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Chapter 13Chapter 13
Money Matters
P.O.W.E.R. PlanP.O.W.E.R. Plan
• PPreparerepare: : Identifying Your Financial Identifying Your Financial GoalsGoals
• OOrganizerganize: : DeterminingDetermining Your Your Expenditures and IncomeExpenditures and Income
• WWorkork: : Making a Budget That Adds UpMaking a Budget That Adds Up• EEvaluatevaluate: : Reviewing Your BudgetReviewing Your Budget• RRethinkethink: : Reconsidering Your Financial Reconsidering Your Financial
OptionsOptions
Money ManagementMoney Management
• Why have a budget?• How can I pay for my college
education?• What is the value of a
college education?• Where does all my money
go?
Develop a BudgetDevelop a Budget
• Formal plan that accounts and plans for expenditures and income
• Based on income• Provides security• Keeps track of spending
PreparePrepare
• Determine short-term goals• Identify long-term financial goals
OrganizeOrganize
• Keep track of your money• Record expenditures in a notebook• Make a list of financial needs
Work-BudgetingWork-Budgeting
Personal Necessities• Food• Clothing• Shelter• Household Supplies• Transportation• Loans• Medical Expenses• Other
BudgetBudget
Educational Necessities• Tuition and Fees• Books• Tools• Computer costs• OtherSocial Needs• Relationships• Clubs and teams• Charitable contributions• Other
Entertainment• Movies and shows• Trips• Recreation and
sportsLifestyle
Improvements• Educational• Living space• Computer• Transportation• Clothing• Other
Estimate Your IncomeEstimate Your Income
• Wages• Family Support• Financial Aid
– Tuition reductions, loans, scholarships
• Interest and Dividends• Gifts
Save MoneySave Money
• Control impulse buying• Make your own lunch• Read newspapers and magazines at
the library instead of buying subscriptions
• Check bills for errors• Cut up credit cards and pay cash
• Make major purchases only during sales
• Share and trade resources with friends• Live more simply• Get good grades (re-taking classes
costs money)
Saving MoneySaving Money
EvaluateEvaluate
• It is important to review and evaluate your budget monthly and make appropriate changes
RethinkRethink
• When problems occur, assess the problem
• Contact your creditors• See a credit counselor• Stick to a plan
Credit CardsCredit Cards
• Average credit card debt of college students is $3,000
• About 10% of college students owe move than $7,000
After graduating from college, do you still want to be paying for a slice of pizza you bought the first week of college?
Do I Need a Credit Card?Do I Need a Credit Card?
• Is there an annual fee?• What is the interest rate?• Is the interest rate fixed or variable?• Do I need a credit card, REALLY?
Advantages of Credit Advantages of Credit CardsCards
• Establishing a good credit history• Emergency use• Convenience
Disadvantages of Credit Disadvantages of Credit CardsCards
• Interest costs can be high• It’s easy to spend too much money• Late payments damage credit rating
Cost of CollegeCost of College
Figure how much college is costing you. – Divide by the number of hours you attend
class. – How much is each class worth?
• Isn’t it important to get your money’s worth?ATTEND CLASS
Funds for CollegeFunds for College
• Loans• Grants• Scholarships
LoansLoans
• Principal: amount of loan• Interest rate: percentage• Term of loan• National Loans
– Stafford Loans-Subsidized and Unsubsidized
– Plus Loans– Perkins Loans
GrantsGrants
• Money that does not have to be repaid• Pell Grants: based on need• Federal Supplemental Educational
Opportunity Grants-limited supply• Work-study Grants-jobs for students in
need
ScholarshipsScholarships
• Does not have to be repaid• Hope scholarships-tax credit 100% on
first $1000 and 50% credit on 2nd $1000 paid on tuition and fees
• Lifetime learning tax credit-20% tax credit for first $5000 for older students or juniors and seniors
Financial AidFinancial Aid
• Speak with a financial aid counselor• Decide how much aid is needed• Fill out application for aid• Complete the FAFSA• Be patient and wait for results
EvaluateEvaluate
• Evaluate your financial aid package• Speak with a counselor if aid is not
adequate
RethinkRethink
Money spent on education gives us a better understanding of the world and its people, insight into who we are, and better job opportunities
PREPARE
ORGANIZE
WORK
EVALUATE
RETHINK
Identify financial goals
Determine expenditures and income
Make a budget that adds up
Review the budget
Rethink financial options
P.O.W.E.R. PlanP.O.W.E.R. Plan
ResourcesResources
The Student Guide (U.S. Department of Education, 2005)
Paying for College Without Going Broke by Kalman Chany and Geoff Martz
(princeton Review, 2005)
• www.collegeanswer.com/index.jsp
• www.fafsa.ed.gov
Web Links
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