ADDITIONAL RESOURCES o www.myfico.com Money $ense o www.feedthepig.org o www.dallasfed.org o www.ira.com A Guide to making Smart SAVING AND INVESTING o www.360financialliteracy.org Financial Decisions Saving is incredibly important to achieving financial o www.practicalmoneyskills.com independence. Financial experts recommend saving three months of income in an “Emergency o www.consumerjungle.org account.” In addition, you should save for major purchases and retirement. Many people do not start saving early enough for THANKS TO OUR their retirement. You should begin saving for retirement as soon as you start working. Money SPONSORS: Date of publication deposited in your early twenties will have more time to grow before you begin to need it. For example, due to the power of compounding interest, $3,500 deposited at the age of 25 will grow to $95,783 by the age of 67 (assuming an 8% growth rate.) You can see that it will be much easier to afford retirement if you start saving early! Brought to you by: So what are you options for retirement plans? Well, you have plenty! The two most popular are the 401K and the IRA. You can open up a 401K account through your employer. A portion of your paycheck will automatically be deducted and invested for you. Usually, your employer will match Gerald W. Schlief School of your contribution up to a certain percentage. Accountancy If you are self-employed or your employer doesn’t And Beta Alpha Psi offer a 401K plan, then an IRA, or independent retirement account, is right for you! An IRA allows you to make pre-tax contributions to a retirement Phone (936) 468-3105 account, and any interest earned on the account is Fax (936) 468-1482 not taxed until it is withdrawn. There are five types McGee Business Building, Suite 292 of IRAs, so find the one that works best for you! Stephen F. Austin State University IS ALL DEBT BAD? HOW TO MAKE A A credit score or FICO score is a number between 200 and 800 that potential lenders look There are many theories about the best plan for CREDIT CARD WORK at before extending credit. It is important when you are trying to obtain financing for a house or debt management. While some financial experts FOR YOU! car. Often, loan applicants with lower credit say that all consumers should be completely scores are required to pay larger interest rates. debt free, most believe that good debt Credit cards are quickly becoming a fixture in management is not necessarily having no debt at modern society, but many people do not know Calculation of your credit score combines all. how to manage their credit card correctly. Failing information from your payment history, the to manage credit card debt has left many people amount owed, the type of credit you use, the A “good debt” would be a debt acquired to attain in bankruptcy. amount of credit you have qualified for and an asset that will increase in value. For example, length of time you have had credit. taking out student loans to finance your Credit cards can be dangerous. They charge education or purchasing a house would be a very high interest rates, and they allow people to How do you improve your credit score? “good debt.” It is important to note, however, that live beyond their means. However, credit cards Consistently making payments on time and debt is not “good” unless you accomplish your offer many advantages along with these keeping a low balance on credit cards will goal. If you buy a house that is too expensive, disadvantages. They are efficient and easy to improve your score. and you cannot make the monthly payments the use, they help you build up a good credit score, debt is not “good.” and many offer protection from identity theft. A “bad debt” is debt for a consumable good. Good management will allow you to benefit from the use of a credit card. BUDGETING: MAKE IT This is also known as “living beyond your means.” Credit card debt, car loans and debt on STICK! The best way to use your credit card is to charge other goods that decrease in value are all “bad only what you can afford to pay off at the end of debt.” This type of debt can be dangerous, The most important thing you can do to take each month. Paying off your full balance each control of your finances is budgeting. Many especially if it becomes habitual. month and paying it on time will allow you to templates are available online free of charge to avoid paying those sky-high interest rates. guide you in this process. When paying off debt, always begin with the highest APR and work down to the lowest APR. When searching for a credit card, do your You must first estimate your monthly expenses research! The most important information is and your monthly income. Start with your presented in the “Schumer Box.” It will tell you income. Take out any deductions for your the APR (the interest rate), finance charges, the savings. List your necessary expenses first, like minimum payment, the credit limit, any annual rent or groceries. Next, deduct your “extras,” like fee and more. Choose a card with a low APR traveling or eating out. and the fewest added fees. Also, make sure that the APR shown is not just an introductory rate. Now the hard part: sticking to it! Remember, Introductory rates only apply for the first few your budget won’t help you improve your months; after that your rates will change! financial status unless you are willing to make it work! WHAT GOES INTO A CREDIT SCORE?
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