National Association of Black Accountants, Inc. M ney $ ense NABA - Money $ense
Money Mindsets <ul><li>“ The only way to not think about money is to have a great deal of it.” </li></ul><ul><li>Edith Wha...
Money Mindsets (cont’d) <ul><li>“ The safest way to double your money is to fold it over and put it in your pocket.” </li...
Money Mindsets (concluded) <ul><li>“ We have become ninety-nine percent money mad. The method of living at home modestly a...
How does money play into your life? <ul><li>Have you thought about your relationship with money? </li></ul><ul><li>Money s...
Financial Education <ul><li>Workshop Learning Objectives: </li></ul><ul><li>Four Pillars of Personal Finance </li></ul><ul...
Four Pillars of Personal Finance <ul><li>Savings </li></ul><ul><ul><ul><li>You are worth every penny of your money </li></...
Four Pillars of Personal Finance <ul><li>3. Budgeting </li></ul><ul><ul><ul><li>Know where your money is going or it’s goi...
Pillar One: Savings
Pay Yourself – Savings is Key <ul><li>Make a habit of paying yourself first </li></ul><ul><ul><li>Rule of thumb is 10% but...
Pillar Two: Managing Debt and Credit
Credit in a Nutshell Are You Trustworthy?
Are You Trustworthy? <ul><li>If I lend you money, will you pay me back? </li></ul><ul><li>Will you pay me on schedule acco...
Types of Credit Accounts and Relationships <ul><li>Mortgage loan (Countrywide, Quicken Loans, Bank of America) </li></...
NABA - Money $ense Type of Credit Lender Advantages Disadvantages HOME MORTGAGE • Commercial bank • Savings and loan • ...
Credit Cards, Credit Bureaus and Credit Reports <ul><li>How They Work Together </li></ul>+ + = Your Credit Score
Credit Cards <ul><li>Terminology you must know: </li></ul><ul><ul><li>APR – Annual Percentage Rate </li></ul></ul><ul><ul>...
Credit Bureaus <ul><li>Three credit bureaus (Equifax, Experian, TransUnion) </li></ul><ul><li>Role they play: </li></ul><...
Credit Reports <ul><li>What is reported? </li></ul><ul><ul><li>Name of creditor </li></ul></ul><ul><ul><li>Length of credi...
Credit Score <ul><li>Why is it important? </li></ul><ul><ul><li>Measurement of creditworthiness </li></ul></ul><ul><ul><li...
Credit Cards – Terms to Know <ul><li>APR : the amount it costs annually when you decide to carry a balance (not pay off yo...
Debt: Friend or Foe? <ul><li>Good Debt vs. Bad Debt </li></ul><ul><ul><li>Buying a home vs. buying an expensive vacation ...
Pillar Three: Budgeting Get in the Money Game!
The Money Game How Do You Play?
Three Ways to Play <ul><li>Getting Ahead – You make more money than you spend. Therefore, you have money at end of month...
BUDGET SCORECARD NABA - Money $ense Category Getting Ahead Breaking Even Falling Behind Monthly INCOME:         Wages/Inco...
Benefits of Budgeting <ul><li>Evaluate source (s) of income – explore ways to increase this amount </li></ul><ul><li>Eval...
Budgeting Basics <ul><li>Save at least 10% of income through automatic payroll deduction (when available) </li></ul><ul>...
Pillar Four: Investing
Make Your Money Grow Money that is invested will grow! NABA - Money $ense What if you saved $1 per day for 30 years? TIME ...
What Did You Learn?
New Mindset, New Habits <ul><li>Take the First Step: </li></ul><ul><ul><li>Step 1 </li></ul></ul><ul><ul><ul><li>I have ta...
Thank You! National Association of Black Accountants, Inc. M ney $ense For more information visit www.nabainc.org NABA - ...
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NABA Money Sense for Adults.ppt

Published on: Mar 3, 2016
Source: www.slideshare.net


Transcripts - NABA Money Sense for Adults.ppt

  • 1. National Association of Black Accountants, Inc. M ney $ ense NABA - Money $ense
  • 2. Money Mindsets <ul><li>“ The only way to not think about money is to have a great deal of it.” </li></ul><ul><li>Edith Wharton </li></ul>
  • 3. Money Mindsets (cont’d) <ul><li>“ The safest way to double your money is to fold it over and put it in your pocket.” </li></ul><ul><li>Kin Hubbard </li></ul>
  • 4. Money Mindsets (concluded) <ul><li>“ We have become ninety-nine percent money mad. The method of living at home modestly and within our income, laying a little by systematically for the proverbial rainy day which is due to come, can almost be listed among the lost arts.&quot; </li></ul><ul><li>George Washington Carver </li></ul>
  • 5. How does money play into your life? <ul><li>Have you thought about your relationship with money? </li></ul><ul><li>Money should not influence your self-esteem </li></ul><ul><li>Your value as a person does not come from money </li></ul>NABA - Money $ense
  • 6. Financial Education <ul><li>Workshop Learning Objectives: </li></ul><ul><li>Four Pillars of Personal Finance </li></ul><ul><li>Keys to saving </li></ul><ul><li>Understand credit </li></ul><ul><li>Recognize good debt vs. bad debt </li></ul><ul><li>Learn to win the money game using a budget </li></ul>NABA - Money $ense
  • 7. Four Pillars of Personal Finance <ul><li>Savings </li></ul><ul><ul><ul><li>You are worth every penny of your money </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Pay Yourself First and Pay Yourself Often </li></ul></ul></ul></ul></ul><ul><li>Handling Credit and Debt </li></ul><ul><ul><ul><li>Knowledge is Power </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Know your credit score and how to raise it </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Know the power and pitfalls of credit/debt </li></ul></ul></ul></ul></ul>NABA - Money $ense
  • 8. Four Pillars of Personal Finance <ul><li>3. Budgeting </li></ul><ul><ul><ul><li>Know where your money is going or it’s going to go places without you </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Know your budget, update your budget, be flexible with your budget </li></ul></ul></ul></ul></ul><ul><li>Investing </li></ul><ul><ul><ul><li>Know what you want and use patience to get there </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Invest based on your goals, risk tolerance, and time </li></ul></ul></ul></ul></ul>
  • 9. Pillar One: Savings
  • 10. Pay Yourself – Savings is Key <ul><li>Make a habit of paying yourself first </li></ul><ul><ul><li>Rule of thumb is 10% but the more the better </li></ul></ul><ul><li>Save for 3 – 6 months living expenses </li></ul><ul><ul><li>Set-up high interest savings account </li></ul></ul><ul><li>Nest egg savings </li></ul><ul><ul><li>Save for vacation, new car, expected expenditure </li></ul></ul>NABA - Money $ense
  • 11. Pillar Two: Managing Debt and Credit
  • 12. Credit in a Nutshell Are You Trustworthy?
  • 13. Are You Trustworthy? <ul><li>If I lend you money, will you pay me back? </li></ul><ul><li>Will you pay me on schedule according to our agreement? </li></ul><ul><li>What happens when you don’t pay on time? </li></ul><ul><li>At what point do you violate my trust? </li></ul><ul><li>What will it cost you to regain my trust? </li></ul><ul><li>What should I tell others when they ask about your trustworthiness? </li></ul>
  • 14. Types of Credit Accounts and Relationships <ul><li>Mortgage loan (Countrywide, Quicken Loans, Bank of America) </li></ul><ul><li>Car loan (GMAC, Chrysler Financial, Ford Motor Credit) </li></ul><ul><li>Major credit card (Bank of America, Capital One, US Bank) </li></ul><ul><li>Dept. store credit (Macy’s, The Limited, Nordstrom) </li></ul><ul><li>Cell phone (AT&T, Sprint, Verizon) </li></ul><ul><li>Bank checking* </li></ul>
  • 15. NABA - Money $ense Type of Credit Lender Advantages Disadvantages HOME MORTGAGE • Commercial bank • Savings and loan • Credit union • Homes often increase in value. • Interest rates for mortgages are relatively low • The interest paid is tax-deductible. • Mortgages are long-term commitments. • Obtaining a home loan involves extensive credit checks. CAR LOANS • Commercial bank • Savings and loan • Credit union • Consumer finance company • Cars can make it easier to work and earn an income. • Cars lose their value relatively quickly. The car you purchase may have little value when the last payment is made. COLLEGE LOANS <ul><li>• Commercial bank </li></ul><ul><li>• Savings and loan </li></ul><ul><li>• Credit union </li></ul><ul><li>Federal government </li></ul>• A college education is a good borrow investment. necessary. • Interest rates can be relatively low. • Students sometimes borrow more than necessary. • New graduates can face difficulty in repaying large loans. PERSONAL LOANS • Commercial bank • Savings and loan • Credit union • Consumer finance company • Personal loans allow individuals to purchase today that boat or vacation they want. • Personal loans have relatively high interest rates. • Some young people may borrow more than their income allows. CREDIT CARDS • Commercial bank • Savings and loan • Department store • Oil companies • Other financial institutions, e.g., American Express • Credit cards are convenient to use and useful in an emergency. • Credit cards provide a record of charges. • Credit cards have relatively high interest rates. • Some young people may borrow more than their income allows.
  • 16. Credit Cards, Credit Bureaus and Credit Reports <ul><li>How They Work Together </li></ul>+ + = Your Credit Score
  • 17. Credit Cards <ul><li>Terminology you must know: </li></ul><ul><ul><li>APR – Annual Percentage Rate </li></ul></ul><ul><ul><li>Finance Charge </li></ul></ul><ul><ul><li>Grace Period </li></ul></ul><ul><ul><li>Fees (annual, transaction, cash advance, late) </li></ul></ul>
  • 18. Credit Bureaus <ul><li>Three credit bureaus (Equifax, Experian, TransUnion) </li></ul><ul><li>Role they play: </li></ul><ul><ul><li>Receive and report credit information from and to various entities who have established or look to establish a credit relationship with you. </li></ul></ul><ul><ul><li>Maintain credit report </li></ul></ul>
  • 19. Credit Reports <ul><li>What is reported? </li></ul><ul><ul><li>Name of creditor </li></ul></ul><ul><ul><li>Length of credit history </li></ul></ul><ul><ul><li>Amount of credit outstanding and borrowing capacity </li></ul></ul><ul><ul><li>Status of payment on account: current or late </li></ul></ul><ul><ul><li>Inquiries on account </li></ul></ul><ul><ul><li>Other information </li></ul></ul><ul><ul><li>Credit score* </li></ul></ul><ul><li>How do you obtain a copy of report? </li></ul><ul><ul><li>FREE at www.annualcreditreport.com </li></ul></ul>
  • 20. Credit Score <ul><li>Why is it important? </li></ul><ul><ul><li>Measurement of creditworthiness </li></ul></ul><ul><ul><li>Basis for creditor’s lending decision </li></ul></ul><ul><ul><li>Determines cost of borrowing (i.e. interest rate) </li></ul></ul><ul><ul><li>Employers may pull it when evaluating potential candidates for hire </li></ul></ul><ul><li>How is it calculated? </li></ul><ul><ul><li>Payment history – (35%) </li></ul></ul><ul><ul><li>Debt to credit limit – (30%) </li></ul></ul><ul><ul><li>Length of credit history – (15%) </li></ul></ul><ul><ul><li>New accounts and recent applications for credit – (10%) </li></ul></ul><ul><ul><li>Mix of credit cards and loans – (10%) </li></ul></ul>
  • 21. Credit Cards – Terms to Know <ul><li>APR : the amount it costs annually when you decide to carry a balance (not pay off your credit </li></ul><ul><li>card in full) each month. </li></ul><ul><li>Can range from 0 to as high as 25% annually </li></ul><ul><li>Finance Charge : Actual dollar cost of using credit </li></ul><ul><li>Grace Period : the number of days you have to pay your bill in full before incurring finance charges (typically 25 days). </li></ul><ul><li>Beware of cards with no grace period! Interest accrues from the moment you charge an item. </li></ul><ul><li>You don’t get a grace period when you carry a balance. </li></ul><ul><li>Annual Fee : the amount you pay annually as a credit cardholder for the privilege of using credit </li></ul><ul><li>If you pay your balance each month, you should avoid cards with an annual fee. </li></ul><ul><li>Some annual fee cards have lower interest rates, so if you carry a balance each month you may actually save money with an annual fee card. </li></ul><ul><li>Transaction Fees : You may be charged additional fees for ATM cash advances, balance transfers, </li></ul><ul><li>late charges and exceeding your credit limit. </li></ul><ul><li>Some cards also charge a monthly fee for not using the card! </li></ul><ul><li>Late Fee : If your payment is not processed by the due date, you may be assessed a late fee of up to $35. </li></ul><ul><li>Avoid this expense by mailing timely payments. </li></ul><ul><li>Remember, creditors must receive a payment at least every 30 days. </li></ul>NABA - Money $ense
  • 22. Debt: Friend or Foe? <ul><li>Good Debt vs. Bad Debt </li></ul><ul><ul><li>Buying a home vs. buying an expensive vacation </li></ul></ul><ul><li>How much debt can you handle </li></ul><ul><ul><li>A conservative rule of thumb: the “20-10 Rule” </li></ul></ul><ul><ul><ul><li>Total household debt including your housing payments shouldn’t exceed 20% of your net household income </li></ul></ul></ul><ul><li>How to handle debt </li></ul><ul><ul><li>Have a plan </li></ul></ul><ul><ul><ul><li>Know how much you owe, know the interest and repayment terms, set a plan, and stick to it </li></ul></ul></ul>NABA - Money $ense
  • 23. Pillar Three: Budgeting Get in the Money Game!
  • 24. The Money Game How Do You Play?
  • 25. Three Ways to Play <ul><li>Getting Ahead – You make more money than you spend. Therefore, you have money at end of month that can be saved or invested. </li></ul><ul><li>Breaking Even – You spent everything you had –no more, no less </li></ul><ul><li>Falling Behind – You spent more than you had using borrowed funds. </li></ul>
  • 26. BUDGET SCORECARD NABA - Money $ense Category Getting Ahead Breaking Even Falling Behind Monthly INCOME:         Wages/Income  $1600  $1600  $1600  Interest Income  $10  $10  $10  INCOME SUBTOTAL   $1,610   $1,610   $1610           Monthly EXPENSES:         Taxes  $250  $250  $250  Rent/Mortgage  $500  $600  $750  Utilities  $100  $100  $100  Groceries/Food  $250  $300  $350  Clothing  $100  $100  $200  Shopping  $75  $75  $100  Entertainment  $100  $160  $200  Miscellaneous/Other  $25  $25  $50  EXPENSES SUBTOTAL   $1,400   $1610   $2000           NET INCOME (Income - Expenses)   $210   $0     $(390)
  • 27. Benefits of Budgeting <ul><li>Evaluate source (s) of income – explore ways to increase this amount </li></ul><ul><li>Evaluate expenditures and where money goes – identify opportunities to reduce this amount </li></ul><ul><li>Save, invest, pay down debt faster </li></ul><ul><li>Cash Flow Equation: </li></ul><ul><ul><li>(+) Revenue or Source </li></ul></ul><ul><li>of Income </li></ul><ul><ul><li>(-) Less: Expense or </li></ul></ul><ul><li>Use of Income _______________ </li></ul><ul><ul><li>(=) Net Cash Flow </li></ul></ul>
  • 28. Budgeting Basics <ul><li>Save at least 10% of income through automatic payroll deduction (when available) </li></ul><ul><li>Create a contingency fund for unexpected expenditures (minimum 6 months of salary) </li></ul><ul><li>Track your spending </li></ul><ul><ul><li>Itemize necessities first and foremost </li></ul></ul><ul><ul><li>Update your budget monthly </li></ul></ul><ul><ul><li>Add new information timely </li></ul></ul><ul><ul><li>Print it out and post it as a daily visual reminder </li></ul></ul><ul><li>Pay down expensive / excessive debt. </li></ul>NABA - Money $ense
  • 29. Pillar Four: Investing
  • 30. Make Your Money Grow Money that is invested will grow! NABA - Money $ense What if you saved $1 per day for 30 years? TIME NO INTEREST 5% DAILY COMPOUNDING Year 1 $ 365 $ 374 Year 5 $ 1,825 $ 2,073 Year 10 $ 3,650 $ 4,735 Year 30 $10,950 $25,415
  • 31. What Did You Learn?
  • 32. New Mindset, New Habits <ul><li>Take the First Step: </li></ul><ul><ul><li>Step 1 </li></ul></ul><ul><ul><ul><li>I have taken control of my financial future </li></ul></ul></ul><ul><ul><ul><li>I am committed to achieving financial freedom </li></ul></ul></ul><ul><ul><li>Step 2 </li></ul></ul><ul><ul><ul><li>I have a budget and I review my budget regularly </li></ul></ul></ul><ul><ul><ul><li>I save 10% or more of my income </li></ul></ul></ul><ul><ul><ul><li>I have 6-9 months of living expenses saved as an emergency fund </li></ul></ul></ul><ul><ul><ul><li>I know how much debt I have and the related interest rates </li></ul></ul></ul><ul><ul><ul><li>I know my credit score </li></ul></ul></ul><ul><ul><li>Step 3 </li></ul></ul><ul><ul><ul><li>I have a 401(k) or similar retirement account that I contribute to regularly </li></ul></ul></ul><ul><ul><ul><li>I have an investment plan that considers my goals and risk tolerance </li></ul></ul></ul>NABA - Money $ense
  • 33. Thank You! National Association of Black Accountants, Inc. M ney $ense For more information visit www.nabainc.org NABA - Money $ense

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