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Managing Money: Budgeting, Banks, and Credit Unions

Learn how to manage your money effectively with a personal budget, understand the impact of inflation, and choose between banks and credit unions. Discover the advantages and disadvantages of both, including accessibility, fees, and customer service. Understand the importance of credit scores and factors that impact them. This guide will help you make informed decisions about borrowing money and making large purchases.

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Managing Money: Budgeting, Banks, and Credit Unions

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  1. How Do I “Manage” My Money? Personal Finance Unit: Banks, Credit, and Credit Unions

  2. Why should you have a personal budget? EOC study guide Personal Finance #3 • It’s really about understanding how much money you have, where it goes, and then planning how to best allocate those funds.

  3. Why Shouldn’t I just Keep My Money In My Mattress?

  4. Inflation!!—an overall increase in prices EOC study guide Macroeconomics #8 What’s inflation? It’s a general increase in prices and fall in the purchasing value of money.

  5. Banks pay interest

  6. Remember all of the banks that failed during the great depression?

  7. Can I really trust a Bank? • If they are Federal Deposit Insurance Corporation (FDIC) members • Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure • Depositors are insured for up to $250,000 • FDIC Shuts Down Syringa Bank in Boise How does FDIC work? EOC study guide Personal Finance #8

  8. Okay, but what’s the difference between a bank and a credit union? • Commercial Bank • Provides transactional savings, money market accounts • Like all businesses, their goal is to maximize corporate profits. EOC study guide Personal Finance #2

  9. Okay, but what’s the difference between a bank and a credit union? • Credit Union • Financial institution that is not-for-profit and customers are members EOC study guide Personal Finance #2

  10. Banks vs. Credit unions: accessibility • Big banks • ATMs are typically plentiful and branches are open on the weekend • Most offer a wealth of mobile and online tools • Credit unions • Meant to serve local communities, often not available outside the area • Branded ATMs are practically nonexistent, most offer to reimburse customers for ATM fees if customers have to go out of network

  11. Banks vs. Credit unions: Checking account fees • Big banks • Notorious for levying major fees against customers—from overdrafts to monthly maintenance fees • According to MoneyRates.com the average monthly maintenance fee is $12.26 • Typical charge for out-of-network ATMs is $2.60 • Credit unions • Fewer fees across the board, for the most part • Overdraft fees are $20-$30, but usually only required to keep $30 in an account • 70% offer free checking (39% of banks do) • Many charge a $2-$5 maintenance fee

  12. Banks vs. Credit unions: Customer service • Big banks • In 2012 they scored a 77 on the American Customer Satisfaction Index • Credit unions • Scored an 82 on the American Customer Satisfaction Index in 2012

  13. To make money! Why do banks loan people money?

  14. Key Debt Terms Principal— a sum of money lent or invested on which interest is paid. Interest— money paid regularly at a particular rate for the use of money lent EOC study guide Personal Finance #11

  15. Why may you need to borrow money?

  16. Student loan repayment

  17. Should I buy it? The monthly payments aren’t too bad

  18. Car loan calculator

  19. How much would you pay for this home? Do interest rates really matter? $150,000

  20. Does your Credit score really matter? Why? Financial institutions care about your character!!! • It matters what kind of "financial citizen" you have been • How do they know? By looking at your credit history • What is a credit score?

  21. What do they care about most? EOC study guide Personal Finance #10 Factors that impact personal credit: • Payment history—have you paid your bills on time • Amounts owed—charge no more than 25% of your limit • Length of credit history—have you been reliable for years? • 3 important credit score factors

  22. Simple--Pay your bills on time.Good credit is common sense--Right? • Unexpected things that lower your credit score

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