FYE: Financial LiteracyContent Created by Boston University Financial Assistance

Fall 2015

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Money Doesn’t Grow On Trees!

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Undecided?

Think about your interests, but don’t be afraid to take a class that is outside of your comfort zone You may really enjoy it!

Think about a double major or a minor Be active in extracurricular activities Having varied interests and being

knowledgeable about different subjects will make you more marketable

What will my salary be?

Bachelor’s Degree Candidates Average Salary*

Humanities 45,042

Social Sciences 49,047

Communications 49,395

Healthcare 50,839

Business 51,508

Math & Sciences 56,171

Computer Science 61,287

Engineering 62,998

*Averages provided by the National Association of Colleges and Employers, Salary Survey January 2015

Find average salaries by BU school/college in the Center for Career Development’s Post-Graduation First Destination Profile

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What will my paycheck look like?$51,174 ÷ 12 months = $4,265

Gross Salary 4,265

Federal Tax 668

FICA (social security) 265

Medicare 62

State Tax 203

Health Insurance 168

Dental Insurance 10

Net Salary 2,889

*Numbers will vary based on personal circumstance. This example is of a single person living in Massachusetts w/no additional deductions. www.paycheckcity.com

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Monthly Budget Think about what your fixed and variable

expenses are each month Fixed Expenses: Rent, Utilities (heat, electric, etc., which may be

variable depending on the season), Car Payment, Cell phone, Communication (internet, TV), Federal Student Loans, & Private Educational Loans

Variable Expenses: Food, Transportation, Credit Cards, Clothing, Laundry, Entertainment, Personal/Miscellaneous, Savings

Irregular Expenses: Gifts, Haircut, Oil Change

Don’t spend more than you make! You may need a second job, or a roommate to make your budget work

Don’t buy stuff you can’t afford! http://www.youtube.com/watch?v=gc-eqqiDKD8

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Weekly Student Spending*Day Item Amount Category

Monday Starbuck's- coffee $3 Food-on campus

Domino's- pizza $12 Food-on campus

Tuesday Starbuck's- coffee $3 Food-on campus

City Convenience- toothpaste $4 Personal Care

Late Night food $7 Food-on campus

Wednesday Starbuck's- coffee $3 Food-on campus

Laundry $5 Laundry

Late Night food $4 Food-on campus

Thursday Starbuck's- coffee $3 Food-on campus

Birthday present/card for friend $20 Gifts

City Convenience- gum $2 Food-on campus

Friday Starbuck's- coffee $3 Food-on campus

Noodle Street $11 Food-off campus

T pass to & from Aquarium $4 Transportation

Aquarium $21 Entertainment

Saturday Starbuck's- coffee $3 Food-on campus

Shopping- Newbury Street (earrings) $12 Clothing/accessories

T pass to & from movie and shopping $8 Transportation

Movie with BU ID $6 Entertainment

Frat party $5 Entertainment

Sunday CVS- index cards $3 Supplies

Late Night food $10 Food-on campus

Weekly Spending Total: $152

*meal plans are not included

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Where Did The Money Go?Weekly Spending

Food-On CampusFood-Off CampusEntertainmentTransportationClothing/AccessoriesGiftsSuppliesPersonal Care/Laundry

35%

7%

21%

8%

8%

13%

2%6%

63%

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Accumulating Debt

Know what you owe! Check your credit card statements each month Keep information about student loans that you take each

year Debt you accumulate today can have an impact on

your life in the future

“If you live like a doctor when you’re a student, you’ll live like a student when you’re a doctor.”

~Unknown

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Interest

A charge for borrowed money, generally a percentage of the amount borrowed

You bought an iPad for $600 and put it on your credit card with 23% interest Your minimum payment is $18 The interest accrued that first month is

approximately $12 How much will that iPad really cost you?

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Payment Options

Pay the minimum of $18 only It will take 72 months (6 years) You will pay $496 in interest

Pay the minimum $18 + interest $12 = $30 It will take 26 months (more than 2 years) You will pay $164 in interest

What about $50 per month? It will take 14 months You will pay $89 in interest

What if your interest rate was less than 23%?*Calculators used from www.bankrate.com

$1,096

$764

$689

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Credit Report

A Credit Report is a detailed report of your credit history. Detailed information regarding a person’s credit history

(i.e. credit card accounts, loans, & payment history) Used by lenders and others to determine an applicant’s credit

worthiness Contains employment history data and address information

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Credit Reporting Agencies

Access your credit report for FREE from annualcreditreport.com

National Consumer Reporting Agencies: Experian: experian.com Equifax: equifax.com TransUnion LLC: transunion.com

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Credit Score A numerical rating used as an indicator of a borrower’s credit worthiness Method was developed by Fair Issac Corporation (FICO®). The standard method for calculating the score involves a number of

weighted factors*: 35% Payment History 30% Amounts Owed 15% Length of History 10% New Credit 10% Account Mix

A FICO® score ranges from approximately 300 to 850. Purchase your score at myFICO.com Obtain an estimate at myFICO.com/FICOCreditScoreEstimator/Estimator.aspx

OR

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Negative Information

Late payment history and other negative information generally remains on your credit report for 7-10 years

An account with a late payment history may be turned over to a Collection Agency by the merchant

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Tips on Maintaining Good Credit

Pay bills on time Pay down high balances, don’t just pay the minimum (if you can)

Reduce your overall debt-to-credit limit ratio Only request a credit limit that you need Monitor your savings/checking accounts Don’t open or close accounts excessively

Be careful about closing zero balance accounts (this will impact your debt-to-credit ratio), or accounts that are old (this will impact your credit history)

Never share personal data unless you initiated the contact Reputable companies will never ask for your password in an email (so don’t

provide it, under any circumstance) Check your credit report on an annual basis and report discrepancies;

mistakes can be made Only use credit for purchases with a lasting value (i.e. education, home,

car, major appliance, etc.) Minimize opening new accounts

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Savings and Retirement

Always pay yourself first! Set short-term and long-term goals Have an emergency fund Think about retirement savings early, at

least when you get your first job

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Key Points for Students to Remember

Make a Budget Look at what you’re spending and see where you can make

adjustments Educational Loans

Only borrow what is necessary Build Credit Now

Always pay bills on time If you have credit cards, pay off the highest interest rates first Monitor your credit report

Save for the Future Whether its spring break or designer jeans, curb credit card

spending

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Still Have Questions?

Check out the $mart Money 101 website bu.edu/smartmoney101/ Follow us on Twitter @BUsmartmoney101

Sign up for Cash Course through the Financial

Assistance website Book a presentation for your group Set up a 1-on-1 meeting through the Financial

Assistance Office Look at course offerings

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QUESTIONS?