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    Smart Money: Financial Literacy 101

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    Lots To Gardens
    The document provides guidance on developing strong financial literacy skills including creating a budget and savings plan. It recommends tracking expenses over two weeks to understand spending habits. Then list income sources to evaluate if expenses match income. The next steps are setting savings goals and creating a monthly budget to allocate funds for expenses and different savings goals. Regularly reviewing the plan helps ensure goals are met. Tips include saving automatically through direct deposit and payroll deductions to build the savings habit.

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    Smart Money: Financial Literacy 101

    Uploaded by

    Lots To Gardens
    75 views4 pages
    The document provides guidance on developing strong financial literacy skills including creating a budget and savings plan. It recommends tracking expenses over two weeks to understand spending habits. Then list income sources to evaluate if expenses match income. The next steps are setting savings goals and creating a monthly budget to allocate funds for expenses and different savings goals. Regularly reviewing the plan helps ensure goals are met. Tips include saving automatically through direct deposit and payroll deductions to build the savings habit.

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    Financial Literacy

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    The document provides guidance on developing strong financial literacy skills including creating a budget and savings plan. It recommends tracking expenses over two weeks to understand spending habits. Then list income sources to evaluate if expenses match income. The next steps are setting savings goals and creating a monthly budget to allocate funds for expenses and different savings goals. Regularly reviewing the plan helps ensure goals are met. Tips include saving automatically through direct deposit and payroll deductions to build the savings habit.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    75 views4 pages

    Smart Money: Financial Literacy 101

    Uploaded by

    Lots To Gardens
    The document provides guidance on developing strong financial literacy skills including creating a budget and savings plan. It recommends tracking expenses over two weeks to understand spending habits. Then list income sources to evaluate if expenses match income. The next steps are setting savings goals and creating a monthly budget to allocate funds for expenses and different savings goals. Regularly reviewing the plan helps ensure goals are met. Tips include saving automatically through direct deposit and payroll deductions to build the savings habit.

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    Smart Money: Financial Literacy 101

    Tools for how to manage your money What will you be spending your money on in the next few months, next year, and beyond? Do you need to buy a laptop or a car? Or are you planning to travel, go to school, or rent an apartment? The first step is to put your goals in writing (write your goals on page 3). Then you can create a spending plan to give yourself enough money to meet your everyday expenses, while helping you save for all your goals. 1. Get a true picture of how you spend your money. Track all of your purchases for two weeksyou could do this be keep receipts or writing down all your purchases. Then group your expenses into categories, such as entertainment, transportation, food, clothing, and gifts. Figure out how much youre spending each week, month, and year. 2. Make a list of your income. Write down what you earn from jobs, gifts, allowance, and any other sources. Calculate what you make each week, month, and year. If your income isnt steady throughout the year, estimate the annual total and average it per month. 3. Evaluate your situation. Do your income and expenses even out? Are you spending more than youre making? Or do you have money to spare? 4. Create a spending and saving plan. Figure out how much you need to save each month to reach your goals. Then decide how youll come up with this money. When making your plan, its better to estimate that youll spend a little more and make a little less than you think. Now that you know your expenses and income, you can plan how much to save for your goals. Look for some easy ways to save, like brown bagging it for lunch or cutting back on entertainment or clothing. Remember, even saving $1 a day will give you $365 a year to put toward your goals. 5. Put your plan into action. For one month, try to make more or spend less. Once you reach a goal, review your plan and tailor it to fit your next savings goal. Your savings will give you the power to get what you want.

    My Monthly Saving and Spending Plan


    Build your own plan using this template. Add or change the categories based on your life. Money coming in Job (after taxes) __________ Allowance __________ Gifts __________ Other income __________ Total income __________ Fixed Expenses (same amount monthly) Savings Account __________ Car Payment __________ Auto Insurance __________ Utilities __________ Rent __________ Tuition __________ Other __________ Variable Expenses (change each month) Gas __________ Entertainment __________ Cell phone __________ Medical __________ School supplies __________ Life insurance __________ Clothing __________ Gifts __________ Total expenses __________ Difference _____________ (income - expenses) Charity __________ Other __________

    Little Things Add Up


    How much do you spend on items like these? What could you cut from your budgetor cut back on to save money?

    Each Fast Food Lunches Cell Phone Music Other indulgences? TOTAL

    Weekly

    Monthly

    Yearly

    It Pays to Save
    No matter what amount you can afford to save each month, it adds up. Here are examples at 3% APY. (Interest rates can vary based on many factors, including type of account and the economy. Check with your credit union for current rates.)

    1 yr $25 per month $50 per month $100 per month $125 $600 $1,220 $1,620 $3,240 $6,480

    5 yr $3,500 $7,002

    10 yrs

    $14,009

    MY GOALS: Things Id like to buy or do that cost money!


    My short-term goals (3 months or less) My intermediate goals (3-12 months) My long-term goals (more than 1 year)

    Where to keep your savings


    Savings accounts keep your money safe and readily available. The most common type is a statement account that reports transactions to you monthly or quarterly. Credit union share savings accounts pay interest that is comparable to, or better than, the interest paid on savings accounts elsewhere. Money market accounts, available at credit unions and other financial institutions, are a type of insured savings account. Theres no requirement for how long you have to keep your money on deposit. These accounts generally pay higher interest than regular savings accounts because they typically require a minimum balance of $1,000 or more. CDs or Certificates (called share certificates at credit unions or certificates of deposit at other financial institutions) generally pay higher interest rates than savings or money market accounts because you agree to leave your deposit for a certain amount of time. Certificate terms generally range from several months to five years. The longer the term, the higher the interest rate. Certificates and savings accounts are generally good options for goals you want to accomplish within a year. Both types of accounts are insured and generally offer quick and easy access to your money.

    Strategies for savings


    Discuss your savings and spending plans with family members, friends, and staff at your credit union. They might notice things youve missed or offer some creative ideas based on their experiences. Review your income. If youve been working for the same pay for more than a year, consider asking for a raise or getting a different job. Be fair, but dont sell yourself short. Break down your expenses into as much detail as possible. For example, instead of budgeting a lump sum for clothes, go through your closet. List the new items youll need for every season and what each will probably cost. Can you sell your old clothes? Or shop for next years summer clothes at the end of the season sales? Avoid unnecessary temptation. Stay out of the mall and off merchant Web sites unless you are shopping with a purpose. Shop only with a list and stick to it. Slow down your spending. Leave extra cash at home, dont buy on impulse, and dont borrow from friends or get advances on your paycheck. Start the savings habit. Financial experts recommend that adults save at least 10% of their before-tax income. If thats too high, pick a dollar amount you can realistically save each month and stick to it. Save automatically. When you have a job, take advantage of direct deposit and payroll deduction at your credit union. Heres how they work: With direct deposit, your entire paycheck is put directly into your account. Your paycheck starts workingearning dividendsright away, instead of waiting until you get around to making a deposit. Direct deposit saves you time and helps you avoid spending. Build an emergency fund. For example, if you have a car, youll need an extra cushion of savings to cover unexpected emergencies (such as car repairs) and expected expenses (such as insurance). When youre out on your own, build an emergency fund equal to three to six months of living expenses to see you through any temporary setbacks.

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