Chapter 23.1 Use your Money

Wisely

Spending Styles

• How a person spends money says a lot about the person’s values and goals.

• Two basic types of spending:– Present Oriented – Future Oriented

Present Oriented

• People buy what they want sooner than later.

• They do less finical planning and saving.

• Do not consider how there spending affects the family.

• Can easily get into debt.

Future Oriented

• People who focus more on their future and savings.

• Make purchases with care.

• Prepared when something pops up.

Future Oriented

• May focus too much on not spending money, or take advantage of people willing to pay.

• May be nervous to spend money.

Spending Styles

• Very few people are one style or the other.

• Most people are a mixture of both styles with one dominate.

Checking Accounts

• Safer than keeping cash on you.

• Deposit money in to an account at the bank or credit union. – Ready for you when you need it.

• Can be taken out in person or by writing a check.

Checking Accounts cont.

• Checks transfer money from an account to another person.

• Some people write checks for money they do not have. – When this happens the check bounces. – Many places have charges for bounced checks.

Checking Accounts cont.

• Electronic funds transfer: Moves money from one account to another electronically. – Good for putting money into savings – Common for transferring money to savings.

Chapter 23.2 Use you Money

Wisely ]

ATM’s

• Automatic teller machines

• Allows you to check balances, withdraw, and even deposit money. – Some are open 24 hours a day.

• Must have an ATM or Debit card and a pin to use them.

Debit Cards

• Another way to purchase something using the money you have in your checking account.

• Money is deducted electronically.

• Be sure to keep tack of the money you are spending.

Online Banking

• Can see your account with a computer and internet access.

• Also can be done on some phones.

• Can pay bills or transfer money.

Online Banking

• Some banks have no physical bank.

• Very convenient.

Credit

• Burrowing someone else’s money and paying it back later.

• Good for large purchases. – House – Car

Credit

• Since credit is rented money, there is a fee with it.

• Interest: What you pay when you use someone else’s money.

• After adding interest the cost of what you buy goes up.

Credit

• Companies keep tract of whether or not people pay their debit.

• Those who pay it well and use it properly earn a good credit rating.

• Credit ratings go down when people do not pay their bills or pay them late.

Credit

• Everyone is entitled to one free credit report each year.

• Lending companies can look at anyone's credit.

• Lending companies look at your credit when deciding whether or not to loan to someone.

Types of Credit

• Lenders make money from giving out loans.

• The larger the amount of money and the longer the loan, the more money they make.

Credit Cards

• Similar to debit cards, but instead you are using money that belongs to the credit card company.

• Most credit cards have a limit. –Amount available to be spent.

Credit Cards

• Make sure you are aware of the interest rates and due dates of your bill.

• Some cards charge interest right away others only charge interest if you do not pay the whole balance.

Loans

• Agreement to borrow money and pay back more than the borrowed amount.

• Banks and credit unions offer lower interest rates.

• Be aware of the loan agreement before you sign it.

Installment Buying

• Offered through businesses that sell items like furniture and appliances.

• Typically more costly than loans.

• Make a down payment–Then pay monthly payments and interest.

Use Credit Carefully

• Easy way to get what you want. Also easy to get into debt problems.

• Make sure that you can pay off whatever you buy with credit.

Savings

• Should always be a goal.

• Easier for Future-oriented people.

• Money in a savings account earns interest.

• Good idea to keep 3-6 months of you salary in savings.