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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.

FALSETRUe

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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