Overview:

Most students are interested in learning how to manage their money. However, many of those same students may be embarrassed to admit that they don’t know the first thing about money management. It’s important to emphasize that it doesn’t matter how much money you have—what’s more important is what you do with your money. This workshop provides a broad overview of money management. Topics discussed include controlling spending, creating a savings habit, dealing with debt, protecting identities, and managing risk.

Preparation:

Review this guide and the accompanying PowerPoint slides.

Customize the PowerPoint slides to include your college’s logo and your CashCourse URL in the footer.

Consider your own money management skills: Do you track your expenses? Do you pay yourself first? Are you a convenience user of credit? Do you know your credit score? It’s important to know your own strengths!

Remember how you felt before you learned the ins and outs of money management and how you learned to manage your money.

Consider that when it comes to talking about money, sharing your own successes and challenges may be more engaging and effective than lecturing.

Materials Needed:

PowerPoint handouts

Copies of CashCourse Financial Goals worksheet

Copies of Spending Perceptions worksheet

Copies of CashCourse Expenses worksheet

Copies of Evaluation worksheet for this workshop

How to Facilitate This Session:

  1. Introduce yourself and express your excitement about sharing some practical tips for managing money.

2.Mention that we all have a limited amount of money regardless of the amount we have. We all have to make decisions about what we should buy now, what we should wait to buy, and what we can actually do without.

? Ask students to quietly consider what they spend money on (their own money and their families’ money). Encourage them to also consider how they think their friends and family members perceive their spending habits. (Would their friends and family members label them as: big spenders, bargain hunters, cheapskates, savvy shoppers, competitive shoppers, or discount buyers…?)

? Ask students if their current spending habits are dictated by their financial situation or if they think they would act in the same manner if their circumstances were better or worse financially.

  1. Distribute the PowerPoint handouts. As you review each slide, engage students in a discussion as detailed in the outline below.
  2. PPT 2: 5 Money Management Tips
  3. Explain that there are five critical actions each student can take to start managing their money—today. Quickly review the list on the slide. State that today’s session will highlight each critical action.
  4. Suggest that before anyone can begin to put all (or any) these actions into place, it’s important to consider your own individual goals.

Distribute the CashCourse Financial Goals worksheets. Ask students to think about their own financial goals.

PPT 3: Setting Goals

  • Review the worksheet and explain that this worksheet asks for specific goals, goal achievement dates, costs of goals, and the amount to save each week or month. An example of a goal is to save money for a spring break trip. The achievement date is the date we need to spend the money for the trip, so let’s use March 1. The total cost of our trip is $800. If we are 10 months away from the achievement date, we need to save $80 a month toachieve our goal. If we break down our goals in this fashion, we are more likely to reach our goals.
  • Distribute the Spending Perceptions worksheet. Review the directions and check for students’ understanding. Allow four to six minutes for students to complete the worksheet. Have students add up all of their numbers to get a total score. Direct students to write their total score somewhere on their worksheets and circle it.

PPT 4: Spending Perceptions

  • Explain that the lower the score, the better. Review the scoring key:
  • 17–27 You are very perceptive. You could teach others how to manage their spending and saving habits.
  • 28–42 Pretty good. If you concentrate on some of your weak areas, you’ll soon be amazed at the difference.
  • 43–58 Welcome to the crowd. Just an hour a week focused on improving your spending would equal an increase in savings—you could actually pay yourself first!
  • 59–75 My bad. You need to make some immediate changes to avoid financial disaster. Consider implementing a spending plan as soon as possible.
  • 75+ Whoa. Better start back at the beginning and pay attention this time around. Life isn’t going to get any easier at this rate.
  • Encourage students who had scores higher than 30 to take a hard look at some of their spending habits and make a plan of action to turn their current situation around.

PPT 5: Control Your Spending

  • Suggest that a great way to control your spending starts with understanding where your money comes from and where it goes.

? Ask students if they can easily list their sources of income.

? Ask students what they expect to be their source(s) of income in the near future.

? Ask students what ideas they have for increasing the amount of money they could bring in on a monthly basis.

  • Explain that the next step in controlling spending focuses on recognizing where your money goes!

? Ask students if they can easily list what they spent money on last week or the week before.

  • Explain that many people who track their expenses are amazed to discover where their money goes.

? Ask students which list was easier to complete. [Most people have a pretty accurate idea of how much money they have coming in, but few people really know how much money they spend.]

? Ask students if they can think of anything that would help them realize how much money they spend. [Some method of tracking expenses—a journal, a diary, an envelope with receipts, a software application, etc.]

•Have students consider whether they would feel less stress if they knew where their money went every month or if that knowledge would cause more stress. [Financial experts suggest that knowing your spending habits is the first step to correcting bad habits and to being less stressed.]

PPT 6: Tracking Your Expenses

•Distribute the CashCourse Expenses worksheets. Encourage students to use this tool to get control of their spending.

•Direct students to carefully consider whether an item they are buying is something they really need or something that would be great to have.

? Ask students what they could do if they discover that they are spending too much money every month. [If they are spending too much on wants, they need to make some choices. They need to give something up!]

PPT 7: PYF

? Ask students if they know what PYF means. If not, explain that it stands for “pay yourself first,” and refers to putting money in savings before spending it on other things.

  • Suggest that building wealth often takes diligence and patience. It requires you to give up something today so that you can consume something else at some point in the future.
  • Remind students of the Financial Goals worksheets they discussed earlier.

? Ask students which is easier: putting a small amount of money away every month or scrambling to find a large sum of money at the last minute to pay for holiday gifts, spring break trips, summer vacations, etc.

  • Explain that the amount of money you put away each week or month is not as critical as the very act of paying yourself first! Even if you can’t afford to save much today, it is still important to save a little. Saving a little is better than saving nothing, and it will create a good habit for your future.
  • Suggest that one way to do this is to make your savings a fixed expense (like rent) so that you pay yourself a set amount each month.

PPT 8–: Credit Crunch

? Ask students to explain the concept of credit. [Credit is the borrowing of funds with the intent of paying them back. In almost every case, there is a charge for borrowing the funds. The charge is usually in the form of fees and/or interest. Credit is considered an alternative to purchasing with money on hand. Credit costs money—all credit is a loan of some kind and it must be repaid with interest.]

? Ask students if they’ve ever really thought much about credit. If they have, what do they think about credit in general—and credit cards specifically?

  • Suggest that the use of credit is a complex issue with no absolute right or wrong answers.
  • Mention that there are generally two kinds of credit users: convenience users and “revolvers.”

? Ask students if they can describe a convenience user. [Convenience users pay their credit card balances in full each month and avoid paying interest on their credit card purchases. This benefit is attained because of the creditor’s grace period. A grace period is the length of time after the receipt of your credit card statement to your payment due date when no interest is charged. This method of credit card use is the most cost effective.]

? Ask students to describe a “revolver.” [These individuals keep a revolving balance on their account and pay interest on everything they purchase. They do not benefit from a grace period. Many “revolvers” make only the minimum monthly payment, which is the most costly and least desirable form of payment.]

  • Suggest to students that just as there are two kinds of credit users, there are two ways to look at credit/debt: good credit/debt and bad credit/debt.

? Ask students if they can think of examples of good credit/debt. [College, graduate school, training, house.]

? Ask students if they can think of examples of bad credit/debt. [Spring break trip, clothes, pizza, sporting event tickets.]

  • Explain that according to an article published in the September 2005 classroom edition of the Wall Street Journal, “ More and more Americans are turning to debt to pay for lifestyles their current incomes can’t support.”
  • Emphasize that while there are some advantages to using credit, the disadvantages may outweigh the advantages. Students should get in the habit of asking themselves:
  • Is this really an emergency? (If you can wear it or eat it, it is probably not an emergency.)
  • Do I have the money on hand to pay off the credit when the statement arrives? (If I have the money now, will I still have it at the end of the month?)
  • Do I really need this or can I live without it? (Tell yourself that you will stop back in a couple of days, and if you really still want to buy the item, you’ll do so. Most impulse buys can be avoided this way.)

PPT 10: Maintaining Good Credit

? Ask students how many of them have used a credit card or taken out a loan.

? Ask the group of students who raised their hands how many of them know their credit score.

  • Explain that the moment you obtain credit (a major credit card, a car loan, a personal loan, a store charge card), you have a credit history. Your credit use is tracked and turns into a credit report, which in turn results in a credit score. Your credit score is used by banks and creditors to determine your creditworthiness and is a factor in determining the rate of interest you will be charged.
  • Your credit score is like a report card of your credit history. It compiles all your available financial data into a model that computes a score between 350 and 850, a higher score being better. Your score is based on your payment history, credit usage, length of credit history, bankruptcies, and more.

? Ask students if they know how insurance companies decide what rate to charge you. [Bummer! Your credit score is part of it! Insurance companies have decided that if you appear to be a bad credit risk, you are probably a bad driver!]

PPT 11: Check Your Credit Report

  • Encourage students to check their own credit reports. Remind students that they are eligible to receive one free credit report from each of the three credit reporting agencies (three free credit reports per year). The best way to check your credit report is to visit www. annualcreditreport.com. This is the official site to help consumers obtain their free credit report and is sponsored by the three credit reporting agencies.
  • Explain that students should review their credit reports closely to be certain that all of the information is correct and that the accounts listed are actually accounts you recognize.

PPT 12: Protecting Your Identity

? Ask students if they know anyone who was a victim of identity theft.

  • Explain thatidentity theft has emerged as one of the dominant white-collar crime problems of the 21st century. Every three seconds another identity is stolen in the United States.

For the seventh straight year, the Federal Trade Commission says identity theft is the largest consumer complaint and the fastest growing crime in America. In 2007, the FBI reported that identity theft affected 9.91 million Americans—that's 9,991,000 people. Many more cases probably went unreported. Identity theft accounted for $52,600,000,000 (billion) in losses in 2007.

  • Share the fact that most identity theft victims never know their identity has been stolen until they get phone calls and letters from collections agencies or even the IRS telling them they owe money—usually a LOT of money.

? Ask students to share their ideas for preventing identity theft.

  • Review the tips listed on the slide.
  • Refer students to the CashCourse Web site for additional tips for spotting fraud.

PPT 13: Managing Risk

? Ask students if they have any concerns about what would happen if they became ill and needed medical treatment.

? Ask students if they ever think about someone ripping off their dorm room or breaking into their apartment.

  • Suggest that these things do happen and the best that you can hope for is that you’re prepared and protected. Without protection, you could find yourself with medical bills you can never pay, in jail for no auto insurance, or without any possessions. Any or all of these situations affect your ability to manage your money!
  • Encourage students to talk to their parents to determine if they are covered under their medical plans. If not, they can check with the school to see if they are eligible for health insurance under the school’s plan.
  • Encourage students to find out if they are covered under their parents’ auto insurance, if applicable.
  • Suggest that students check into coverage for their possessions (computers, TVs, iPods, etc.). Not all homeowners’ insurance policies cover possessions in college dorm rooms. Student Personal Property Insurance is available from a variety of sources. Rental insurance is available to cover personal property if you are renting an apartment.

PPT 14 - 15: Next Steps

  • Remind students that behavioral scientists believe you need to do something 21 times to create a new habit. Therefore, spenders cannot become savers overnight! However, if each student chose one action and practiced that action 21 times, it’s probable that a positive new habit will be created.
  • Review the five money management tips.
  • Encourage students to think of one action they could take to help them live within their income. (Be ready to offer your own. You might comment that you’re going to limit yourself to one cup of gourmet coffee a week instead of three. Figure out how much money you’ll save each week, then each month and finally one year just by cutting back on two trips to Starbucks or wherever you like to go. Share that amount with students.)
  • Thank students for their attendance and participation and challenge them to develop their money management skills starting tomorrow!
  • Remind them that there are many handy tools on the CashCourse web site. If you would like to collect feedback, distribute the Evaluation worksheet and ask students to complete it.

Content © 2008 National Endowment for Financial Education. All rights reserved.

CashCourse is a trademark of the National Endowment for Financial Education.