Chapter 10

Secrets of Managing Your Money for a Happier and Better Life

Copyright 2011. Raymond Gerson

Chapter Objectives

• Gain financial literacy• Learn how to manage your money well• Develop skills to pay off debts and to stay out

of debt• Learn how to buy what you need and save

money

Benefits of Good Money Management

• Peace of mind

• Money for fun

• Savings to take care of emergencies

• Money to help others

• Ability to live a comfortable life

• Money for retirement

• Ability to contribute to causes of interest

Other Points About Financial Management

• Bankruptcies for 18-24 year olds have significantly increased.

• Financial problems are the number one cause of divorces.

• When you have enough money you are free to think of more important things.

• Money is a poor master, but an excellent servant.Take the Money Management Questionnaire/ Activity 10.1

Money Management Can be Easy to Learn

• Dennis Kofke taught his 3 year old by giving her three jars for her allowance money:

• Spending jar – 75%• Savings jar – 15%• Give away jar – 10%

Complete Activity 10.3.

Money Dos and Don’ts

• Set and pursue financial goals

• Save at least 10% of your income

• Regularly pay to reduce your debts

• Use some money to help others

• Start a tax deferred retirement account

• Work or be of service to earn money

Money Dos and Don’ts (Cont’d)

• Apply for Pell grants, scholarships and other financial aid

• Simplify your life to save money• Control impulse spending• Balance spending on your needs and wants

and savings• Shop for best deals• Budget to keep track of your spending

Budget Your Money for Success

• A budget is an itemized list of your income and expenses.

• You can save by keeping your spending less than your income.Fill out the Monthly budget Worksheet.

Credit Cards

• It is easy to get credit cards and also easy to go into debt.

• The average person in our society has five credit cards.

• Pay off your balance each month if possible.• Debit cards – if you have trouble controlling

your spending treat debit cards like credit cards.

Take the credit card self-quiz-Activity 10.6

Tips for Managing Credit Card Use and Debt

• Develop a payment plan.

• If you must borrow take out a low interest loan.

• Pay off one card at a time.

• Pay off the card with the highest interest first.

• Before using your credit card for a purchase ask if it is necessary.

Balance for Financial Freedom

According to Warren and Tyagi balance is the key to financial management:

• 50% for your needs or “must-haves”

• 30% for your wants• 20% for your savings

Do activities that follow this discussion in the book

Financial Aid Grants• Pell – Foundation of all grants and usually for

undergraduates.• FSEOG – Awarded to undergrads with

exceptional financial needs.• ACG – For Pell eligible students in first or

second year.• Teach Grant – For students who plan to be

teachers.• Federal Work Study – For on and off campus

jobs.

Student Loans

• Federal Perkins. For undergraduate and graduate students. Must be paid back at 5% interest.

• Stafford Loan (Subsidized). The U.S. Department of Education pays interest while the borrower is in school.

• Stafford Loan (Unsubsidized). The borrower is responsible for all interest.

• Direct or FFEL Plus Loan. These loans are unsubsidized and the borrower is responsible for all interest.

Steps to Federal Student Aid

• Seek assistance from your college financial aid office or U.S. Department of Education.

• Get a Federal Student Aid PIN.• Collect documents needed to apply.• Complete FAFSA between January 1 and June 30th.• ED will send your student aid report (SAR).• Your school may request additional information.• Contact your student financial aid office with any

questions about the aid you were offered.

Attitudes and Money

• Your emotions influence your beliefs about money.

• Emotions affect how you spend and save money.

• Your feelings about money affect career decisions, health and relationships.

• Do you see money in a positive or negative light?

• Take the Financial Attitude Questionnaire-Activity 10.10

Multiple Streams of Income

• Money can be thought of as a reward for your extent of service.

• You are not restricted to one source of income.

• You could have a job, a part-time business, income from investments and more if that appeals to you.

• Money is not the only source of motivation. Intrinsic motivation (from within) is also important.

Student Success Story

• Read the story by Betty Villarreal.

• Discuss your reaction and what you learned from this story.

Summary of Main Points

• When you have enough money it frees you to think about more important things.

• You can become the master of money instead of money becoming your master.

• Balancing your needs, wants and savings can lead to a debt free life and financial independence.

• You are capable of creating several sources of income if you desire.