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4 Table of Contents CreditSmart Module 2: Managing Your Money Welcome to Freddie Mac s CreditSmart Initiative... 6 Program Structure... 6 Using the Instructor Guides... 7 Lesson Concepts and Icons... 8 How to Access the WBT... 8 Tips for Instructors... 9 Workshop Preparation Tips... 9 Before the Workshop Begins... 9 Adult Learning Tips Instructor Training Introduction to Module 2: Managing Your Money Module Overview Glossary Topic 1: Managing Your Money Overview Managing Your Money Start the Discussion Topic 2: Needs versus Wants Overview Needs versus Wants Start the Discussion Activity Knowledge Check Topic 3: The Importance of a Spending Plan Overview Resources for this topic The Importance of a Spending Plan Topic 4: How to Create a Spending Plan What to Consider When Developing a Spending Plan Knowledge Check Activity Topic 5: The Importance of Good Spending Habits Objectives Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 4

5 Good Spending Habits Start the Discussion Examine Your Spending Habits Activity Topic 6: The Importance of Saving Savings Start the Discussion Topic 7: How to Establish a Savings Plan Overview Start the Discussion Establish a Savings Plan Topic 8: Using Credit Cards Wisely Overview Start the Discussion Using Credit Cards Knowledge Check Module Conclusion Module 2 Summary Appendix A: Module 2: Managing Your Money Glossary... 38

6 Welcome to Freddie Mac s CreditSmart Initiative This consumer financial education and outreach initiative is designed to help consumers build and maintain better credit, make sound financial decisions, and understand the steps to successful long-term homeownership. In this guide, you ll find everything you need to lead participants through real-life scenarios, group discussions and activities that will encourage them to apply these lessons to their daily lives. By sharing the CreditSmart resources with others, you ll help them increase their financial understanding, gain life-long money management skills, and show them how to avoid costly mistakes. Program Structure The CreditSmart Curriculum includes 12 complete financial education modules that can be completed in two ways self-paced online or in a classroom setting. Module Title 1 Your Credit and Why It Is Important 2 Managing Your Money 3 Goal Setting 4 Banking Services: An Important Step 5 Establishing and Maintaining Credit 6 Understanding Credit Scoring 7 Thinking Like a Lender 8 Avoiding Credit Traps 9 Restoring Your Credit 10 Planning For Your Future 11 Becoming a Homeowner 12 Preserving Homeownership: Protecting Your Home Investment 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 6

7 Welcome to Freddie Mac s CreditSmart Initiative, Continued Using the Instructor Guides The Instructor s Guide can be used alone or as an adjunct to the Web-Based Training (WBT) program. Even if participants choose not to experience the program online, gaining familiarity with the WBT will help you present the material more effectively. The most up-to-date content can always be found online at Each of the twelve CreditSmart modules has its own Instructor Guide which follows the organization of the Web-Based Training (WBT) available online and includes much of the same content. Each Instructor Guide includes: A glossary of all the relevant terms introduced in the topic A module introduction which includes An overview Learning objectives Sample discussion questions to start the lesson The Basics a list of bullet points outlining the key concepts of the lesson A module summary of all the key concepts in the lesson Activities, knowledge checks, and discussion questions where applicable 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 7

8 Lesson Concepts and Icons Each lesson of a module will present several key concepts. These concepts are introduced to your participants in a variety of ways described in the table below. Activity Discussion Knowledge Check An activity usually involves class participation, whether it is a game, exercise, or worksheet completion. Typically after an activity you will have the opportunity to lead a discussion. Discussions allow you to introduce key concepts while involving your participants in the conversation and making the information relevant to them. Sample discussion questions are included in each lesson to help you guide the discussion. Throughout all the lessons in this module, there are short knowledge checks designed to start discussions or quickly test participants knowledge of certain concepts. How to Access the WBT The CreditSmart Web-Based Training (WBT) is available free of charge in both English and Spanish and can be accessed on the Web at Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

9 Tips for Instructors The following tips and suggestions will help to ensure the successful delivery of the CreditSmart curriculum. Workshop Preparation Tips Select handouts and exercises for the selected topic in advance to help enhance your presentation and discussion with participants. Determine if you will need other instructional materials such as overhead transparencies, slides, flip charts, handouts, and videos. Arrive at the workshop location early to set up. Decide how the room should be set up (e.g., classroom style, lecture). Make sure that all of the necessary equipment, such as a computer and projector is available and working. Provide a sign-in sheet and allow space (e.g., side table, counter, etc.) for handouts and resource materials. Set up refreshments, if provided. Provide adequate signs directing participants to the workshop location. Greet and welcome participants individually as they arrive. Begin the workshop promptly. Distribute and collect evaluation forms before the end of each workshop. Confirm that all participants have signed the sign-in sheet to ensure credit for attending the workshop. Before the Workshop Begins Welcome participants and introduce yourself. Review logistics (session length, restroom location, breaks, etc.). Provide a brief history of the CreditSmart curriculum, which you can find at Provide an overview of workshop material Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 9

10 Tips for Instructors, Continued Adult Learning Tips Adults learn in different ways; therefore, you will want to use different techniques, vary your presentation style, and be sensitive to how your students are responding. Relate the content to what your students already know. Doing so will make your workshop more effective and will help to ensure participants retain more information. Be sensitive to those with special needs and/or learning disabilities. Use ice breakers, activities, exercises, and/or videos to break up the flow of your presentation. Supply handouts and local and/or national articles that highlight the topic being presented. Poll the audience to gauge participants level of knowledge of the topic being presented. Research available community credit counseling resources in advance to ensure that consumers have access to appropriate referrals, as necessary. Instructor Training Freddie Mac provides CreditSmart instructor training for anyone who is interested in teaching the CreditSmart curriculum. Select one of the options below: Contact Freddie Mac by ing: Attend a CreditSmart Train-the-Trainer workshop hosted by Freddie Mac. This instructor training series includes a comprehensive review of the CreditSmart curriculum, plus instruction on best practices in conducting effective classroom training. Visit for more information Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

11 Introduction to Module 2: Managing Your Money Module Overview This module will provide participants with information and tips on how to manage their money. Participants will learn the difference between needs and wants, and about the importance of creating a budget and developing good spending habits. Learning Objectives After completing this lesson, participants should be able to: Differentiate between needs and wants Create a spending plan Create a savings plan Use credit cards wisely Module Topics: Managing Your Money Needs Versus Wants The Importance of a Spending Plan How to Create a Spending Plan The Importance of Good Spending Habits The Importance of Saving How to Establish a Savings Plan Using Credit Cards Wisely Some of these topics include activities to help simulate real-world scenarios with your participants. Glossary A Glossary is included in Appendix A of this guide, and contains definitions and descriptions of terms and phrases related to this module. A Glossary is also included in the Participant Presentation. Encourage your participants to use the Glossary during and after the class to become more familiar and comfortable with the terminology Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 11

12 Topic 1: Managing Your Money Overview This topic discusses ways to manage your money. Time 10 minutes Managing Your Money The Basics Savings is key to good money management. A need is something that is required for basic survival (e.g., shelter, food, clothing) A want is something that is not essential for survival, but is desired for comfort, convenience, or status A spending plan is an itemized list of all of your expenses and is used to measure or gauge your expenses against your income Start the Discussion To start the discussion with your participants, ask some open-ended questions or invite them to discuss some ways to manage their money. Here are some examples to get you started: Why is it important to save money? Are you saving money for something you need or want? How are you currently managing to save money? Continued on next page Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

13 Topic 1: Managing Your Money, Continued Start the Discussion (continued) Instructor note: Define the following terms: Managing Your Money Term Needs Wants Spending Plan Definition Needs are the things in life which are required for basic survival. Examples of needs include shelter, food, and clothing. Wants are the things in life which are not essential for survival, but are desired for comfort, convenience, or status. A spending plan is an itemized list of all of one's expenses. Spending plans are tools commonly used to measure or gauge expenses against income Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 13

14 Topic 2: Needs versus Wants Overview This topic discusses the differences between needs and wants. Time 10 minutes Needs versus Wants The Basics Examples of needs are shelter, food and clothing An example of a want is a five-bedroom house Wants are neither good nor bad You should balance your needs and wants to successfully establish a savings plan and good spending plan principles Needs Versus Wants Continued on next page Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

15 Topic 2: Needs versus Wants, Continued Needs versus Wants (continued) Instructor note: Define the following term: Needs Versus Wants, (cont.) Term Good credit Definition Good credit is the term commonly used to mean that one's credit has been handled responsibly and that payments have been made on time. Start the Discussion To start the discussion with your participants, ask some open-ended questions about needs versus wants. Here are some examples to get you started: What is the difference between something you need and something you want? What are some things you think you need right now? What are some things you want right now? 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 15

16 Topic 2: Needs versus Wants, Continued Activity Instructor note Refer participants to the Needs Versus Wants worksheet on page 8 of the Participant Presentation. Ask participants to take a few minutes to think about their personal needs and wants, and list those items on the worksheet. Participants should estimate the monthly cost of each of the items they have listed on the handout and calculate the total monthly cost of needs and the total monthly cost of wants. Once they are finished, ask participants if they are spending as much for their wants as for their needs. Exercise: Needs Versus Wants Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

17 Topic 2: Needs versus Wants, Continued Knowledge Check Instructor note: Now that participants have learned more about needs and wants, ask them the following question: Is the latest imported luxury sedan considered to be a need or a want? o Correct Answer: Want Knowledge Check 1 After participants answer the question, remind them that wants are things you desire, but can live without, such as fashion items, restaurant meals, entertainment, or the latest imported luxury sedan. Needs are items that you must have for basic survival Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 17

18 Topic 3: The Importance of a Spending Plan Overview This topic introduces the purpose of a spending plan. Participants will learn about the nine steps to create a spending plan, and will identify fixed and variable expenses. Time 10 minutes Resources for this topic Nine Steps to Develop a Spending Plan Sample Spending Plan Worksheet The Importance of a Spending Plan The Basics A spending plan allows you to determine if your total income meets your total expenditures. A spending plan can help motivate you by achieving short-term objectives. A spending plan allows you to control your finances by enabling you to see how you actually spend your income. You can use a spending plan to help you stay within your means and make wise choices. The key to successfully developing a spending plan is to be realistic and focused. Fixed expenses generally do not vary from month to month. Variable expenses are costs or payments that change from month to month Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

19 Topic 3: The Importance of a Spending Plan, Continued The Importance of a Spending Plan (continued) Instructor note: Define the following terms: The Importance of a Spending Plan Term Credit Report Debts Defintion A credit report provides a history of your use of credit. Specifically, it's a file maintained by a credit reporting agency that contains information about a person, such as where the individual works and lives; information reported to the credit reporting agency by creditors regarding money borrowed and payments made; and public record information, such as whether the person has filed for bankruptcy. What is owed to a person or institution for obtaining merchandise or services without immediately paying for them. Usually, a debt is acquired through a loan or the use of credit Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 19

20 Topic 4: How to Create a Spending Plan Time 15 minutes What to Consider When Developing a Spending Plan To develop a spending plan, consider the following questions: What are my fixed expenses? What are my variable expenses? Instructor note: Define the following terms: How to Create Your Spending Plan Term Fixed expenses Variable expenses Definition Fixed expenses are costs or payments that generally do not vary from month to month. An example of a fixed expense is a car loan. Variable expenses are costs or payments that change from month to month. Some examples of variable expenses include money spent on: Groceries Clothes Doctor visits Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

21 Topic 4: How to Create a Spending Plan, Continued What to Consider When Developing a Spending Plan (continued) Nine Steps to Create a Spending Plan How to Create Your Spending Plan (cont.) Instructor note: Define the following terms: Term Net monthly income Definition Your take-home pay for one month after taxes. It is the amount of money that you actually receive in your paycheck Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 21

22 Topic 4: How to Create a Spending Plan, Continued What to Consider When Developing a Spending Plan (continued) Instructor note: There are several factors that need to be considered when establishing a spending plan that works. Ask participants to turn to page 12 of the Participant Presentation. Review and discuss the following nine steps to take to create a spending plan: Step Action 1 Determine your net monthly income. 2 List your fixed monthly expenses (e.g., expenses that stay the same every month, such as a car payment). 3 Know your variable expenses (e.g., expenses that change month to month, such as groceries. 4 Track and plan for large, periodic expenses (e.g., car insurance). 5 Compare your income with your expenses. 6 Set priorities, goals, and limits. 7 Set a savings plan and make it a priority. 8 Always keep an emergency fund for life s unexpected emergencies (e.g., medical bills). 9 Plan ahead for major purchases and avoid impulse decisions Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

23 Topic 4: How to Create a Spending Plan, Continued What to Consider When Developing a Spending Plan (continued) How to Create Your Spending Plan (cont.) 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 23

24 Topic 4: How to Create a Spending Plan, Continued Knowledge Check Instructor note: Now that participants have learned more about how a spending plan can help them manage their monthly fixed and variable expenses, ask them to turn to page 14 of their Participant Presentation to answer the knowledge check. Once they have finished, review the correct answers. Which of the following items are examples of fixed expenses rent, doctor visits, groceries, or car payments? o Correct answer: Rent and Car payments Instructor note: Knowledge Check 2 Remind participants that fixed expenses are costs or payments which generally do not vary from month to month. Of the items listed, rent and car payments are examples of fixed expenses. Doctor visits and groceries are examples of variable expenses Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

25 Topic 4: How to Create a Spending Plan, Continued Activity Instructor note: Refer participants to the Spending Plan Worksheet on pages of the Participant Presentation (see Instructor s copy below). Explain the structure of the spending plan and give participants 10 minutes to begin creating a spending plan by filling in their monthly expenses using the sample worksheet. Exercise: Spending Plan Worksheet 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 25

26 Topic 5: The Importance of Good Spending Habits Objectives After completing this lesson, participants will be able to: Express, in their own words, the importance of saving Evaluate their spending habits Time 15 minutes Good Spending Habits The Basics It is important to examine your spending habits before developing a spending and savings plan. Creditor, is the term used for the person or entity that is providing credit or a loan to a borrower at specific terms and conditions. Savings is the key to being comfortable and more financially secure. Having a savings account in a bank or credit union can help prevent future financial disasters in the event of an unforeseen emergency. Developing and adhering to a savings plan can be hard work, but it can help you become financially secure and meet your goals and priorities. Start the Discussion To start the discussion with your participants, ask some open-ended questions or invite them to discuss their current spending habits including their plans for saving. Here are some examples to get you started: Why is it important to save money? What are the benefits of saving? What are some of the ways you can save every month? Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

27 Topic 5: The Importance of Good Spending Habits, Continued Examine Your Spending Habits Instructor note: Below is a list of questions we should ask ourselves when developing a spending plan. Ask them to take a few moments to read each question to see if they are at risk of damaging their credit and setting themselves up for financial difficulties. The Importance of Good Spending Habits Instructor s Copy Instructor note: Define the following term: Term Creditors Definition Creditor is the term used for the person or entity that is providing credit or a loan to a borrower at specific terms and conditions. The term creditor can generally be used interchangeably with the term lender Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 27

28 Topic 5: The Importance of Good Spending Habits, Continued Activity Instructor note: Refer participants to the questionnaire on page 21 of their Participant Presentation (see Instructor s copy below). Instruct them to answer the questions and write their answers in the space provided. Once completed, discuss their answers and begin the discussion in Topic 6: The Importance of Saving. Are you currently unable to save money Have you reached the limit on your credit cards? Are you able to make only the minimum required payments on your credit cards? Are you buying things simply to make yourself feel good? Are you frequently buying merchandise only to return it upon discovering you have no need for it? Are you consistently borrowing from your savings or emergency fund to pay for current obligations? Do your monthly debts (excluding your rent or mortgage) exceed 20% of your monthly take-home pay? Have your creditors asked you to return any credit cards or have you been denied credit? Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

29 Topic 6: The Importance of Saving Time 10 minutes Savings The Basics Savings can allow you the opportunity to take advantage of potential investments. Having a savings account in a bank or a credit union can help prevent future financial disasters in the event of an unforeseen emergency. Start the Discussion To start the discussion with your participants, ask some open-ended questions or invite them to discuss some ways to save. Here are some examples to get you started: What does having savings in the bank mean to you? How can having a savings benefit you and your family? What are some things you are spending your money on now that you can eliminate and put the money into savings? The Importance of Saving Continued on next page 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 29

30 Topic 6: The Importance of Saving, Continued Start the Discussion (continued) Instructor note: Define the following terms: Term Savings Account Definition An account where you keep money for safekeeping or as an investment that earns interest. Bank Credit Union A federally regulated financial institution that offers you a place to keep your money and uses it to make more money. Banks make loans, cash checks, accept deposits, and provide other financial services. A federally regulated cooperative financial institution that is owned by the people who use its services. Credit unions serve groups that share something in common, like where they work or go to church. You have to become a member of the credit union to keep your money there Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

31 Topic 7: How to Establish a Savings Plan Overview In this lesson, participants will learn how to establish a savings plan. Time 10 minutes Start the Discussion To start the discussion with your participants, ask some open-ended questions or invite them to discuss savings plans. Here are some examples to get you started: Are there current goals you want to save for? Why would you recommend opening a savings account to someone who doesn t have one yet? List some reasons why you might withdraw money from your savings account. Establish a Savings Plan The Basics Developing and following a savings plan can help you become financially secure and meet your goals and priorities. A savings plan is another way to change your spending habits. When developing a savings plan, determine which categories you ll cut from your spending plan to make up your projected savings. How to Establish a Savings Plan 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 31

32 Topic 8: Using Credit Cards Wisely Overview In this lesson, participants will learn about credit history, the impacts of high, unpaid balances on your credit score, and the details of a monthly credit card statement. Instructor note: Consider inviting a credit counselor to talk with participants about using credit cards wisely and avoiding debt. Time 15 minutes Start the Discussion To start the discussion with your participants, ask some open-ended questions or invite them to discuss credit cards and how to use them wisely. Here are some examples to get you started: What are some of the ways we use credit cards? What are the major credit cards (i.e., Visa, MasterCard, American Express)? Are there any advantages to using credit cards? If yes, what are they? What information can be found on a credit card statement? Using Credit Cards The Basics Being able to borrow money when you need it can give you financial flexibility. When using credit, you may end up purchasing more things and spending more for them than you would if you paid cash. Interest on credit cards usually begins one month after a purchase is made and borrowing limits are pre-set according to your credit rating. Having too much debt can damage your money situation for years. Your credit score is used to predict the likelihood of future loan default. Always pay the more than the minimum amount due if you use credit cards and cannot pay off the credit card in full each month Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

33 Topic 8: Using Credit Cards Wisely, Continued Using Credit Cards (continued) Using Credit Cards Wisely Instructor note: Define the following terms: Term Credit History Credit Score Defintion A credit history is a record of credit use. It is comprised of a list of individual consumer debts and an indication as to whether or not these debts were paid back in a timely fashion or "as agreed." Credit institutions have developed a complex recording system of documenting your credit history. This is called a credit report. A credit score is a numerical value determined by a statistical model based upon past credit behaviors, which predicts the likelihood of future loan default. Continued on next page 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 33

34 Topic 8: Using Credit Cards Wisely, Continued Using Credit Cards (continued) Using Credit Cards Wisely, (cont.) Be on the Alert! Continued on next page Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

35 Topic 8: Using Credit Cards Wisely, Continued Using Credit Cards (continued) Term Credit Counseling Credit Repair Companies Defintion Look in your community to locate nonprofit credit counseling agencies that can offer you free or lowcost assistance to get back on track. Contact the National Foundation for Credit Counseling ( which includes more than 700 community-based offices located in all 50 states and Puerto Rico. To locate a National Foundation for Credit Counseling Member Agency in your area, call: Credit repair companies are private, for-profit businesses that claim to offer consumers with credit and debt repayment difficulties assistance in "fixing" their credit problems and/or "fixing" an impaired credit report Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 35

36 Topic 8: Using Credit Cards Wisely, Continued Knowledge Check Instructor note: Now that participants have learned more about credit cards, ask them the following question to identify which actions will be helpful in keeping out of credit card trouble. When finished, review the correct answers identified in the image below, Knowledge Check 3. When it comes to using credit cards, which of the following actions will be helpful in keeping out of credit trouble? State the following: o o o o o Paying exactly the minimum due each month? Paying the credit card bill on time each month? Paying more than the minimum due each month? Using the card for purchase amounts beyond your monthly spending limit? Paying off the credit card balance in full each month? Knowledge Check Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

37 Module Conclusion Module 2 Summary Summarize this module by reviewing the key points below with y our participants. Key points from Module 2: Managing Your Money: Module 2 Conclusion 2013 Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 37

38 Appendix A: Module 2: Managing Your Money Glossary Term Bank Credit Counseling Credit History Creditor Credit Repair Companies Credit Report Definition A federally regulated financial institution that offers you a place to keep your money and uses it to make more money. Banks make loans, cash checks, accept deposits, and provide other financial services. Look in your community to locate nonprofit credit counseling agencies that can offer you free or low-cost assistance to get back on track. Contact the National Foundation for Credit Counseling ( which includes more than 700 community-based offices located in all 50 states and Puerto Rico. To locate a National Foundation for Credit Counseling Member Agency in your area, call: A credit history is a record of credit use. It is comprised of a list of individual consumer debts and an indication as to whether or not these debts were paid back in a timely fashion or "as agreed." Credit institutions have developed a complex recording system of documenting your credit history. This is called a credit report. Creditor is the term used for the person or entity that is providing credit or a loan to a borrower at specific terms and conditions. The term creditor can generally be used interchangeably with the term lender. Credit repair companies are private, for-profit businesses that claim to offer consumers with credit and debt repayment difficulties assistance in "fixing" their credit problems and/or "fixing" an impaired credit report. A credit report provides a history of your use of credit. Specifically, it's a file maintained by a credit reporting agency that contains information about a person, such as where the individual works and lives; information reported to the credit reporting agency by creditors regarding money borrowed and payments made; and public record information, such as whether the person has filed for bankruptcy. Continued on next page Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money

39 Appendix A: Module 2: Managing Your Money Glossary, Continued Credit Score Credit Score A credit score is a numerical value determined by a statistical model based upon past credit behaviors, which predicts the likelihood of future loan default. Credit Union Debts Fixed Expenses Good Credit Needs Net Monthly Income Savings Account Spending Plan Variable Expenses Wants A federally regulated cooperative financial institution that is owned by the people who use its services. Credit unions serve groups that share something in common, like where they work or go to church. You have to become a member of the credit union to keep your money there. Debts are what is owed to a person or institution for obtaining merchandise or services without immediately paying for them. Usually, a debt is acquired through a loan or the use of credit. Fixed expenses are costs or payments that generally do not vary from month to month. An example of a fixed expense is a car loan. Good credit is the term commonly used to mean that one's credit has been handled responsibly and that payments have been made on time. Needs are the things in life which are required for basic survival. Examples of needs include shelter, food, and clothing. Your take-home pay for one month after taxes. It is the amount of money that you actually receive in your paycheck. An account where you keep money for safekeeping or as an investment that earns interest. A spending plan is an itemized list of all of one's expenses. Spending plans are tools commonly used to measure or gauge expenses against income. Variable expenses are costs or payments that change from month to month. Some examples of variable expenses include money spent on: Groceries Clothes Doctor visits Wants are the things in life which are not essential for survival, but are desired for comfort, convenience, or status Freddie Mac CreditSmart Instructor s Guide Module 2: Managing Your Money 39