Introduction

This page is split into sections for each major topic as listed below. Feel free to cover as much or as little of each section as is best suited for your audience. Each section covers the content in a script like manner and provides tips on how to teach it. In addition, the section may contain a link to an interactive activity related to the topic. There are many ways to present this material to your audience but to get started, you can download the following complete presentation for use in your workshop or for use as a baseline to create your own presentation.

Budgeting

To be financially secure, independent of income, it is important to allocate money for different purchases and expenses so that main expense requirements are also met without going in debt. At the same time, you also do not want to spend all your money. If you want to make bigger purchases sometime in future, it is important to save. This is called budgeting.

Your budget considers your personal income and helps you allocate money for various expenses. It is important to set aside money for housing, utilities, health care, food, and entertainment. In addition part of the monthly income should be devoted to paying off loans and some reasonable portion of income should be set aside for savings. The amount to save depends on your short term and long-term goals which may include buying a car, paying for higher education, and financing a house. In addition, these savings act as your emergency funds in the case of unforeseen expenses (ex. Due to accidents or losing a job). You should always make sure to have enough savings to fund your living expenses for at least for 2 months and ideally for 6 months, if needed.

Smart Purchasing and Lifestyle Choices

One of the best ways to have your money go far is to spend it wisely. While we always need to buy groceries and essentials, it is important to be smart while buying so that we have money left for savings and other wants.

Smart buying means getting items that you need and you will use at a good price. We can minimize costs by paying attention to the price at different stores. To know where to get a good price, read advertisements but also read between lines of advertisements. Sometimes there are limits placed on the amount you can buy at the reduced price or it requires you to buy one item at full price to get another item at a reduced price. For all these conditions it is important to do basic calculations and use your judgment. Let’s go through a couple scenarios.

Say we go to buy 1 pound of beans. We see an advertisement from Store A for beans at 1 dollar a pound and from store B for 2 dollars a pound. Now we go to store A but our pound of beans costs 4 dollars. This is because in small print it said a dollar per pound for every pound over a pound. By going to store A we have lost 2 dollars that we could have saved if we saw the condition and went to Store B instead. However, if we are buying beans for a party and we need a ton of beans (at least 4 pounds), then the Store A cost will be cheaper.

To summarize, there are three things we need to analyze- how much we need, what are the prices at different stores, and what the conditions to get those prices are.

Now there are also ways we can reduce the cost of an item through coupons. Again it is necessary to utilize judgment to decide whether the price of an item will become cheaper with the use of a coupon. It is important to read the conditions and validity periods of the coupons before accounting for them in your calculations.

Sometimes, buying cheaper and smarter may require more effort, but it can provide much healthier options in addition to saving you money. For example, one can buy canned or dried beans. Usually, one pound of dry beans are equivalent to 4 cans and is ¼ the cost. You will need to soak beans few hours and cook it for a little longer; however, this option not only saves you a lot of money, but also has less sodium and more nutrients (and therefore is much healthier).

Loan Management

You should avoid taking loans as much as possible. However, taking a loan can be a wise decision if you have means to pay it back on time and it increases your earnings or savings in the long term. For example, you may need to take loans for higher education, for a car, for a house, or even to start your own business.

When taking a loan, it is important to do your research and be careful as to not get caught in expensive credit card payments or payday loans. The key is to know when the loan offers sound too good. Payday loans are small loans lent at a high interest rate on the agreement that it will be repaid when the borrower receives their next paycheck. Because of the high interest rates, someone who takes a payday loan can end up paying more than double of what was borrowed, and hence these loans should be avoided.

When looking at a loan, it is extremely important to look at the interest rates and the minimum payments required every month to be in good standing.

Good Credit

Throughout your life, you will find it necessary to borrow. However, in order to borrow easily and cheaply, it is important to have good credit. When you need to borrow or apply for a credit card, the lender looks at your credit score. If you have a good score, you can get a loan easily and at a lower interest rate than if your credit score is not as good. Hence, it is important to maintain a good credit score.

What is a credit score? A credit score is a three-digit number that tells how worthy of a borrower someone is. Anything above 700 is seen as good while anything below 500 is seen as sub-par. A good credit score makes you a trustworthy borrower and makes it easier to apply for credit cards, receive loans, and rent an apartment.

You can improve your credit by borrowing and paying off what you borrowed on a timely basis. The paradox of a good credit score is that you need to borrow first before you can get a credit score but in order to get a good loan, you need good credit score. One way to build good credit history is to get a credit card, but pay it off every month. This way, you avoid paying expensive interest charges, while developing credit history.

Here are some key Credit Terms:

  • Interest: A charge for borrowing money, most often based on a percentage of the amount owed.
  • Fixed interest rate: When the interest you are charged on borrowed money remains constant.
  • Variable interest rate: When the interest you are charged on borrowed money changes based on outside influences. There are sometimes rules as to how much the interest rates can change, so pay attention to that when taking long-term loans.
  • APR: This stands for annual percentage rate. With credit cards, APR is the amount of interest a cardholder pays in a year in addition to the regular balance. It’s important to note that an APR can be fixed or variable.
  • Credit limit: The maximum amount of money you are allowed to borrow.
  • Grace period: The time between your purchase and the point when you start having to pay interest on the amount you borrowed.
  • Minimum payment: Credit cards typically demand you pay a minimum amount of money on what you owe each month. Remember, though, you will be charged interest on the amount of money you don’t pay.
  • Annual fee: Many credit cards, particular those that offer rewards like airline miles, charge an annual fee to use the card. This is important to pay attention to, as the fee can actually be more than any rewards you might be able to use.

Investment

You may also want to make investments in higher education or start your own business. Both require financial investments. There are programs available to give you loan for such at a much lower interest rates than what you can get from commercial banks. So, have due diligence on the kind of loan that you want to take to ensure that you get the loan at low interest rate.

Education

  • Give information on the kind of programs available
  • 4 year degree colleges vs. vocational training
  • Scholarship opportunities: Mention that in order to fund higher eduction, there are many scholarship opportunities available. Scholarships are available for both financial need and merit. In addition, students from the foster care system may find scholarships tailored towards them. One fine example of such as scholarship is the Family Fellowship program which offers both financial aid and mentorship and is solely targeted towards foster youth.

Starting a business

  • What that entails
  • Need to get loans

Future

Once you have started budgeting and paid off your short-term loans, you should start focusing on what you do with the money that you are saving regularly. It is important to invest this money wisely so that not only it stays safe, but also grows at a good rate.

There are many places into which you can invest money and the investments may generate a greater return. The investments generally have trade-offs- the safer ones tend to give lower interest rates and hence grow slowly while the riskier ones may give higher rates of return but also have a good chance of loosing money.

The following topics are generally covered for older audiences depending on time left after the previous topics are covered.

Common investment options:

  • The most basic way to save money is in savings accounts at banks. They have small interest rates and a small return on investment. However, the money is fairly secured. The government ensures that each bank account is insured for 250,000 dollars and hence even if the bank goes out of business, you will get your money back up to the above amount.
  • You can also invest in stocks, bonds, and real estate (feel free to talk about these types of investments for longer).
  • The government also gives special tax credit for money saved in a retirement account. Up to a certain limit, you don’t need to pay tax on the amount saved in these accounts. Once you have a stable job, there are several retirement investments options (ex. IRAs, 401ks, 403bs, Roth vs Post, etc). Each have their own rules, requirements, and benefits so it is good to do some research to find which option is the best for your financial situation and needs.

Make sure to mention that this is not for immediately but is something to think about. Can talk about retirement investments (IRAs, 401ks, 403bs, Roth vs Post, etc)

Mention that income taxes are also financially related. Have to be paid every year.

If there is time, you can also discuss current economic conditions including the causes of previous economic depression and the trends in the current economy