HUECU welcome · You may qualify for lower interest rates. Help you achieve your personal goals...
Transcript of HUECU welcome · You may qualify for lower interest rates. Help you achieve your personal goals...
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HUECUWINTERSESSION
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welcome
Personal Finance Management
Presented by: HUECU
HARVARD UNIVERSITY EMPLOYEES CREDIT UNION
The Harvard University Employees Credit Union is a
financial institution exclusively serving the students,
alumni, faculty and staff of Harvard University and the
affiliated organizations. Family members are also eligible.
MISSION
“ To enhance our members’ lives by developing and offering
trustworthy products that are easy to understand, easy to
use and best suited to meet their financial needs. ”
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NOT-FOR-PROFIT
All earnings returned to the members in
the form of better value and enhanced
services.
COOPERATIVE MODEL
• Member deposits used to fund loans for other members.
• Every member is an equal shareholder
• Volunteer Board of Directors elected by members
Cooperative Banking
CREDIT UNION vs. BANKSSTRUCTURE
Not-for-profit, member-owned For-profit, owned by stockholders
CLIENTELE Members share a common bond (such as where they go to school or work)
No restrictions on clientele; typically serve middle-to-high income clients
GOVERNANCE Volunteer board of directors elected by members
Paid board of directors, who may not be from the community or use the bank’s services, elected by stockholders
Learn about your money personality. Create a plan to meet your goals: Budgets, Taxes, Insurance and more
Day 1
Establishing a High Credit Score. Savings for Retirement. Building Wealth through Investments.
Day 2
OVERVIEW
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structurePresentations
Interactive Polls
Questions and Answers
Case Studies
Lunch
Our goal
Provide you with information and tools to help you reach your financial goals.
NOT to make you financial planners.
MigdaliaGomez
Financial EducationSpecialist
HUECU The Colony Group
PayPal Partners HealthCare
Meet the experts
PatrickDonnelly
CFP®/Principal & Senior Financial
Counselor
ShaharZiv
Director of Corporate Strategy
Dee DeeChen
Manager of Professional Staff
Benefits
The Colony Group
MattIlteris
CFP®/Senior Financial Counselor
Why focus on Financial wellness?
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No One Told MEStart with a foundation
Checking savingsRecommended for daily transactional needs
Earn interest on your deposits
May use checks to make payments
Recommended for long term savings
Debit (or check) cards are used to access funds and/or make payments
May incur fees if money is withdrawn frequently
Personal Identification Number (PIN) or signatures are used to authorize debit transactions
1 Safe zonebe open to, and respectful of, questions asked
Common terms
Debit or Check Cards: Withdraws money from your
checking account.
Debit vs. credit cards
Credit Cards: Borrow money at a fee (interest
rate). Money must be repaid.
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You and Your Money
What are your financial goals?
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YOUR goalsList your top three goals and target dates on the Budget Worksheet (skip “step” for now)
Financial Goals
Travel
Home Ownership
Education
Savings
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ARE YOURGOALS…
HOW MUCH Did YOU SPEND?
Today?
This week?
This month?
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Where is your money going?
Dining
Entertainment
Coffee
Travel
Could you cover a…
$10
$100
$1,000
$10,000
Emergency today?
What challenges do you face in making progress toward your financial goals? 89%
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CHALLENGES
• Loss of job
• Limited income
• Financial emergencies
• Impulse buying
• Unplanned spending
• Unplanned use of credit cards
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Psychology of Spending
What kind of spender are you?
Psychology of Spending
Spender• “Retail Therapy”
• “Keeping up with the Joneses”
• Impulse shopper
Saver
95% Consumer spending decisions are related
to emotional needs
What triggers your spending and saving?
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What was the most recent purchase you made?
• How did you feel about
the purchase?
• How did you pay for it?
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Experiences vs. material things
Experiences Material Things
Cash vs. Credit
• Parting is painful.
• Less willing to spend.
• More likely to recall cost.
• Happier with purchase.
• Higher perceived value of
purchase.
• Can see decline in cash pile versus
increase in credit card balance.
• Interest on purchases.
• Purchases are aggregated and billed
monthly.
• Easy to spend more than what you
have.
• Can be replaced if you lose it.
• Fraud protection.
• On your credit report.
Understanding why we buy What We Buy can help us make smart financialdecisions.
SPENDINGPLAN
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Know Where Your Money Goes
Needs/Fixed Costs
Wants/Flexible
Spending
Savings/Financial Goals
Emergency savings, retirement, etc.
20%
Entertainment, clothing, dining out, etc.
30%
Home, travel, medical expenses,
etc.
50%
Sample Budget $50,000/year
A) Monthly Income* $2,604
Monthly Expenses
Housing (Rent/mortgage, utilities, insurance, taxes, etc.) $1,100
Food (groceries) $300
Cell phone $120
Student loan repayment (standard repayment for $31,000 at 3.8%) $311
Credit card payment $100
Savings (emergency) $150
Entertainment (dining out, movies, etc.) $200
Transportation (MBTA, parking, taxi, car etc.) $100
Medical expenses (medicine, glasses, dental, etc) $50
Other (laundry, haircuts, clothing, children, pets, etc.) $100
B) Total Expenses $2,531
A) Total Income $2,604
Minus Total Expenses - $2,531
C) Monthly Discretionary Income/Deficit $ 73
42%
12%
5%
12%
4%
6%
8%
4%
2%
4%
*www.Paycheckcity.com, 1 federal and 1 state allowance, 10% pretax contribution to retirement
Savings and Budgeting Tips
Know Your Expenses
Cost Weekly Cost Annual Cost
Coffee $3.50 $24.50(Seven times a week)
$1,274
Lunch $10 $30(Three times a week)
$1,560
Dinner $25.00 $50 (Twice a week)
$2,600
Total $97.50 $5,434
What else could you have done with $5,000?
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Know What you owe
Student loans Credit cards Auto loans
Refinancing may lower your interest rate
Be mindful that extending loan terms may increase the amount you pay overall.
• Rate• Terms
• Conditions89%
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Knowyour money • Daily balance
• Spending over X amount• Bill payment reminders
Set alerts
• Online tool/apps• Excel• Cell phones• “Envelope”/cash only method
Make a date with your money
Track your spending
Winter Expenses
Fall Expenses
Spring Expenses
Summer Expenses
Adjust your SpendingPlan Frequently
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Begreen
Reusable water bottle/coffee mug
• Eat/freeze leftovers
• Eat what is in your house
Turn off the lights/ adjust the temperature
Reduce food waste
Walk, bike or take public transportation
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Going outtonight?
Let me see if I can
Dealing with fomo
I can’t, I am saving for…
It’s okay to say…
No, thank you.
I brought lunch/dinner.I spent more than I wanted lastweek…going to skip this time…
Places To Go
Potlucks
Times To Meet
Swaps
Or…suggest alternatives
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Moneyis fun
Cut expenses you won’t missOR
don’t bring you joy .
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Boston-Areaon a budget• Harvard and student discounts
• Free events
• Charlie Card discounts
• Dining Options
• Shopping options
• MBTA shopping
“Cook”
Prep
$5
$20
$50
$260
$1,040
$2,600
Weekly Annually 4 Years Later
$1,040
$4,160
$10,400
It adds up
YOU
WHEN YOU PAY YOURSELF FIRST
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Watch Your Money Grow
• Versus having your savings a part of your day to day bank account
Use a specific savings account
Get daily balance reminders
Automate savings
Received unexpected money? • Contribute a percentage to the account.
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You’re going to go off budget…
Those are opportunitiesfor you to reevaluate.
Life happens
Stay the courseBetter to save something, than to save nothing.
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Before Tomorrow
Complete the Current Section on the Budget Worksheet(skip “proposed” sections for now)
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Secret to Balance Your Budget…
Spend Less and/orIncrease Your Income
Maximizing Your Income
Monthly salary $3,333.33
$40,000 Annual Salary
Federal Taxes $358.33
State Taxes $176.58
Social Security $206.67
Medicare $44.33
Take home pay $2,543.42
What about…• Medical?
• Vision?
• Dental?
• Retirement savings?
• Health Insurance?
• Short-term disability insurance?
• Long-term disability?
• Life insurance?
• Flexible Spending Account (FSA)?
• Health Savings Account (HSA)?
We’ll learn more about these from our next speakers.
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CASE STudy
Making Credit Work For You
You could be denied an apartment or job if you have bad credit?
FALSETRUe
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Who Reviews Your Credit?
• Financial lenders
• Employers
• Landlords
• Automotive dealers
• Professional licensing boards
• Insurance companies
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You could pay more for a car, house, or other loans if you have bad credit?
FALSETRUe
Credit Impact: Rates and Payments
Credit score APR Monthly Payment Additional Costin a year
720-850 4.23% $741 $0
690-719 5.68% $757 $192
660-689 7.73% $780 $468
620-659 11.29% $822 $972
590-619 16.28% $882 $1,692
500-589 17.71% $900 $1,908
<500 Not eligible ---- ----
If your credit improves, you may be able to refinance your debt.
Source: Myfico.com – 36 month car loan - $25,000
What is Credit?
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credit Utilizing something now (e.g. education, car or home) and paying for it over a period of time.
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Collect financial information from:Credit
Bureaus
Provide credit information on individual consumers
Creditors, lenders, utilities,
debt collection agencies, the
courts, amongst other sources.
Three major U.S. credit bureaus:
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Credit report
Reflects your current and past uses of debt, including:
• Credit card debt, auto debt,
education debt, and other debts
• Open and closed accounts
• On-time and late payments
• Collections
• Requests for credit (inquiries)
How long is information kept on credit report?
Credit report timingOpen accounts in good standing Indefinitely
Closed accounts in good standing 10 years
Late or missed payments 7 years
Collection accounts 7 years
Civil judgments 7 years
Chapter 7 bankruptcy 10 years
Chapter 13 bankruptcy 7 years
Unpaid tax liens 10 years
Paid tax liens 7 years
Credit inquiries 2 years
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I do not have/use credit cards or loan, so I must have good credit?
FALSETRUe
Credit score ranges
300
850
575
FICO Score ranges 300 to 850 Only 20% of
population have a FICO Score of 800 or betterNational average
FICO score is 695
7% of population have scores below 500
Paying a bill 60 days late will affect my credit score.
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Late payments
Recent late payments could decrease credit score by 100 points.
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FICO SCORE
fico.org
I need to carry a balance on my credit cards to have good credit.
FALSETRUe
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How to Improve Your Score
Maintain reasonable amounts of unused credit (stay well below your credit limit)
I already have a loan or credit card. I can’t get a better interest rate.
FALSETRUe
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A High CreditScore Can:
Save You Money You may qualify for lower interest rates.
Help you achieve your
personal goalsMost people borrow money for home
purchases, college, and vehicles.
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Credit Tip: • Protect your Identity
• Millennials are most• Vulnerable to phone scams
• Likely to store bank information
on phones
• Check financial accounts while on
public Wi-Fi
• Not use passwords to protect
mobile devices
consumerreports.org
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fico.com
Credit Tip:
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To build credit
Borrow and repay debt responsibly and on time!
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HUECU Credit Building Options
• Secured credit cards
• Unsecured credit cards
• Credit builder loans
• Debt consolidation loans
• One-on-one financial coaching.
International members are eligible to apply for credit at HUECU
AnnualCreditReport.comReceive a free annual copy of report from each of 3 bureaus.
Preparing for Tomorrow
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Summaryof day 1 Started the foundation
and laid the groundwork • Identified your financial goals
• Learned about building credit
(pay bills on time!)
• Found ways to save money75%
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Nextsteps
Complete Day 1 survey now at
On Your Budget Worksheet, Complete: Current budget,
asset and debt section
Pull your credit report at
HUECU.org/wintersession
Annualcreditreport.com
See you tomorrow at 10:00 am
• Establishing a high credit score
• Savings for retirement
• Building wealth through investments
Thank you