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					Money Smarts
     What to do with your
     hard earned paycheck

            by Summer Yacco
True or False?

   You became a counselor to get rich.
   You are unconcerned about money.
   It’s easy to talk about money.
   If you got a raise or won the lottery,
    your money troubles would be over.
   According to government data, the 25 lowest-
    paying occupations employ 15.6 million people; the
    best-paying jobs employ 3 million. - Forbes

   In 2005, the average income from Social Security
    was $13,371. - U.S. Census Bureau 2005

   In 2004, almost 2/3rds of students graduated
    college with debt.

   In early 2007, only nine states had a financial-
    literacy course requirement. -Forbes
When looking for a job:

   Negotiating salary
   What benefits are offered?
   Healthcare
   Retirement Plan
   Childcare
   Any others?
Ways to get into debt

     College
     Children
     Divorce
     Unemployment
     Credit cards      Paycheck advances
     Mortgage          Car title loans
     Illness
     Loans
            Improve Your
           Financial Habits
   Paying off debts
   Increasing income
    – Working more, negotiating pay, changing jobs
    – Acquire Assests: Investing, Real Estate
   Saving
   Budgeting and decreasing expenditures
   Paying less taxes by learning about taxes,
    laws, and accounting
             Increase Your
           Financial Literacy
Financial resources provide the following information
   and more:
 Advice articles
    – “How to Survive a Divorce”
    – “Getting What (You Think) You're Worth”
        (Job Negotiation)
   Definitions
   Current trends
   Market data and tools

Check out: Forbes, The Wall Street Journal,
  Investopedia, or do a search on the web.
Learn the Basics

   Budgeting
   Credit Cards
   401k
   Savings Accounts
   CDs
   Stocks
   Bonds
   Mutual Funds
Budget Your Money and
   Pay yourself first
   Create a budget
    – Identify income sources
    – List fixed and flexible expenses
    – Monitor and review the budget
   Try a budget calculator
Habit & Yearly Cost
(The $ Adds Up!)
   Daily Cup of Coffee$547/yr
   2 Packs of Cigarettes/Day$2555 - $3285/yr1
   Hardback & 3 Paperback Books/Mo.$690/yr
   Lunch Take-out 5 days/wk @ $5-
    $10/day$1300 - $2600/yr
   3 Drinks at a Bar/Wk.$936 - $1092/yr
   3 Six-packs of Beer/Wk.$624 - $936/yr
Understand Your Spending

    People spend for a variety of reason
    Discover what kind of spender you
    Values – What is it important to spend
     money on?
    What is behind avoidance of the issue?
     – fear, stress, laziness, denial, lack of
Delay Major Purchases
   Resist the rhetoric of not wasting rent and buying a
   Build equity first.
    – Wipe out non-student-loan debt
    – Establish solid savings
   Know where you want to live for at least five years
   Have a salary high enough to make the mortgage-
    interest deduction attractive for tax reduction.
                 Steps for Financial
                    Goal Setting
   Step 1: Identify and write down your financial goals

   Step 2: Break each financial goal down into several short-
    term (less than 1 year), medium-term (1 to 3 years) and
    long-term (5 years or more) goals.

   Step 3: Educate yourself! Read Money magazine, or a book
    about investing, or surf the Internet's investing web sites.

   Step 4: Evaluate your progress at least semi-annually. If
    you're not making satisfactory progress on a particular goal,
    re-evaluate your approach.
Credit Cards
   APR (Annual Interest Rate)
   Method for calculating the finance charge
   Fees
   Cash advance features
   Credit limit
   Incentives or additional features
   Federal Laws
    – The federal Truth in Lending Act defines creditor
      responsibilities. Also protects against stolen credit cards
    – The federal Truth in Savings Act requires creditor
      disclosure concerning deposit accounts
    – The federal Fair Credit Billing Act protects against poor
      quality or damaged goods and services
Saving vs. Investing

 Profitability   Risk
 Profitability   Risk
 Investing is riskier, but can result in
  greater profit.
 Assets continue to earn you money.

 Liabilities continue to cost you money.
Save and Invest for the
Long Term.
   Time protects against risk.
   Reinvest the interest you earn.
   Earn compound interest.
   Choose the appropriate combination of
    potential profit (return) and level of
    risk (safety)
Savings Accounts
 Earn Interest
 Pull out money whenever you want it.
 Usually insured by the Federal Deposit
  Insurance Corporation (FDIC).
Insured Bank Money Market Accounts
 Offer higher interest rates than savings
 Often give you check-writing privileges
 Many are insured by the FDIC
     Certificates of Deposit

   Higher interest than savings accounts.
   Protected by the FDIC.
   Agree to keep your money in the bank
    for a certain amount of time.
401k Retirement Plan
   An employee can elect to have part of their wages
    deferred to the plan on a pretax basis.
   Employers may match or contribute to the
    employee’s 401k.
   These wages are not subject to income tax
    withholding at the time of deferral. However, they
    are included as wages subject to social security,
    Medicare and federal unemployment taxes.
   The money you put into a 401(k) plan is invested
    by the employer.
   Restrictions limit the employee’s ability to withdraw
    these assets. Penalties may apply before an
    employee reaches retirement age.
   The amount an employee can elect to defer is
Stocks and Bonds
 Stocks represent shares of ownership in a public company.
 Make money by selling shares at higher rate.
 Company may share earnings (residuals) with shareholders.
 Stocks are riskier than bonds, but can mean higher returns.
 Bonds are a chance for you to lend your money to the
  government or a company.
 You can receive interest and your principle back over
  predetermined amounts of time.

  There are many other types of investments other than stocks
  and bonds (including annuities, real estate, and precious
Mutual Funds

   A mutual fund is an institution that sells
    shares to the public and uses the proceeds
    to buy a portfolio, of various types of
    stocks, bonds, or both.
   Profits and losses are shared proportionally.
   Two key benefits: diversification and
    professional management.
   Requires less money and effort to diversify.
Programs for Students

   From the earliest possible age, all children
    should be involved in the family finances.
   The Girl Scouts, Boys and Girls Club and JA
    offer comprehensive financial-literacy
    educational programs.
   School Programs
   Mentors
   Games and Simulations
Counselor Role
   Be informed
   Have resources available
   Consider the connections between money, career,
    relationships, and life choices.
   Explore client values about money, work, spending,
    saving, and investing.
   Questions:
    – How can mental health, marriage and family, and school
      counselors use their financial knowledge to help clients?
    – What should counselors tell clients regarding finances?
      What should counselors avoid?
   Balance multiple accounts in one place.
   Keep track of what you owe and what you
    are owed.
   Articles and Links
   Government Page on investing, money,
    taxes, and more
   Virtual Stock Exchange
 The Good Guy on Wall Street – Warran Buffet
 Rich Dad Poor Dad – Robert Kiyosaki
 One Up on Wall Street – Peter Lynch
 Wall Street Journal
 Young Money
 Forbes
 Money
 The Economist
 Fortune
Resources for Educators,
Students, and Parents
   Test your knowledge –
   National Education Association
   PBS Lesson Plans
   Young Investor
   Money Lesson Plans
   Articles written by teens
   Money and taxes for kids
   College/High School