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Checks and Balances: A Financial Literacy Session

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Aravind Mohan, Manager, PwC, Mikela Suter, Corporate Responsibility Fellow & Senior Associate, PwC

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Checks and Balances: A Financial Literacy Session

  1. 1. Checks and Balances: A Financial Literacy Session Aravind Mohan, Manager, PwC Mikela Suter, Corporate Responsibility Fellow & Senior Associate, PwC
  2. 2. PwC: Bridging the financial literacy gap do not know how to use a credit card effectively Jumpstart 50% of teens believe schools do not do enough to educate kids about money Creative Wealth International 43% of parents / guardians do not feel competent to teach personal finance topics FDIC 80% of teachers
  3. 3. Millennial stressed out about finances: case study #1
  4. 4. Survey result #1: Do you feel that high school and college prepared you to be financially literate? No 61% Absolutely Not 31% Kind Of? 8%
  5. 5. Paying my own bills How to preserve the benefits my parents have built for me instead of squandering them away I feel like the main stress I have now is that I know that I am not particularly good at keeping track of my finances - I just got my first credit card this week (I have been told for years that I should have one of those), I have all of my money in my checking account because until like 2 months ago I didn't have a savings account (which apparently also is a bad idea?). Filing my taxes Building credit. I had absolutely no idea how that worked. I thought if I didn't have a credit card or didn't use it much it was good.... 1) Determining which 401k plan to enroll in (how much risk did I want to take?) 2) What % of my salary I could actually afford to contribute to my 401k each year Budgeting Long term financial planning Survey result #2: What were you most nervous about related to finances when you were entering real life?
  6. 6. GOAL = LESS OF THIS “I’m financially illiterate!!!”
  7. 7. AND MORE OF THIS “I’m in control of my finances!”
  8. 8. BUDGETING 101
  9. 9. 57% of US households do not have a budget. (Don’t be one of those households)Economic Watch
  10. 10. This is a budget  Quick tips: 1. Don’t spend more than you make 2. Account for savings and emergency fund 3. Use apps to track your spending 4. Stick to it!
  11. 11. CREDIT 101
  12. 12. #DidYouKnow… • You spend 12-18% more when you swipe a card instead of paying in cash. Dun and Bradstreet • The average household credit card debt is $15,706. Nerdwallet • 56% of Americans have no idea their credit score is the MOST IMPORTANT FACTOR in applying for any loan – only 58% of Americans have “good” credit score ratings or higher. Business Insider
  13. 13. CREDIT: What is it? Our spending habits and payment histories often serve as a means by which some organizations and companies determine how much they can trust us.
  14. 14. CREDIT REPORTS Collect: • Consumer Information • Consumer Statement • Summary Information • Account History Information • Public Record Information • Inquiry Information • Creditor Information
  15. 15. VERY BAD Epic Quiver BAD FAIR GOOD EXCELLENT CREDIT SCORE:
  16. 16. CREDIT: DOs 1. Build credit: get a credit card Student credit union authorized user 2. Use your card for routine expenses Daily coffee, groceries 3. Pay your expenses on time and monthly
  17. 17. CREDIT: DON’Ts 1. Don’t open too many cards at the same time Red flag for lenders 2. Don’t open another card to pay off older cards 3. Don’t close old credit cards The length of your credit history matters
  18. 18. SAVING 101
  19. 19. Millennial stressed out about finances: case study #2
  20. 20. Survey result #3: What surprised you when learning about your personal finances? • “Setting up a 401(k)is v straightforward (*used "v" instead of very to make it sound more hip) and I'm kicking myself that I waited until two years into my job to set one up. But I'm still glad I did it when I was 25 instead of waiting until years down the road.” • “More difficult than I expected: selecting which funds to allot my 401(k) savings into.” • “How quickly 401(k)s can grow once you start putting into it!” • “How much I spend on food and coffee. It’s insane.”
  21. 21. #DidYouKnow… • 46% of all US workers have less than $10,000 saved for retirement and 29% have less than $1,000 saved for retirement. Time • 63% Of Americans don't have enough savings to cover a $500 emergency. Bankrate.com
  22. 22. Emergency example:
  23. 23. S&P 500 Index: 90 Year Historical Chart http://www.macrotrends.net/2324/sp-500-historical-chart-data
  24. 24. The 411 on your 401(k) • Established companies offer retirement plans – your 401(k) • Company takes $$$ out of your paycheck and invests it for you (you have the option to invest more if you choose to) • Upon retirement, $$$ paid back to you to help with living expenses
  25. 25. Investing: ????????????? • Timing is important • $$$ you decide to take out and invest on your own • Research your personal investment strategy (stocks, bonds, mutual funds)
  26. 26. SAVING: TIPS 1. Start saving early Every dollar counts 2. Compound interest is a beautiful thing 3. You can never predict an emergency
  27. 27. PAYING BACK STUDENT LOANS 101
  28. 28. #DidYouKnow… • Only 50% of millennials with student loans were “very confident” in their ability to pay off their student loans. Junior Achievement • 24% of millennials believe their student loan debt will ultimately be forgiven. Junior Achievement
  29. 29. Student Loans: 3 strategies to know 1. Deferment Putting your loans on hold 2. Targeting Prioritizing payments to one loan 3. Consolidation Packaging multiple loans into a single loan
  30. 30. Pay attention to interest rates!
  31. 31. GAME TIME
  32. 32. Why financial literacy? $1.3 trillion of student loans in the United States of which 11.8% are delinquent or in default. Forbes 39% of adults received a passing grade when asked about basic financial knowledge (mortgage payments, investment returns). CNBC 46% 17 states of teens do not know how to create a budget effectively. PwC require students to take a personal finance course as a high school graduation requirement. Council for Economic Education
  33. 33. QUESTIONS?
  34. 34. KEY TAKEAWAYS: 1. BUDGETING Know what you’re spending 2. CREDIT Build it 3. SAVING It’s never too early 4. STUDENT LOANS Analyze and strategize
  35. 35. THANK YOU THANK YOU THANK YOU THANK YOUHave A Nice Day!

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