO Score! You have to pay a fee to get FICO

  17. Stay Insured

  18. Healthy Relationship with Money • In summary, financial well-being can be defined as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life.

  19. Additional Resources • https://financialliteracy.psu.edu • finlit@psu.edu • Student Financial Education Center (SFEC) • https://www.libraries.psu.edu/psul/business/sfec.html

  20. MoneyCounts: A Financial Literacy Series Thank You! Comments and Questions Dr. Daad A. Rizk Financial Literacy Manager MoneyCounts: A Financial Literacy Series 240 D Outreach Building University Park PA 16802 dar39@psu.edu 814-863-0214

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