MoneyWise…Your Financial 411

1. MoneyWise…Your Financial 411

2. What’s Covered • Today’s Teens • Managing Your Money • Banking • Bank Cards • Understanding Credit • Identity Theft

3. Section 1: Today’s Teens

4. Today’s Teens • Characteristics • Born 1979 -1997 • 60 million • Next dominant generation • 32% of the total US population by 2010 • Events • Famous Gen Y-ers

5. Today’s Teens • Totally “plugged in” – very tech savvy • Spend 1/3 of their time on the Internet • Upbeat and confident • Family centric • Big spenders • Lofty financial goals

6. Section 2: Managing Your Money

7. Work • Benefits • Experience • Work habits • Responsibility • Skills • Contacts and references • Money • Do what interests you • Learn what you like and don’t like • Get career ideas & target your college major

8. Your Paycheck John Smith Taxable Marital Status: Single 123 Main Street Exemptions/Allowances: Anytown, NY 99999 Federal: 0 State: 0 Social Security Number: xxx-xx-xxxxEarnings Rate Hours Earnings this Period Year-to-Date Earnings Regular $7.75 9.5 $73.63Gross Pay$73.63 $1,819.37 Deductions Social Security Tax -$4.56 $112.80 Medicare Tax -$1.07 $26.38 NY SUI/SDI Tax -$0.37 $8.79 Federal Income Tax $8.06 Net Pay $67.63

9. Managing Your Money • Needs versus wants • Do I need it? • Do I want it? • What are your goals? • Short Term • Car? • IPod? • Long Term • College?

10. Budget: Needs vs. Wants

12. Spend Wisely: Shop Smart • Comparison shopping = big pay off • Don’t be an impulse shopper • Pause before you purchase • Check out sales, coupons and rebates

13. Managing Your Money • Make a plan • Take stock of what you earn • Create your budget • Write down expense • Eliminate some “wants” • Budgeting is work – but it’s worth it • Keeping track will help you save

15. Saving • Start now! • Save consistently • Review your goals • Cut back • Invest in your future

16. Monthly Cost of Operating a Car • Maintenance (4 oil changes) $ 10 • Repairs/Parts $ 30 • Fuel $ 80 • Insurance ($1,800 - $2,500 / yr) $ 200 • Annual Registration ($60 / yr) $ 5 • Total $ 325 Cost of Driving a Car • The monthly responsibilities of maintaining a car without a loan payment

17. Monthly Cost of Purchasing, Financing & Operating a Car • Loan payment $ 240 • Maintenance (4 oil changes) $10 • Repairs/Parts $ 30 • Fuel $ 80 • Insurance ($2,500 - $4,000) $ 200 - $300 • Annual Registration ($60 / yr) $ 5 • Total $ 565 - $655 Cost of Owning a Car • More than just the purchase price & financing costs Estimates the monthly cost of purchasing, financing and operating a $10,000 vehicle driven and insured by a 20 year old male with a $2,000 down payment and the balance financed at 16% interest for 5 years.

18. Cell Phones • Teens: an important, fast-growing segment of the cell phone market • Carriers offer family plans and pre-paid accounts • Beware of additional charges • Texting, toll free numbers, directory assistance • Prepaid cell phones charge rates of up to 45 cents per minute

19. Section 3: Banking

20. Finding the Right Bank • FDIC • Locations • Hours of Operation • Types of Accounts Offered • Interest Rates • Service Rates and Fees • Online Service • Special Accounts

21. Checking Accounts • Keep enough money in your account • Record all activities in your checkbook register • Review your bank statements promptly • Report suspected errors to your bank immediately • Don’t sign blank checks • Know where your checkbook, ATM and debit cards are at all times • Report missing items to your bank immediately

22. Cover Every Check • Bounced checks & overdrafts are very expensive • Up to $35 bank charge – or more! – for each bounced check • The payee can also charge a fee • Warning: If you don’t pay the fees, you’ll be entered into the ChexSystems national database and you won’t be able to open another checking account for five years!

23. Writing a Check • Date the check • Write the name of the person or firm to whom the check will be payable • Enter the amount (in figures) next to the $

24. Writing a Check • Write the amount (in words) on the next line • Sign your name on the bottom line EXACTLY as it appears on the bank signature card • Use the “Memo” line to record the purpose

25. Balancing Your Checkbook • Balance your checkbook every month • Time to point out mistakes is limited • Use the instructions provided by your bank • Back of statement (for paper statements) • Online (for electronic statements) • You'll need to reference every transaction recorded in your checkbook register … so be diligent

26. Section 4: Bank Cards

27. ATM, Debit and Credit Cards • ATM – used to manage money in a bank account by using an automated teller machine • Debit – used to pull money from a bank account for withdrawals as well as purchases • Credit – used to purchase; debts must be repaid or interest accrues

28. ATM 24-hour access to your money Daily limits on withdrawal amounts Fees charged when used at ATMs not owned by your bank Debit Purchase amount is automatically deducted from your checking account Card may be used for Credit purchases, too Some banks charge a fee when the card is used as Debit ATM Card vs. Debit Card

29. Debit Purchase amount is automatically deducted from your checking account Provides alternative payment method to cash No interest charged Credit Purchases made with credit card are paid for with a loan from bank (billed monthly) Interest accrues monthly Try to pay in full every month; at the very least, pay more than the minimum amount required Debit vs. Credit Card

30. Section 5: Understanding Credit

31. Credit Cards

32. Managing Your Credit Card • Always pay on time • Pay more than the billed amount • Try to only use your card for emergencies • Don’t charge more than you can afford

33. Cons Can negatively affect credit Debt accumulation Years to repay debt High interest rates Repayment could be 3 to 5 times original purchase price Immediate cash availability Pros Build credit Available for emergencies Immediate cash availability Rent a car Frequent flyer miles Online purchases Credit Card Pros & Cons

34. Scenario #1 You charge $2,500 You pay $50 per month Yearly interest rate: 19.9% How long will it take to pay the balance? Scenario #2 You charge $2,500 You pay $100 per month Yearly interest rate: 19.9% How long will it take to pay the balance? It’s Hard to Get ‘Out from Under’ 9 years 1 month 2 years 9 months

35. Benefits of Good Credit • A person with “good credit” is someone most likely to repay a loan • You will be more likely to receive the credit you want when you want it • Car loans • Student loans • Apartment rentals • Utilities & phone service

36. Checking Your Credit • Your Credit Score: the higher the better • Get Your Free Report (once per year)Annual Credit Report - www.annualcreditreport.com • Credit Reporting Agencies • Equifax: 1-800-685-1111 www.equifax.com • Trans Union: 1-800-888-4213 www.transunion.com • Experian: 1-888-397-3742 www.experian.com

37. Section 6: Identity Theft

38. Identity Theft • 31% of identity theft victims are young people • Teens often first discover they are victims when applying for a driver’s license

39. Protect Yourself • Protect your identity – keep your SSN private • Protect your ATM, debit, credit cards • Memorize all passwords and PINs • Use a shredder • Be aware of your surroundings at an ATM • Use only secure online Web sites • Report important losses immediately

40. www.consumer.gov/idtheft 1-877-438-4338 Federal Trade Commission (FTC)

41. Thank You