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