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Personal Money Management

Personal Money Management. How to Handle YOUR Money. Important Terms to Understand. Income —money you earn Savings —income a person has not spent after buying things he /she wants or needs Investing —putting money aside in order to receive

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Personal Money Management

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  1. Personal Money Management How to Handle YOUR Money

  2. Important Terms to Understand • Income—money you earn • Savings—income a person has not spent after buying things he /she wants or needs • Investing—putting money aside in order to receive a greater benefit in the future • Interest—a fee for the use of the money invested; aka, profit

  3. Think About Your Money • What is the advantage of a savings account over a checking account? • It’s a form of investing your money • You earn a higher interest rate on your money

  4. Keep on thinking • When is the BEST time to borrow money (obtain a loan)? • Look for low interest rates!!! Shop around with different lenders • Work hard to keep your credit score high

  5. More thinking • When should people buy less on credit? • When you already have debt accumulating • When interest rates are high

  6. Be careful!!! • Why are credit cards dangerous? • You must pay them off • Interest rates add more to the money you owe • High debt to income ratios can damage your credit rating

  7. Try to invest your money • There are a variety of ways to make money on your money • Open a savings account • Buy certificates of deposit (CDs)—these carry a higher interest rate than a savings account • Buy bonds—the longer you wait for your bond to mature the money you will make • Buy stocks & mutual funds—but be willing to wait; few people can “get rich quick” in the stock market

  8. Remember—you have choices How you spend your money is your choice • Make sure to be able to live on the money you earn to avoid debt • Develop a budget & review it frequently • Save money—its recommended you have a minimum of 3 months salary saved just in case you lose your job • Be careful with this concept: opportunity cost • This is when you have money left over after meeting all your expenses and you CHOOSE to spend it • Pay attention to how you choose to use this money • You can save it! • You can spend it on something important like car repairs • You can “treat” yourself to something, maybe a nice dinner out, a new outfit, etc • BUT—think about the long term cost of your choice

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