Miami-Dade County Public Schools Department of Social Sciences. Financial Literacy Tip of the Week: Secondary

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1 Miami-Dade County Public Schools Department of Social Sciences Financial Literacy Tip of the Week: Secondary

2 Financial Literacy Tip of the Week Secondary: Below are statements that can be shared via school announcements to support financial literacy education. There is a statement for each week of the school year. And now, for your financial literacy tip of the week Always remember one of the most important rules of financial planning - Pay Yourself First. Take at least 10% of whatever money you receive from a job, chores or gifts and set it aside for savings. Establishing this good habit will put you on the right track financially for the rest of your life. 2. NEVER take a payday loan or use a check cashing store! They have very expensive fees and high interest and you can end up paying astronomical rates. A typical payday loan is like paying an annual percentage rate of almost 400%. 3. Beware of the buy now/pay later habit. Never pay for things you just want, like a vacation, with a credit card unless you have the money in the bank to pay it off in full. 4. As Ben Frankin said, a penny saved is a penny earned. A penny may not seem like much, but 100 of them equal a dollar, and 100 dollars is the bill with Ben Franklin s face on it! 5. Have you ever heard your parents say, money doesn t grow on trees? Well, that s obvious, but what they really mean is that money is scarce, or limited in supply and once it is spent on one thing, it can t be used for another. 6. Buying insurance is a way to protect against the risk of unexpected loss. For example, you may have taken out the insurance on your tablet, which will cover you if you lose or damage it. Without your policy, you would have to pay almost $500 for something that might not have even been your fault. Insurance helps as you grow up to help pay for damage from car accidents, hurricanes or especially medical bills. 7. As actor and humorist Will Rogers used to say, too many people spend money they earned, to buy things they don t want, to impress people that they don t like. Think about whether you really need the things you are buying or are you just trying to keep up with your friends? 8. A lot of people think having a credit card is a bad idea. The truth is that credit cards have a lot of advantages including the fact that you don t have to carry cash when you are out

3 shopping and you can use it in case of an emergency. You should always pay off your balance in full each month though, so you don t get into credit card debt and don t have to pay interest charges or fees. 9. The average American currently has $4,717 in credit card debt. At the average credit card interest rate of 15%, by only making the minimum monthly payment of $189, it will take 10 years and a month to pay off that $4,717 bill. The total amount of payments would amount to $22,869. (Time Magazine) 10. Don t confuse needs with wants. You need shoes on your feet, but you don t need 10 pairs of $200 shoes. Expensive habits like designer coffee or video games can quickly add up to big expenses. 11. Be a smart consumer. A simple savings of just over $2.00 a day from the age of 18 to 67, invested at 8% annual interest will grow to more than $300,000. (adapted from the Millionaire Game) 12. People don t plan to fail, they fail to plan. Only 40% of adults keep a budget and track their spending. 75% of Americans live paycheck to paycheck and 25% have no savings at all! As the Jamaican proverb says, save money and money will save you. 13. A great way to learn to be financially responsible is to open a student savings account at a reputable bank or credit union. With a student account, you will pay no fees and will begin to establish a relationship with a bank or credit union, which helps to build your credit history and make it easier to get a loan. 14. When you are ready to buy your first car, do your homework before you go to the car dealership. Financing or taking a loan from the dealership is usually 2% higher than securing the loan yourself from your bank or credit union. This simple step can save you hundreds or even thousands of dollars over the term of the loan. 15. Eating out less often is a great way to save money. The average American family spends a year on restaurant food. Preparing fresh food and eating at home is healthier too! 16. Did you know that the simple habit of taking your lunch to work can save $112,000 over your lifetime? Small savings make a big difference! (

4 17. Harry Potter author J.K. Rowling said, It is our choices that show what we truly are, far more than our abilities. Always make good financial choices. Make a budget to track your spending and cut out things you don t really need. You can make a budget using something as simple as a notebook and pencil or try one of the apps on your smart phone. 18. Did you know that having good grades can actually save you money? Discounts are given by insurance companies for automobile coverage and most importantly, you can qualify for a Bright Futures scholarship at any public university in Florida or the American Dream scholarship offered by Miami Dade College and get a huge break on college tuition. 19. Always pay your bills on time, even early, if you can. You avoid late fees and interest and help to build your credit score and credit history, by establishing a responsible payment history. 20. Check your credit report at least once each year at This is the only website where you can check your credit without it hurting your score. The three credit reporting agencies - Experian, TransUnion and Equifax - are accessible through this website. 21. Try to avoid getting into debt. One out of 9 people ages use more than 40% of their income to pay off debt. If you find yourself in debt, try financial expert, Suze Orman s tip of paying off the smallest bill first. If you really need help, consult a reputable, professional non-profit credit counseling firm. 22. Remember one of the basic rules of financial planning - live within your means. One out of 5 Americans, or 20% of Americans, lives beyond his or her means leading to credit card or other consumer debt. 23. Taking Advanced Placement and Dual Enrollment classes not only help you get into college, but passing the tests saves you and your parents money on tuition, books and other college expenses. Taking a CLEP test before you begin college is another way to save time and money! 24. When you are ready to buy a house or a condo, shop around for the best fixed rate loan you can find. Adjustable Rate Mortgages or ARM s sound good because the interest is usually lower to start with, but can go up and will make your monthly payments go up, as

5 well. These type of loans helped cause the housing crisis that led to the Great Recession of One of the basic rules of investing is that high reward investments carry high risk. Low reward investments like savings accounts, government bonds and certificate of deposits, carry low risk. Diversify your investments to help spread your risk. 26. Some people pay cash for their cars, but most Americans either lease them or buy them by financing. Even though leasing might seem like a bad idea because you never own the car, it is actually cheaper for people who like driving new cars than buying a car and turning it in every couple of years for a new model. 27. New cars depreciate, or lose value, the minute you drive them off the car lot. If you want to save money on a car and do not care if it is brand new, consider finding a car with low mileage from a reputable source like your credit union or CarMax or AutoNation 28. The stock market is an organized exchange where people buy and sell certificates of ownership in corporations. The average long-term return of the New York Stock Exchange is 10% a year, even including the Great Depression and Great Recession, making it a great way for regular people to invest their money. Remember the basic rules of the stock market though buy low, sell high and don t panic if the market goes down think long-term! 29. Another great choice for investing your money is to put it in mutual funds. Mutual funds are investments funded by shareholders that trade in diversified holdings and are professionally managed. (Google Definition) There are thousands of mutual funds to choose from. For example, a well-known mutual fund, Fidelity Contrafund, has an average return of 12.29% over the life the fund. 30. You can estimate how long it will take your money to double in an investment by using the rule of 70. Simply, divide 70 by the interest rate or rate of return. At a 10% rate of return it will take 7 years for your money to double. A account paying only 1% interest will take 70 years. 31. Never co-sign a loan for a friend unless you are willing to become responsible for that loan. According to Money Magazine, 43% percent of their readers who lent money to family or friends were not paid back in full and 27% did not have any money paid back to them. Imagine being stuck with a car loan or student loan! 32. Never take a cash advance from your credit card. Interest rates for cash advances are significantly higher and begin immediately upon taking the cash and you usually have to

6 pay transaction fees. Build your savings account so you will have money there in case of an emergency. 33. It is estimated that 35% of high school seniors using credit card. A study by Ohio State University found that young adults are going into credit card debt at a more rapid rate than other age groups, and they pay it off more slowly. Don t be a statistic. Use credit wisely and don t spend more than you can afford! 34. Having a pet is a big financial commitment. According to the American Kennel Club, the average lifetime cost of raising a dog is more than $20,000. Make sure the cute little puppy you wanted doesn t end up being one of the millions of animals in shelters because you didn t realize how expensive it would be when it grows up! 35. Teenagers view more than 40,000 advertisements a year on television alone, not to mention the ads on the internet, social media and other sources. Advertisers spend billions of dollars a year to target teenagers to make them want to buy their products resulting in more than $350 billion in spending by in the US economy by teenagers and their parents. Make sure you are buying something because you really need it and like it, and not because you have been persuaded to because of clever ads. ( 36. There is a strong correlation between the amount of education a person has and the amount of money they earn. According to the Bureau of Labor Statistics, full-time workers age 25 and over without a high school diploma had median weekly earnings of $493, compared with $678 for high school graduates. College graduates with at least a bachelor s degree had median weekly earnings of $1,137; those with master s degrees earned $1,341 and professional degrees $1,730 per week. You are also much less likely to be unemployed if you have a good education.