Tips and Tools For Financial Success - Newton Free Library

Financial Literacy at the Library
Tips and Tools
For Financial Success
How to Save, Spend, Borrow
And Invest Your Money

Financial Literacy at the Library
Tips and Tools
for
Financial Success
A Legacy for Literacy
Newton Free Library
330 Homer Street
Newton, MA 02459

Background and Acknowledgments
Financial Literacy at the Library was held at the Newton Free Library from October 2010
through July 2012. Its goal was to offer a basic program in financial education that was
accessible to all members of the community.
Supported by a grant from the FINRA Investor Education Foundation through Smart investing
@ your library®, a partnership with the American Library Association, it presented the FDIC
Money Smart curriculum in its entirety and hosted guest speakers at monthly meetings. Through
in-house events and online resources, Financial Literacy at the Library helped many newcomers
and long term residents of the Metro Boston area become more competent and confident users of
financial services.
We would like to acknowledge American Consumer Credit Counseling, Federal Deposit Insurance
Corporation and FINRA Investor Education Foundation for their significant contributions to
this project as well as permission to reproduce materials for this booklet. We appreciate the
support of the Newton-Needham Chamber of Commerce and the Newton Senior Center who
faithfully publicized our events in their monthly newsletters, Whole Foods Market for donations
of refreshments and NewTV for broadcasting Event videos. A special acknowledgement for
our partner, The Second Step, Newton, MA who welcomed and coordinated the delivery of our
financial education curriculum to its client population.
We would also like to thank the following individuals who generously gave of their time and
expertise: Kathleen Barrett and Katie Ross, American Consumer Credit Counseling; Tim
DeLessio, Boston office, FDIC; Roberta Rosenberg, Roberta Woods-Dunham, Carol Thompson,
Liz Meffen and Claudia Segura, The Second Step; Ana Gonzalez, City of Newton Department of
Human Services; Robert Kane and Tom Donnellan, Newton North High School; Michael Yip,
Celestial Media; Newton Free Library volunteers: Irene Harrison, Lucy Caldwell-Stair, Peter
Kalil; and our Guest Speakers: Kip Child, FDIC; Deborah Bloomberg, Federal Reserve Bank of
Boston; Susan Caulfield, Newton Free Library; Francine Kollias, Social Security Administration;
Christine Kieffer, FINRA Investor Education Foundation; Martha Savery, Massachusetts
Educational Financing Authority; William J. Brisk, Esq.; Barbara Anthony, Massachusetts Office
of Consumer Affairs and Business Regulation; Linda Kaplan, Massachusetts Department of
Revenue; David P. Simon, Bentley University; Barbara Chandler, Metropolitan Boston Housing
Partnership; Joshua S. Grinspoon, U. S. Securities and Exchange Commission; Congressman
Barney Frank, The Fourth District of Massachusetts.
We especially would like to thank Burt and Judy Lavine for the contribution of their graphic
design skills on many of our publicity flyers and in particular for the cover of this publication.
We would like to express a very special thank you to Roberto Mighty of Celestial Media whose
expert video recordings have allowed us to extend our reach beyond the physical walls of the
Newton Free Library into the virtual world. With much gratitude, we would like to acknowledge
the contribution of Julie Soforenko whose clear voice and thoughtful explanations brought the
FDIC Money Smart curriculum to life for our auditorium and online audience.
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Table Of Contents
Introduction: How to use this Guide ............................................. 5
Chapter I. Financial Planning and Security
Organizing your Financial Records ................................................ 8
Goal Setting and Financial Planning ............................................... 10
Financial Goals Worksheet (SMART) ............................................... 12
Planning for Unexpected Life Events .............................................. 14
How to be Financially Prepared for Disasters ........................................ 15
Identity Theft ................................................................. 17
What to do if a Wallet or Purse is Stolen ............................................ 19
Chapter II. Banking
Introduction to Banks ........................................................... 22
Choosing a Bank and a Bank Account Checklist ..................................... 23
Opening and Maintaining a Bank Account .......................................... 25
Ways to Take Money Out of your Account ........................................... 26
Using Electronic Banking ........................................................ 28
Activity: Checking Account Fees .................................................. 30
Activity: Writing a Check ........................................................ 31
Activity: Record Transactions in Your Check Register ................................ 32
Activity: Reconcile Your Check Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Activity: Name That Service ..................................................... 35
Paper Money .................................................................. 36
Banking Terms and Definitions ................................................... 38
Chapter III. Budgeting
Practice Good Habits ........................................................... 40
Create a Budget and Pay Yourself First ............................................. 41
Establish an Emergency Fund .................................................... 42
Household Budgeting Worksheet .................................................. 43
Activity: Monthly Income and Expenses ............................................ 44
Activity: Spending Plan Considerations ............................................ 48
Financial Recovery Plan ......................................................... 50
Budgeting Terms and Definitions ................................................. 54
Budgeting Quiz with Answers .................................................... 55
Chapter IV. Saving and Investing
Preparing to Invest: Introduction ................................................. 60
Savings Tips ................................................................... 62
How your Money can Grow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Risk-Return Relationship Table ................................................... 65
Compounding (with Tables) ...................................................... 67
Investing in your Twenties ....................................................... 68
Retirement Savings Vehicles ...................................................... 69
Activity: Pay Yourself First Action Plan ............................................ 72
Activity: Savings Goals Worksheet ................................................. 73
Investment Terms and Definitions ................................................. 74
Investing Quiz with Answers ..................................................... 75
Saving and Investing Online Resources ............................................. 78
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Chapter V. Credit
Overview of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
What is a Credit Report ......................................................... 83
How to Read your Credit Report .................................................. 84
How the Credit Report is Used .................................................... 85
How to Get your Free Annual Credit Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Credit Cards: What are they used for? .............................................. 89
Credit Card Comparison Chart ................................................... 91
Sample Credit Card Statement .................................................... 92
Paying your Credit Card Bill ..................................................... 94
Activity: Maria’s Credit Report ................................................... 95
Activity: John’s Credit Report .................................................... 96
Activity: Who Poses the Most Credit Risk? .......................................... 97
Activity: Using Credit Cards Responsibly ........................................... 98
Credit Terms and Definitions ..................................................... 99
Credit Quiz with Answers ........................................................ 100
Chapter VI. Borrowing Basics
Types of Loans ................................................................. 104
Car Loans .................................................................... 105
To Rent or to Own? ............................................................. 107
Buying a Home ................................................................ 108
Activity: Which Loan is Best? ..................................................... 109
Activity: Beware of Dealer-Lender Relationships ..................................... 110
Activity: How Much Mortgage can Patricia Afford? ................................... 111
Mortgage Shopping Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Borrowing Terms and Definitions ................................................. 116
Borrowing Basics Quiz with Answers .............................................. 117
Chapter VII. Life Skills
Menu Planning Worksheet ....................................................... 122
Grocery Shopping Tips .......................................................... 123
Grocery Shopping List . ......................................................... 124
Computer and Internet Terms and Definitions ...................................... 125
Housing Terms and Definitions ................................................... 127
Renting an Apartment Quiz with Answers .......................................... 128
Chapter VIII. Glossary
Glossary (Excerpted from FDIC Money Smart). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Chapter IX. Recommended Resources
Bibliography by Topic ........................................................... 140
Bibliography by Level of English Comprehension .................................... 144
Financial Education DVD Collection ............................................... 148
Online Resources .............................................................. 151
Community Resources .......................................................... 155
Nationwide Resources ........................................................... 157
4

Introduction: How to use this Guide
This practical guide on personal finance provides a foundation for learning about
important life skills such as financial planning, budgeting, saving, investing, and
borrowing. With helpful explanations, worksheets, vocabulary lists, and quizzes,
each chapter covers a wealth of information on various financial topics. These
resources can be used in a variety of educational settings. Materials benefit learners in
one-to-one, small group, classroom or self-study situations.
The learning experience can be customized as well by choosing sections that are
pertinent to individual life goals and objectives. If a learner is thinking of purchasing
a home, Chapter 6 on Borrowing Basics offers information on different types of loans,
renting versus owning, and activity sheets on mortgage affordability. If a learner is
just starting to consider investing or is close to retirement and wants some advice,
Chapter 4 on Saving and Investing offers savings tips, describes investment vehicles, and
provides worksheets that help identify saving and investing strategies. Chapters can
be read in whatever order meets the immediate needs of the learner. Vocabulary lists
and an extensive glossary facilitate comprehension of the readings and concepts found
in each chapter.
Also included are a Newton Free Library select bibliography and filmography. We
identify the level of English comprehension (beginning, low intermediate,
intermediate, advanced and multi-level) of all books that are listed in the
bibliography. The classification helps learners and educators choose those materials
that are most appropriate for the learner’s level of English proficiency. The guide
ends with recommended websites as well as community and nationwide resource lists.
We hope that you enjoy working with this guide as much as we have enjoyed
creating it!
Susan Bécam, Grant Project Principal
Suzanne Kalil, Grant Coordinator
Lisa Percy, Grant Coach
Lucy Caldwell-Stair, Grant Assistant
5

6
Newton Free Library hosted Financial Literacy at the Library from October 2010 through July 2012.

I. Financial Planning and Security
Organizing your Financial Records
Goal Setting and Financial Planning
Financial Goals Worksheet (SMART)
Planning for Unexpected Life Events
How to be Financially Prepared for Disasters
Identity Theft
What to do if a Wallet or Purse is Stolen
Recommended Supplemental Materials:
1. Clark, Teri. The Complete Personal Finance Handbook: step-by-step
instructions to take control of your financial future-with CD-ROM,
Ocala, FL: Atlantic Publishing, 2007. LIT 332.024 C54C
2. Leeds, Regina. One Year to an Organized Financial Life, Cambridge,
MA: Da Capo Lifelong, 2010. LIT 332.024 L51O
3. Schmohe, Karen. Family Financial Management: Instructions and
Forms, Cengage, 2009. LIT 332.024 F21F
4. i-Safe Internet Life Skills Activities, Jossey-Bass, 2010.
LIT 004.678 I74J
5. Montague, David. Essentials of Online Payment Security and Fraud Prevention,
Wiley, 2010. 332.178 M76E
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© 2011 American Consumer Credit Counseling, Inc.
Organizing Your Financial Records
Use this worksheet as a guide when organizing your financial life.
Financial Record General Category Specific Items Within Category Filed Lockbox Safe Deposit Notes
Automotive and recreational vehicles Inspection Records
Copy of registration and title
Repair and maintenance receipts
Dealership Papers
Bank Accounts Monthly account statements
1099 tax forms
PIN numbers and passwords
Deposit slips
Cancelled Checks
Withdrawal slips
Credit Applications
Credit Card Information
Receipts
Correspondence
Student Loans
Employment Benefits description and related paperwork
Handbook
Employer information
Most recent paycheck stub
Resume
W2’s
Insurance Policies
Correspondence
Info on how to file a claim
Copies of claims filed and receipts
Spare claim forms
Medical Record Correspondence
Personal medical records
Receipts of paid bills
Treatment plans and long term medication needs
General medical history
Personal Adoption papers
Naturalization papers
Birth and death certificates
Marriage, divorce, and separation certificates
Court orders on personal matters

Military Discharge papers
Specific Items Within Category Filed Lockbox Safe Deposit Notes
Financial Record General
Category
Residence Annual mortgage statements
Copies of purchase related documents
Legal proceeding regarding property
Association information
Receipts for improvements
Copy of lease and rental receipts/cancelled checks
Correspondence and agreements
Retirement savings Tax forms
Information on loans from tax deferred accounts
IRA records
Records of withdrawals
1099 Forms
Distributions
Income received
Schools Correspondence
Financial aid forms
W10 for childcare
Receipts for tuition, books, fees, etc.
Transcripts
Social Security Correspondence
Social Security Number
Personal earnings history
Record of income received
Taxes Cancelled checks for taxes paid
Copies of estimated returns
Requests for extensions
Correspondence
Most recent year of filing and supporting documents
Records of alimony
Gambling income, losses, and prizes
Warranties and receipts Receipts when you need evidence of items value
Maintenance contracts and records
Owner’s manuals
Wills and trusts Copies of trust, wills
Correspondence
Documentation of gifts
Tax documents
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Goal Setting & Financial Planning (from FINRA Investor Education Foundation)
When you make a financial plan, you identify the financial goals that are important to you, your best
estimate of what they will cost, your time frame for achieving them and the types of investments that
may be the most appropriate for accumulating the money you need.
Short-term goals:
Paying for the expenses you anticipate in the next few years requires a cautious plan. You should
focus on minimizing the risk to your assets and preserving your wealth. Make sure the money you’ll
need in the near future is both secure and accessible.
Common short-term goals:
• Buying a car
• Making a down payment on a home
• Taking a vacation
• Returning to school for extra education and degrees
• Getting married
• Establishing your own business
• Paying off credit cards, student loans and other debts
Possible investments for achieving short-term goals:
• Savings accounts
• CDs
• Money market accounts
• U.S. Treasury bills
• Short-term bonds or short-term bond funds
Mid-term goals
Think about the next ten years, concentrating on what you hope to accomplish and the expenses you
anticipate these goals will cost. Planning for mid-term goals means carefully balancing investment
growth and financial security.
Common mid-term goals:
• Paying for children’s education
• Purchasing a larger home
• Buying a second home or vacation home
• Buying a boat or recreational vehicle
• Traveling to a special destination
Possible investments for achieving mid-term goals:
• Stock in a variety of companies
• Stock mutual funds
• Exchange traded funds tracking a diversified range of indexes
• U.S. Treasury notes
• High-rated bonds or bond funds
• Zero-coupon bonds with appropriate maturity dates
Long-term goals
It is never too early to begin planning for the major financial goals you want to achieve more than
ten years down the road. Realizing your hopes and dreams for the future calls for a persistent and growth-oriented
investment strategy.
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Common long-term goals:
• Living comfortably during retirement
• Affording travel and hobbies
• Continuing to support your children
• Financial security for long-term health care
• Providing an inheritance for your heirs
• Creating a legacy
Possible vehicles for achieving long-term goals:
• Stock in emerging and developing as well as well-established companies
• Stock mutual funds that invest in growing companies
• Exchange traded funds tracking a diversified variety of indexes
• Long-term bonds
• Zero-coupon bonds with appropriate maturity dates
Re-evaluating Your Goals Over Time
Your financial goals will likely change as your financial circumstances change. That’s why it is
important to reassess your goals periodically — and at least once a year. As you do your annual
financial check-up, ask yourself the following questions and be prepared to make any changes you
think are needed.
• Are the goals on my list still the goals I care about?
• Are there other things that matter more to me now?
• Have I made financial progress since last year?
• If not, what could the reasons be?
• Am I using the best investments to meet specific goals?
• What other choices might provide stronger results?
• Am I giving each goal the attention it deserves?
• Do I need to change my investment strategy on any of my goals because of a change in time frame?
List Your Financial Goals
Make a list of your primary short-, mid- and long-term financial goals, the approximate date when
you hope to achieve them, how much you have saved already, approximately how much you’ll need
and where your savings are. This list can serve as benchmark for evaluating your progress. Remember
that it’s perfectly normal for your goals to change as your life changes.
Goal
Time
Frame
On
hand
Needed
Replace my car 12 Months $4,900 $5,200 for 20% down
on $26,000 car
Amount or Rate of
Return Needed to
Reach Goal
$300 (save $25 per month) or
6.12% annual rate of return
Account/
Investment
12-month CD
plus savings
account
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Financial Goals Worksheet (SMART) © 2011 American Consumer Credit Counseling, Inc.
Use this worksheet to create a SMART goal. Identify a goal that is short, mid, and long-term when
completing. Make copies of this worksheet for each individual goal.
Today’s Date: Start Date: Date Achieved:
Verify that your goal is SMART
Specific: What is your goal? (What? Why? and How?)
Measurable: How will you measure your progress? (How many? How much?)
Achievable: Is achieving this goal realistic with effort and commitment? What steps are involved?
Realistic: What skills and knowledge are necessary to reach the goal? Is it do-able?
Timely: When will you achieve this goal?
This goal is important because:
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Financial Goals Worksheet - Take Action!
Identify the obstacles you may face when working to achieve your goals, and find solutions.
Potential Obstacles
Potential Solutions
Who are the people you will ask to help you?
Specific Action Steps: What steps need to be taken to reach your goal?
What:
Expected completion date:
Completed:
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Planning For Unexpected Life Events–Death and Disability
(from FDIC Money Smart)
Planning ahead:
• Gives you control; you make choices for your situation
• Relieves stress of decision making from caretakers/family members
• Saves money and helps you avoid financial disaster or setback
• Allows time for gathering information, comparing options, and determining which options
help achieve what is most important
Long-Term Care
A majority of people who need long-term care are older. However, the need for long-term care
can come at any age due to disabling diseases, car accidents, Acquired Immune Deficiency
Syndrome (AIDS), brain injuries, strokes, and other disabling events. For instance, it is estimated
that 43 percent of the approximately 12 million people in the U.S. who say they need assistance
with activities of daily living are working-age adults or children.
Families and individuals who do plan ahead for long-term care will be in a better position to
understand long-term care changes, weigh options, and make sound long-term care decisions.
Consider taking these steps before you or a family member becomes ill or disabled:
• Prepare a plan. Start with reviewing your income and expenses.
• Make sure trusted family members know where to find personal and financial
documents in an emergency.
• Think about the direct deposit of pay and benefit checks into bank accounts.
• Consider automatic payment of important, recurring bills.
• Make sure you are properly insured. Speak with a financial planner or an insurance agent
you trust. Review your policy often as life changes.
• Maintain a healthy lifestyle.
• Consider a durable power of attorney. This is a legal document giving one or more people
the authority to handle finances or other personal matters if the individual becomes mentally
or physically incapacitated.
• Suggest a living will or other instructions about future medical care. Most people
should have a living will specifying the type of medical care they want or do not want if they
become terminally ill and are unable to communicate their wishes.
Experts also recommend a health care power of attorney or health care proxy designating a
family member or other trusted person to make decisions about medical treatment. Living wills
and health care proxies are intended to ensure that someone’s wishes regarding medical care are
honored, but they also can prevent unnecessary and costly procedures.
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How to Be Financially Prepared for Disasters (from FDIC Money Smart)
Natural or man-made disasters strike without warning and can happen to anyone. These include
floods, fires, earthquakes, tornadoes, hurricanes or similar events that can force people to evacuate
their homes. Even minor disasters can damage or destroy property or other belongings. They can also
seriously impair your ability to conduct essential financial transactions. In addition to planning for
your family’s safety and basic needs (e.g., shelter, food, and water) you should be ready to deal with
financial challenges, including how to pay for supplies or temporary housing if necessary.
What to Have Ready
Consider keeping the following documents, bank products, and other items in a secure place and
readily available in an emergency:
• Forms of identification: These primarily include driver’s licenses (or state identification cards for
nondrivers), insurance cards, Social Security cards, passports, and birth certificates.
• Your checkbook with enough blank checks and deposit slips to last at least a month
• ATM cards, debit cards (for use at ATMs and merchants), and credit cards: Do not assume that
merchants and ATMs in areas affected by a disaster will immediately be functioning as usual. Have
other options available for getting cash and making payments.
• Cash
• Phone numbers for your financial services providers: These include local and toll-free numbers for
your bank, credit card companies, brokerage firms (for stocks, bonds, or mutual fund investments)
and insurance companies. Important account numbers: These includebank and brokerage account
numbers, credit card numbers, and homeowner’s or renter’s insurance policy numbers. You may
want to copy the front and back of your credit cards (and keep them in a safe place).
• The key to your safe deposit box
What to Keep and Where to Keep It
After you have gathered your most important financial items and documents, protect them as well as you
can while also ensuring you have access to them in an emergency. Here is a reasonable strategy for many
people:
• Make backup copies of important documents.
• Make an electronic image of your documents so you can more easily store the information.
• Give a copy of your documents to loved ones or let them know where to find the documents in an
emergency.
• Store your backups some distance from your home in case the disaster impacts your entire
community.
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1. Determine what to keep at home and what to store in a safe deposit box at your bank. A safe
deposit box is best for protecting certain papers that could be difficult or impossible to replace, but
not anything you might need to access quickly. What should you put in a safe deposit box? Examples
include a birth certificate and originals of important contracts. What is better left safely at home,
preferably in a durable, fireproof safe? Your passport and medical care directives because you might
need these on short notice. Consult your attorney before putting an original will in a safe deposit box.
Some states do not permit immediate access to a safe deposit box after a person dies, so there may be
complications accessing a will stored in a safe deposit box.
2. Seal important documents in airtight and waterproof plastic bags or containers to prevent
water damage.
3. Prepare one or more emergency evacuation bags. Pack essential financial items and documents
(e.g., cash, checks, copies of your credit cards and identification cards, a key to your safe deposit
box, and contact information for your financial services providers). Make sure each evacuation bag
is waterproof and easy to carry and kept in a secure place in your home. Periodically update the
contents of the bag. It will not do you any good if the checks in your bag are for a closed account.
What Else to Consider
1. Sign up for direct deposit. Having your paycheck and other payments transmitted directly into
your account will give you better access to those funds by check or ATM, and you will not have to
deliver the deposit to the bank or rely on mail service, which could be delayed. Note: There could
be delays in the processing of direct deposits in a disaster situation, but the problem is usually fixed
within a reasonable timeframe.
2. Arrange for automatic bill payments from your bank account. This service enables you to make
scheduled payments, (e.g., for your phone bill, insurance premiums and loan payments, and avoids
late charges or service interruptions).
3. Sign up for Internet banking services. This also makes it possible to conduct your banking
business without writing checks.
4. Review your insurance coverage. Make sure you have enough insurance, including:
flood,earthquake, and personal property coverage, as applicable, to cover the cost to replace or repair
your home, car and other valuable property.
To find out more about being financially prepared for disasters visit
www.fdic.gov/consumers/consumer/news/index.html and type in disaster preparedness in the
search box.
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Identity Theft (from FDIC Money Smart)
Identity theft occurs when thieves steal your personal information (e.g., your Social Security number
(SSN), birth date, or credit card numbers). With sufficient information, another person can become you
and use your identity to commit fraud or other crimes
How to Avoid Identity Theft
1. Protect your SSN, credit card and debit card numbers, personal identification numbers
(PINs), passwords, and other personal information.
Never provide this information in response to an unwanted phone call, fax, letter, or email, no matter
how friendly or official the circumstances may appear. Be mindful of those who may be shoulder surfing
(or trying to look over your shoulder) while you use the ATM, and seeking to steal your PIN. In case your
wallet is lost or stolen, carry only the identification you really need: checks, credit cards, or debit cards.
Keep the rest, including your Social Security card, in a safe place. Do not preprint your SSN, phone
number, or driver’s license number on your checks. You have the right to refuse requests for your SSN
from merchants. Ask the merchant to use another form of identification that does not include your SSN
(e.g., a passport) and have your driver’s license number changed.
2. Protect your incoming and outgoing mail.
For incoming mail: Try to use a locked mailbox or other secure location (e.g., a post office box). If your
mailbox is not locked or in a secure location, try to promptly remove mail that has been delivered or
move the mailbox to a safer place. When ordering new checks, ask about having the checks delivered to
your bank branch instead of having them mailed to your home where you run the risk of a thief finding
them outside your front door.
For outgoing mail containing a check or personal information: Try to deposit it in a United States
(U.S.) Postal Service blue collection box, hand it to a mail carrier, or take it to the post office instead of
leaving it in your doorway or home mailbox. A mailbox that holds your outgoing bills is a prime target
for thieves who cruise neighborhoods looking for account information. Avoid putting up the flag on a
mailbox to indicate that outgoing mail is waiting.
3. Sign up for direct deposit.
Sign up for direct deposit of your paycheck or state or federal benefits, (e.g., Social Security). Direct
deposit prevents someone from stealing a check out of your mailbox and forging your signature to access
your money. It is also beneficial in the event of a natural disaster.
4. Keep your financial trash “clean.”
Thieves known as dumpster divers pick through garbage looking for pieces of paper containing SSNs,
bank account information, and other details they can use to commit fraud. What is your best protection
against dumpster divers? Before tossing out these items, destroy them, preferably using a crosscut
shredder that turns paper into confetti that cannot be easily reconstructed.
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5. Keep a close watch on your bank account statements and credit card bills.
Monitor these statements each month and contact your financial institution immediately if there is
a discrepancy in your records or if you notice something suspicious (e.g., a missing payment or an
unauthorized withdrawal). Contact your institution if a bank statement or credit card bill does not arrive
on time. Missing financially related mail could be a sign someone has stolen your mail and/or account
information, and may have changed your mailing address to run up big bills in your name from another
location.
6. Avoid identity theft on the Internet.
Never provide bank account or other personal information in response to an unsolicited email, or
when visiting a website that does not explain how personal information will be protected. Legitimate
organizations would not ask you for these details because they already have the necessary information,
or can obtain it in other ways. If you believe the email is fraudulent, consider bringing it to the attention
of the Federal Trade Commission (FTC). If you do open and respond to a phony email, contact your
financial institution immediately. For more about avoiding phishing scams, or to obtain a brochure with
tips on avoiding identity theft, visit www.fdic.gov.
Take precautions with your personal computer (PC). For example, install a free or low-cost firewall to
stop intruders from gaining remote access to your PC. Download and frequently update security patches
offered by your operating system and software vendors to correct weaknesses that a hacker might exploit.
Use passwords that will be hard for hackers to guess. For example, use a mix of numbers, symbols,
and letters instead of easily guessed words. Also, shut down your PC when you are not using it. For
practical tips to help you guard against Internet fraud, secure your computer, and protect your personal
information visit www.OnGuardOnline.gov.
7. Review your credit record annually and report fraudulent activity.
Review your credit report carefully for warning signs of actual or potential identity theft (e.g., items that
include mention of a credit card, loan, or lease you never signed up for, and requests for a copy of your
credit record from someone you do not recognize), which could be a sign that a con artist is snooping
around for personal information. Learn more by visiting the FTC at www.ftc.gov/credit.
8. Get more information.
Visit the FTC at www.ftc.gov/idtheft or call 1-877-IDTHEFT (438-4338).
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What to Do If Your Wallet or Purse is Lost or Stolen
(from FDIC Money Smart)
What would you do if your wallet or purse were lost or stolen?
If your wallet or purse is lost or stolen, the FTC suggests you:
• File a report with the police as soon as possible. Keep a copy of the report in case your bank or
insurance company needs proof of the crime.
• Cancel your credit cards immediately. Get new cards with different numbers.
• Place a fraud alert on your credit report by calling any of the major credit reporting agencies:
Equifax: 1-800-525-6285
TransUnion: 1-800-680-7289
Experian: 1-888-397-3742
• Report the loss to your bank. You might want to open new checking and savings accounts and stop
payment on any lost checks.
• Contact the major check verification companies to request that they notify the stores that use their
databases to not accept your lost checks. You can also ask your bank to notify the check verification
service with which it does business. Two of the check verification companies that accept reports of
check fraud directly from consumers are:
TeleCheck: 1-800-366-2425
Certegy: 1-800-437-5120
• Request a new ATM card with a new number and password.
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Kip Child, FDIC Community Affairs Specialist presented an Introduction to Money
Smart at our October, 2010 inaugural meeting.

II. Banking
Introduction to Banks
Choosing a Bank and a Bank Account Checklist
Opening and Maintaining a Bank Account
Ways to Take Money Out of your Account
Using Electronic Banking
Activities:
Checking Account Fees
Writing a Check
Record Transactions in your Check Register
Reconcile your Check Register
Name that Service
Paper Money
Banking Vocabulary
Recommended Supplemental Materials:
BOOKS
1. Freedman, Jeri. First Bank Account and First Investment Smarts, New York: Rosen Publishing,
2009. LIT 332.6 F87F
2. Hudak, Heather C. Everyday Economics: Banking, New York: Weigl Publishers,
2010. LIT 332.1 H86B
3. Mathematics of banking and credit, Steck-Vaughn/Houghton Mifflin, 2011 LIT 332 M42M
VIDEOS
1. The Fundamentals of Banking: get serious about spending, saving, & investing. Jacksonville,
FL : Linx Educational, 2009. DVD ESL 332.1 F96F (25 minutes)
2. Personal Finance Essentials: Checking accounts and everyday banking New York : Meridian
Education Corp., c2011 DVD ESL 332.024 P43CH (31 minutes)
21

Introduction to Banks (from FDIC Money Smart)
Banks, credit unions, and thrifts are businesses that offer you a safe place to keep your money and use
your deposits to make loans. Banks, credit unions, and thrifts are also called financial institutions, since
they offer many financial services.
Reasons to Keep Money in a Bank
Reasons why you should keep your money in a bank include:
• Safety - Your money is safe from theft, loss, and fire.
• Convenience - You can get money quickly and easily. Using direct deposit, for example, allows
you quicker access to your money because funds that are electronically deposited are available
sooner than if you deposited a check. We will talk more about direct deposit later. You can also
use Automated Teller Machines (ATMs) to get fast access to your money. Most ATMs are available
24 hours a day, 7 days a week. Additionally, you can use your bank’s ATM or debit card to make
purchases instead of cash.
• Cost - Using a bank is almost always cheaper than using other businesses to cash your check.
• Security - The Federal Deposit Insurance Corporation (FDIC) insures deposits up to the maximum
amount allowed by law. This means that the FDIC will return the money to the customers if a bank
closes and cannot give its customers their money.
• Financial future - Building a relationship with a bank establishes a record of paying bills, can help
you save money, and can help with getting a loan.
Types of Financial Institutions
Types of financial institutions include:
• Banks and thrifts - Banks and thrifts make loans, pay checks, accept deposits, and provide other
financial services.
• Credit unions - A non-profit financial institution owned by people who have something in common.
You have to become a member of the credit union to keep your money there. Credit unions accept
deposits, make loans, and provide other financial services.
Insured banks and thrifts are guaranteed by the FDIC. This means that if the bank were to fail the FDIC
would return your money, up to the insured amount.
• You can tell if the FDIC insures a bank by the displayed FDIC logo.
• Most credit unions are insured by the National Credit Union Administration (NCUA). The deposit
insurance rules are the same at NCUA-insured credit unions as they are at FDIC-insured banks.
The FDIC has an online tool called the Electronic Deposit Insurance Estimator (EDIE). It lets you
calculate the insurance coverage of your accounts at each FDIC-insured institution. You can find EDIE
online at www.myfdicinsurance.gov/.
22

Choosing a Bank and a Bank Account Checklist (from FDIC Money Smart)
Use the chart below when looking for a bank and accounts that are right for you.
*If the financial institution is a credit union,
be sure you are eligible to join.
Bank Name/
Account Type
Bank Name/
Account Type
Bank Name/
Account Type
Bank Information
Does the bank offer the services I need?
Convenient branches and ATMs?
Bank hours?
Do employees speak my language?
Is it insured by FDIC/NCUA?
Accounts
Requirements for opening account?
Checking Accounts
Minimum opening balance?
Minimum monthly balance?
Fees?
Fee waivers available?
Number of withdrawals per month without a
fee?
Earns interest?
Deposit hold times?
Overdraft Programs
Low balance alerts offered?
Overdraft fees?
Link to a savings account to cover overdrafts?
Opt-out options?
Savings accounts
Minimum opening balance?
Minimum monthly balance?
Annual percentage yield (APY)?
Fees?
Fee waivers available?
Withdrawal limits per month?
Services available?
ATM Cards
Fees?
Fee waivers available?
Location/number of ATMs?
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Debit Cards
• Fees?
• Fee waivers available?
• Rebates or bonuses for use?
• Location/number of ATMs?
• Debit card transactions requirements or
limits?
Mobile/online banking
• Is it available?
• Transaction types and limits?
• Fees?
• Fee waivers available?
• Online bill pay?
Other Information?
Total Monthly Costs
Total Annual Costs

Opening and Maintaining a Bank Account (from FDIC Money Smart)
Opening and maintaining a bank account is not as difficult as you might think. There are four basic
things you have to do:
1. Open the account
2. Make deposits and withdrawals
3. Record interest and fees
4. Keep track of your balance
Opening a Bank Account
The first thing you need to do to open a bank account is to go through a process called account
verification. The bank wants to make sure that you:
• Will be a responsible bank account customer
° If you have not been a good banking customer in the past, they may not want to risk
having you as a customer now
• Are who you say you are, by verifying your identity
• Are able under the law to open a bank account
Ask the bank what type of identification you need to open an account. You will need:
• To prove your identity (e.g., show a state-issued driver’s license or ID card)
° If you are not a citizen of the United States (U.S.), some banks may accept other
forms of photo identification including the Matricula Consular card, resident alien
card (Green Card), or passport.
° Typically, any government-issued ID displaying an ID number and the country of
issuance is accepted.
• To provide your Social Security number (SSN) or Individual Taxpayer Identification Number
(ITIN)
If the bank determines that you are eligible to open an account, you can deposit money into your
new account. If you are not eligible, ask about “second chance” checking programs.
• These programs may require you to meet certain requirements (e.g., completing a check-writing
workshop).
• Ask your local financial institution and/or any reputable credit counseling agency if there are
programs in your area.
• Consider opening a savings account if you have had trouble managing a checking account in the
past.
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Ways to Take Money Out of Your Account (from FDIC Money Smart)
You can write a check, use electronic banking, or use the teller service and a withdrawal slip.
Steps to Writing a Check
A check is a written contract between you and your bank. When you write a check, you are asking
the bank to take money from your account and give it to someone else. There are three steps you
need to take to write a check:
1. Make sure you have enough money in your account.
2. Complete all the blank spaces on the check.
3. Record the transaction in your check register.
Preprinted Information
When you receive your first box of checks you can expect to find information already printed on the
checks including:
• Your name and address
• The check number and codes
• Your bank’s name
• Routing number
• Your account number
Do NOT have your Social Security or driver’s license number preprinted on your checks because of
the risk of identity theft.
Writing a Check for Cash
If you want to use a check to take cash out of your account:
• Write “Cash” or your name in the “Pay to the Order of” area on your check.
• Do not write a check for “Cash” until you are in the bank.
• Like writing any other check, remember to record the withdrawal in your check register.
How to Withdraw Money from the ATM
To withdraw money using an ATM:
1. Insert your ATM card, using the illustration indicating which end of the card to insert first. On some
machines, you will insert and remove your card in one motion; other machines will take your card until the
end of the transaction.
2. Follow the prompts to withdraw the money:
a. Enter your PIN.
b. Select “Withdrawal” (or “Withdraw”) from the touch screen menu, or the appropriate button to the side
of the screen.
c. Use the keypad to enter the desired withdrawal amount. Most ATMs deliver funds in multiples of $10 or
$20.
d. Retrieve your money from the cash slot.
e. The machine may ask if you want to complete another transaction or if you would like a printed receipt—
if you do, press “Yes”; if not, press “No.” If you print a receipt, save it so you can accurately enter the
transaction in your check register.
3. If you make any mistakes when entering the information, you may be able to press “Clear” to reenter the
information or “Cancel” to cancel the transaction and start over.
4. Do not forget to take your ATM card if the ATM returns it at the end of a transaction!
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A Note About ATM Fees
If you have a limit to the number of ATM transactions you can make per month, be sure to
withdraw all you need so you do not get charged for extra transactions.
Also be aware of the fees your bank charges for using another bank’s ATM—in addition to the fee
the other institution may impose. For example, if you withdraw $20 from another bank, your bank
may charge you up to $3.00 for using another bank’s ATM and the other bank may charge you a
$3.00 fee. That means you will be withdrawing $20 and paying $6 in fees, which is equivalent to a
fee of 30 percent!
In addition, be careful not to overdraw your account, as you may incur NSF/overdraft fees.
Remember to record all ATM transactions and fees in your check register to avoid overdrawing your
account.
Use the Teller Service and a Withdrawal Slip
Your bank may only require you to sign a receipt the teller prints when completing a withdrawal. If
your bank provides or requires you to use a withdrawal slip, you may need to fill in:
• The date
• Your name, if not preprinted
• Account number and account type (e.g., checking or savings), if not preprinted the amount you
wish to withdrawal
• Your signature
Completing a deposit slip in order to receive cash back is another option for withdrawing money
from your account.
27

Using Electronic Banking (from FDIC Money Smart)
Overview
Electronic banking uses computers to move money to and from your bank account instead of checks and
other paper transactions. Examples of electronic banking include:
• Automated Teller Machine (ATM) transactions with use of an ATM or debit card Automatic bill pay
• Online bill pay
• Cell phone banking
Debit Cards
A debit card is similar to an ATM card but it has more functions. The difference is that you can use a
debit card to make purchases at retail locations (e.g., department stores and gas stations).
If someone uses your card without your permission, federal law protects you. But the protection differs
depending on whether you used your debit or credit card.
With a debit card, the disputed transaction will have already been withdrawn from your account. If
you report the problem promptly, the financial institution will put the money back into your account
(less $50) if it is unable to resolve the matter within 10 business days. You must report errors within 2
business days of discovering them to be fully protected under federal law. Some banks may voluntarily
waive all liability for unauthorized transactions if you took reasonable care to avoid fraud or theft.
With a credit card, you do not have to pay the disputed transaction while the company that issued the
credit card is investigating the matter. If someone uses your credit card without your permission after
it is lost or stolen, federal law limits your losses to a maximum of $50, although industry practices may
further limit your losses.
Temporary Holds
When you swipe a card for a purchase where the exact amount is not known (e.g., at a hotel or when
reserving a rental car), a temporary hold is sometimes placed on funds in your account until the actual
transaction posts to the account. The hold will likely be for an amount greater than you actually spend.
This temporary hold could prevent you from buying other things, even if you do have the money
available.
For example, imagine you have $200 in your checking account and you use your debit card to reserve
a hotel room that costs $100. If the hotel places a temporary hold on the funds in your account for
the amount of $200, you will have no money available to use until the hotel posts the charges to your
account or releases the hold.
Many car rental companies and hotels allow you to use debit cards to reserve a car or a room. The
temporary hold amount is generally more than the cost of the car or room and can last several days.
When making travel reservations, be sure to ask about the debit card hold policy.
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Automatic Bill Payment
Automatic bill payment automatically takes money from your account to pay your bills. If you use
automatic bill pay, make sure you have enough money in your account to cover your bills when they are
due, and keep track of your account balance. Check your bills regularly to ensure the bill is accurate and
the payment is made. You may be responsible for late payments if the bill is not paid automatically as
anticipated.
Online Bill Payment
Online bill payment is different from automatic bill payment in that you can designate when bills are
paid from your account each month. You may be able to pay bills from your online banking account,
through a budgeting software program, and/or by creating an online account with your service provider
(electric, water, or cable/satellite companies, etc.).
Cell Phone (Mobile) Banking
Depending on the services offered by your financial institution and your cell phone service provider, you
may be able to conduct the following banking transactions from your cell phone:
• Receive text message alerts when your account balance reaches a certain level, or when a certain
transaction occurs
• Access your online bank account to check balances, pay bills, and transfer funds between accounts
• Locate your bank’s closest ATMs
• Pay for purchases
Safe Electronic Banking
The Internet offers convenient new ways to shop for financial services and conduct banking transactions
any day, any time. However, safe electronic banking involves making wise choices that will help you avoid
costly surprises, scams, or identity theft. Some precautions you can take include:
• Using a secure and encrypted connection to the Internet
• Disregarding fraudulent emails asking you to send your account number, password, or any personal
information via email; legitimate financial institutions do not ask for this information via email
• Confirming that an online bank is legitimate by contacting the Federal Deposit Insurance
Corporation (FDIC) (at www.fdic.gov)
• Monitoring your bank account activity closely
• Keeping your information private
• Contacting your bank to find out more about precautions you can take with the online and mobile
banking services they offer
• Using anti-virus software, keeping it updated to detect and block spyware and other malicious
attacks, and using a “firewall” to stop hackers from accessing your computer
Protection Against Identity Theft
The Internet offers the potential for safe, convenient new ways to shop for financial services and conduct
banking business any day, any time. However, safe electronic banking involves making good choices and
making decisions that will help you avoid costly surprises or even scams.
29

Activity 1: Checking Account Fees (from FDIC Money Smart)
Match the fee description with its fee type. Read each description and choose a fee type from the box.
Then write the fee type next to the description.
Phone Inquiry Fee
Teller Fee
Monthly Service Fee
ATM-User Fee
Stop-Payment Fee
Returned Deposit Item
Overdraft Fee
Check Printing Fee
Fee for helping you balance your checkbook
Per-Check Fee
Fee Type
Description
This is also called a maintenance fee. The bank might charge this monthly
fee just for having the account.
This is a fee for each check you write. Depending on the account, you might
pay the fee for each check, or only when you write more than a certain
number of checks (perhaps five) a month.
A charge automatically deducted from your checking account for printing
checks you purchase from the bank. You can buy checks from other
companies as well, choosing from many different designs.
A charge for using the ATM at your bank or at a bank other than your own.
If you use another bank’s ATM that bank may charge an additional fee.
Also called non-sufficient funds (NSF) fees, these fees are charged when
you do not have enough money in your account to cover your transactions
(e.g.,withdrawal, purchase, or payment).
Banks might charge you this fee if a check you wrote is cashed or deposited
and do not have enough money in the account to cover the check.
This fee is charged if you ask the bank to stop the check from being paid.
Note that the bank might not be able to catch the check before it is paid.
Some banks charge this fee if you call to check your balance or determine
whether a check or deposit has cleared.
Some banks will help you balance your checkbook. Others might charge
you for this service.
Some banks may charge a fee if you use a teller to make deposits or
withdrawals more than a set number of times each month. Banks that
charge this fee do so to encourage you to use an ATM for your basic
banking transactions.
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Activity 2: Writing a Check (from FDIC Money Smart)
Imagine that on March 26, 20XX you decide you want to buy a coffeemaker from a store called
Coffee Mart. The coffeemaker costs $19.75, including tax.
Look at your Practice Check Register. Do you have enough money in your checking account to
write a check for this coffeemaker?
If you do, fill out the check below to pay for your coffeemaker.
YOUR NAME 69/175-2031 0105
Address
City, State, ZIP
Date
Pay to the
Order of $
Dollars
Your Financial Institution
For
3266
Now record the following information in your check register:
• Check #: 105
• Date: 3/26/20XX (You can enter the current year, if you choose.)
• Description of Transaction: Coffee Mart
• Payment/Debit (-): $19.75
• Balance: $180.25
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Activity 3: Record Transactions in Your Check Register (from FDIC Money Smart)
Complete your check register by entering the following transactions and calculating the new balance
each time. Here is the information we are going to record:
• Date: 3/12/20XX
• Description of Transaction: Debit
• Deposit/Credit (-): $100.00
And…
• Date: 3/19/20XX
• Description of Transaction: Deposit
• Deposit/Credit (+): $30.00
And…
• Date: 3/19/20XX
• Description of Transaction: Deposit
• Deposit/Credit (+): $50.00
Check
Number
Date
Description of
Transaction
Payment/Debit
(-)
Deposit/Credit
(+)
Balance
2/20 Previous
Balance
$200 .00
105 2/26 Coffee Mart 19.75 $180 .25
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Activity 4: Reconcile Your Check Register (from FDIC Money Smart)
Y
Your
Use the checking account statement to answer the questions below, and reconcile your check
register according to the directions on the next page.
Bank
1212 Y Street
Somewhere, US 00001
Summary of Account Activity
For period ending 3/20/20XX
Date of last statement 2/20/20XX
Date
Transaction Description
2/20 Previous Balance
2/26 Check #105
3/12 ATM Withdrawal
3/19 Deposit
3/19 Withdrawal
3/20 Monthly Fee
Cleared Checks
Check #
105
Checking Account Monthly Statement
Withdrawal/
Deposit Amount
Amount
19.75
-19.75
-100.00
30.00
-25.00
-5.00
Your Name
4321 Second Street
Somewhere, US 00001
Account Number 543685321454
Balance
200.00
180.25
80.25
110.25
85.25
80.25
Ending Balance 80.25
Summary
Previous Total Total No. of No. ATM No. of Service New
Balance Deposits Withdr. Checks Transactions Deposits Charge Balance
$200.00 $30 $125 1 1 1 $5.00 $80.25
What is the checking account statement balance?
(see “New Balance” or “Ending Balance” on the statement)
Does this balance match the balance on your practice check register?
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Sample Check Register
Check
Number
Date
Description of
Transaction
Payment/Debit
(-)
Deposit/Credit
(=)
Balance
2/20 Previous
Balance
$200 00
105 2/26 Coffee Mart 19 75 $180 25
3/12 Withdrawal 100 00 $80 25
3/19 Deposit 30 00 $110 25
3/20 Monthly fee 5 00 $105 25
Directions
To reconcile your check register:
1. Compare your check register with the monthly account statement. Put a small check mark ( )
beside each item in your check register that matches an item on your statement.
2. Are there any items that are listed on the monthly account statement that do not appear on the
check register? If so, which one(s)?
3. Add the missing transactions to your check register below the last transaction.
4. Calculate the balance by adding deposits or subtracting withdrawals from your check register
balance.
5. What is the new balance in your check register?
6. Does this match the checking account statement balance?
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Activity 5: Name That Service (from FDIC Money Smart)
Read the description of each service. Choose the banking service that matches it, and fill in the
blank with the name of the banking service.
Banking services
Direct deposits
Money order
Telephone banking
Online banking
ATM
Money transfer
Debit card
Stored value card
Loan
Remittance
Description of services
1. A method of electronically transferring money from one bank to another.
2. A specific type of money transfer that goes to a bank or a person in another
country.
3. A kiosk or terminal where you can deposit, withdraw, or transfer money from
one account to another 24 hours a day.
4. You place a call to check your account balance.
5. This allows you to check your account balance on the computer. It may also
include the ability to pay bills and transfer funds between accounts.
6. This is used like a check to pay a bill.
7. One method your employer or a government agency might choose to issue
your paycheck or benefits check.
8. Money you borrow from a bank with a written promise to pay it back later.
9. When you use this card to buy something from a store or another business,
the money comes out of your bank account immediately.
10. A card onto which you can load money to be used for future purchases.
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Paper Money
Copy, cut, and put the following into envelopes so that each participant has a total of $100:
Two $20s = $40 Four $10s = $40 Three $5s = $15 Five $1s = $5
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Banking Terms and Definitions
Checkbook register
Balance your
Checkbook
Thrifty
Receipt
Budget
APR
ATM
Your personal record of all transactions, where you write down money coming
in and going out of your account
Calculate how much money you should have in your bank account, comparing
your register with the statement from the bank
Always looking for a less expensive way to do things
A piece of paper which shows when, where, how much you paid and what you
bought. To return something, you need the receipt.
A plan that includes how much money you earn, and what you need to spend.
The purpose of a budget is to save money and stay out of debt.
Annual percentage rate. The APR tells you the total cost of borrowing.
Automated teller machine. You can save fees by using the ATMs from your
bank when you withdraw money.
Word Groups
The word CREDIT has many meanings in English. Look at these sentences to understand the different
meanings.
Roger paid too much on his electricity bill in October, so now he has a credit of $10. This means he can
pay $10 less than what he owes in November.
The bank officer told Bob that he had bad credit, because after Bob lost his job he often wrote checks
that bounced when there wasn’t enough money in his account to cover them. His sister Anne is able to
pay her bills on time and has good credit. If Anne needs to borrow money, she will pay a lower interest
rate than Bob.
Banks are more ready to lend money to people who have a regular income and pay their bills on time.
These people are credit-worthy.
My neighbor Mrs. Miller suggested that I apply for a job at the pharmacy; so I should give her credit for
her helpful suggestion. I showed my appreciation to Mrs. Miller by writing a short thank you note.
Sarah always works hard and does an excellent job. She is a credit to her family, and her parents are
very proud of her.
Harry asked the teacher if he could do another paper for extra credit, because he wanted to improve
his English grade. His teacher said extra work could help move Harry’s grade from a C+ to a B-.
To complete her college degree, Karen needs 28 more course credit hours.
38

III. Budgeting
Practice Good Habits
Create a Budget and Pay Yourself First
Establish an Emergency Fund
Household Budgeting Worksheet
Activities:
Monthly Income and Expenses
Spending Plan Considerations
Financial Recovery Plan
Budgeting Terms and Definitions
Budgeting Quiz with Answers
Recommended Supplemental Materials:
BOOKS
1. Bostick, Nan. Managing Money, Costa Mesa, CA: Saddleback, 2011. LIT 332.024 B65M
2. Heath, Julia A. Personal Finance Essentials: Decision making and budgeting, Volume 1, New
York : Facts On File, c2012. LIT 332.024 P41D v1
3. Lawrence, Judy. Budget Kit: the common cents money management workbook, 6th ed. Kaplan,
2011. LIT 332.024 L43B
4. Peterson, Judy Monroe. First Budget Smarts. New York: Rosen Publishing, 2009.
LIT 332.024 P44F
5. Wiseman, Blaine. Budgeting, New York, NY : Weigl Publishers, c2009. LIT 332.024 W75B
VIDEOS
1. Personal Finance Essentials: Budgeting and financial decision. New York: Meridian Education
Corp., c2011. DVD ESL 332.024 P43B (36 minutes)
39

Practice Good Habits (from FINRA Investor Education Foundation)
Good habits pay off in many areas of life, and practicing good savings and investing habits is no exception.
Sometimes, a single action can create a continuing habit. For example, if you contribute as much as possible to
an employer-sponsored retirement plan where you work—or if you have money transferred directly each month
from your checking account to one or more savings and investment accounts—then you’ve established the habit of
paying yourself automatically. Not only does that eliminate the risk that you will forget to save or invest regularly,
but you also might find that you never miss that money because it comes out of your paycheck before you can
spend it. In fact, you might ultimately decide it makes sense to do the bulk of your saving and investing this way.
Remember, too, that if you spend the money in a tax-deferred retirement account—such as an individual
retirement account (IRA) or employer-sponsored 401(k) or similar plan—before you reach age 59 ½, you will owe
taxes and probably penalties. That’s an added incentive not to touch the money even when you might be able to
withdraw it.
You should also consider:
1. Reinvesting all the interest, dividends or distributions you earn on your existing investments, which
happens automatically with tax-deferred accounts;
2. Earmarking a percentage of all gifts, bonuses and unexpected income to your investment accounts;
3. Paying your credit card bills in full each month and investing the money you had been spending on
finance charges;
4. Budgeting a specific percentage of your income for investing; and
5. Making sure that the amount your employer withholds for taxes is neither too much nor too
little—the average refund is more than $2,000—and put the difference in your investment account
throughout the year.
It’s often wise to open a special account to hold the money you are accumulating specifically to buy investments.
That might be a money market mutual fund or other cash account with your brokerage firm so that you can easily
transfer the money needed to pay for the purchase of a stock, bond, mutual fund or other investment. Similarly,
proceeds from investments you sell and any dividends or interest from investments you’ve already made can be
rolled into that account, where they will be available to cover new purchases. If you invest directly with a mutual
fund company, you can set up a similar arrangement. You might use the fund company’s money market fund to
hold your cash, and then transfer it into a stock, bond or other mutual fund when you have enough cash to meet
any investment minimum. Once you’ve purchased a money market fund with the mutual fund company, you can
then arrange for a regular direct deposit from your paycheck—or an automatic transfer from a bank account—to
your account. The amount required for additional deposits is almost always less than the minimum to purchase a
fund.
Whether you open an account at a brokerage firm or with a mutual fund company or both, be sure to ask about
any account maintenance and transaction fees that may apply.
Finally, it is important to check your account statements—from every bank, brokerage firm, mutual fund company
or other financial institution you do business with—to confirm that all of your transactions are accurately
reflected. If you detect an error, be sure to contact your financial institution right away. And, for your
investments, be sure to monitor your portfolio performance on a regular basis to make sure that you
maximize your returns over time.
40

Create a Budget—and Pay Yourself (from FINRA Investor Education Foundation)
The first step to responsible saving and investing is getting a handle on your expenses. Unexciting as it sounds,
the best way to do so is to write down what you and others in your family earn, and what your monthly expenses
are. It’s not a bad idea to keep a running log of all income and expenses, even the little ones, for a couple of
months. By identifying and eliminating unnecessary extras, you might find that you have more resources than you
previously thought.
Saving and investing are essential to financial security. If you are spending all your income (or worse, spending
more than you make by running up debt) and never have money to put away, you’ll need to find ways to reduce
your expenses or make additional money. This generally requires making some tough choices such as cutting back
on dining out or foregoing nice-to-have extras such as a new car or a family vacation— or it may mean taking a
second job.
To free up money for saving and investing, it’s sometimes helpful to segment current and planned expenses into
those that are essential (needs) and those that are non-essential (wants). For example, buying a crib for a new baby
is essential, but cable TV is not.
Pay Off Credit Card or Other High-Interest Debt First
Few money-management strategies pay off as well as, or with less risk than, paying off all high-interest debt you
may have. You pay the very highest rates if you are borrowing money through so-called “payday lenders.” If a
payday lender’s rate sounds reasonable, that is likely because it is being quoted for a very short period—sometimes
just a few days—rather than at the actual annual rate that a bank would have to disclose.
Using credit can have advantages and disadvantages. If you spend within your means and pay off your
balance on time and in full each month, credit cards can serve as a safe, convenient substitute for cash—with the
added bonus that they can help you establish and maintain a solid credit history. But if you use them to purchase
items you couldn’t otherwise afford—or max out your cards to cover routine monthly expenses— credit cards can
quickly compound your debt.
Many credit cards charge interest rates that run as high as 1.5 percent a month—18 percent annually—which
can add up quickly if you don’t pay off your balance in full each lending cycle, usually one month. Consistently
carrying over your balances can result in even higher rates being charged over time. If you owe money on your
credit cards, the best thing you can do is pay off the balance in full as quickly as possible. Otherwise, money that
could be going into an interest-bearing savings account is going to pay interest instead.
Paying only the minimum balance due each month can land you in a perpetual cycle of debt. For example, let’s say
you have a $3,000 balance on a credit card that charges 18 percent APR and requires a minimum payment of 2.5
percent each month. Assuming you charge nothing else, it will take you 327 months—more than 27 years—to pay
off your debt. In addition, the total amount you pay in interest for that $3,000 charge will be $5,404.34—and your
total bill will be $8,404.34.
Once you have paid off your credit cards and any high-interest, short-term loans, you can create a budget that
includes money to save and invest. That will allow you to chart a course to financial security. To get started,
consider adopting this healthy practice: Pay yourself something each month when you pay your
household bills. A desirable number to shoot for is a personal savings rate of 10 percent—but if that
amount isn’t realistic for you at the start, don’t be discouraged. Any positive savings goal is better than
allowing consumer or credit card debt to mount.
41

Establish an Emergency Fund (from FINRA Investor Education Fund)
Emergencies happen. A roof needs replacing. People are injured in accidents. Employers lay off workers. If
something unexpected happens to you, will you have the money you need to pay the repair bills or see you through
weeks or even months of being out of work?
Insurance is one way to protect yourself against certain situations—such as a fire in your home or the unexpected
death of a breadwinner—that can substantially impact your finances. Health insurance is essential because there is
always the risk you’ll be injured or become ill, and disability insurance can fill the gap if you’re injured or ill and
can’t work. But even the best insurance doesn’t protect you against every financial problem you may encounter.
If you have access to credit, through a credit card or line of credit, you may be able to tap that resource in a pinch,
even though you will probably owe a substantial amount of interest on the money you borrow. Sooner or later,
you’ll also have to repay the principal.
To keep yourself financially grounded, especially in the face of unexpected events, you need to have an emergency
fund. That’s an account that holds at least three to six months of your income—or more if you are the sole support
for yourself or you have dependents.
Setting Up Your Emergency Fund
If you don’t already have money in a savings account that you could use in an emergency, opening one should be
your first investment decision. Using six-months of salary as a guideline for how much you’ll need to save, estimate
how long it will take you to build up a fund to that level if you put 10 percent of your earnings away every time
you’re paid. If you can’t afford 10 percent, you can make it 5 percent and add any unexpected money you receive,
such as a gift, until you reach your goal. Then leave that money untouched unless you actually face a financial
emergency.
Some people choose a CD for their emergency fund, or a series of CDs of approximately equal value, with one
maturing every six months or every year. This approach is called laddering. You can roll over the CDs as they
mature, to keep your ladder intact. The loss of interest you face for taking money out early may motivate you to
keep your fund intact. But in a real emergency, the interest you may lose is a small price to pay for having the
money you need. And if you have to spend any of the money, you should plan to replace it.
You might also consider buying U.S. Treasury bills with some of your emergency fund money. They, too, can be
timed to mature on a regular schedule and, like CDs, they tend to pay more interest that a simple savings account.
And while they aren’t bank products, they are backed by the federal government. That means there is no risk of
losing principal if you hold them to maturity. And because they have very short terms, like 4 weeks, 13 weeks or
26 weeks, they usually don’t expose you to either inflation risk or interest rate risk.
Other options for an emergency fund include money market mutual funds. A money market mutual fund is a
mutual fund that must, by law, invest in low-risk securities, such as government securities and certificates of
deposits. Compared with other types of mutual funds, money market funds are highly liquid, low-risk securities.
Unlike money market deposit accounts, money market funds are not federally insured. While they are intended to
pay dividends that are comparable to prevailing short-term interest rates, they can lose value.
42

Household Budgeting Worksheet
Housing/Utilities
Rent/mortgage $
Heating $
Electricity $
Water/sewage $
Renter/homeowner insurance $
(if not included in mortgage)
Trash service $
Telephone and cell phone $
Home maintenence $
Cleaning supplies $
TOTAL $
Transportation
Gas $
Car payment(s) $
Car insurance $
Car inspection $
Car repairs and maintenence $
Car registration $
Public transportation or taxi $
Parking and tolls $
TOTAL $
Insurance (if not payroll deducted)
Health $
Life $
Disability $
TOTAL $
Food
Groceries $
School lunches $
Work-related (lunch/snacks) $
TOTAL $
Medical
Doctor visits $
Dental $
Prescriptions $
TOTAL $
Childcare
Daycare $
Babysitter/nanny $
Child support/alimony $
TOTAL $
Donations
Religious or charity $
TOTAL $
Education
Tuition $
Books and supplies $
Newspapers and magazines $
TOTAL $
Personal
Barber/salon services $
Toiletries $
Children’s allowances $
Tobacco products $
Beer, wine, or liquor $
Clothing $
Laundry/dry cleaning $
TOTAL $
Entertainment
Sporting events, concerts, etc. $
Movies/video rentals $
Restaurants/take-out $
Internet service $
Cable/satellite TV $
Gambling/lottery tickets $
Fitness/social clubs $
Vacation/travel $
Hobbies $
TOTAL $
Debts
Student loan $
Credit card $
Medical bills $
Personal loan $
TOTAL $
Savings
Emergency fund $
Down payment fund $
TOTAL $
Gifts
Birthdays $
Major holidays $
TOTAL $
Total Monthly Expenses $
- Net Income $
= Cash Flow $
(disposable/deficit)
© 2011 American Consumer Credit Counseling, Inc.
43

Activity 1: Monthly Income and Expense Worksheet
(from FDIC Money Smart)
The Monthly Income and Expense Worksheet should be prepared on a monthly basis to help you
determine how much money you have coming in, how much is going out, and whether or not you have
enough income to pay your bills and expenses each month. Read the scenario below and list the monthly
income amounts in the left column and monthly expenses in the right column.
My Income
Wages $
Self-Employment Income $
Public Assistance $
Child Support/Alimony $
Interest/Dividends $
Social Security $
Advance Earned Income Credit $
Other $
Scenario:
Income
A couple receives monthly net wages, or
take-home pay, in the amount of $3,500.
Expenses
• Rent $1,000
• Credit card and loan payments total
• $140 Child care expenses total $400
• Savings total $75
• Telephone bill totals $40
• Food expenses total $400
• Transportation and gasoline costs total
$200
• Personal expenses total $150
My Expenses
Fixed Expenses
Rent/Mortgage $
Property Taxes/Insurance $
Trash Collection $
Cable/Satellite $
Telephone/Internet $
Car Payment $
Car Insurance $
Health Insurance $
Other Loan Payments $
Day Care/Elder Care $
Flexible Expenses
Savings $
Water $
Electric $
Gas/Oil $
Cell Phone $
Food $
Transportation/Gas $
Car Maintenance $
Education $
Personal Expenses $
Donations $
Total Income $ Total Expenses $
44

Read the scenario, review the Monthly Income and Expense Worksheet on the following page, and
answer the questions below.
Scenario
Shanise is recently divorced and has two children. Her ex-husband has not been able to provide child
support for the last two months because he was laid off from work. Shanise was working parttime before
the divorce and had planned to do so until her youngest child went to school. However, that plan has
changed and she had to get a full-time job. Her monthly net wages, or take-home pay, is about $1,850.
She also receives an Advance Earned Income Credit (EIC) of $150 a month.
During the divorce Shanise and her husband lost their house because neither of them could afford the
mortgage. She is currently renting a place for $750 a month. She has a $420 car payment, and it costs
her about $100 a month for gas. Car insurance averages about $75 a month.
She has been able to save some money on child care because her husband is able to care for the kids
some of the time. However, she still pays about $150 a month on child care. Shanise also pays $110
for her cable, Internet, and home phone and $45 a month for her cell phone. Water is included in the
rent, but her electric bill averages out to about $80 a month with budget billing. She pays about $400
a month for groceries and at least $150 on personal expenses for herself and the kids. Additionally, her
monthly credit card payments are about $100 a month. When she does not have time to prepare meals
she takes the kids out to eat or eats out for lunch, which probably totals about $120 a month.
Questions
Do her expenses exceed her income?
Can you identify some ways she might change her spending to help balance her income and
expenses?
If Shanise is unable to balance her income and expenses, how would you recommend she
prioritize her spending or expenses?
45

Shanise’s Monthly Income and Expense Worksheet
Income
Expenses
Wages
$1,850
Fixed Expenses
Rent/Mortgage
$750
Public Assistance
Child Support/Alimony
Interest/Dividends
Social Security
Advance EIC
$150
Property Taxes/Insurance
Cable/Telephone/Internet
Cell Phone
Car Payment
Car Insurance
$110
$45
$420
$75
Other
Health Insurance
Other Loan Payments
Flexible Expenses
Savings
Water
Electric
$80
Gas/Oil
Groceries
Eating Out
Transportation/Gas $
Credit Cards
Day Care/Elder Care
$400
$120
$100
$100
$150
Car Maintenance
Education
Personal Expenses
$150
Donations
Total Income
$2,000 Total Expenses $2,500
46

Increase Your Income
How might how each person or persons increase their income?
1. Samar was doing well financially until he was laid off from work. He has not been able to
find work yet, and is concerned about how he is going to pay his bills because he has almost
depleted his savings. What steps could he take to increase his income?
2. The Jacksons’ home was recently destroyed by a ___________________. They did not have
adequate insurance coverage to cover the damages. How might they increase their income?
Tips to increasing your income:
• Review and change your tax-deduction status if you regularly receive a tax refund. This way you can
receive the money throughout the year to pay your expenses. There are also a number of tax credits
(further described below) that may help increase your income, including:
• Advance EIC or Earned Income Tax Credit (EITC)
o Child tax credit
o Credit for child and dependent care expenses
o Education credits
o Tax credits for retirement savings contributions
• Reduce or stop your retirement contributions temporarily as opposed to cashing out your
contributions and paying the taxes and penalties
• Take on a part-time job if you already work full time
• Use a talent or hobby to increase your income
• Seek unemployment assistance if unemployed and not already receiving assistance
• Enroll in a training program to learn a new career or job skill in order to obtain a job
• Update and distribute your resume in order to obtain a job or a higher paying job
• Sell your assets (e.g., an extra vehicle, furniture, jewelry, or your home) if you need to downsize
• Rent out an extra bedroom in your home
47

Activity 2: Spending Plan Considerations (from FDIC Money Smart)
The purpose of this exercise is to give you an opportunity to practice making budgeting decisions when
you have more expenses than income. Read the scenario carefully. Answer the questions. Be prepared to
explain your answers.
Scenario
The Clarks hold off on paying their credit card bills until the end of the month because they know they
do not have enough money to cover what they owe. They have five credit cards. Three of them have an
interest rate of 24 percent. The other two cards have an interest rate of 13 percent. Two of the high
interest rate cards and one of the lower interest rate cards are 15 days past the due date.
Looking over the credit card bills, Mr. Clark is amazed to see that his wife spent $200 last month on
shoes. She is amazed to see that he bought yet another power tool and spent $385 for it. “No wonder we
have no money!” each says to the other.
When reviewing the bills, Mr. Clark confesses that he stops for coffee on his way to work every morning
and eats out for lunch. Mrs. Clark admits that she gets a pedicure and manicure twice a month.
By the time the Clarks pay their rent, utilities, car payment, and grocery bill, they do not have enough
money to make the minimum payment on three of their five credit cards.
What has caused these financial problems for the Clarks?
What can they do to resolve their problems?
48

Develop a Spending Plan
A spending plan is a step-by-step plan for meeting expenses and financial goals in a given
period of time.
Following a spending plan:
• Helps you know what your income and expenses are every month
• Reduces the anxiety of not being able to meet your expenses
• Gives you a sense of control over your money because a spending plan is all about choices—choosing
how to use your money
• Helps you build assets that will improve the quality of life for you and your family
Spending Plan Tools
Select the tool you are most comfortable with:
Monthly Payment Schedule or Calendar
These tools let you record in advance when you will receive income and when bills are due so you
can manage your expenses. Assign dates to pay your basic necessities, or set aside money for monthly
expenses, (e.g., food) and high priority expenses immediately following the dates you are paid to ensure
those bills are covered. You can cross out or check off expenses as you pay them so you can keep track of
what has been paid.
Expense Envelope System
This tool is useful if you pay your bills in cash each month. Make an envelope for each expense category
(e.g., rent, gas, food). Label the envelope with a category name, amount, and due date. Divide the income
you receive into the amounts to cover the expenses listed on the envelope. Pay bills right away so you are
not tempted to spend the money on something else.
Budget Box System
The budget box is a small box with dividers for each month, with one divider for each day of the month.
When you receive a bill, check the due date and place it behind the divider that represents the bill’s due
date. As you receive income, pay your bills right away so you will not be tempted to spend your money on
something else.
Computer Spreadsheet System
If you have access to a personal computer you can create your own spreadsheet with a column for income
sources, income dates, expenses, and expense due dates. At the end of the income sources and expenses
columns, add the function and formula to total each column.
Free personal finance tools are also available online and you can purchase personal finance programs.
Once you set up the system, updating information is quick and easy. It is important to enter transactions
frequently to track your financial position.
Recordkeeping
Keeping accurate records helps you successfully implement and follow a spending plan. Keep financial
records in a safe place or in a safe deposit box. Organize your files so it is easy to find important financial
information. Keep your tax records for at least three years.
49

Activity 3: Financial Recovery Plan (from FDIC Money Smart)
A financial recovery plan will help you determine strategic ways you can save money, pay your bills,
and reduce or eliminate your debt. Your financial recovery plan should include financial goals and a
spending plan to meet these goals. To reach your financial goals it is extremely important to involve
all family members, including older children, in determining how you might increase your income or
decrease your expenses to meet your financial goals.
Set Financial Goals
1. Identify and write down your financial goals to keep yourself accountable and focused on your goals.
Make sure your financial goals are SMART:
Specific
Measurable
Attainable or Achievable
Relevant
Time-bound or time-based
2. Organize your financial goals by timeframes.
3. Evaluate your progress and reevaluate your goals.
My Financial Goals
List your main financial goals and any supporting goals to help you reach them. Make sure each goal is
Specific, Measurable, Attainable, Relevant, and Time-bound.
Main Financial Goals
Supporting Financial Goals
50

Implement Your Plan
Seek Assistance
When you are ready to put your financial recovery plan into action you may need assistance to help cover
your monthly expenses (e.g., mortgage, rent, food, and utility bills). To identify and learn about local,
state, and national assistance programs:
• Ask friends and family members if they are familiar with any assistance programs.
• Contact your utility providers and ask about assistance programs, or visit their website for
information and enroll if applicable.
• Call 211 or visit www.211.org.
• Look for food banks and national food assistance programs that may operate in your area. Contact
your local Department of Human Services or Social Services.
• Seek referrals through your Employer Assistance Program, unemployment office, financial
counselor, or financial advisor.
If you think you make too much money to qualify for assistance programs, do not assume! There are
programs available that do not have income guidelines or provide benefits to those in a medium or
moderate income level.
Additionally, you can refer to:
• www.recovery.gov for more information about initiatives resulting from the new recovery law
• www.govbenefits.gov for details on the broader array of federal loan programs, and to determine if
you are eligible for government benefits
• www.makinghomeaffordable.gov to determine if you are eligible for programs that help you avoid
foreclosure or overcome obstacles to refinancing your home loan
Rebuild Your Credit
After experiencing a financial setback there are two ways to rebuild your credit: do it yourself or use a
reputable credit counseling agency.
To repair your own credit:
• Order a copy of your credit report.
• Review it for errors and request an investigation if there are any. Contact your creditors to explain
your situation.
• Negotiate payment plans with your creditors when you have some money to pay them.
• Opt-out of receiving unsolicited offers for credit cards to avoid
51

Review Your Financial Recovery Plan Regularly
Consider reviewing your:
• Spending plan a month or two after implementing it, and periodically thereafter
(e.g., every six months)
• Financial goals and spending priorities every 12 months or after any life changing events
• Credit report at least every 12 months to check for errors and monitor your progress if rebuilding
your credit and before applying for a loan
Adjust Your Financial Recovery Plan
You may need to review and adjust your financial recovery plan:
• When your income and/or expenses change (increase or decrease)
• When you accomplish, adjust, or create a new financial goal
• When you transition to a new life stage
• Before something unexpected happens
Review and Adjust Your Insurance Coverage
Review your insurance coverage at least once a year, and consult with an insurance representative about
purchasing additional insurance or adjusting the coverage if necessary.
For free tips and online tools and information about insurance, check with organizations (e.g. your state’s
department of insurance, or the Better Business Bureau, and the FTC) and visit:
• www.mymoney.gov
• www.dol.gov
• www.ssa.gov
• www.naic.org
• www.insureuonline.org
Review and Adjust Your Investments
Here are some tips for reviewing and rebuilding your investment portfolio:
• Review your investment portfolio at least once a year, when you experience any major life changes, or
when the market changes.
• Review and adjust your allocations according to your risk tolerance and the amount of time you have
before you need to use the money.
• Assess the fees and annual expenses you are charged and shop around for funds with lower fees and
expenses. Reinvest your dividends.
• Increase your retirement contributions by one or two percent. You will not see a significant drop in
your paycheck, but you should see significant increases in your earnings over time.
52

• Educate yourself and learn more about managing and building your investments rather than
following investment advice blindly.
° Read the prospectus of an investment product or instrument carefully.
° Get more information from reliable sources:
Internal Revenue Service (IRS): www.irs.gov
www.pueblo.gsa.gov/cic_text/money/401k/401k.htm
Use resources at the public library to educate yourself.
Rebuild Your Savings
Once you are on the path to recovery you should consider rebuilding your savings.
This allows you to pay for extra expenses without disrupting or derailing you from
your financial recovery plan. These extra expenses may include:
• Unexpected home or car repairs and other unexpected expenses (e.g., medical expenses
• Expenses that occur once or twice a year (e.g., property taxes and insurance premiums)
• Foreseen future expenses (e.g., a heat pump, water heater, or roof that is getting old and needing to
be replaced)
If you can pay for extra expenses with your savings you can avoid paying the interest and fees you would
be charged when using a credit card.
However, here are a few tips to consider when beginning to save:
• Start small and slowly increase the amount of money you save.
• Be respectful of your savings and only use it when necessary (e.g., car breaks down and you need to
repair it so you can get to work).
• Make extra monthly payments to yourself once you have paid off a credit card or loan, or when you
receive extra income.
Prevent Future Financial Setbacks
Actions you can take to stay on that road to financial recovery:
• Rebuild your savings to pay for extra expenses and avoid incurring debt while trying to recover
financially.
• Continue to apply what you have learned about financial recovery and managing your finances (e.g.,
controlling and monitoring your spending, regularly reviewing and adjusting your plan) even after
you have recovered.
• Keep moving forward.
• Be patient.
• Educate yourself.
• Ask for help and talk with others in a similar financial situation.
53

Budgeting Terms and Definitions
Budgeting - the responsible management of money
Parents often have a budgeting plan for a child’s wedding.
Debt - an amount of money that is owed
Many people accumulate debt by using credit cards for items they can’t afford.
Expenses - products and services that money is spent on
Your personal expenses may include rent, food, and utilities.
Income - money earned or received from other sources
The IRS (Internal Revenue Service) requires you to report your income on your tax form.
Insurance - protection against damage, loss, theft, and other adverse situations
You must have car insurance to drive in Massachusetts.
Loan - money that is borrowed and must be paid back
He took out a loan from the bank to pay for his new car.
Mortgage - long-term loan secured by property such as buildings or land
Most people use a mortgage to buy their first house.
Rent - a payment made for the use of leased property
Every month she has to mail her rent check to the landlord.
Salary - earned income
The employee asked his boss for a raise in salary.
Tuition - money or fees required to attend educational institutions
Private universities usually charge higher tuition than state schools.
Utilities - resources such as electricity, heat, water for a home or business
Some utilities such as a phone may have a fixed monthly rate.
54

Budgeting Quiz
1. How long should you keep your tax records?
a. 2 years
b. 3 years
c. 5 years
d. 10 years
2. Which of the following would be considered a fixed expense?
a. Rent
b. Vacation
c. Electricity
d. Gasoline
3. Social Security covers all of the following except:
a. Survivors
b. Taxes
c. Medicare
d. Disability
4. Which of the following may be used as a budgeting tool?
a. Budget Box System
b. Monthly payment calendar
c. Monthly payment schedule
d. All of the above
5. Another name for a personal spending plan is:
a. Flexible Expenses
b. Net Income
c. Daily Spending Diary
d. Budget
6. Which of the following is not a source of income?
a. Alimony
b. Dividends
c. Student loan
d. Public assistance
7. Gross income is:
a. Income after deductions
b. Income plus expenses
c. Income after security and taxes
d. Income without deductions
55

8. Which loans should you pay off first?
a. The loans you have the longest
b. The loans with the highest balance
c. The loans with the highest interest rate
d. The loans from local banks
9. Which of the following is not a tax credit?
a. Education
b. Retirement savings contributions
c. Child and dependent care
d. Credit card interest
10. To prepare a budget you should:
a. Determine income and expenses
b. Find ways to decrease spending and increase income
c. Track daily spending
d. All of the above
56

Budgeting Quiz –Answers
1. Correct Answer: b. FDIC Money Smart indicates tax records should be kept for 3 years. Contact
the IRS for annual changes.
2. Correct Answer: a. Typically rent is the same amount each month and does not vary.
3. Correct Answer: b. The Social Security Program does not provide money for taxes.
4. Correct Answer: d. Each of these tools are used for budgeting and explained in module.
5. Correct Answer: d. A spending plan is an estimate of the amount of money you anticipate using or
budget. Flexible expenses are outflows net income is an inflow and a daily spending diary is a tool
used for budgeting.
6. Correct Answer: c. A student loan is a debt that must be paid back and can only be used for
education.
7. Correct Answer: d. Gross income is the amount of money earned before money is taken out.
8. Correct Answer: c. Loans with high interest rates compound and rapidly increase debts so it is wise
to take care of them first.
9. Correct Answer: d. Credit card interest is debt and not an item that can lower your taxes.
10. Correct Answer: d. Choices a, b, and c are all effective steps that can be used for budget
preparation.
57

58
Christine Kieffer, Senior Director, FINRA Investor Education
Foundation, introduced the documentary film, Tricks of the Trade:
Outsmarting Investment Fraud, at the June 2011 meeting.

IV. Saving and Investing
Preparing to Invest: Introduction
Savings Tips
How your Money can Grow
Risk-Return Relationship Table
Compounding (with Tables)
Investing in your Twenties
Retirement Savings Vehicles
Activities:
Pay Yourself First Action Plan
Savings Goals Worksheet
Investment Terms and Definitions
Investing Quiz with Answers
Saving and Investing Online Resources
Recommended Supplemental Materials:
BOOKS
1. Freedman, Jeri. First Bank Account and First Investment Smarts, New York: Rosen Publishing,
2009. LIT 332.6 F87F
2. Furgang, Kathy. Real world economics: How the stock market works, New York: Rosen Pub.,
c2011. LIT 332.642 F96H
3. Goldie, Daniel C. The investment answer : learn to manage your money & protect your
financial future, New York: Business Plus, 2011. LIT 332.6 G56I
4. Gough, Leo. How the stock market really works, New York: Financial Times Prentice Hall, c2011.
LIT 332.632 G72H
5. Heath, Julia A. Personal finance essentials: Saving and investing, New York: Facts On File,
c2012. LIT 332.024 P41H v4
6. Morrison, Jessica. Everyday Economics: Saving and Everyday Economics: Investing (two titles),
New York, NY: Weigl Publishers, c2009. LIT 332.024 M83S and LIT 332.6 M83I
7. Pirie, Madsen. Economics made simple: how money, trade and markets really work,
Petersfield, Hampshire: Harriman House Ltd, 2012. LIT 330 P66E
VIDEOS
1. Personal finance: Saving strategies (No Brainers series, program 2). Cerebellum; Camarillo,
CA, 2005. DVD ESL 332.024 P439.2 (26 Minutes)
2. Saving and investing (Personal finance Essentials series). New York: Meridian Education Corp.,
c2011. DVD ESL 332.024 P43S (32 minutes)
59

60
Preparing to Invest (from FINRA Investor Education Foundation)
Introduction: Saving and Investing
People save and invest to have enough money at some point in the future to pay for the things they want or need.
While you might hear these two terms used interchangeably, saving and investing are overlapping, yet distinct
concepts that involve different processes. Stated most simply, saving is the act of putting aside for another day
some of the money you earn or receive as gifts, while investing is what you do with those dollars, including
choosing products and strategies to make money grow or to preserve the assets you’ve accumulated.
If you have specific financial goals that will cost money—such as purchasing a car or a home, paying for college or
building a secure retirement—accumulating assets and building wealth through saving and investing are the keys
to achieving those goals.
Saving for the Future
There are various ways to save. One way is to open one or more deposit accounts, such as a checking or savings
account, in a bank or credit union—or what you’ll sometimes hear described as a savings institution. Deposit
accounts give you ready access to your money, and your account balances are typically insured by the federal
government up to a set limit. Insurance for bank accounts is provided by the Federal Deposit Insurance
Corporation (FDIC), while insurance for credit union accounts is provided by National Credit Union Share
Insurance Fund. The insurance currently protects individual, joint, business and trust accounts up to $250,000
for each depositor in a participating bank or credit union. As a result, when you put money into an insured bank
or credit union account, you don’t risk losing any of your money—neither the amount you put in, which is your
principal, nor the amount you earn in interest. Retirement accounts in those same institutions are insured up to
$250,000 for each depositor, provided all the money is in bank accounts.
Another way to save is to purchase U.S. savings bonds either through an online account with Treasury Direct
(www.treasurydirect.gov), at a bank or sometimes though a program where you work. Savings bonds are backed
by the federal government, so your money is safe. While maturity dates differ depending on the type of bond you
buy and when you buy it, most saving bonds continue to pay interest for at least 30 years from the date of issue.
Series EE savings bonds pay a fixed rate of interest, while Series I savings bonds pay interest linked to the rate of
inflation.
You can’t cash a savings bond for a year after you purchase it, and you’ll lose three months’ interest if you cash it
in within the first five years. After that, you can cash it any time without penalty and collect the interest that has
accrued.
Earning Interest
Every savings institution tells you the interest rate it is paying, expressed as both a nominal, or named, rate and
an annual percentage yield (APY). If the APY is larger than the nominal rate, even by a little bit, that means the
interest is paid more frequently than once a year, and that the interest earnings are added to the principal (or
amount on deposit) each time they are paid. This process, called compounding, creates a bigger base on which
future earnings can accumulate.
Banks and other financial institutions use a complex formula to calculate how interest compounds over the years.
But you don’t have to be a math whiz to see how your money can grow. The Rule of 72 is a shorthand way to
figure out how many years it will take for compounding to double your money at a particular interest rate. What
you do is divide the interest rate you’re earning into 72.
For example, let’s say you have $1,000 and you want to know how long it will take to double your money. If you
earn 6 percent interest each year on your account, you divide 72 by 6:
72 ÷ 6 (representing 6 percent interest) = 12 (years to double your money)
At the end of 12 years, you will have just over $2,000 in your account. Remember, this illustration only focuses
on the impact of compounding on your initial deposit of $1,000—and does not take into account any additional
deposits you might make over time. If you were to deposit $100 each year to your account, it would take only six
years for you to have $2,000.

The true magic of compound interest is that you earn interest not only on your principal, but also on the interest
you accumulate each year.
Learning About Bank Products
Savings institutions offer different types of accounts, sometimes described as bank products, which pay different
interest rates. In general, the higher the rate paid on an account, the more limitations there are on access to your
money. These are the most common types of accounts:
• Basic savings accounts usually pay interest at a lower rate than other bank offerings, though some
institutions may pay higher than average rates, especially when they are competing for customers. You can
withdraw or make additional deposits any time you like.
• Money market accounts usually pay a somewhat higher rate than basic accounts, but typically limit
the number of withdrawals or transfers you can make each month. These accounts may impose fees or stop
paying interest, or both, if your balance falls below a certain minimum.
• Certificates of deposit (CDs) pay the highest rates, but require you to leave your money in the account
for a specific term, or period of time, to earn interest. If you take your money out before the CD matures,
or reaches full term, you may forfeit some or all of the interest you expected to earn. Generally, the longer a
CD’s term, the higher the rate of interest it pays.
Seeking Growth Through Investing
If you are willing to take a certain amount of risk with the money you have saved, you can use it to make
investments that you expect to be worth more in the future or to pay you regular income over time at a rate higher
than you usually can earn on a bank account—or both.
Two of the key ways in which investments differ from savings accounts are: (1) investments are not insured by
the federal government and can lose value, and (2) investment earnings are not guaranteed. If you choose your
investments carefully and if the financial markets perform in your favor, your return—or what you get back on the
amount you invest—can be higher, sometimes much higher, than you could earn on an insured savings account.
Higher expected returns are accompanied by risk. By investing, you take the risk that the investments you choose
may not live up to your expectations, or that troubles in the marketplace may depress investment prices. You can
have a loss if you sell your investment for less than you paid for it. In a worst-case scenario, your investment might
lose all its value. You can limit your risk, however, by not putting all your eggs in one basket and by choosing a
well-diversified mix of investments.
While there are many things of value that you might choose to buy because you expect them to provide a
profit, the term investment is usually used to describe products that are traded in an organized and regulated
marketplace. The best known investments include:
• Stocks, or equities, which give you ownership shares in a corporation.
• Bonds, or fixed income, which promise (but usually don’t guarantee) repayment of the money you invest
plus interest for the use of that money.
• Mutual funds and exchange-traded funds, which are pooled investment vehicles that invest in stocks,
bonds or other financial instruments.
• Cash equivalents, which include U.S. Treasury bills and other short-term interest-paying investments,
such as money market mutual funds (as opposed to money market deposit accounts at a bank).
Other types of investments include listed options, which are contracts to purchase or sell a stock at a set price in
the future, and real estate investment trusts (REITS), which invest in properties or, less often, in mortgages on
properties. Purchasing shares in a REIT is very different from the direct purchase of real estate. The latter can
be considered an investment in the sense that a house or property can increase in value and may provide income
if you rent it out to a person or company. An important difference, though, is that real estate is not traded on an
organized market where there is almost always a buyer when you want to sell. In fact, while real estate may sell
quickly in some periods, it may sell very slowly in others.
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Savings Tips (from FDIC Money Smart)
1. Consider needs versus wants. Think about the items you purchase on a regular basis. These add up.
Where can you save?
• Do you eat out at restaurants a lot?
• Can you cut back on daily expenses (e.g., coffee, candy, soda, or cigarettes)?
• Do you have services you do not really need (e.g., cable television)?
2. Use direct deposit or automatic transfer to savings.
• When you get paid, put a portion in savings through direct deposit or automatic transfer.
• If you have a checking account, you may sign up to have money moved into your savings account
every month. What you do not see you do not miss!
• You may purchase United States (U.S.) Savings Bonds through payroll deduction.
3. Pay your bills on time. This saves the added expense of:
• Late fees
• Extra finance charges
• Disconnection fees for utilities (e.g., phone or electricity)
• Fees to reestablish connection if your service is disconnected
• The cost of eviction
• Repossession
4. Consider opening a checking account at a bank or credit union instead of using check-cashing stores.
You might pay 2 percent or more of each check you cash. Two percent of a $500 check is $10. This
can easily add up to several hundred dollars in fees every year. If you would like more information
about checking accounts, you can take the Check It Out module.
5. Put some money into a savings account if you get a raise or bonus from your employer.
6. Keep making the monthly payments to yourself once you have paid off a loan. You can save or invest
the money for your future goals.
7. Save at least part of any cash gift you receive.
8. Avoid debt that does not help build long-term financial security, including: loans for a vacation,
clothing, and dinners out in restaurants. Examples of debt that helps build long-term financial
security include:
• Paying for college education (for you or your child)
• Buying or remodeling a house
• Buying a car for work transportation
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9. Pay off high-interest credit cards or other loans as soon as you can.
10. Save your change at the end of the day and deposit it weekly or monthly.
11. Save as much of your tax refund as possible. Choose to receive your tax refund via direct deposit.
You can split it between a maximum of three different accounts (e.g., checking and/or savings
accounts). You can also choose to use part of your refund to purchase a U.S. Savings Bond.
12. Join a retirement plan (i.e., a 401(k) or 403(b) plan) if your employer offers one and deducts the
money from your paycheck! Most employers will match up to $.50 of each dollar you contribute.
The matched amount is free money!
13. Do your homework if you decide to purchase investments. Know what you are investing in and
get professional advice if you need it. You should have at least two to six months of emergency cash
savings before you begin investing in investment products that are not federally insured.
14. Reinvest the dividends of any stocks you own to purchase more stocks. Some companies offer an easy
way to do this called a Dividend Reinvestment Program (DRIP). This process grows your investment
faster, similar to compounding.
15. Join an investment club if you are interested in learning about investing. Investment clubs are
groups of people who work together to understand the process and value of investing even small
amounts of money (as little as $5 to$10).
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How Your Money Can Grow (from FDIC Money Smart)
Making regular payments to yourself, even in small amounts, can add up over time. The amount your
money grows depends on the interest earned and the amount of time you leave it in the account.
Interest and Compound Interest
Interest is an amount of money banks or other financial institutions pay you for keeping money on
deposit with them. Interest is expressed as a percentage and is calculated based on the amount of money
in your account.
Compounding is how your money can grow when you keep it in a financial institution that pays interest.
When the bank compounds the interest in your account, you earn money on the previously paid interest,
in addition to the money in your account. Not all savings accounts are created equal. This is because
interest can be compounded daily, monthly, or annually.
Annual Versus Daily Compounding
Annual Compounding
Start with $1,000 at 1%
compounded annually.
At the end of the first day, you still have
$1,000.
At the end of the year, you have $1,010.00
10, or 1% of $1,000 is added to the original
deposit.
Daily Compounding
Start with $1,000 at 1% compounded daily
At the end of the first day, you have
$1,000.03.
On the second day, add the interest earned,
$.03, and compound the total amount
$1,000.03…
At the end of the year, you have $1,010.05
from compounding each day’s interest rate
added to $1,000.
Total: $1,010.00 Total: $1,010.05
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Risk-Return Relationship Table (FINRA Investor Education Foundation)
Type of systematic
risk
Market risk
Interest-rate risk
Inflation risk
Recession risk
Description
• Risk that economic factors may cause
segments of the financial markets and
any investments within those segments
to fall in value
• Possibility that the market value of
an existing bond will fall if interest
rates decrease because newly issued
investments will pay higher rates than
older bonds
• Increases in interest rates can
potentially lower the demand for stocks
to the extent that newly issued bonds
or other interest bearing products with
higher coupons allow investors to take
less risk for a competitive return
• As inflation rises, the value of fixedrate
investments, such as bonds and CDs,
declines, since their interest rates aren’t
adjusted to keep pace
• An economic slowdown could mean
that many types of investments could
lose value
Risk management strategy
• Allocate your assets so you own
investments that respond differently to
various economic factors
• Avoid panic selling and locking in
losses when prices are low if the
investments’ long-term prospects are
still good
• Diversify with short- and midterm
bonds and bond funds, since they’re
less sensitive to interest-rate changes
• Hold individual bonds to maturity
• Ladder your bond portfolio across
three or four bond issues with different
maturities
• Allocate a percentage of your long-term
portfolio to stock and stock funds to
outpace inflation
• Allocate a portion of your portfolio to
inflation-linked bonds.
• Maintain a long-term outlook
• Include countercyclical stocks in your
portfolio, meaning stocks that tend not
to fall even during a recession (such as
pharmaceuticals or utilities)
Currency risk
Political risk
• As U.S. dollar rises in value, the value
of overseas investments may decline,
and vice versa
• Political instability in an
interconnected global economy can
affect the value of domestic and
international investments
• Include some conservative investments
that aren’t positively correlated to the
stock market in your portfolio
• Diversify both domestically
and abroad in both developed
and emerging markets
• Allocate a percentage of your portfolio
to products that are less vulnerable to
market turmoil
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Risks that you can predict will occur—though not when they will happen—are known as systematic risks.
These risks are part and parcel of investing in the financial markets. While learning to accept risk as
a normal part of investing is necessary to your success as an investor, there are ways to minimize the
impact of systematic risks on your portfolio.
Allocating your portfolio across a broad spectrum of asset classes is a primary way to reduce systematic
risk. For instance, you might invest a percentage of your portfolio in bonds and bond funds, another
percentage in a variety of stock and stock mutual funds, including international stock as well as small-,
medium-, and large-company domestic stock, and another percentage in cash equivalents, such as CDs
and U.S. Treasury bills. Some investors also include real estate, precious metals, and other products in
their portfolios, often by choosing funds that invest in those products.
There are also certain market conditions when you may be able to find competitive investment returns
with comparatively less risk. For instance, when interest rates rise, bonds may offer returns that are on
par with some stock returns but with less risk to principal. That’s the case, in part, because they are less
volatile.
One of the biggest risks you may fall prey to, however, is trying to avoid risk altogether. If you invest very
conservatively or don’t invest at all because you’re afraid of losing your principal, you become vulnerable
to inflation, which can erode the value of your interest-bearing savings and investments over the longterm.
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Compounding with Tables (FINRA Investor Education Foundation)
Compounding is what happens when your investment earnings or income are reinvested and added to your
principal, forming a larger base on which earnings can accumulate. The larger your investment base, or principal,
grows, the greater the earnings your investment can potentially generate. So the longer you have to invest, the more
you can potentially benefit from compounding.
For example, compare what happens to the investment accounts of Investor A and Investor B.
Total Investment
Average annual rate of return
Total dollars generated by investment after
20 years
Total dollars generated by investment after
40 years
Investor A
$10,000
9%, not compounded
$28,000
$46,000
Investor B
$10,000
9%, compounded yearly
$56,044
$314,094
Both Investor A and Investor B invest the same amount of money and get the same average annual rate of return
of 9 percent. That’s a realistic average annual pretax return for a diversified stock portfolio. The difference is that
Investor A chooses to withdraw, rather than reinvest, the return. At the end of 20 years, Investor B’s investment will
be worth more than twice as much as Investor A’s, and at the end of 40 years, that difference will have grown to
almost seven times as much.
In this second example, you’ll see that the effect that time has for two investors that have both chosen compounding:
Investor C
Monthly investment $200 $400
Average annual rate of return,
compounded yearly
9% 9%
Investor D
Length of investment 40 years 20 years
Total value of account
After 40 years:
$883,900
After 20 years:
$267,670
Again, both Investor C and D invest the same amount of money—$96,000—at a 9 percent average annual rate of
return, this time compounded yearly for both. But while Investor C puts away $200 a month for 40 years, Investor
D puts away $400 a month, for only 20 years. At the end of the investment period, however, Investor C’s account
is worth more than three times Investor D’s account. That’s because Investor C’s account benefited from 20 extra
years of compound growth.
It’s worth noting that while you can accurately determine the value of compounding on an investment or savings
account offering a fixed rate of return, you can only estimate the return you will receive on investments that
fluctuate, such as stock or mutual fund investments. All other things being equal, though, the investor who starts
earlier and reinvests returns is going to be much better off than the one who starts later and does not reinvest those
returns.
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Investing in Your Twenties (FINRA Investor Education Foundation)
If you’re starting your career or have recently graduated from college, the financial choices you make now can
have a bigger impact on your future financial security than those you make at any other time of your life.
You don’t necessarily have to sacrifice a lot to have a big long-term impact. Even modest sums invested regularly in
growth investments, such as a well-diversified portfolio of stock, stock mutual funds or ETFs have the potential to
increase to a substantial nest egg over 25 or 30 years or more.
There will be competing pulls on your money if you’re paying off student loans or helping your parents or younger
siblings with their expenses. And, if you’re just starting out on your own, you may be finding it difficult to make
ends meet.
On the other hand, you’re probably not paying off a large mortgage and home repair expenses or dealing with the
costs of raising a family. You probably don’t have major healthcare expenses. In addition, if you have a job you like
and you’re good at, it’s reasonable to expect that your earnings will increase.
Benefits of starting early
Having time ahead of you gives you other advantages. Few people are able to come up with the money they need
to meet major expenses—such as buying a home or sending children to college—out of their ordinary income. But
by planning ahead and making small but regular contributions to your investment accounts, it becomes easier to
accumulate the sums you’ll need. If you have the money automatically deducted from your paycheck or checking
account, you may never even miss it.
Plus, the longer you have to invest, the greater the potential for your investments to compound, or grow in value.
Compounding is what happens when your investment earnings or income are reinvested and start generating
earnings themselves. To see how this works, compare the following two individual retirement accounts (IRAs):
Investor A’s portfolio
Monthly investment $150 $300
Length of investment 40 years 20 years
Total investment $72,000 $72,000
Annual interest rate, compounded
yearly
Total value of account at end of
investment period
9% 9%
$667,637 $202,434
Investor B’s portfolio
Investor A begins investing $150 a month in an IRA when he’s 25. Investor B, on the other hand, doesn’t start
investing in an IRA until she’s 45, although she contributes twice the amount of Investor A, or $300 per month.
When they turn 65, they’ve both contributed the same amount of money to their accounts, or $72,000, and both
have earned an average annual rate of return of 9 percent, compounded yearly—a realistic average rate of return
for a diversified stock portfolio.
But while Investor B has $202,434 in her account by age 65, Investor A has $667,637 in his account—over
three times as much. The difference is that he started much earlier, and his account had 20 additional years to
compound.
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Retirement Savings Vehicles (FINRA Investor Education Foundation)
IRAs
When IRAs were first introduced, there was just one basic type, which was open to anyone with earned income.
But since then, IRAs have evolved to include a number of variations:
• Traditional: There are two categories of tax-deferred traditional IRAs: deductible and
nondeductible. If you qualify to deduct your contributions, you can subtract the amount you
contribute when you file your tax return for the year, reducing the income tax you owe. If you don’t
qualify to deduct, the contribution is made with after-tax income.
• Whether you qualify for the deduction, as well as the amount of your deduction, will depend on a
combination of your modified adjusted gross income —which is your income after certain deductions
are subtracted. It also depends on whether you or your spouse are eligible to participate in employersponsored
retirement plans through your jobs.
° ° Single taxpayers and couples who are not eligible to participate in employer plans can deduct the full
amount of their traditional IRA contributions no matter how much they earn.
° ° If both spouses are eligible to contribute to an employer plan, and they file a joint return for tax year
2012, the deduction is reduced as modified adjusted gross income climbs from $92,000 to $112,000.
The deduction phases out completely when your income reaches that ceiling.
° ° For married couples filing jointly where only one spouse is eligible to participate in an employersponsored
plan, the deduction for tax year 2012 is reduced as modified adjusted gross income climbs
from $173,000 to $183,000.
° ° For singles who are eligible to save in an employer plan, the deduction is reduced as modified
adjusted gross income climbs from $58,000 to $68,000.
Earnings on investments in a traditional IRA are tax-deferred for as long as they stay in your account. When you
take money out—which you can do without penalty when you turn 59½, and are required to begin doing once you
turn 70½,—your withdrawal is considered regular income so you’ll owe income tax on the earnings at your current
rate. If you deducted your contribution, tax is due on your entire withdrawal. If you didn’t, tax is due only on the
portion that comes from earnings. You can’t contribute any additional amounts to a traditional IRA once you turn
70, even if you’re still working.
• Roth: Contributions to a Roth IRA are always made with after-tax income, but the earnings are
tax-free if you follow the rules for withdrawals: You must be at least 59½ and your account must
have been open at least five years. What’s more, with a Roth IRA you’re not required to withdraw
your money at any age—you can pass the entire account on to your heirs if you choose. And you can
continue to contribute to a Roth as long as you have earned income, no matter how old you are.
Contribution levels for a Roth are the same as those for a traditional IRA in 2012.
However, there are income restrictions associated with contributing to a Roth IRA. In 2012, if your modified
adjusted gross income is less than $110,000 and you’re single, you’re eligible and can contribute $5,000, or
$6,000 if you are 50 or older. As your modified adjusted gross income increases, you can contribute a decreasing
percentage of the $5,000 until your modified adjusted gross income reaches $125,000, when your eligibility to
contribute is phased out. If you’re married and file a joint return, the limits are $173,000 for a full contribution,
which is phased out entirely at $183,000. Both you and your spouse can each establish your own Roth IRAs.
If you’re eligible for a partial Roth contribution, you can put the balance of the $5,000 in a traditional
IRA, and you might qualify to deduct that portion.
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Which Is Better: Traditional vs. Roth IRA?
The answer to this question will vary from person to person. Assuming you’re eligible for either a deductible,
traditional IRA or a Roth IRA, here are some factors to consider:
o Current- year tax benefits—Depending on your income and employment, contributions to a traditional
IRA may be tax deductible, which reduces your taxable income each year you contribute. But if you
don’t need that tax break now, a Roth IRA can give you more flexibility since you can withdraw your
contributions at any time without paying taxes or fees—and you can withdraw your earnings tax-free if
your account has been open at least five years and you are 59½ or older.
o Likely future tax bracket—If you’re young and likely to be in a higher tax bracket when you retire, then
a Roth IRA may make more sense. But if you’re likely to be in a lower tax bracket after you retire,
a traditional IRA is usually the better choice. With a traditional IRA, however, you are subject to
minimum required distributions when you reach age 70 ½.
• Spousal: If you’re married to someone who doesn’t earn income (for example, if your spouse stays home with
small children), you can contribute up to the annual limit in a separate spousal IRA in that person’s name as
well as putting money into your own IRA. For example, in 2012, your total contribution could be $5,000 to
your spouse’s IRA and $5,000 to your own, plus catch-up contributions if you’re 50 or older.
Your spouse owns the spousal IRA, chooses the investments and eventually makes the withdrawals. A spousal
IRA can be a traditional deductible, traditional nondeductible or a Roth IRA, as long as you qualify for the
type you select.
• Deemed or “Sidecar” IRAs: In some cases, you can make contributions to an IRA through your employer
by taking advantage of a deemed or “sidecar” IRA provision.
In this case, your employer deducts your IRA contributions from your after-tax earnings. All the rules for this
account—that is, for contribution limits, withdrawal rules and so forth—are the same as for any other IRA. If
you qualify, you may be able to deduct your contribution when you file your tax return.
You might find a deemed IRA helps you to save. After all, contributions are automatic, so you don’t have to
remember to write a separate check to your IRA custodian and you won’t be tempted to spend the money on
something else. But you might also find that your choices of IRA investments are limited with this option, since
they will depend on which financial services company your employer chooses as custodian or trustee of the
account.
In addition, if you’re not keeping accurate records of your deemed IRA contributions, you might inadvertently
go over the contribution limit, which remains the same no matter how many separate IRA accounts you have.
That could mean incurring penalties.
IRA Rollovers
There are penalties for withdrawing from your IRA before 59½, but there are no penalties for transferring
your account from one custodian to another. You might want to do that for several reasons: to be able to make
different types of investments, to consolidate several IRAs with a single financial services company or perhaps
simply because you move across the country.
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In most cases, you roll over a traditional IRA to another traditional IRA and a Roth IRA to a Roth IRA.
There are specific guidelines for handling rollovers. Normally, the easiest way is a direct rollover: You ask
your current IRA custodian to transfer the money directly to another custodian where you already have
an IRA—either a previously existing one or one you’ve just opened. Once you fill out the authorization
forms, the money will be moved electronically to the investments you have selected in the new account—
though not instantly. It may take days or even weeks for the transaction to take effect and you’ll want
to follow up to be sure that the transfer has actually been completed and the money invested as you’ve
directed.
A direct rollover isn’t the only way to handle moving your IRA assets. You can ask for a check for the
amount to be rolled over and complete the transaction on your own. But you must deposit the full
amount into the new IRA within 60 days. If you don’t, regardless of the reason, the IRS considers the
money an early withdrawal, so taxes are due as well as a potential 10 percent penalty if you’re younger
than 59½. What’s more, that amount can never be deposited in a tax-deferred account again.
You may also choose to convert a traditional IRA to a Roth IRA. Before January 1, 2010, only taxpayers
with incomes under $100,000 could make these kinds of conversions. But that ceiling has been lifted.
The law creating this change also included a special provision that allows taxpayers to spread the extra
taxes caused by the conversion over 2011 and 2012. When you convert a tax-deferred IRA to a Roth IRA,
all tax-deductible contributions, plus the earnings they’ve generated, are added to your gross income and
taxed at your regular income tax rate. So if you’ve accumulated a substantial amount in the IRA you’re
moving, you could face a hefty tax bill.
If you’re thinking about moving your assets to a Roth IRA, you should consult your tax adviser to be sure
it is appropriate for you. One thing you’ll want to consider is how you’ll pay the taxes. In most cases, the
benefits of converting tax-deferred accounts to a Roth are only realized if the taxes are paid from savings
or investments outside the retirement fund itself.
Pulling the tax payment from your rollover could be more costly for younger investors. If you are younger
than 59½ years old, you could receive a 10 percent early withdrawal tax penalty if the full conversion
amount is not deposited in your new Roth account within 60 days.
Another factor is whether you’ll keep the Roth IRA open at least five years. If that doesn’t seem likely,
making the switch is probably not a good idea because you’ll owe tax again on the withdrawals since the
tax-free withdrawal provisions won’t apply.
IRA Beneficiaries
When you open an IRA, you should name a beneficiary for your account. A beneficiary is the person
you want to receive the assets you have accumulated when you die. If your IRA custodian permits it, you
might also name contingent or secondary beneficiaries—essentially, back-up heirs in case something
happens to your first choice, or that person chooses not to take the money. For example, you might name
your spouse as primary beneficiary and your children as contingent beneficiaries.
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Activity 1: Pay Yourself First Action Plan (from FDIC Money Smart)
The top half of the plan gives you space to record factors that may affect the steps you take to save, and
the savings or investment products you use to save. The bottom half of the plan gives you space to record
the actions you plan to take now, a month from now, and a year from now in order to reach your savings
goals.
Decision Factors
How much do I want to accumulate over a certain period of time?
How long can I leave my money invested?
How do I feel about risking my money?
Action Plan
What will I do now to save toward my goals?
What will I do by the end of the month to save toward my goals?
What will I do by the end of the year to save toward my goals?
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Activity 2: Savings Goals Worksheet (from FDIC Money Smart)
Think about and write down any savings goals you have and the amount you need to save.
1. My savings goals:
Write down some ways to save money for the goals you identify.
2. Strategies to save for my goals:
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Investment Terms and Definitions
Blue Chip – a company that is well-known with a history of growth and profits
His parents invested in blue chip stocks for his college fund.
Bonds – long-term debt securities issued by corporations and governments usually
paying interest on a regular basis
The city issued bonds to raise money for a new housing project.
Brokerage – firms licensed by the Securities and Exchange Commission (SEC) to buy
and sell securities for clients and for their own accounts
He went to a brokerage to purchase shares of stock.
Certificates of Deposit – an interesting-earning investment issued by a bank with a
fixed amount and term
My bank offered a high interest 5-year certificate of deposit.
Commission – a fee charged by a broker to buy or sell shares of stock
The broker made a large commission on the sale of the new technology stock.
Diversification – a strategy of investing in several types of investments in order to
maximize profit and reduce risk of loss
Her investment portfolio held securities in many different types of industries in order
to achieve diversification.
Dividend – payment that stockholders receive from a company’s profit
The healthcare stock that she owned paid a quarterly dividend.
Invest – use money to make more money
Some people invest in art along with stocks and bonds.
Liquidity – easily sold or converted into cash
Stocks traded on the New York Stock Exchange have a high liquidity.
Maturity – the date that a security is due and the initial investment plus any
remaining interest owed is repaid
The maturity date for her bond is April 1, 2014.
Mutual Fund – an investment that is made up of several securities managed by a professional
He chose to invest in a mutual fund because he wanted the expertise that a fund
manager provides.
Securities – all types of investments such as stocks, bonds, funds, etc.
The Securities and Exchange Commission regulates investment securities.
Stocks – shares of ownership in a company
Some stocks pay dividends several times a year.
74

Investing Quiz
1. Which of the following are popular investments?
a. Stocks and bonds
b. Mutual funds
c. Money market accounts
d. All of the above
2. Two types of stock are:
a. Roth and 401K
b. Risk and Reward
c. Standard and Poor’s
d. Common and Preferred
3. Diversification is a common investment strategy. Which of the following is the best
example of diversification?
a. Buying stocks, bonds and certificates of deposits
b. Buying stock in 3 technology companies
c. Purchasing corporate, treasury and municipal bonds
d. Purchasing stocks from different brokers
4. A corporate bond that typically pays high interest because it is high risk is called:
a. A municipal bond
b. A treasury bond
c. A junk bond
d. A corporate bond
5. All of the following are stock exchanges except:
a. NYSE
b. FDIC
c. AMEX
d. NASDAQ
6. A mutual fund is:
a. Managed by a professional
b. A pool of money used to buy a variety of stocks
c. A way an investor can buy shares in companies that they couldn’t afford to buy alone
d. All of the above
7. A fee paid to a broker is called:
a. Interest
b. Dividends
c. Commission
d. Return on investment
75

8. Which of the following people have the primary responsibility to give advice about securities
and are required by law to act in the interest of their clients?
a. Brokers
b. Financial planners
c. Investment advisors
d. Day traders
9. Profit on the sale of an investment is called?
a. a stock split
b. A dividend
c. a capital gain
d. All of the above
10. What is par value?
a. An acronym for principal and return
b. A term for the redemption value of a bond
c. An index and valuation of stocks
d. The part of your dividend that you reinvest
76

Investing Quiz – Answers
1. Correct Answer: d. All of the above
Although people have differing risk levels, all of these investments are commonly bought.
2. Correct Answer: d. Common and Preferred
Common stock represents ownership in a corporation. Dividends paid on common stock fluctuate
with the profitability of the company. Preferred stock is an equity investment that typically pays a
fixed dividend on a regular schedule. Roth and 401K refer to retirement accounts. Standard and
Poor’s is a rating service.
3. Correct Answer: a. Buying stocks, bonds and certificates of deposits
Diversification specifically refers to having several different kinds of securities in an investment
portfolio.
4. Correct Answer: c. A junk bond
A junk bond is considered a risky investment and carries a lower rating.
5. Correct Answer: b. FDIC
The FDIC stands for the Federal Deposit Insurance Corporation and insures bank accounts. NYSE
is the New York Stock Exchange. AMEX is the American Stock Exchange and NASDAQ is the
National Association of Securities Dealers Automated Quotation system.
6. Correct Answer: d. All of the above
Letters a, b, and c are all true.
7. Correct Answer: c. Commission
Commission refers to a fee. Interest is money earned on a bank deposit or a bond or paid on a
loan or credit card. Dividends represent money paid on stock. Return on investment is the profit,
usually calculated as a percentage, made on an investment.
8. Correct Answer: c. Investment advisors
Investment advisors give advice. They do not necessarily buy and sell securities or create financial
plans.
9. Correct Answer: c. a capital gain
Dividends are paid on shares owned, not sold. A stock split changes the value of an individual
share of stock, but not your total investment.
10. Correct Answer: b. A term for the redemption value of a bond
Par value is the face value of a bond. It is equal to both the issue price and the amount repaid at
maturity.
77

Saving and Investing Online Resources
10 Basic Steps to Help you Get Started -
http://www.smartaboutmoney.org/Home/TaketheFirstStep
How to get organized, save for your future, set financial goals and more.
Basics of Saving and Investing
http://www.investorprotection.org/teach/?fa=basics
Four part investor education program that includes an Introduction to Financial
Markets, and Investment Fraud.
Feed the Pig
http://www.feedthepig.org/
Free financial information and tools to empower 25-34 year olds to take charge of
their personal finances and live within their means.
Gen i Revolution
http://www.genirevolution.org/
Developed by the Council for Economic Education for middle school and high school
students, an online game that gives students the chance to learn important personal
finance skills.
Investing Basics
http://www.investor.gov/investing-basics
From the U.S. Securities and Exchange Commission. Also see Introduction to the
Markets http://www.investor.gov/introduction-markets
Investment Planning: The Basics
http://www.360financialliteracy.org/Topics/Investor-Education/Investing- Basics/Investment-Planning-
The-Basics
From 360 Degrees of Financial Literacy/American Institute of Certified Public
Accountant.
Investor Knowledge Quiz
http://www.finra.org/Investors/ToolsCalculators/P116940
FINRA’s basic quiz on investing with informative answers. PDF download available.
Investor Protection Tips
http://www.sec.state.ma.us/sct/sctinv/invidx.htm
From the Mass Securities Division downloadable brochures on Annuities, Mutual
Funds, Investment Fraud and more.
Investor Tools from the CFA Institute
http://www.cfainstitute.org/about/investor/Pages/index.aspx
Includes Glossary, Basics of Investing and Investment Insights.
78

Making your First Investments
http://www.aaii.com/classroom/article/making-your-first-investments
From the American Association of Individual Investors.
My Retirement Paycheck
http://www.myretirementpaycheck.org
For consumers nearing retirement, whether they have made retirement plans or not.
Answers questions on an array of financial topics such as insurance, debt and fraud
protection. From the National Endowment for Financial Education.
Opportunity and Risk: An Educational Guide to Trading Futures and Options on
Futures
http://www.nfa.futures.org/NFA-investor-information/publicationlibrary/opportunity-and-risk-entire.pdf
From the National Futures Association.
SavingforCollege.com http://www.savingforcollege.com/
Financial Aid Basics, Guide to 529 plans and more.
Saving our Futures
http://www.americaspromise.org/Resources/Financial-Responsibility
Program about financial responsibility developed for middle and high school students.
Curriculum available in English and Spanish.
Smart Investing – Getting Started
http://www.finra.org/Investors/SmartInvesting/GettingStarted/
How to get started on your investment program from the FINRA Foundation.
79

80
Julie Soforenko, Community Outreach Coordinator, American Consumer Credit Counseling
presented the FDIC Money Smart curriculum.

V. Credit
Overview of Credit
What is a Credit Report?
How to Read your Credit Report
How the Credit Report is Used
How to Get your Free Annual Credit Report
Credit Cards: What are they used for?
Credit Card Comparison Chart
Sample Credit Card Statement
Paying your Credit Card Bill
Activities:
Maria’s Credit Report
John’s Credit Report
Who Poses the Most Credit Risk?
Using Credit Cards Responsibly
Credit Terms and Definitions
Credit Quiz with Answers
Recommended Supplemental Materials:
BOOKS
1. Byers, Ann. First credit cards and credit smarts, New York: Rosen Pub., 2010.
LIT 332.765 B99F
2. Consumer Math: Mathematics of banking and credit, Steck- Vaughn/Houghton Mifflin, 2011.
LIT 332 M42M
3. Heath, Julia A. Personal finance essentials: Credit and borrowing, New York: Facts On File,
2012. LIT 332.024 P41C v3
4. Hollander, Barbara. How credit crises happen, New York, NY: Rosen Pub., 2011.
LIT 338.542 H71H
VIDEOS
1. Credit basics: Simple strategies for smart credit, Linx Educational, 2009.
DVD ESL 332.024 C86C (25 minutes)
2. Get out of debt! : and rebuild your credit, ShowMeHow Videos, c2009. DVD ESL 332.024 G33G
(52 minutes)
3. Personal finance essentials: Credit, borrowing and debt, New York: Meridian Education Corp.,
c2011. DVD ESL 332.024 P43C (36 minutes)
4. Understanding credit basics: know the score! Chicago, IL: Learning Seed, c2010.
DVD 332.7 U55U (23 minutes)
5. Using credit cards wisely: take charge! Chicago, IL. : Learning Seed, c2010. DVD 332.7 U85U
(25 minutes)
81

Overview of Credit (from FDIC Money Smart)
Credit Defined
Credit is the ability to borrow money. When you borrow money on credit, you get a
loan. You make a promise to pay back the money you borrowed plus interest, which
is an extra amount of money a financial institution charges for letting you use its
money.
Credit is important for a number of reasons:
• It can be useful in times of emergencies.
• It is sometimes more convenient than carrying large amounts of cash.
• It allows you to make a large purchase (e.g., a car or house) and pay for it over time.
• Prospective employers, landlords, and insurance companies may look at how well you manage credit.
Credit is a loan often secured by collateral or a guarantee. Collateral is security, or an
asset that you provide the lender. Giving the lender collateral means that you pledge
an asset you own (e.g., your home) to the lender with the agreement that it will be the
repayment source in case you cannot repay the loan.
Credit Case: Marvin’s Desks
Marvin makes writing desks and sells them for extra money. He wants to borrow
$1,000 for a new band saw and an electric sander. He obtains a loan from the bank
and pledges his new equipment as collateral.
If Marvin does not (or cannot) pay back the loan, what will the lender probably do?
82

What Is a Credit Report? (from FDIC Money Smart)
A credit report is a record of how you have paid your debts. It tells lenders:
• Who you are
• How much debt you have
• Whether you have made payments on time
• Whether there is negative information about you in public records
Credit Reporting Agencies
There are three major credit reporting agencies: Equifax, Experian, and TransUnion.
These agencies receive information from a variety of creditors, usually monthly, about
whether you are making loan and credit card payments on time. The agencies also collect
information about bankruptcy filings, court-ordered judgments, tax liens, and other public
record information from courthouse records.
Information Contained in a Credit Report
The reports from each of the credit agencies look different, but generally contain the same
basic information.
1. Your identifying information, including:
• Name
• Social Security Number (SSN)
• Current and previous addresses
• Telephone number
• Birth date
• Current and previous employers
• Spouse’s name, if married
2. A report containing your credit history
3. A list of inquiries
4. A report containing information about you in public records (e.g., collection accounts, bankruptcies,
foreclosures, tax liens, civil judgments, delinquent student loan payments, and late child support
payments)
Personal Bankruptcy
The two most relevant types of bankruptcies are: Chapter 13 bankruptcy and Chapter 7 bankruptcy. You
need to have a regular income to qualify for Chapter 13 bankruptcy. You can keep all of your property,
but you must make regular payments on the debts, even after filing for bankruptcy. Income restrictions
apply when filing for Chapter 7 bankruptcy. You must give up certain property to the creditor. Yet, you
may be allowed to keep certain property that the law agrees is needed to support yourself and your
dependents.
It is important to understand that bankruptcy has a very negative impact on your credit. It should be
your last resort! Depending on the type of bankruptcy, it will remain on your credit report from 7 to 10
years. Having a bankruptcy on your credit report will make it hard to get credit in the future. The law
now requires that you receive credit counseling before filing for bankruptcy.
83

How to Read Your Credit Report (from FDIC Money Smart)
The following information is generally included on all credit reports:
1. Personal or consumer information (e.g., name, addresses, and employment)
2. Personal or consumer statement, if you submit a statement to the credit reporting agencies to be
included in your credit report
3. Account summary, including: creditor information, account status and type, and account history
4. Inquiries that have been made into your credit history
5. Public record information (e.g., tax lien, legal item, bankruptcy, wage item, judgment, etc.) that is
not shown in this example:
84

How the Credit Report Is Used (from FDIC Money Smart)
Information in your credit report may determine whether you will:
• Get a loan or other form of credit
• Get a job
• Be able to rent an apartment and/or affect the amount of your security deposit
• Get insurance
Keep in mind, credit reporting agencies do not make credit decisions. Credit reporting agencies simply report the
information provided by creditors. This information can affect whether you get your next loan.
Creditors might deny a loan application if you have no credit history or if you have had credit problems in the
past. A good credit record indicates you will most likely repay the loan, and lenders will be more willing to give you
a loan.
Credit Score
Your credit score is based on the information in your credit report.
• Your credit score—sometimes referred to as a credit rating or Fair Isaac Corporation (FICO) Score—is a
number that helps lenders determine how much of a credit risk you may be.
• It has become increasingly common for lenders to make decisions largely based on credit scores.
It is important to learn how the score is calculated so you can improve your score if necessary to obtain credit.
• Your payment history is the largest percentage of your credit score. That is why it is important to pay your
bills on time.
If you do not have a history of late payments, your score may be lowered if your credit card balance is close to the
limit or if you have just begun to use credit.
Creditors may use one or more credit scores. They may generate the scores themselves, or they may use a score
calculated by another firm. Two of the scores used by creditors and lenders are FICO Score and VantageScore.
FICO Score
The FICO score is the primary method lenders use to assess how deserving you are of their credit. A FICO score
is calculated using a computer model that compares the information in your credit report to what is on the credit
reports of thousands of other customers. FICO scores range from about 300 to 850.
The FICO model takes into account several factors when evaluating creditworthiness:
• Past payment history: 35 percent
• Outstanding debt: 30 percent
• How long you have had credit: 15 percent
• New applications for credit: 10 percent
• Types of credit: 10 percent
85

Federal law prohibits personal information (e.g., ethnicity, religion, gender, or marital status from being reflected
in your FICO score).
VantageScore
VantageScore is a newer credit scoring system offered by all three credit reporting agencies. You should have a
similar VantageScore from each of the three agencies. The VantageScore ranges from 501 to 990. It groups scores
into letter categories covering an approximately 100-point range, just like grades you receive on a report card. For
example, your credit grade would be “A” if you had 901 points or more.
Effects of Good and Bad Credit Scores
It is very difficult to say what is a good or a bad score since lenders have different standards for how much risk
they will accept.
• A credit score that one lender considers satisfactory may be regarded as unsatisfactory by other lenders.
• One thing is certain for virtually all lenders when it comes to obtaining a loan or a credit card; the better your
credit score is the more likely you are to get a lower interest rate and pay less for borrowing money.
• Scores fluctuate depending on credit activity. Since credit reporting agencies only calculate your score at the
lender’s request, it will be based on the information in your file at that particular credit reporting agency, at
that particular time.
• Different scores from different credit reporting agencies can be a result of them having different information.
To ensure accuracy of your information, you should obtain a copy of your credit report from each credit
reporting agency.
Inquiries May or May Not Affect Your Credit Score
The inquiries section of your credit report contains a list of everyone who accessed your credit report within the
last two years, including voluntary inquiries spurred by your own requests for credit and inquiries from lenders
and other companies you authorized to order your credit report.
Inquiries as a result of a request you make for your own credit report will not influence your credit score. But,
inquiries from lenders and potential creditors can be a factor in your credit score. For instance, your credit score
may drop if you apply for a new credit card. If it does, it probably will not drop much. If you apply for several
credit cards within a short period of time, multiple inquiries will appear on your report. Several inquiries on your
credit report may suggest to a lender that you could be having financial troubles or are on the verge of becoming
too deep in debt.
Shopping for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though
you are only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made
in the 30 days prior to scoring. After 30 days, multiple inquiries relating to a mortgage or auto loan application in
a typical shopping period are treated as one inquiry. That means that your credit score is not harmed by shopping
around for the best car or home loan.
86

How to Get Your Free Annual Credit Report (from FDIC Money Smart)
To order your free annual report from one or all three of the credit reporting agencies, do one of the following:
• Submit a request online at www.annualcreditreport.com
• Call toll-free: 1-877-322-8228
• Complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P. O. Box 105281
Atlanta, GA 30348-5281
You can print a copy of the Annual Credit Report Request Form from www.annualcreditreport.com or www.ftc.
gov/credit. You will need to provide:
• Your name, address, SSN, and date of birth
• Your previous address if you have moved in the last 2 years
• Identifying information specific to you for security purposes (e.g., amount of your monthly
mortgage payment)
• Different information for each requesting company, because the information each has in your file
may come from different sources
In addition to the one free report a year, you may also be able to obtain a free credit report if:
• Your application for credit, insurance, or employment is denied based on information in your credit report
• You are unemployed and plan to look for a job within 60 days
• You are receiving public assistance
• You have reason to believe that your report is inaccurate because of fraud, including identity theft
If you are not eligible for a free annual credit report, a credit reporting agency may charge you up to $10.00 for
each copy. To buy a copy of your report, contact one of the following:
• Equifax: 1-800-685-1111 or www.equifax.com
• Experian: 1-888-EXPERIAN (397-3742) or www.experian.com
• TransUnion: 1-800-916-8800 or www.transunion.com
Opting Out
Credit card companies often access your credit report so that they can send you applications for their credit cards.
• You have the right to opt out of receiving these offers.
• The Fair Credit Reporting Act (FCRA) gives you the right to opt out or stop credit reporting
agencies from providing your name and address for marketing lists for credit or insurance.
• Call toll-free 1-888-5-OPT-OUT (567-8688) or visit www.optoutprescreen.com/.
• Another option is to call the phone numbers that may be listed in your credit card privacy notices.
87

Annual Credit Report Request Form
You can complete and submit the Annual Credit Report Request form to receive a copy of your free
annual credit report.
88

Credit Cards: What Are They Used For? (from FDIC Money Smart)
Credit Cards versus Debit Cards
Credit cards are a convenient form of borrowing money to purchase goods and services
and pay at least a portion (minimum payment) of the bill every month. Charge cards
are used like credit cards, but you must pay the entire balance every month. Debit cards
are similar to credit cards except that they are tied to your checking account.
Debit Cards
Credit Cards
Payments Buy now, pay now. Buy now, pay later.
Interest Charges
Fees
Other Potential
Benefits
No charges apply as funds are automatically
debited from your checking account.
Fees on certain transactions (e.g., an
Automated Teller Machine (ATM) fee
charged for withdrawing funds from
an ATM not operated by the financial
institution that issued your debit card).
Potentially costly fees if you try to spend
more money than available in your account.
Easier and faster than writing a check.
No risk of losing cash that you cannot
replace. Some cards may offer freebies or
rebates. As long as you do not overdraw your
account, debit cards are a good way to pay
for purchases without borrowing money and
paying interest.
Charges will apply if you carry a balance or
your card offers no grace period (time to
repay without incurring interest charges).
Fees and penalties can be imposed if
payments are not timely. Some cards also
have annual fees. Not all cards offer grace
periods (time to repay without incurring
interest charges).
Freebies sometimes offered (e.g., cash
rebates, bonus points, or travel deals).
You can withhold payment on charges in
dispute. Purchase protections offered by
some cards for faulty goods. If you are
careful about how you manage your credit
card, especially by paying your bill on time,
your credit score may go up and you may
qualify for lower interest rates on loans.
Other Potential
Concerns
Usually there are no protections against
faulty goods and services. You need another
way to pay for unexpected emergencies
(e.g., car repairs) if you do not have enough
money in your bank accounts.
Over-spending can occur, since the credit
limit may be higher than you can afford.
If you do not pay your card balance in full
each month, or your card does not have
an interest-free grace period, you will pay
interest. This can be costly, especially if you
only pay at or near the minimum amount
due each month.
Federal law limits your losses to a maximum of $50 if your credit card is lost or stolen, although industry
practices may further limit your losses. With a debit card, your maximum legal liability is $50 if you
notify the bank within two business days.
89

Other Cards
Stored Value (Prepaid) Cards
There are four main types of stored value cards:
1. Payroll cards are used by an employer to pay wages instead of giving you a paper paycheck. Payroll
cards are unique from other types of stored value cards because you do not need to purchase them or
pay activation fees since your employer provides the card.
2. Government disbursement cards are provided by government agencies to pay benefits. One example
is the Direct Express® debit card for Social Security payments.
3. General Purpose cards can be purchased from retailers. Some come with a set value, while others
require you to “load” (add) money to the card after obtaining it.
4. Gift cards can be purchased in fixed amounts. Unlike most other stored value cards, these often can
only be redeemed for purchases from particular stores or restaurants.
The use of a stored value card will not allow you to build a credit history because no money is being
borrowed. How can you wisely choose or use a prepaid card?
• Look into the fees, which can add up if you are not careful.
• Understand your consumer protections, which may vary depending on the card you use.
• Take additional precautions to protect yourself from fraud or theft.
Secured and Unsecured Credit Cards
Most credit cards are unsecured. This means you do not have to provide collateral in order to get a credit
card. You might want to consider a secured credit card if you have no credit history or have had credit
problems in the past. To get a secured card, you generally need to pledge a bank savings account as
collateral. Be sure to look carefully at all fees you have to pay to get and maintain a secured card. If the
fees seem high to you, shop around for a better deal.
Gold and Platinum Cards
Gold and platinum credit cards traditionally have higher credit limits, require a good credit history and
higher income, and may offer rewards. Not all gold and platinum cards have the same favorable terms.
Be sure to carefully read the disclosures before you apply for a gold or platinum card.
Reward Cards
Many credit cards offer the option of earning cash rebates or reward points. Look for a card that will
earn you rewards at stores and services you use most often. Make sure the rewards you expect to earn
justify the annual fee, if applicable. These cards may create an incentive to spend as much as you can
so you earn more rewards points. Remember, unnecessary spending can result in paying interest and
unmanageable debt.
Pre-Approved Cards
Credit card companies may offer you a pre-approved credit card in which you MIGHT qualify for the
interest rates and credit limit being offered. Whether or not you get the best rates depends on your
income, employment, and credit history. Always read the credit agreement carefully BEFORE signing on
the dotted line. Be aware of limitations or conditions that are not obvious in the advertisement and shop
for the best possible deal.
90

Credit Card Comparison Chart (from FDIC Money Smart)
Name of credit card issuer/card.
What is the APR?
Introductory APR?
Rate for purchases?
Rate for cash advances?
Penalty APR?
What are the fees?
Annual fee
Late fee
Over-the-limit fee
Cash advance fee
Other fees?
Is there a grace period?
Are there any benefits (reward
points earned, rebates, etc.)?
What is my credit limit?
Other? (e.g., customer service
hours; online access; access to a
real person?)
Tips to Consider When Shopping for a Credit Card
Credit Card 1 Credit Card 2 Credit Card 3
Before signing up for a credit card, consider these tips:
• Review online services and compare credit card companies.
• Make sure you understand the implications of fixed and variable rates and penalty APRs.
• Beware of introductory rates.
• Decide how you will use the credit card and what you will purchase with it.
• Start small. Do not charge too much on your credit card until you are comfortable with the
monthly bill. Shop around for the plan that best fits your needs. Make sure you understand the
terms of the plan before you accept the card.
• Read the fine print.
• Beware of credit card issuers who require application fees. Most credit card issuers do not charge
fees to open accounts.
91

Sample Credit Card Statement
1
Payment Due Date
2
New Balance
3
Past Due Amount
4
Minimum Payment
8/27/20XX
1097.82
0.00
$21.00
1. Payment Due Date: Your payment
must be received by the credit card
company no later than this date or
you they will incur a late fee.
$
Account Number: XXXXXXXXX
Samantha Waters
202 Lexington Street
Anytown, USA 31011
Make your check payable to:
Credit Card Services.
Please write amount enclosed.
New address or email? Print on back.
Mail payment to:
ABC Card Services
84 Freeman Street
Anytown, USA 22011
Manager your account online:
www.yourcard.com/creditcards
2. New Balance: The total amount that
is charged to your credit card. You
can either pay this in full or pay
in a lesser amount and be charged
interest.
3 .Past Due Date: Status of an account
when the minimum payment has
not been received at the due date
4. Minimum Payment: The minimum
amount that you can pay to prevent
your account from going into
default.
Additional contact information
conveniently located on the reverse side
ACCOUNT SUMMARY
PAYMENT INFORMATION
5
6
7
8
9
10
11
12
13
Account Number: XXXXXXXXX
Previous Balance $210.00
Payment, Credits - $210.00
Purchases + $1,097.82
New Balance $1,097.82
Opening/Closing Date 07/03/10 - 08/02/10
Total Credit Line $5,000
Available Credit $3,903
Cash Access Line $5,000
Available for Cash $3,903
New Balance $1,097.82
Payment Due Date 08/27/10
Minimum Payment Due $21.00
14
Late Payment Warning: If we do not receive your minimum
payment by the date listed above, you may have to pay up a $39.00 late
fee and your APRs will be subject to increase to a maximum Penalty
APR of 29.99%
15
Minimum Payment Warning: If you make only the minimum
payment each period, you will pay more in interest and it will take you
longer to pay off your balance. For example:
5. Previous Balance: The total amount charged to your credit card reflected on
your previous billing statement
6./7. Payment, Credits: The amount that has been paid back to your credit card
from returns or payments during the billing period.
8. Purchases: The total of everything you have paid for with your credit card
since the last statement date.
9. Opening/Closing Date: The dates that the billing cycle begins & ends
10. Total Credit Line: This is the total amount you have to spend on your credit
card before any purchases are made.
11. Available Credit: This is the amount of credit you have left on your credit
card after subtracting your current balance.
12. Cash Access Line: This is the total amount of cash you are allowed to take out
for a cash advance
13. Available for Cash: This is the amount you have left to take out for a cash
advance
14. Late Payment Warning: A letter from the creditor warning that if they do not
receive a payment by a certain date they will charge you a late fee and your
APR may increase to the penalty rate
15. Minimum Payment Warning: A letter from the creditor warning that if you
only make the minimum payment each month on your credit card, you will be
expected to pay more interest and it will take longer to pay off your balance.
If you make no
additional charges using
this card and each
month you pay...
Only the minimum
payment
You will pay off the
balance shown on
this statement in
about ...
And you will end up
paying an estimated
total of..
13 years $2,035
$37 3 years $1,338
(Savings=$697)
If you would like information about credit counseling
services, call 1-234-567-8910.
© 2011 American Consumer Credit Counseling, Inc.
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ACCOUNT ACTIVITY
Date of
Transaction Merchant Name or Transaction Description $ Amount
PAYMENTS AND OTHER CREDITS
07/19 Payment - Thank you - 210.00
PURCHASES
07/24 Gourmet Food, Anytown USA 230.23
07/25 Hotel, Anytown, USA 370.94
07/26 Car Rental, Anytown, USA 226.42
07/27 Clothing 123, Anytown, USA 270.23
2010 Totals Year-to-Date
Total fees charged in 2010 $0.00
Total interest charge in 2010 $0.00
Year-to-date totals reflect all charges minus
any refunds applied to your account on or after
January 31, 2010.
INTEREST CHARGES
Your Annual Percentage Rate (APR) is the annual interest rate on your account.
16
Balance Type
Purchases
Cash Advances
Balance Transfer
17
Annual
Percentage Rate
(APR)
31 days In Cycle
13.24% (v)
19.24% (v)
13.24% (v)
18
Balance Subject
To Interest Rate
$0.00
$0.00
$0.00
19
Interest
Charges
$0.00
$0.00
$0.00
20
Accrued Interest
Charges
$0.00
$0.00
$0.00
(v) = Variable Rate
Please see Information About Your Account Section for the Calculation of Balance Subject to Interest Rate,
Annual Renewal Notice, How to Avoid Interest on Purchases, and other important information, as applicable.
16. Balance Type: The method in which interest is calculated for your account
17. Annual Percentage Rate: The annual percentage rate you’ll be charged if you carry over a balance from month to month.
18. Balance Subject To Interest Rate: This refers to the balance that is being incurred interest
19. Interest Charges: A charge incurred by the credit card company to service its debt over a period of time
20. Accrued Interest Charges: The total amount of interest that has been charged to your account to date
Disclaimer: All quoted interest rates, fees, and repayment time frames are examples only. Refer to your personal credit card for terms and agreements.
93

Paying Your Credit Card Bill (from FDIC Money Smart)
Minimum Payment
With a credit card, you have to pay at least the minimum amount due each month. Credit card companies must
mail or deliver your credit card statement 21 days before the bill is due. In addition:
• Your due date should be the same date each month.
• The payment cut-off time cannot be earlier than 5 p.m. on the due date.
• If your payment due date is on a weekend or holiday, you will have until the following business day to pay. For
example, if the due date is Sunday the 15th, your payment will be on time if it is received by Monday the 16th
before 5 p.m.
Cost of Making the Minimum Payment
Look at two charts that show what happens when you make the minimum payment, and when you pay more than
the minimum payment. Assumptions for the tables include:
• APR = 18 percent (If the APR is higher, the item would be more expensive and would take longer to pay off)
• Minimum monthly payment equals greater of $20 or 2 percent of balance
• No late payments are made
• No additional purchases are made
• Interest is calculated by applying a monthly rate to the average daily balance
• Average daily balance method is used to calculate interest
• Years are rounded to the nearest whole year
• Dollar amounts are rounded to the nearest dollar
Item Price APR Interest
Paid
How Much You
Really Pay for
the Item
Total Years to
Pay Off
TV $500 18% $132 $632 3
Computer $1,000 18% $863 $1,863 8
Furniture $2,500 18% $5,363 $7,863 23
Benefit of Paying More Than the Minimum Payment
The best way to save money and avoid paying interest charges is to pay off your balance in full when you first
receive your bill. However, the following chart shows the benefit of paying more than the minimum payment if you
cannot pay off the balance in full.
Original
Balance
APR
Monthly
Payments
Total Years to
Pay Off
Interest Paid
Total of
Payments
$2,500 18% Minimum 23 $5,363 $7,863
Payment (MP)
$2,500 18% MP + $24 4 $1,025 $3,525
$2,500 18% MP + $41 3 $754 $3,254
94

Activity 1: Maria’s Credit Report (from FDIC Money Smart)
Read about Maria’s situation and answer the questions provided.
Maria’s Situation
Maria is planning to buy a home. She has already received one free credit report from each of the three
credit reporting agencies earlier this year. However, she wants to get a copy of her credit report before
she applies for a home loan to make sure the information in the report is still accurate.
Can Maria get this new credit report for free?
Why or why not?
Since Maria is applying for the home loan with her husband, can she get a credit report that includes
both her and her husband’s credit information? Explain your answer.
Maria and her husband decide to shop around for the best price on a home loan. Several lenders
prequalify them for a home loan. Maria realizes that each time they got prequalified the lender
requested a copy of their credit reports. Should Maria and her husband be worried about these inquiries
affecting their credit scores? Explain your answer.
95

Activity 2: John’s Credit Report (from FDIC Money Smart) - Use the information on the sample
credit report to answer the questions about John’s credit history.
JOHN Q CONSUMER
Report #1234567
Personal Information
123 Main Street #2
Somewheresville, USA 01234
SSN#123-45-6789 DOB 02/01/68
Potentially Negative Items
Televise Cable Comm.
Acct# 1234 5678 1234 5678
Date filed 05/01/05
Status: Delinquent in collections 120+ days
Amount $35.00
Credit limit N/A
Accounts in Good Standing
XYZ BANKCARD USA
Acct# 0110220
Date added 12/12/98
Status: Open/Never late
Monthly Payment $15
High balance $129
Credit Limit $1,000
Report Date
01/01/2006
Employers
1. ABCDE Engineering Corp, Somewheresville USA
2. Port City Engineering, Anywhere, USA
Homeowner Credit Services
Acct# 0110220
Date added 04/23/00
Status: Closed at consumer’s request
08/22/2004
Monthly Payment $0
High balance $3,228
Credit Limit $1,000
Requests for Credit History
VISA Card
Address: PO Box 1414 NY NY 10001
Date: 04/01/05
John Consumer has an account that has been sent to a collection agency. Where on
his credit report would you find this information?
Who is the original creditor?
In August 2004, an account was closed at John’s request. What was the high balance on this account?
In what section did you find this information?
Who does John work for? Where did you find this information? Hint: current employers are listed first.
96

Activity 3: Who Poses the Most Credit Risk? (from FDIC Money Smart)
Read the profiles of each person who wants to apply for a loan. Determine if each person is a credit risk
or not. Explain why you think so.
Bob
Bob has never applied for a loan and has no credit history. He works and saves his cash, but has never
opened a savings account.
Do you think Bob poses a high credit risk to the lender? _ Yes _ No
Why or why not?
Eda
Eda has been late making her car payments and recently stopped paying them all together. She also has a
tax lien on her house.
Do you think Eda poses a high credit risk to the lender? _Yes _No
Why or why not?
Jelani
Jelani took out a car loan last year. He has been making the payments on time and has a good credit
history.
Do you think Jelani poses a high credit risk to the lender? _ Yes _ No
Why or why not?
Miranda
Miranda’s son, who is 19 and working, would like to get a credit card and promises to pay the bill on
time. Miranda agrees to cosign for her son. Several months later, she finds out he has been making late
payments.
Do you think Miranda poses a high credit risk to the lender? _ Yes _ No
Why or why not?
Who would be a greater risk to a lender: Miranda or her son?
Which of the four people above poses the greatest risk to a lender? Why do you think so?
97

Activity 4: Using Credit Cards Responsibly (from FDIC Money Smart)
Each of these four people is using their credit cards in different ways. Read each scenario and determine
whether or not they may be using the cards responsibly. Describe what could happen if each person
continues to use their credit card as described.
Example 1
Maria receives a credit card bill. She gets a cash advance on another credit card to pay part of the bill.
Example 2
The balance on Marvin’s credit card is $2,410. His limit is $2,500. He makes only the minimum payment
($20 a month) and is always close to the limit on his credit card.
Example 3
Jerome uses his credit card for convenience. He pays cash for most small purchases. He pays his credit
card bill in full each month.
Example 4
Cathy was excited to receive a credit card offer in the mail. She applied for the credit card without
reading the terms. When the card came, she bought several new outfits for work. When the credit card
bill came, she was surprised to find additional fees charged to her account totaling $179.
98

Credit Terms and Definitions
Bankruptcy - the state of being insolvent or unable to pay your debts or creditors
His business failed and he went into bankruptcy.
Credit - money given in exchange for a promise for future repayment
The bank authorized a line of credit in the amount of $1,000.
Debt - the amount a borrower owes a person or institution
She accumulated a lot of debt from her student loans.
Disclosure - revelation or the act of exposure
The applicant needed to provide full disclosure about his credit history.
Dispute - a controversy or difference of opinion
The woman had a dispute with the store manager concerning a charge on her credit
card bill.
Fees - charges or a sum paid for a privilege
If you don’t pay your bill on time you may incur late fees.
Inquiry - the act of seeking information by questioning; an investigation
There was an inquiry about a loan that was in default.
Issuer - a legal entity that is authorized to offer a product or service
The bank on Main Street was the issuer of her first credit card.
Judgment - the ability to form an opinion and make a decision wisely
The loan officers needed to make a judgment about the customer’s credit history.
Lien - a legal claim on another’s property as a means to secure payment of a debt
The plumber placed a lien on their house because the homeowners did not pay for his repair work.
Payment - compensation or something given in return, such as money
Her mortgage payment is due on the first of each month.
Rejected - refused, denied or turned down
The applicant’s loan application was rejected because of a bad credit history.
Risk - the probability of loss or the possibility of misfortune
The bank takes a risk when making a loan.
99

Credit Quiz
1. A credit report tells lenders:
a. Whether there is negative information about you in public records
b. Whether you have made payments on time
c. How much debt you have
d. All of the above
2. Which of the following is not a major credit reporting agency?
a. American Express
b. Equifax
c. Experion
d. TransUnion
3. How long does your tax lien remain on your credit report?
a. 2 years
b. 5 years
c. 7 years
d. Forever
4. Credit reports do not contain:
a. Income
b. Checking and savings account balances
c. Business account information
d. All of the above
5. Lenders might deny a loan for all of the following reasons except:
a. Credit problems in the past
b. Marital status
c. No credit history
d. a tax lien
6. The FICO Model takes into account several factors when evaluating credit worthiness. Which
factor has the greatest impact on your score?
a. Outstanding debt
b. How long you have had certain credit
c. Past payment history
d. Types of credit
7. How often can you get a free copy of your credit report?
a. Once a year
b. Twice a year
c. Every 2 years
d. Only if you have a credit problem
100

8. All of the following appear on your credit report for 7 years except:
a. Tax liens
b. Chapter 13 Bankruptcy
c. Chapter 7 Bankruptcy
d. Collection Accounts
9. Information in your credit report may determine whether you will:
a. Get insurance
b. Get a job
c. Rent an apartment
d. All of the above
10. You may get a free credit report if:
a. You are receiving public assistance
b. You are unemployed and plan to look for a job within 60 days
c. Your report is inaccurate because of fraud
d. All of the above
101

Credit Quiz Answers
1. Correct Answer: d. All of the above
Lenders use all the information above to determine your creditworthiness.
2. Correct Answer: a. American Express
American Express issues credit cards and may use the services of a credit reporting agency but they
are not a major credit reporting agency.
3. Correct Answer: c. 7 years
After a period of 7 years a paid tax lien will remain on your credit report. An unpaid tax lien will
remain for a longer period of time.
4. Correct Answer: d. All of the above
Personal credit reports only contain certain pieces financial information. Your business account
information, bank account balance, and income are not identified in a credit report.
5. Correct Answer: b. Marital status
Lenders cannot turn down a loan based upon whether or not you are married.
6. Correct Answer: c. Past payment history
35% of your FICO score is based on your credit history.30% of your FICO score is based on amounts
that are owed. The other 3 factors are length of credit history, new credit, and types of credit used.
7. Correct Answer: a. Once a year
Although you may request copies of your credit report more than once a year a fee may be charged.
8. Correct Answer: c. Chapter 7 Bankruptcy
Chapter 7 bankruptcy will appear on your Credit report for 10 years.
9. Correct Answer: d. All of the above
Your credit report score impacts many parts of your life including rentals, jobs and insurance.
10. Correct Answer: d. All of the above
The special circumstances above are all reasons that may qualify for a free credit report. Ask if there
is a fee for your situation.
102

VI. Borrowing Basics
Types of Loans
Car Loans
To Rent or to Own?
Buying a Home
Activities:
Which Loan is Best?
Beware of Dealer-Lender Relationships
How Much Mortgage can Patricia Afford?
Mortgage Shopping Worksheet
Borrowing Terms and Definitions
Borrowing Basics Quiz with Answers
Recommended Supplemental Materials:
BOOKS
1. College financing information for teens : tips for a successful financial life, 2nd Ed, Detroit,
MI : Omnigraphics, c2012. LIT 378.3 C68B 2011
2. Debt information for teens : tips for a successful financial life, 2nd Ed., Detroit, MI :
Omnigraphics, c2012. LIT 332.024 D35B 2011
3. Heath, Julia A. Personal finance essentials: Credit and borrowing (v. 4) LIT 332.024 P41H
4. Tomljanovic, Tatiana. Everyday Economics: Borrowing, New York, NY: Weigl Pub., c2009.
LIT 332.7 T59B
VIDEOS
1. The Home Buying Process. Show Me How Videos, c2008. DVD ESL 643.12 H75H (56 minutes)
2. Personal finance essentials: Credit, borrowing, and debt. New York: Meridian Education Corp.,
c2011. DVD ESL 332.024 P43C (36 minutes)
103

Types of Loans (from FDIC Money Smart)
Consumer Installment Loans
A consumer installment loan is used to pay for personal expenses for you and your
family. Examples are:
• Auto loans, whereby the automobile you are purchasing is used as collateral for the loan
• Unsecured loans for short-term needs, such as buying a computer
Credit Cards
Credit cards give you the ongoing ability to borrow money for household, family, and other personal
expenses.
Having a credit card allows you to buy things without actually having the money right away. Remember
that if you are not careful in spending, you can get into big trouble—you could be burdened with debt.
You need to be sure you are able to make the minimum monthly payment on your credit card bill.
Home Loans
There are three main types of home loans.
Home purchase loans are made for the purpose of buying a house. These loans are secured by the house
you are buying.
A home refinancing loan is a loan that replaces an existing home loan by paying it in full and replacing
it with a new home loan. A cash-out refinance loan allows you to borrow more money than owed on the
loan to be replaced. Reasons homeowners might want to refinance their home loan include getting:
• A lower interest rate
• Money for home repairs
• Money for other personal needs
Home equity loans allow you to borrow money that is secured by your home. Equity is the value of the
home minus the debt or what you owe on the home loan:
Value of Home $250,000
Minus debt -200,000
Equity $50,000
If you already have a home mortgage, such as the original home purchase loan, the home equity loan
would be a second mortgage also secured by your home. A lender may allow you to borrow up to a
certain percentage of your home’s value, generally up to 80 percent. These loans can be used for any
reason.
104

Car Loans (from FDIC Money Smart)
There are many decisions you must make before purchasing or leasing a car. The Federal Trade Commission
(FTC) has many publications that can help you. Call the FTC (1-877-FTC-HELP) to request a copy of its
brochures or download them from FTC’s website: www.ftc.gov/credit.
Car Loans versus Car Leases
Factors Car Loans Car Leases
Ownership potential
Wear and tear
Monthly payments
Mileage limitations
Auto insurance*
Cost
The car belongs to you and the bank that gave
you the loan until you have paid off the loan.
Then the car becomes yours.
No additional costs for wear and tear are included
in your loan agreement.
Payments are higher, but you only pay them for a
set term. Then you own the car.
There are no mileage restrictions.
It is usually less expensive than auto insurance
for leased cars. Insurance may cost more during
the loan than it will after the loan is repaid
because the lender may require more coverage.
Purchasing a car is usually more cost effective if
you plan to keep the car long term.
However, in the short term, the costs will
probably be greater than a car lease because your
total loan amount and monthly payments are
likely to be higher.
You are essentially renting the car from the
dealership. The lease is like a rental agreement.
You make monthly payments to the dealership for
a set number of months. The car does not belong
to you. When the lease ends, you have to return
the car to the dealership. You may decide to
purchase the car at the end of the lease. However,
the total cost generally ends up being more than
it would have been if you had bought the car.
Most leases charge you extra money for any
damage found at the end of the lease that goes
beyond normal wear and tear.
Payments are lower because you are not
purchasing the car; the dealership still owns it. As
long as you lease a car you will continue to make
monthly payments.
Leases restrict the number of miles you can
drive the car each year. If you exceed the mileage
allowed you have to pay the dealer for each
mile over the limit, according to your lease. For
example, a dealer may charge you 15 cents for
every mile that you drive over 24,000 miles in
2 years. If you drive the car an additional 3,000
miles, you would then owe the dealer $450 for
those miles.
It usually costs more if you lease a car than it
does if you buy.
Most car leases require you to carry higher levels
of coverage than purchase agreements do. Some
insurance carriers may also consider leasing to be
higher risk than purchasing.
A lease will probably cost less than a car loan in
the short term because your total loan amount
and monthly payments are likely to be lower.
However, if you exceed the mileage on a leased
car, and/or decide to buy it outright once your
lease has expired, it will end up costing you more.
*Make sure you find out what the requirements are and get a cost estimate from your insurance company before
you decide whether to lease or buy.
Financing a Car
Your car becomes the collateral for the loan, which means the lender will hold the car title (indicating who owns
the car) until the loan is paid off. If you do not pay off the loan, the bank can repossess the car and sell it to get
the remaining loan amount back.
New car loans typically last three to seven years, and used car loans typically last two to five years. Know exactly
how much you are paying for the car and exactly how much you need to borrow.
105

When Dealers Offer Low Interest Rates
Dealers sometimes offer low loan rates and other special promotions. However, to get the lowest advertised rate,
you might have to:
• Make a large down payment
• Agree to a short loan term, usually 3 years or less
• Have an excellent credit history
• Pay a participation fee (money some dealer finance companies might charge to get a low interest rate).
Ads promising high trade-in allowances and free or low-cost options may help you shop, but finding the best
deal requires careful comparisons. Many factors determine whether a special offer provides genuine savings. The
interest rate, for example, is only part of the car dealer’s financing package. Terms like the amount of the down
payment also affect the total financing cost.
Questions to Ask About Low Interest Loans
A call or visit to a dealer should help clarify details about low interest loans. Consider asking these questions:
• Will you be charged a higher price for the car to qualify for the low-rate financing? Would the price be
lower if you paid cash or supplied your own financing from your bank or credit union?
• Does the financing require a larger than normal down payment? Perhaps 25 or 30 percent?
• Are there limits on the length of the loan? Are you required to repay the loan in a condensed period of
time, say 24 or 36 months?
• Is there a significant balloon payment—possibly several thousand dollars—due at the end of the loan?
Other Special Promotions
Asking questions like these can help you determine whether special promotions offer genuine
value:
• Does the advertised trade-in allowance apply to all cars, regardless of their condition? Are there any
deductions for high mileage, dents, or rust?
• Does the larger trade-in allowance make the cost of the new car higher than it would be without the trade
in? You might be giving back the big trade-in allowance by paying more for the new car.
• Is the dealer who offers a high trade-in allowance and free or low-cost options giving you a better price on
the car than another dealer who does not offer promotions?
• Does the dealer’s invoice reflect the actual amount that the dealer pays the manufacturer? You can consult
consumer or automotive publications for information about what the dealer pays.
Auto Service Contracts
A service contract is a promise to perform (or pay for) certain repairs or services. Though it is sometimes called an
extended warranty, a service contract is not a warranty. A service contract may be arranged at any time and always
costs extra; a warranty comes with a new car and is included in the original price.
Used Car: Warranty Protection
When shopping for a used car, look for a Buyer’s Guide sticker posted on the car’s side window
This sticker is required by the FTC on all used cars sold by dealers. It tells whether a service
contract is available. It also indicates whether the vehicle is being sold:
• With a warranty
• With implied warranties only
• “As is”
Alternative Fueled Vehicles (AFVs)
Consider the fuel type and availability, operating costs (Visit www.fueleconomy.gov for detailed information),
performance/convenience, energy security/renewability, and emissions (Visit www.epa.gov/greenvehicle/).
106

To Rent or To Own? (from FDIC Money Smart)
Renting a Home
Advantages:
• Property maintenance is the responsibility of the landlord.
• You can move or change homes once you have met the terms of the rental contract.
• You do not have the costs associated with owning a home (e.g., property taxes, homeowner’s
insurance).
Renters insurance, while not required, can be obtained from many insurance companies.
Renters insurance:
• Protects you against the loss or destruction of your possessions (e.g., burglary or fire)
• Covers your living expenses if you are unable to live in your apartment because of a fire or other
covered disaster
• Provides liability protection if, for example, someone is injured at your home while visiting
Disadvantages:
• You do not own your home or apartment or receive the benefits of being a homeowner.
• Your rent might increase or cost more than a mortgage payment.
• You might be unable to renew your rental contract and then have to find a new place to live.
Owning a Home
Advantages:
• You can build equity. Equity is the value of the home minus the amount you owe on it.
• You can borrow against the equity for many purposes.
• Homes generally increase in value over time and are a good long-term investment.
• The home is yours once your mortgage is paid in full.
• Homeownership may reduce the amount of income tax you pay (interest and taxes are tax
deductible).
• You can pass your home on to family members.
Disadvantages:
• Property maintenance and upkeep are your responsibility.
• You are responsible for the additional costs of:
° Homeowner’s insurance
° Other types of insurance if required by the lender (e.g., flood or earthquake insurance)
° Real estate taxes
° Homeowner’s association fees, if applicable, to pay for maintenance of the common areas and
the exterior of the buildings and grounds
• You may have to sell or rent your home before you can afford to buy or rent another one.
• You can lose your home, and your investment in it, if you do not make timely mortgage payments.
107

Buying a Home (from FDIC Money Smart)
• Step 1: Determine if you are ready to buy a house
• Step 2: Determine how much mortgage you can afford
• Step 3: Determine which mortgage option is best for you
• Step 4: Qualify for a loan
• Step 5: Go through settlement
Am I Ready To Buy a Home?
Use these questions to help you decide if you are ready to buy a home.
1. Do I have a steady source of income?
2. Have I received this income on a regular basis for at least the last 2 or 3 years?
3. Do I have a credit history?
4. Do I have a good record of paying bills?
5. Will I be able to pay my bills and other debts?
6. Do I have the ability to make the mortgage payment every month, plus handle additional costs for
taxes, insurance, maintenance, and unexpected repairs?
7. Do I anticipate moving to another community within the next two or three years?
8. Do I have money saved for a down payment and closing costs?
9. Where do I want to live?
10. What kind of neighborhood do I want?
11. What types of schools are in the neighborhood?
12. How much space do I need?
Down Payment
The down payment is the portion of the home’s purchase price the buyer pays in cash. Lenders prefer
that you have 20 percent of the purchase price for a down payment. If you have difficulties saving 20
percent, there are mortgage options that make it possible to buy a home with a smaller down payment
(e.g., only 3 percent).
Other Expenses
• Household emergencies, repairs, and other expenses (It is a good idea to save money in a special
savings account for these.)
• Private Mortgage Insurance (PMI); required insurance for loans that are more than 80 percent of the
home’s value
Mortgage Payments Considerations
The monthly mortgage payment should be no more than 28 percent of your monthly income and should
include:
• A partial repayment of principal
• Interest and PMI (if required)
• Homeowner association dues (if you live in a condominium or other association)
• Property taxes if included in your monthly payment
108

Activity 1: Which Loan Is Best? (from FDIC Money Smart)
This exercise gives you an opportunity to practice identifying the type of loan best suited for particular
items. Read the description of the purchase to be made. Fill in the blank with the most appropriate loan
type for that purchase.
TYPES OF LOANS
Consumer installment loan
Credit card
Home loan (purchase, refinance, or equity)
Which type or types of loans would be best to…
…finance a college education?
…make small purchases in a department store, such as a $50 household appliance?
…make home improvements?
…consolidate two or more loans?
…buy a $500 refrigerator?
109

Activity 2: Beware of Dealer-Lender Relationships (from FDIC Money Smart)
Dealers will often try to make extra profit through the loan process. Read the scenario and determine if
the dealer is providing Sam the best rate. Then, answer the question below. Be prepared to explain your
answer.
Scenario:
Sam assumed the dealer would give him the best deal and did not shop around for a car loan. After all,
he was able to negotiate the best price at this dealership: $6,000 for a used pickup truck. The dealer told
Sam that if he put up $1,000 as a down payment, he could get a car loan for 16 percent. Sam accepted
the agreement without researching other possibilities.
This is what happened:
• The car dealer called several lenders in the area for Sam.
• Lender A told the dealer that Sam qualified for a $5,000 car loan for as low as 10 percent.
• However, Lender A had an agreement with the dealer stating that for any rate over 10 percent, the
lender and the dealer would split the profit. This gives the dealer an incentive to work with Lender A
and to charge Sam a high interest rate.
• In this case, the dealer quoted Sam a 16 percent rate.
• The difference between a 16 percent loan and 10 percent loan is $921. That means Sam paid $921
more than he had to.
• The dealer and Lender A split the $921.
What could Sam have done differently?
110

Activity 3: How Much Mortgage Can Patricia Afford? (from FDIC Money Smart)
As a rule of thumb, many people estimate they are able to afford a mortgage of two to three times their
household income.
x 2 =
(Annual Income)
x 2.5 =
(Annual Income)
x 3 =
Consider your debt-to-income ratio. Lenders usually require the principal, interest, taxes, and
insurance (PITI) of your housing expenses to be less than or equal to 25 to 28 percent of your monthly
gross income. Lenders call this the front-end ratio. Calculate your front-end ratio and be sure your
monthly mortgage payment is no greater than this figure.
x .28 =
(Monthly Gross Income) x 28% = Front-End Ratio
Lenders usually require housing expenses plus long-term debt to be less than or equal to 33 to 36
percent of your monthly gross income. Lenders call this the back-end ratio. Calculate your back-end
ratio and be sure your monthly mortgage payment is no greater than this figure.
x .36 =
(Monthly Gross Income) x 36% = Back-End Ratio
Long-term debt is outstanding debt with a remaining term of at least one year. It can include student
loans, credit cards, car loans, other loans, and other non-housing expenses.
If your debt-to-income exceeds these ratios, talk to your lender about your options.
111

How much can Patricia afford?
Since Patricia’s monthly gross income is $4,100 her maximum monthly mortgage payment, including
escrow, should be $1,148 or less.
Front-End Ratio:
$4,100 x 28% = $1,148
Patricia’s monthly gross income is $4,100 so the combination of her mortgage, $1,148, and her other
long-term debt, should be no more than $1,476.
Back-End Ratio:
$4,100 x 36% = $1,476
Based on the difference between the back- and front-end ratios, how much can Patricia’s remaining
debts (e.g., car loan payments, monthly credit card bills) be?
Two other factors affect how much mortgage Patricia can afford: the length or term of the mortgage, and
whether her mortgage has a fixed or variable interest rate.
Mortgages may range from 10- to 50-year terms. See the table below for the most typical mortgage
products: 15- and 30-year terms.
15-Year Mortgage
• Borrow less money because of larger monthly
payments
• Build equity faster
• Less interest to pay
• Lower interest rate
• For example, if you borrowed $75,000 for 15
years at 7.5%, your monthly principal and interest
payment would be $695.
30-Year Mortgage
• Borrow more money because of lower monthly
payments
• Build equity more slowly
• Can deduct more interest from income tax
• Higher interest rate
• For example, if you borrowed $75,000 for 30
years at 8%, your monthly principal and interest
payment would be $550.
Whether her mortgage has a fixed or variable interest rate will also affect the mortgage amount that
Patricia can afford.
Fixed-Rate Mortgage
• Interest rate stays the same for the term of the
loan.
• Your payments are predictable and not affected by
interest rate changes.
• Interest rates could go down while you are locked
into your mortgage at a higher-than-market rate.
Adjustable-Rate Mortgage (ARM)
• Interest rate can increase or decrease during the
term of the loan.
• You might have a low rate for an initial period of 1,
3, 5, 7, or 10 years. Monthly payments may initially
be lower than fixed-rate loans. The interest rate and
your payment can increase significantly throughout
the term of the loan.
• If interest rates rise, do not count on being able to
refinance into a lower-rate fixed-rate loan, as your
financial situation could change (e.g., due to a job
loss)—and still, refinancing to a rate lower than the
going rate may not be possible.
112

Note: Make sure you compare loan offers based on annual percentage rate (APR), and not the interest rate. The
APR is the cost of the loan expressed as a yearly rate, including interest and certain fees.
Which mortgage do you think would be good for Patricia, based on what we know so far about how much
mortgage she can afford? Why?
113

Mortgage Shopping Worksheet (from FDIC Money Smart)
Name of Lender:
Name of Contact:
Date of Contact:
Mortgage Amount:
A. Basic Information on the LoansType of Mortgage:
fixed rate, adjustable rate,conventional,FHA, other?
If adjustable, see below
Minimum down payment required
Loan term (length of loan)
Contract interest rate
APR
Points (may be called loan discount points)
Monthly (PMI premiums)
How long must you keep PMI?
Estimated monthly escrow for taxes & hazard insurance
Estimated monthly payment (PITI, PMI)
B. Fees
Different institutions may have different names for some fees and may
charge different fees. We have listed some typical fees you may see on
loan documents.
Application fee or Loan processing fee
Origination fee or Underwriting fee
Lender fee or Funding fee
Appraisal fee
Attorney fees
Document preparation and recording fees
Broker fees (may be quoted as points, origination fees,
or interest rate add on
Credit report fee
Other fees
C. Other Costs at Closing/Settlement
Title search/Title insurance
For lender
Title search/Title insurance
For you
Mortgage
1
Lender 1 Lender 2
Mortgage
2
Mortgage
1
Mortgage
2
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Estimated prepaid amounts for interest, taxes, hazard insurance,
payments to escrow
State and local taxes, stamp taxes, transfer taxes
Flood determination
Prepaid PMI
Surveys and home inspections
D. Total Fees and Other Closing/Settlement Cost Estimates
Name of Lender
Mortgage
1
Mortgage
2
Mortgage
1
Mortgage
2
E. Other Questions and Considerations about the Loan
Are any of the fees or costs waivable?
Prepayment penalties
Is there a prepayment penalty?
If so, how much is it?
How long does the penalty period last? (e.g., 3 years? 5 years?)
Are extra principal payments allowed?
Lock-ins
Is the lock-in agreement in writing?
Is there a fee to lock-in?
When does the lock-in occur—at application, approval, or another
time?
How long will the lock-in last?
If the rate drops before closing, can you lock-in at a lower rate?
If the loan is an adjustable rate mortgage: What is the initial rate?
What is the maximum the rate could be next year?
What are the rate and payment caps each year and over the life of
the loan?
What is the frequency of rate change and of any changes to the
monthly payment?
What is the index that the lender will use?
What margin will the lender add to the index?
Credit life insurance
Does the monthly amount quoted to you include a charge for
credit life insurance?
If so, does the lender require credit life insurance as a condition
of the loan?
How much does the credit life insurance cost?
How much lower would your monthly payment be without the
credit life insurance?
If the lender does not require credit life insurance, and you
still want to buy it, what rates can you get from other insurance
providers?
115

Borrowing Terms and Defintions
Annual Percentage Rate – (APR) the yearly amount or measure of interest that is charged to
borrow money
The annual percentage rate on his car loan is 6%.
Borrower - a person who uses money or an item with the intention of returning it
The borrower repaid the loan early and was able to eliminate two payments.
Capacity - the ability to perform an action or task
The bank wanted to know if she still had the capacity to make her loan payments since she had been laid off.
Car Title – a legal document that indicates ownership on an automobile
The bank held the car title until the loan was paid in full.
Collateral - property or other assets provided to secure a loan
He used his business as collateral for the loan.
Consumer – one who purchases goods or services
A smart consumer compares the price of products before making a purchase.
Equity – the value of a property or asset minus the existing debt
After 20 years of ownership, the couple had 60% equity in their house.
Finance charge - the amount of money it will cost a borrower for interest and fees on a loan
She compared the finance charge on two different loans to decide which one would cost less.
Financing – the money obtained to fund the purchase of an asset such as a car or home
Her parents applied for financing from the bank for an addition to their home.
Fixed Rate – an amount of interest that remains the same during the entire loan period
They opted for a fixed rate mortgage so they would know how much to budget each month for housing.
Installment - payment on a loan that occurs on a regular basis
Online banking made it easy to pay his monthly loan installment instantly with a click of the mouse.
Lender - a person or business that provides money for a loan with the expectation of getting it back
The lender offered a good annual percentage rate on the loan.
Loan – money provided to a borrower that normally requires a promise of repayment of both the amount
borrowed plus interest
She had to take out a student loan to pay her college tuition.
Variable Rate – a rate of interest that may go up or down during a loan period
He took a risk by accepting a variable rate loan hoping that the payment would decrease and he would pay less.
116

Borrowing Basics Quiz
1. Which of the following places offer car loans?
a. Finance companies
b. Credit unions & Thrifts
c. Car dealerships and banks
d. All of the above
2. Which of the following might be a condition to obtain a low interest rate from a dealer?
a. Paying a participation fee
b. Making a large down payment
c. Having an excellent credit history
d. All of the above
3. The formula used to calculate home equity is:
a. Equity = the current market value of the home plus the outstanding debt
b. Equity = the current market value of the home minus the outstanding debt
c. Equity = the price you paid for the home
d. None of the above
4. The 4 Cs of loan decision making are:
a. Cash, Credit, Car type, and Convenience
b. Consumer, Credit card, Co-signer, and Credit Union
c. Credit History, Customer Service, Compounding, and Cash Deposit
d. Capacity, Capital, Character, Collateral
5. Which of the following items are not usually purchased with an installment loan?
a. Cars
b. Food and Beverages
c. Furniture
d. Household appliances and computers
6. Security that you provide a lender by pledging an asset that you own is called:
a. APR
b. Compensation
c. Collateral
d. Installment loan
7. Making equal payments over a period of time is an example of:
a. An adjustable rate mortgage
b. A fixed-rate installment loan
c. A home equity line of credit
d. None of the above
117

8. Which of the following statements apply to rent-to-own services?
a. The store is the legal owner until you make the final payment.
b. If you miss a payment the store may repossess the item.
c. You will pay more than if you used an installment loan.
d. All of the above
9. The Federal Trade Commission has publications on the following:
a. Renting a car
b. Buying a car
c. Automobile maintenance
d. All of the above
10. All of the following are advantages of car loans rather than car leases except:
a. No mileage restrictions
b. Payments are lower
c. No additional cost for wear and tear
d. The car belongs to you after you have paid it off
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Answers for Borrowing Basics Quiz
1. Correct Answer: d. All of the above
Many places offer car loans. A savvy consumer compares the terms and rates to find the best
option.
2. Correct Answer: d. All of the above
A car dealer may require any or all of the conditions listed. First time purchasers without credit
history may need a co-signer.
3. Correct Answer: b. Equity = the current market value of the home minus the outstanding debt
Debt is subtracted from the value of the home to determine equity.
4. Correct Answer: d. Capacity, Capital, Character, Collateral
Your capacity is your ability to repay a loan (income). Capital is the value of your
investment (down payment). Character means that you paid your debts in the past (credit
history). Collateral is an asset that you pledge to the lender to secure your loan (property).
5. Correct Answer: b. Food and Beverages
Answers a, c and d typically are higher-priced durable goods which could serve as collateral
on an installment loan.
6. Correct Answer: c. Collateral
Collateral might be a car or home.
7. Correct Answer: b. A fixed-rate installment loan
Equal payments are typical of a fixed rate loan.
8. Correct Answer: d. All of the above
All the above statements refer to rent-to-own.
9. Correct Answer: d. All of the above
Many useful publications can be found on the FTC website at https://bulkorder.ftc.gov/
10. Correct Answer: b. Payments are lower
Payments are typically higher for car loans and lower for car leases.
119

120
A Legacy for Literacy is a program for English language learning at the
Newton Free Library.

VII. Life Skills
Menu Planning Worksheet
Grocery Shopping Tips
Grocery Shopping List
Computer and Internet Terms and Definitions
Housing Terms and Definitions
Renting an Apartment Quiz with Answers
Recommended Supplemental Materials:
BOOKS
1. 21st century Lifeskills series. Saddleback Educational Pub., c2011. Includes: Car and driver,
LIT 629.2 H97C; Consumer spending, LIT 332.024 B65C; Everyday household tasks,
LIT 648 H97E; Getting ahead at work, LIT 650.1 S79G; Job search, LIT 331.7 S79J
2. Davis, Brian. Top notch interviews : tips, tricks, and techniques from the first call to getting
the job you want, Franklin Lakes, NJ: Career Press, 2010. LIT 331.7 D29T
3. Gast, Natalie. Perfect phrases for ESL: advancing your career. New York: McGraw-Hill, c2010.
LIT 428.24 G21P
4. Get $mart with your money series. New York: Rosen Pub., 2010, c2009. Includes: First car
smarts, LIT 629.222 H22F; First apartment smarts, LIT 643.27 B99F; First job smarts,
LIT 650.1 H22F.
5. Heath, Julia A. Personal finance essentials: Education and careers, New York: Facts On File,
c2012. LIT 332.024 P41E v2
6. Hemmert, Amy. Out & about in the world of computers: an introductory computer
course for beginning English learners, Burlingame, CA: Alta Book Center Publishers, 2008.
LIT 004.16 H37O
7. i-SAFE Internet life skills activities. San Francisco, Calif.: Jossey-Bass, 2010. LIT 004.678 I74J
VIDEOS
1. Consumer smarts: the skinny on being savvy, Jacksonville, FL: Linx Educational, 2009.
DVD ESL 658.834 C76C (25 minutes)
2. Personal finance essentials: Taxes and Tax Benefits, Meridian Education Corp, 2011.
DVD ESL 332.024 P43T (32 minutes)
121

Menu Planning Worksheet
Day Breakfast Lunch Dinner
Monday
Menu
Item
Ingredients and
Amounts Needed
Menu
Item
Ingredients and
Amounts Needed
Menu
Item
Ingredients and
Amounts Needed
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
© Family Economics & Financial Education – Revised March 2006 – Foods Unit – Grocery Shopping Within a Budget – Page 7 Funded by a grant from Take
Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
122

Grocery Shopping Tips
1. Clean out the fridge before shopping and do a basic inventory of existing food.
2. Make meal plans and a grocery list based on the plans.
3. Create a grocery master list. The list should contain food items commonly purchased. The master
list can be arranged in several formats (i.e. based on a specific stores layout, by food groups, or by
meals).
4. Remember to stay disciplined while grocery shopping. Follow the list and do not buy on impulse.
5. Do not shop hungry. Studies indicate impulse buying occurs if a person is hungry.
6. Shop alone. “Helpers” will only add to the grocery cart.
7. Produce, bakery, and meat department staff are great reference sources. Be sure to check out their
“day old” items.
8. Look at higher and lower shelves for bargains or alternative items because the most expensive
brands are at eye level.
9. Buy in season fresh fruits and vegetables. They will be less expensive and are better quality.
10. Check store entrances, newspapers, and flyers for coupons.
11. Only use coupons for items normally purchased.
12. Check comparable brands to be sure get the best buy.
13. Buy meat in family packages and freeze in smaller “meal” size packages.
14. Avoid trips to the “corner store.”
15. Due to volume discounts, larger stores are generally cheaper than smaller ones.
16. Department stores like Wal-Mart and K-mart can be considerably cheaper for paper products,
laundry detergent, and soft drinks.
17. Do one bulk-shopping trip a month for staple foods.
18. Stock up on sale products on the list (i.e. canned fruit and veggies, frozen juice, and pasta
products).
19. Shop for bread products at bakery outlets.
© Family Economics & Financial Education – Revised March 2006 – Foods Unit – Grocery Shopping Within a Budget – Page 10 Funded by a grant from
Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
123

Organization Method Used
Grocery Shopping List
Organization Method Category Item Total Amount Needed Price
Total Cost of Groceries
Weekly Amount to Budget For
Savings or Loss on groceries
Budgeted amount – grocery total = savings/loss
© Family Economics & Financial Education – Revised March 2006 – Foods Unit – Grocery Shopping Within a Budget – Page 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University
of Arizona
124

Computer Terms and Definitions
Computer and Internet Terms and Definitions
Backspace Key - erases one character before the cursor
Caps Lock Key - makes all the letters in capital (uppercase)
Close Button - shuts a window or program
Commands - a direction given to the computer to perform a task
CPU - the central processing unit known as the “brains” of the computer
Cursor - a blinking line that shows where typing will begin
Delete Key - erases one character after the cursor
Desktop - the screen you see when you start the computer that shows files and folders
Drive - a device that allows a computer to read or write some storage medium
Enter Key - moves the cursor to the next line
File - a document you save with a name
I-Bar -an I-shape in a document that you move with the mouse
Icon - a picture that shows what is inside such as folders or documents
Keyboard - the part of the hardware that has keys and a spacebar on it
Keys - buttons on the keyboard with letters, numbers and words
Monitor - the part of the computer that contains the screen and looks like a TV
Mouse - the tool that moves the pointer on the screen and allows you to make selections
Mouse pad - the square piece of plastic or rubber that the mouse sits on
Num Lock Key – abbreviation for Number Lock Key; used for entering numbers
Open - to access a file or folder that has already been created
Screen - the part of the monitor where you can see the information
Scroll bar - horizontal (across) and vertical (up and down) rectangles with boxes that let you move up,
down and across to view everything in a document window
Select - to choose by highlighting
Shift Key - allows the typing of the symbols on the top row and creates capital letters
Shut down - the process of turning off the computer from the Start menu
Space bar - the long and narrow bar on the keyboard that is used to make spaces
Start button - where you open programs and shut down the computer
Tab Key - creates a space by moving the cursor usually 6 spaces to the right
USB - a Universal Serial Bus is an external socket that can connect devices to a computer
Window - the rectangular box that lets you see what is inside of files, folders or programs
125

Internet Terms and Definitions
Blog – a website where users can create diaries or journals to be viewed on the internet
Chat room – a place on the Internet where users can talk to one another online in real time
e-commerce – business conducted over the internet
Home Page – the first screen that you see when you go to a website
Hyperlink – highlighted words, objects, or graphics in hypertext that link one web page or site to
another
Hypertext – the words or text that appears on a computer screen that are hyperlinks
Internet – A large computer network linking smaller computer networks worldwide and allowing them
to communicate with one another
Internet Service Provider (ISP) - a company that gives users access to the Internet
Network- a group of computers that are linked together to communicate and share information
Search Engine – A system that finds World Wide Web pages by looking for specific words or phrases
Site Map – a website view that shows the web pages in an outline format
Surfing the Net – an expression that means to search the internet for information
Uniform Resource Locator (URL) – an internet address
Web Browser – a software program that will load and display a Web page
Web Page – a single hypertext document on the World Wide Web devoted to a single topic
or related topics
Web Site – a connected group of pages on the World Wide Web devoted to a single topic
or related topics
World Wide Web (WWW) – a system of interlinked hypertext documents
126

Housing Terms and Definitions
Application - a form or document used for a specific purpose such as a lease or a job
The landlord told him that his rental application had to be approved before he could sign the lease.
Condominium - a type of housing where the purchaser owns a unit and shares common areas
They decided to purchase a condominium because it gave them use of a clubhouse with a gym and
pool.
Duplex - a type of housing where two units share a common wall or an apartment on two
levels connected by a staircase
The young couple wanted to live in a duplex with their in-laws.
Fair Housing Act – a set of laws that prohibit discrimination in the sale or rental of homes
The landlord did not want to rent the apartment to the interracial couple, but could not discriminate
because of the Fair Housing Act.
Furnished - provided with necessary items such as furniture or appliances
Since he was relocating to another country he chose to rent a furnished apartment.
Landlord - a property owner who rents buildings or land
The landlord collected the rent on the first day of the month.
Lease – a contractual agreement to occupy property for a time period in exchange for rent
She signed a lease for two years that began in September.
Rent - payment made by a tenant for the use of a building such as an apartment
She had to find another place to live because she couldn’t afford the rent increase.
Security Deposit - money paid by a tenant in advance that is kept by a landlord for
protection against damages to the property
The tenants did not get their security deposit back because they damaged the carpeting.
Sublet - to rent leased property to another person, also known as sublease or subcontract
They sublet their apartment in July and August when they went on vacation.
Tenant - a person who pays rent and occupies a building
The tenant was evicted for failure to pay rent.
Townhouse - a two or three story home that shares a common sidewall and is often found in cities
The townhouse they lived in was in a beautiful neighborhood near the park.
Utilities - services such as water, electricity, gas, heat, etc.
The rent for the apartment included all utilities except telephone service.
127

Renting an Apartment Quiz
1. The money that is required by a landlord for protection against damage to the property is
known as:
a. Utility fees
b. Social Security
c. Rent
d. Security deposit
2. A one room apartment with a kitchen area is a:
a. Duplex
b. Townhouse
c. Studio
d. Sublet
3. A person with a good credit rating who co-signs a lease for another person without good
credit is called a:
a. Lessor
b. Landlord
c. Realtor
d. Guarantor
4. A policy that a tenant purchases to protect personal property in a home is known as:
a. Renter’s tax
b. Renter’s insurance
c. Renter’s deposit
d. None of the above
5. Which of the following is not a utility?
a. Furniture
b. Electricity
c. Telephone service
d. Heat
6. An inspection by the landlord and tenant prior to renting an apartment is called:
a. An amenity
b. A walk-through
c. A lease review
d. All of the above
7. The Fair Housing Act prohibits discrimination in the sale or rental of housing based on:
a. National origin
b. Religion
c. Familial status
d. All of the above
128

8. According to the 2010 Consumer Expenditure Survey (U.S. Bureau of Labor Statistics),
approximately what percent of American household income is spent on housing?
a. 25%
b. 35%
c. 45%
d. 55%
9. A rental application can be rejected if a person has:
a. Insufficient income
b. Bad references
c. Criminal background
d. All of the above
10. What is a “tenant at will”?
a. A tenant who will stay until the end of the lease
b. A landlord who will renew the lease with the same rental terms
c. A rental arrangement that has no expiration date but may be terminated by either
the tenant or landlord
d. A tenant who will be allowed to sublet to another person
129

Answers to Renting an Apartment Quiz
1. Correct Answer: d. Security deposit
A security deposit is one way that landlords protect themselves against loss. Other types of deposits
might be required such as a key deposit, pet deposit and last month’s rent.
2. Correct Answer: c. Studio
A duplex is a type of housing where two units share a common wall or an apartment on two levels
connected by a staircase. A townhouse is a 2 or 3 story home and a sublet means to allow someone
else to rent your rental. A studio is a one room dwelling.
3. Correct Answer: d. Guarantor
A lessor or a landlord leases the property. A realtor finds tenants for the property. A guarantor or
cosigner promises to pay the rent if the tenant does not.
4. Correct Answer: b. Renter’s insurance
Renters’ insurance may cover things like water damage, fire and theft and may be required by the
landlord.
5. Correct Answer: a. Furniture
Utilities are public services. Though an apartment might be furnished, furniture is not a utility.
6. Correct Answer: b. A walk-through
A walk-through is a prudent measure for both landlord and tenant and may also occur at the end of
a rental period. A lease review is not an inspection and an amenity is a benefit such as a pool.
7. Correct Answer: d. All of the above
This act prohibits many types of discrimination including the ones listed above.
8. Correct Answer: b. 35%
People spent more on housing than any other category.
9. Correct Answer: d. All of the above
Any one of the above reasons can be used to deny an applicant.
10. Correct Answer: c. A rental arrangement that has no expiration date but may be
terminated by either the tenant or landlord
Tenant at will laws vary from state to state. A tenant at will is a rental situation that often doesn’t
have a formal set of rules.
130

VIII. Glossary
Glossary (excerpted from FDIC Money Smart Series)
131

Glossary (excerpted from FDIC Money Smart)
401(k) Plan: A retirement savings plan established by an employer in which employees set aside a
percentage of pay in an account that earns interest.
403(b) Plan: A retirement savings plan similar to a 401(k), but exclusively for employees of public
schools and certain tax-exempt organizations.
529 College Savings Plan: An education savings plan operated by a state or educational institution. It
is designed to help families set aside funds to pay for future college costs.
Annual Percentage Rate (APR): The cost of your loan expressed as a yearly percentage rate.
Annual Percentage Yield (APY): The amount of interest you will earn on a yearly basis. It is expressed
as a percentage.
Automated Teller Machine (ATM): A kiosk or terminal where you can deposit, withdraw, or transfer
money from one account to another 24 hours a day.
Balance: The amount of money you have in your bank account.
Bank: A business that offers you a safe place to keep your money and uses your deposits to make loans.
This business is also called a financial institution.
Bank Statement: A monthly record of the deposits and withdrawals made.
Bonds: Loans to corporations or to the government for a certain period of time, called a term. You earn
interest on your loan investment, and at the end of the term, your bond matures and can be repaid to
you by the company.
Certain Retirement Accounts: Deposit accounts owned by one person and titled in the name of that
person’s retirement plan.
Certificate of Deposit (CD): An account in which you leave your money for a set term (e.g., six months
or one, two, or five years). You cannot make deposits or withdrawals to the account during this term.
Check: A written contract between you and your bank. When you write a check, you are asking the bank
to take money from your account and give it to someone else.
Checking Account: An account that allows you to write checks to pay bills and buy goods. The financial
institution will send you a monthly statement that lists the deposits, withdrawals, and purchases you made.
Check Register: A booklet to write down all of your deposits and withdrawals from your account,
including any fees and monthly charges.
Collateral: The security you provide the lender.
132

Compounding: Interest paid on money that is invested, allowing the initial investment to increase over
time.
Consumer Installment Loan: A loan used to pay for personal expenses for you and your family over
a set term or period of time.
Corporate bonds: Loans to corporations for a certain period of time, called a term.
Credit: The ability to borrow money.
Credit Cards: Plastic cards with magnetic strips on the back. The front displays your account number,
name, and bank name. With a credit card, you can buy goods or services and pay for them over time,
receiving a bill each month. Credit cards give you the ongoing ability to borrow money for household,
family, and other personal expenses.
Credit Union: A non-profit financial institution owned by people who have something in common.
You have to become a member of the credit union to keep your money there.
Debit Card: A card that allows you to deposit cash into and withdraw money from your checking
account at many Automated Teller Machines (ATMs), and make purchases at retail locations that accept
credit cards (e.g., department stores or gas stations).
Deposit: A transaction in which money is added to your account (e.g., you deposit money, the bank pays
you interest, or a check is direct deposited into your account).
Deposit Account: A bank account that allows you to add money to the account.
Deposit Slip: A piece of paper that tells the bank how much money you are adding to your account.
Direct Deposit: An electronic method for transferring and depositing money directly into your
account.
Diversification: When you spread the risk of loss over a variety of savings and investment options.
EE Bond: EE is a type of bond that is normally purchased at half its face value and must be held for at
least one year before being cashed.
Elder Financial Abuse: Act of using an elder’s money or assets contrary to his or her wishes, needs,
or best interests for the abuser’s personal gain.
Electronic Banking: The use of computers to move money to and from your account, instead of using
checks and other paper transactions. Electronic banking includes debit card transactions, electronic bill
pay, and Automated Teller Machine (ATM) transactions.
Electronic Bill Pay: A service that automatically takes money from your account to pay your bills.
Electronic Transfer Account (ETA): A low-cost savings account that provides federal payment
recipients with the opportunity to receive their federal payments through direct deposit.
Endorsement: The act of signing the back of a check so that you can deposit or cash it.
133

Equity: The difference between how much your house is worth and how much you owe on your
mortgage.
Expedited Funds Availability Act (EFAA): An act that limits the amount of time a bank can hold a
deposit in your checking account.
Endorsement: The act of signing the back of a check so that you can deposit or cash it.
Federal Deposit Insurance Corporation (FDIC) Deposit Insurance Regulations:
Regulations that protect your money if the bank fails. However, FDIC does not insure non-deposit
investment products, including: stocks, bonds, mutual funds, and annuities.
Fees: The amounts charged by financial institutions for activities such as reviewing your loan
application and servicing the account.
Fee Schedule: A bank document that lists the fees you might be charged for certain account activities.
Fixed Expenses: Expenses with amounts that do not change from month to month.
Fixed Rate: The interest rate stays the same throughout the term of the loan, except in the case of
credit cards, where the rate may be changed.
Flexible Expenses: Expenses with amounts that often change from month to month.
Gross Income: Total income without deductions.
Guarantee: A form of collateral. It occurs when someone you know agrees to be responsible for any
money that you owe the lender but have not paid.
Home Equity Loan: A loan that allows a homeowner to borrow money that is secured by their home.
Home Purchase Loan: A loan for the purpose of buying a house that is secured by the house
you are buying.
Home Refinancing Loan: A process by which an existing home loan is paid off and replaced
with a new loan.
I Bond: A type of bond purchased at face value, which is the amount printed on the bond and must be
held for at least one year before being cashed.
Identity Theft: When a person uses your personally identifying information without your permission
to commit fraud or other crimes.
Individual Development Account (IDA): A matched savings account in which another
organization (e.g., a foundation, corporation, or government entity) agrees to add money to your account
to match the money you save in it.
Insurance: Protection for you and your family against loss, for which you pay a certain sum
periodically (known as an insurance premium) in exchange for a guarantee from the insurance company
that they will cover or compensate you for certain losses (e.g., those by fire, accident, death, etc.).
134

Interest: A percentage of your balance that the bank pays you or an amount of money for keeping your
money at that bank or the amount of money a financial institution charges for letting you use its money.
Investment: A long-term savings option that you purchase for future income or financial benefit.
Joint Account: A deposit account owned by two or more people and titled jointly in the co-owners’
names only, with no beneficiaries.
Loan: Money you borrow from a bank with a written promise to pay it back later.
Long-Term Care: Care or help with daily activities for those with a chronic illness or disability.
Minimum Balance: A certain balance that banks might require you to have to open an account, earn
interest, or avoid fees.
Money Market Account: An account that usually pays a higher rate of interest, and it usually
requires a higher minimum balance to earn interest than a regular savings account does. You can make
deposits and withdrawals.
Money Order: It is similar to a check. It is used to pay bills or make purchases when cash is not accepted.
Mutual Fund: A professionally managed collection of money from a group of investors. A mutual fund
manager invests your money in some combination of various stocks, bonds, and other products.
Net Income: Gross income minus deductions such as Social Security and other taxes.
Non-Deposit Investment Products: Products including stocks, bonds, mutual funds, and annuities.
The FDIC does not insure these products.
Payday Loan: A short-term loan. The loan service cashes the check on your payday, at which time
your loan is paid in full.
Payroll Deduction Individual Retirement Arrangements (IRA): An employee establishes an
IRA (traditional or Roth IRA) with a financial institution and authorizes a payroll deduction for the IRA.
Penalty APR: The terms of your credit card agreement may provide that the creditor will permanently
increase the interest rate on your credit card by a large amount if you do not pay your credit card bill on
time, or if you exceed your credit limit.
Pharming: When criminals seek to obtain personal or private information by making fake websites
appear legitimate.
Phishing: When criminals send out unsolicited emails that appear to be from a legitimate source in an
attempt to trick you into divulging personal information.
Predatory Lending: Use of certain marketing tactics in making loans, such as abusive collection
tactics and loan terms that deceive borrowers into thinking they are receiving better loan terms than
they really are.
135

Privacy Notice: A written explanation of how the company handles and shares your personal financial
information. You will usually receive a privacy notice when you open an account or become a customer
of a financial company, once a year after opening an account, and any time the financial company
changes its privacy policy.
Reconciliation: The act of resolving the difference between the statement balance and your check
register balance.
Refund Anticipation Loans: Short-term loans secured by your income tax refund.
Rent-to-Own Service: A service that lets you use an item for a period of time by making monthly or
weekly payments. You can opt to purchase the item(s) you are renting as well, but it is usually much more
expensive than purchasing the item (s) outright.
Reconciliation: The act of resolving the difference between the statement balance and your check
register balance.
Remittance: A money transfer that goes to a bank or a person in another country.
Retirement Investments: Money you invest over a long period of time so that you will have money to
live on when you are no longer working.
Revocable Trust Account: A deposit account held as a payable on death (POD) or in trust for (ITF)
account, or one that is established in the name of a formal revocable trust (also known as a living or
family trust account).
Roth Individual Retirement Arrangements (IRAs): Contributions to a Roth IRA are not tax
deductible while contributions to a traditional IRA may be deductible. The distributions (including
earnings) from a Roth IRA are not included in income.
Rule of 72: A formula that lets you estimate how long it will take for your savings to double in value
given a particular interest rate. This calculation assumes that the interest rate remains the same over
time.
Savings Account: An account that earns interest.
Signature Card: A form you complete and sign when you open an account indicating you are the
account owner.
Single Account: A deposit account owned by one person and titled in that person’s name only, with no
beneficiaries.
Skimming: When criminals steal credit/debit card numbers by using a special storage device when
processing your card.
Spending Plan: A step-by-step plan for meeting expenses in a given period of time.
Statement Savings Account: An account that earns interest. You will usually receive a quarterly
statement that lists all your transactions–withdrawals, deposits, fees, and interest earned.
136

Stocks: Parts of a company, called shares. If the company does well, you might receive periodic
dividends based on the number of shares you own. Dividends are part of a company’s profits that it gives
back to you, the shareholder.
Substitute Check: An electronic image of your check that has the same standing as the actual check.
Thrift: A financial institution that operates under federal and state laws and regulations. Thrifts make
loans, pay checks, accept deposits, and provide other financial services.
Traditional Individual Retirement Arrangements (IRAs): Contributions to a traditional IRA
may be tax deductible, based on the amount of your contribution and your income. The earnings on the
amounts in your IRA are not taxed until they are distributed.
Transaction: A banking activity (e.g., depositing or withdrawing money, using your Automated Teller
Machine (ATM) or debit card, or having checks direct-deposited into your account).
Treasury Inflation-Protected Securities (TIPS): Provides protection against inflation, and the
interest rate is tied to the Consumer Price Index.
Truth in Savings Act (TISA): An act that requires financial institutions to tell you the terms of
consumer deposit accounts (e.g., checking or savings accounts). It also requires the bank to periodically
send you statements for your accounts.
Unsecured Loan: A loan not backed by collateral. Credit cards are often unsecured loans, although
some are secured by a bank account.
U.S. Savings Bonds: A long-term investment option backed by the full faith and credit of the U.S.
Government. Savings bonds can be purchased at a financial institution for as little as $25 or through
payroll deductions.
U.S. Treasury Securities: Loans to the U.S. Government for a certain period of time, called a term.
Treasury securities are backed by the full faith and credit of the U.S. Government and include Treasury
bills (T-bills), notes (T-notes), and bonds (T-bonds).
Variable Annuity: An insurance contract that invests your premium in various mutual fund-like
investments.
Variable rate: An interest rate that may change during the loan term.
Withdrawal: The process of taking money from your bank account.
Wire Transfer: A form of money transfer from one bank to another.
137

138
Congressman Barney Frank spoke at the final Financial Literacy at the Library event on July 16, 2012.

IX. Recommend Resources
Bibliography by Topic
Banking and Credit
Business Communication
Careers and Life Skills
Computers
Internet Safety
Personal Finance
Bibliography by Level of English Comprehension
Beginning
Low Intermediate
Intermediate
Advanced
Tutor/Teacher
Multi-Level Series
Multi-Level - Other
Financial Education DVD Collection
Online Resources
Community Resources
Nationwide Resources
139

Bibliography by Topic
Banking and Credit
Byers, Ann. First Credit Cards and Credit Smarts, New York: Rosen Publishing, 2009.
LIT 332.765 B99F
College financing information for teens: tips for a successful financial life, 2nd Ed., Detroit, MI:
Omnigraphics, 2012. LIT 378.3 C68B
Credit Repair, 9th ed. Berkeley, CA: Nolo, 2009. 332.743 L55C
Debt information for teens: tips for a successful financial life, 2nd Ed., Detroit, MI: Omnigraphics,
2012. LIT 332.024 D35B
Freedman, Jeri. First Bank Account and First Investment Smarts, New York: Rosen Publishing,
2009. LIT 332.6 F87F
Hollander, Barbara. Real world economics: How credit crises happen, New York, NY: Rosen Pub.,
2011. LIT 338.542 H71H
Hudak, Heather C. Everyday Economics: Banking, New York: Weigl Publishers, 2010. LIT 332.1
H86B
Mathematics of banking and credit, Steck-Vaughn/Houghton Mifflin, 2011. LIT 332 M42M
Tomljanovic, Tatiana. Everyday Economics: Borrowing, New York: Weigl Publishers, 2009.
LIT 332.7 T59B
Business Communication
Banks, Erik. The Palgrave Macmillan Dictionary of Finance, Investment and Banking,
New York: Palgrave Macmillan, 2010. 332.03 B22P
Bennie, Michael. Guide to Good Business Communications: how to write and speak
English well in every business situation, 5th edition, Parkwest, 2009. LIT 658.45 B43G
Downes, John. Dictionary of Finance and Investment Terms, Hauppauge, NY: Barrons’ Educational
Series, c2010. LIT 332.03 D75D
Gast, Natalie. Perfect Phrases for ESL: everyday business life, New York: McGraw- Hill, 2010.
LIT 428.34 G21P
MacKenzie, Ian. Professional English in Use: Finance, Cambridge, 2006. LIT 428.34 M19F
Sweeney, Simon. Communicating in business : a short course for business English
students, Cambridge: Cambridge University Press, 2004. LIT 428.24 S97C
140

Careers and Life Skills
Bostick, Nan. Consumer Spending, Costa Mesa, CA: Saddleback, 2011.
LIT 332.024 B65C
Byers, Ann. First Apartment Smarts, New York: Rosen Publishing, 2010.
LIT 643.27 B99F
Chase, Erin. The $5 dinner mom breakfast and lunch cookbook, New York: St. Martin’s
Griffin, 2011. LIT 641.55 C38F
Gast, Natalie. Perfect Phrases for ESL: advancing your career, New York: McGraw-
Hill, 2010. LIT 428.24 G21P
Harmon, Daniel E. First Car Smarts, New York: Rosen Publishing, 2009.
LIT 629.222 H22F
Harmon, Daniel E. First Job Smarts, New York: Rosen Publishing, c2010.
LIT 650.1 H22F
Harris, Marjorie. Thrifty: living the frugal life with style, Toronto: Anansi, 2010
LIT 640.73 H24T
La Bella, Laura. Real world economics: How taxation works, New York, NY: Rosen
Pub., 2011. LIT 336.2 L11H
MacDougall, Debra Angel. The 6 Reasons you’ll get the Job: what employers look for whether they
know it or not, New York: Prentice-Hall, 2010. LIT 331.7 M14S
Pluhar, Annamarie. Sharing housing: a guidebook for finding and keeping good housemates,
Peterborough, NH: Bauhan Pub., 2011. LIT 646.7 P72S
Staudacher, Carol. Job Search, Costa Mesa, CA: Saddleback, 2011. LIT 331.7 S79J
Staudacher, Carol. Getting Ahead at Work, Costa Mesa, CA: Saddleback, 2011. LIT 650.1 S79G
Computers and the Internet
Deacon, Dan. Computer Words: a teaching resource. Scottsdale, AZ: Remedia Publications, c2005
LIT 428.1 D34C
Demetriades, Dinos. Information Technology. Oxford: Oxford University Press, 2003. LIT 004 D39I
Dictionary of Computer and Internet Terms. 10th ed. Hauppauge, NY: Barrons, 2009. TRAINING
ROOM R 004.03 D75D
Downing, Douglas. Dictionary of Computer and Internet Terms. 10th ed. Hauppauge,
NY: Barron’s Educational Series, 2009. R 004.03 D75D
141

Glendinning, Eric. Basic English for computing, Oxford, 2003. LIT 428.34 G48B
Hemmert, Amy. Out & about in the world of computers. Burlingame, CA: Alta Book Center
Publishers, c2008. LIT 428.24 H489C
i-Safe Internet Life Skills Activities, Jossey-Bass, 2010. LIT 004.678 I74J
Miller, Michael. Absolute Beginner’s Guide to Computer Basics. 4th ed. Indianapolis, IN: Que, 2007.
004 M61A
Montague, David. Essentials of Online Payment Security and Fraud Prevention, Wiley, 2010.
332.178 M76E
Quann, Steve. Learning computers, speaking English : cooperative activities for learning English
and basic word processing, Ann Arbor: University of Michigan Press, 2007. LIT 005.369 Q25L
Stokes, Abby. Is This Thing On? A Computer Handbook for Late Bloomers, Technophobes, and
the Kicking and Screaming. New York: Workman, 2008. 004.16 S87I
Personal Finance
Blumenthal, Karen. Wall Street Journal Guide to Starting your Financial Life, New York: Three
Rivers Press, 2009. LIT 332.024 B61W
Bostick, Nan. Managing Money, Costa Mesa, CA: Saddleback, 2011. LIT 332.024 B65M
Clark, Teri. The Complete Personal Finance Handbook: step-by-step instructions to take control
of your financial future - with CD-ROM, Ocala, FL: Atlantic Publishing, 2007. LIT 332.024 C54C
Estrada, Javier. The Essential financial toolkit: everything you always wanted to know about
finance but were afraid to ask, Palgrave Macmillan, 2011. LIT 332.6 E79E
Family Financial Management: Instructions and Forms, 8th ed., Mason, OH: South- Western,
2010 LIT 332.024 F21F
Keown, Arthur J. Personal Finance: turning money into wealth, Boston: Pearson, 2010.
LIT 332.024 K43P
Lawrence, Judy. Budget Kit: the common cents money management workbook, 6th ed.
Kaplan, 2011. LIT 332.024 L43B
Leeds, Regina. One Year to an Organized Financial Life, Cambridge, MA: Da Capo Lifelong, 2010.
LIT 332.024 L51O
142

Heath, Julia A. Personal finance essentials, New York: Facts On File, 2012. Decision making
and budgeting, LIT 332.024 P41D v1; Education and careers, LIT 332.024 P41E v2; Credit and
borrowing, LIT 332.024 P41C v3; Saving and investing. LIT 332.024 P41H v4
Merriman, Paul A. Financial fitness forever: 5 steps to more money, less risk, and more peace of
mind, New York: McGraw-Hill, 2012. LIT 332.024 M55F
Peterson, Judy Monroe. First Budget Smarts. New York: Rosen Publishing, 2009. LIT 332.024 P44F
Ramsey, Dave. The Money Answer Book: quick answers to your everyday financial questions,
Nashville, TN: Thomas Nelson, c2010. LIT 332.024 R14M
Tucci, Paul A. The handy personal finance answer book, Canton, MI: Visible Ink Press, 2012.
332.024 T79H
Wiseman, Blaine. Everyday Economics: Budgeting, New York: Weigl Publishers, 2009.
LIT 332.024 W75B
Saving and Investing
Furgang, Kathy. Real world economics: How the stock market works, New York: Rosen Pub., 2011.
LIT 332.642 F96H
Goldie, Daniel C. The investment answer: learn to manage your money & protect your financial
future, New York: Business Plus, 2011. LIT 332.6 G56I
Gough, Leo. How the stock market really works, 5th ed., New York: Financial Times Prentice Hall,
2011. LIT 332.632 G72H
Mathematics of personal finance & investments, Boston: Steck-Vaughn Co, 2011.
LIT 332.632 M43P
Morrison, Jessica. Everyday Economics: Investing, New York: Weigl Publishers, 2009
LIT 332.6 M83I
Morrison, Jessica. Everyday Economics: Saving, New York: Weigl Publishers, 2009
LIT 332.024 M83S
Pirie, Madsen. Economics made simple: how money, trade and markets really work, Petersfield,
Hampshire: Harriman House Ltd, 2012. LIT 330 P66E
143

Bibliography by Level of English Comprehension
Beginning
Hemmert, Amy. Out & about in the world of computers. Burlingame, CA: Alta Book Center
Publishers, 2008. LIT 428.24 H489C
Low Intermediate
Clark, Teri. The Complete Personal Finance Handbook: step-by-step instructions to take control
of your financial future - with CD-ROM, Ocala, FL: Atlantic Publishing, 2007. LIT 332.024 C54C
Chase, Erin. The $5 dinner mom breakfast and lunch cookbook, New York: St. Martin’s Griffin,
2011. LIT 641.55 C38F
Hudak, Heather C. Everyday Economics: Banking, New York: Weigl Publishers, 2010.
LIT 332.1 H86B
Hudak, Heather C. Everyday Economics: Spending, New York: Weigl Publishers, 2010.
LIT 339.47 H86S
Mathematics of banking and credit, Steck-Vaughn/Houghton Mifflin, 2011. LIT 332 M42M
Morrison, Jessica. Everyday Economics: Investing, New York: Weigl Publishers, 2009 LIT 332.6 M83I
Morrison, Jessica. Everyday Economics: Saving, New York: Weigl Publishers, 2009 LIT 332.024 M83S
Tomljanovic, Tatiana. Everyday Economics: Borrowing, New York: Weigl Publishers, 2009.
LIT 332.7 T59B
Vaz-Oxlade, Gail. Easy money, Edmonton: Grass Roots Press, 2010. LIT 332.024 V47E
Wiseman, Blaine. Everyday Economics: Budgeting, New York: Weigl Publishers, 2009.
LIT 332.024 W75B
Intermediate
Byers, Ann. First Apartment Smarts, New York: Rosen Publishing, 2010. LIT 643.27 B99F
Byers, Ann. First Credit Cards and Credit Smarts, New York: Rosen Publishing, 2009.
LIT 332.765 B99F
Chapman, Rebecca. English for emails, Oxford; New York: Oxford University Press, 2007.
LIT 428.34 C36E
College financing information for teens: tips for a successful financial life, 2nd Ed.,
Detroit, MI : Omnigraphics, 2012. LIT 378.3 C68B
144

Debt information for teens: tips for a successful financial life, 2nd Ed., Detroit, MI:
Omnigraphics, 2012. LIT 332.024 D35B
Davis, Brian. Top notch interviews: tips, tricks, and techniques from the first call to
getting the job you want, Franklin Lakes, NJ: Career Press, 2010. LIT 331.7 D29T
Freedman, Jeri. First bank account and first investments smarts, New York: Rosen
Pub., 2010. LIT 332.6 F87F
Furgang, Kathy. Real world economics: How the stock market works, New York:
Rosen Pub., 2011. LIT 332.642 F96H
Gillett, Amy. Speak business English like an American for native Chinese speakers, Ann Arbor,
Mich: Language Success Press, LIT 428.4 G41CH (2009); Speak business English like an American,
for native Russian speakers, LIT 428.34 G41R (2006); Speak business English like an American:
learn the idoms & expressions you need to succeed on the job!, LIT 428.24 G41S (2006)
Glendinning, Eric. Basic English for computing, Oxford, 2003. LIT 428.34 G48B
Goldie, Daniel C. The investment answer: learn to manage your money & protect your financial
future, New York: Business Plus, 2011. LIT 332.6 G56I
Harmon, Daniel E. First Car Smarts, New York: Rosen Publishing, 2009. LIT 629.222 H22F
Harmon, Daniel E. First Job Smarts, New York: Rosen Publishing, 2009. LIT 650.1 H22F
Harris, Marjorie. Thrifty: living the frugal life with style, Toronto: Anansi, 2010. LIT 640.73 H24T
Hollander, Barbara. Real world economics: How credit crises happen, New York, NY: Rosen Pub.,
2011. LIT 338.542 H71H
La Bella, Laura. Real world economics: How taxation works, New York, NY: Rosen Pub., 2011.
LIT 336.2 L11H
Longman business English dictionary, 2nd Ed. Harlow: Pearson Longman, 2007 LIT 650.03 L86L
Mathematics of personal finance & investments, Boston: Steck-Vaughn Co, 2011. LIT 332.632 M43P
Morrow, Ed. 10,001 ways to declutter your home on a small budget. New York: Skyhorse Pub., 2010.
LIT 648.5 M88T
Peterson, Judy Monroe. First Budget Smarts. New York: Rosen Publishing, 2009. LIT 332.024 P44F
Pluhar, Annamarie. Sharing housing: a guidebook for finding and keeping good housemates,
Peterborough, NH: Bauhan Pub., 2011. LIT 646.7 P72S
145

Quann, Steve. Learning computers, speaking English : cooperative activities for learning English
and basic word processing, Ann Arbor: University of Michigan Press, 2007. LIT 005.369 Q25L
Samtur, Susan J. Supershop like the coupon queen: how to save 50% or more every time you
shop, New York: Berkley Books, 2010. LIT 641.31 S19S
Sweeney, Simon. Communicating in business : a short course for business English students,
Cambridge: Cambridge University Press, 2004. LIT 428.24 S97C
Tucci, Paul A. The handy personal finance answer book, Canton, MI: Visible Ink Press, 2012.
332.024 T79H
Advanced
Eggert, Max. Body language for business, New York, NY: Skyhorse Pub., 2012. LIT 153.69 E29B
Gast, Natalie. Perfect Phrases for ESL: everyday business life, New York: McGraw- Hill, 2010.
LIT 428.34 G21P
Gast, Natalie. Perfect Phrases for ESL: advancing your career, New York: McGraw- Hill, 2010.
LIT 428.34 G21P
Gough, Leo. How the stock market really works, 5th ed., New York: Financial Times Prentice Hall,
2011. LIT 332.632 G72H
Heath, Julia A. Personal finance essentials, New York: Facts On File, 2012. Decision making
and budgeting, LIT 332.024 P41D v1; Education and careers, LIT 332.024 P41E v2; Credit and
borrowing, LIT 332.024 P41C v3; Saving and investing. LIT 332.024 P41H v4
i-Safe Internet Life Skills Activities, Jossey-Bass, 2010. LIT 004.678 I74J
Mack, Ryan C. Living in the village: build your financial future and strengthen your community,
New York: St. Martin’s Griffin, 2011. LIT 332.024 M19L
MacKenzie, Ian. Professional English in Use: Finance, Cambridge, 2006. LIT 428.34 M19F
Merriman, Paul A. Financial fitness forever: 5 steps to more money, less risk, and more peace of
mind, New York: McGraw-Hill, 2012. LIT 332.024 M55F
Painter, Rosemary. Idioms and clichés for ESL/EFL advanced students, business students, and
professionals, Lexington, KY, 2011. LIT 428.4 P16I
Pirie, Madsen. Economics made simple: how money, trade and markets really work, Petersfield,
Hampshire: Harriman House Ltd, 2012. LIT 330 P66E
146

Tutor/Teacher
Cordell, Jane. Cambridge business English activities: serious fun for business English students,
Cambridge, U.K.: Cambridge University Press, 2000. LIT 428.34 C81C
Estrada, Javier. The Essential financial toolkit: everything you always wanted to know about
finance but were afraid to ask, Palgrave Macmillan, 2011. LIT 332.6 E79E
Family Financial Management: Instructions and Forms, 8th ed., Mason, OH: South Western, 2010.
LIT 332.024 F21F
Lawrence, Judy. Budget Kit: the common cents money management workbook,
6th ed. Kaplan, 2011. LIT 332.024 L43B
Multi-Level Series
Business Advantage Series - Intermediate to Upper Intermediate, Cambridge: Cambridge
University Press, 2011. LIT 428.34 B96
Business One:One Series - Pre-Intermediate to Advanced, Oxford: Oxford University Press, 2011.
LIT 428.34 A64
Business Result Series: Elementary to Advanced, Oxford: Oxford University Press, 2009. LIT 428.34 B96
Future English for Results Series: Introductory to Advanced, White Plains, NY: Pearson Education,
2010. LIT 428 F98F
Market Leader Series: Introductory to Advanced, Longman: Pearson Longman, 2009.
LIT 428.34 M34
Multi-Level – Other
Brown, Stephen E. Improve your English: English in the workplace, Chicago, IL: McGraw-Hill,
2008. LIT 428.34 B81I (Intermediate, Advanced)
Gillett, Amy. Speak better business English and make more money, Ann Arbor, Mich:
Language Success Press, 2011. LIT 428.34 G41S (Intermediate, Advanced)
147

Newton Free Library Financial Education DVD Collection
Title Publisher and Date Call Number Time
Before you apply: Job and Skills Evaluation Cambridge Educational, 2011 DVD 650.14 G33BE 26
Before you apply: Resumes, Portfolios and your online persona Cambridge Educational, 2011 DVD 650.14 G33B 28
Buying into brand marketing: shaping your perceptions Learning Seed, 2012 DVD 658.82 B98B 28
Learn Business English through dramatized situations, Episode 1 Bigfoot Entertainment, 2005 ESL DVD 428.007 L47L 60
Learn Business English through dramatized situations, Episode 2 Bigfoot Entertainment, 2005 ESL DVD 428.007 L47L 60
Learn Business English through dramatized situations, Episode 3 Bigfoot Entertainment, 2005 ESL DVD 428.007 L47L 60
Consumer smarts: the skinny on being savvy Linx Educational, 2009 DVD ESL 658.834 C76C 25
Credit basics: Simple strategies for smart credit Linx Educational, 2009 DVD ESL 332.024 C86C 25
Doing the Job: Basic job skills Cambridge Educational, 2011 DVD 650.14 G33D 30
Doing the Job: Starting out and the daily grind Cambridge Educational, 2011 DVD 650.14 G33DO 29
Easy at Work: Breakfast, lunch and the salon, Volume 8 Easy The ESL Series DVD 428.34 E13E.8 42
Easy at Work: Custodian job, Volume 13 Easy The ESL Series DVD 428.34 E13E.13 52
Easy at Work: Dinner service, Volume 9 Easy The ESL Series DVD 428.34 E13E.9 44
Easy at Work: Front of the house, Volume 5 Easy The ESL Series DVD 428.34 E13E.5 42
Easy at Work: Hotel Kitchen, Volume 4 Easy The ESL Series DVD 428.34 E13E.4 42
Easy at Work: Housekeeping, Volume 10 Easy The ESL Series DVD 428.34 E13E.10 47
Easy at Work: Job Interviews, Volume 7 Easy The ESL Series DVD 428.34 E13E.7 53
Easy at Work: Job skill & qualifications, Volume 6 Easy The ESL Series DVD 428.34 E13E.6 49
Easy at Work: Lobby, Volume 3 Easy The ESL Series DVD 428.34 E13E.3 44
Easy at Work: Opportunity Knocking, Volume 15 Easy The ESL Series DVD 428.34 E13E.15 53
Easy at Work: Retail Sales, Volume 11 Easy The ESL Series DVD 428.34 E13E.11 59
Easy at Work: Taking care of business, Volume 12 Easy The ESL Series DVD 428.34 E13E.12 49
Easy at Work: Teresa's New Job, Volume 1 Easy The ESL Series DVD 428.34 E13E.1 44
Easy at Work: Tour of the Hotel, Volume 2 Easy The ESL Series DVD 428.34 E13E.2 47
Easy at Work: Workplace responsibility, Volume 14 Easy The ESL Series DVD 428.34 E13E.14 49
Fundamentals of Banking: Get serious about spending, saving & investing Linx Educational, 2009 DVD ESL 332.1 F96F 25
148

Newton Free Library Financial Education DVD Collection (page 2)
Title Publisher and Date Call Number Time
Get out of debt!: and rebuild your credit ShowMeHow videos, 2009 DVD ESL 332.024 G33G 52
Get that Job Cerebellum Corporation, 2002 DVD ESL 331.7 G33G 90
Getting and Using Your Resume, Cover Letter, Portfolio and JIST Card Jist Publishing, 2011 DVD ESL 650.14 G33G 25
Getting the job you really want: Getting organized to find a job Jist Publishing, 2011 DVD ESL 650.14 G33GE 25
Getting the Job: Job search and networking Cambridge Educational, 2011 DVD 650.14 G33G 26
Grocery Shopping Challenge Learning ZoneXpress, c2009 DVD 641.3 G89G 12.5
Home Buying Process ShowMeHow videos, 2008 DVD ESL 643.12 H75H 56
How will this help get me a job? VEA, c2011 DVD 650.14 H84H 22
Know your consumer rights (and responsibilities) Learning Seed, c2010 DVD 640.73 K76K 29
No Brainers on Interviewing - Getting Ready Cerebellum Corporation, 2004 DVD ESL 331.7 I61I.1 26
No Brainers on Interviewing - Putting your best foot forward Cerebellum Corporation, 2004 DVD ESL 331.7 I61I 26
No Brainers on Personal Finance - Money Basics Cerebellum Corporation, 2008 DVD ESL 332.024 P43P.1 26
No-Brainers on Personal Finance - Saving Strategies Cerebellum Corporation, 2008 DVD ESL 332.024 P439.2 26
Personal Finance Essentials: Budgeting and financial decision making Meridian Education Corp., 2011 DVD ESL 332.024 P43B 36
Personal Finance Essentials: Checking accounts and everyday banking Meridian Education Corp., 2011 DVD ESL 332.024 P43CH 31
Personal Finance Essentials: Credit, borrowing and debt Meridian Education Corp., 2011 DVD ESL 332.024 P43C 36
Personal Finance Essentials: Saving and Investing Meridian Education Corp., 2011 DVD ESL 332.024 P43S 32
Personal Finance Essentials: Taxes and tax benefits Meridian Education Corp., 2011 DVD ESL 332.024 P43T 32
Real Food - the cost of convenience Learning Seed, 2008 DVD 642.1 R22R 24
Sensible Steps to a Stylish Wardrode Learning Seed, 2010 DVD 646.3 S47S 19
Shopping behind the seams - judging quality in clothes Learning Seed, 2009 DVD 646.3 S55S 20
Supermarkets: Aisles of Persuasion Learning Seed, 2012 DVD 658.87 S95S 28
Tricks of the Trade: Outsmarting Investment Fraud FINRA Inv. Educ. Found, 2009 DVD 364.163T73T 51
Understanding Credit Basics: know the score! Learning Seed, 2010 DVD 332.7 U55U 23
Using Credit Cards wisely - take charge! Learning Seed, 2010 DVD 332.7 U85U 25
Workplace Communication Skills Jist Publishing, 2011 DVD 651.7 W89W 25
149

Financial Literacy at the Library Filmed Events
Title Publisher and Date Call Number Time
Introduction to Money Smart with Kip Child Celestial Media, 2010 DVD 332.024 F49I 1:04
Money Smart: Bank on It with Julie Soforenko Celestial Media, 2010 DVD 332.024 F49M 1:04
Money Smart: Borrowing Basics with Julie Soforenko Celestial Media, 2011 DVD 332.024 F49B 1:06
Money Smart: Check it Out with Julie Soforenko Celestial Media, 2011 DVD 332.024 F49C 54
Social Security Basics with Francine Kollias Celestial Media, 2011 DVD 332.024 F49S 1:31
Money Smart: Money Matters with Julie Soforenko Celestial Media, 2011 DVD 332.024 F49MO 1:11
Money Smart: Pay Yourself First with Julie Soforenko Celestial Media, 2011 DVD 332.024 F49P 59
Money Smart: Keep it Safe with Julie Soforenko Celestial Media, 2011 DVD 332.024 F49K 1:07
College Financing with Martha Savery Celestial Media, 2011 DVD 332.024 F49CO 1:25
Estate Planning Basics with William J. Brisk Celestial Media, 2011 DVD 332.024 F49E 1:01
Consumer Rights and Protection with Barbara Anthony Celestial Media, 2011 DVD 332.024 F49R 44
Investing Basics with David P. Simon Celestial Media, 2012 DVD 332.024 F49IN 1:06
Money Smart: Financing Fundamentals with Julie Soforenko Celestial Media, 2012 DVD 332.024 F49CA 1:08
Investment Fraud with Joshua S. Grinspoon Celestial Media, 2012 DVD 332.024 F49IN 1:09
Money Smart: Financial Recovery after a Setback with Julie Soforenko Celestial Media, 2012 DVD 332.024 F49CA 1:05
Financial Reform and the Economy with Congressman Frank Celestial Media, 2012 DVD 332.024 F49F 1:15
150

I. Learning English
Online Resources
General English
EFL Club - http://eflclub.com/
English- http://zone.msn.com/en-us/home
English the Easy Way - http://english-the-easy-way.com/
ESL Desk - http://www.esldesk.com/esl-links
Online ESL Help Resource Center – http://www.online-college-reviews.com/resources/online-esl-helpresource-center/
Grammar Resources
English Grammar Exercises: http://eslcafe.com/grammar
English Grammar Self-Tests: http://a4esl.org/q/h/grammar.html
Pronunciation Resources
American English Speech: http://www.uiowa.edu/~acadtech/phonetics/english/framesetCommonly
Confused Sounds: http://soundsofenglish.org/pronunciation/sounds/
Vocabulary Resources
American Slang: http://schandlbooks.com/AmericanSlang
Practical Vocabulary: http://www.eslpartyland.com/students/inter
Other Resources
ESL Lessons: http://hills.ccsf.org/~esltech/Lessons/Comp/lab
English Study Zone: http://web2.uvcs.uvic.ca/elc/studyzone/
II. Computer Practice
Mouse Practice: http://skyways.org/central/mouse/page1
Keyboard practice: http://skyways.org/central/keyboard/page1
Computer Basics: http://www.gcflearnfree.org/computerbasics
III. Games and Quizzes
Celebrity Calamity (http://financialentertainment.org/) Become the business manager for three
celebrities who spend beyond their means. Players must effectively use a bank account, debit card, and
credit card to be successful.
Financial Football (http://practicalmoneyskills.com/games/trainingcamp/ff/) Test your money
management skills by answering financial questions that allow you to move down the field and score
touchdowns.
http://www.genirevolution.org/Financial Literacy Quiz (http://www.proprofs.com/quiz-school/story.
php?title=financial-literacy-quiz_2) Consumer rights quiz created by KQED Public Television
Gen i Revolution (http://www.genirevolution.org/) Developed for middle school and high school students,
this online game gives students the chance to learn important personal finance skills.
151

Reality Check (http://www.jumpstart.org/reality-check.html) Test how closely your current spending
habits
match your plans for the future.
$ave Steve (http://www.savesteve.org) Online video game that teaches personal finance through a virtual
world
of robots, secret laboratories and parallel universes.
Spendster.org - Use the calculator to find out how much money you are wasting and where it could
be going instead. Upload a video to share your overspending story.
Wow Zone (http://www.tdbank.com/wowzone) Interactive site with information to help children and
teens
understand the value of money. Includes tips for Educators and Parents.
IV. Money and Finance
Financial Dictionary - http://www.financialdictionary.net
KQED Financial Resources - http://www.kqed.org/education/educators/financial-literacy-resources
Official US Government Website about Money - http://www.mymoney.gov
The Beehive Money Page - http://www.thebeehive.org/money
World English Financial - http://www.world-english.org/financialwords
V. Saving and Investing
10 Basic Steps to Help you Get Started - http://www.smartaboutmoney.org/Home/TaketheFirstStep
How to get organized, save for your future, set financial goals and more.
Basics of Saving and Investing - http://www.investorprotection.org/teach/?fa=basics Four part
investor education program that includes an Introduction to Financial Markets, and Investment
Fraud.
Feed the Pig - http://www.feedthepig.org/
Free financial information and tools to empower 25-34 year olds to take charge of their personal
finances and live within their means.
Gen i Revolution – http://www.genirevolution.org/
Developed by the Council for Economic Education for middle school and high school students, an
online game that gives students the chance to learn important personal finance skills.
Investing Basics - http://www.investor.gov/investing-basics
From the U.S. Securities and Exchange Commission. Also see Introduction to the Markets
(http://www.investor.gov/introduction-markets).
Investment Planning: The Basics
http://www.360financialliteracy.org/Topics/Investor-Education/Investing-Basics/Investment- Planning-
The-Basics
From 360 Degrees of Financial Literacy/American Institute of Certified Public Accountant.
152

Investor Knowledge Quiz - http://www.finra.org/Investors/ToolsCalculators/P116940
FINRA’s basic quiz on investing with informative answers. PDF download available.
Investor Protection Tips - http://www.sec.state.ma.us/sct/sctinv/invidx.htm
From the Mass Securities Division downloadable brochures on Annuities, Mutual Funds, Investment
Fraud and more.
Investor Tools from the CFA Institute http://www.cfainstitute.org/about/investor/Pages/index.aspx
Includes Glossary, Basics of Investing and Investment Insights.
Making your First Investments - http://www.aaii.com/classroom/article/making-your-first-investments
From the American Association of Individual Investors.
My Retirement Paycheck - http://www.myretirementpaycheck.org
For consumers nearing retirement, whether they have made retirement plans or not. Answers questions
on an array of financial topics such as insurance, debt and fraud protection. From the National
Endowment for Financial Education.
Opportunity and Risk: An Educational Guide to Trading Futures and Options on Futures
http://www.nfa.futures.org/NFA-investor-information/publication-library/opportunity-and-riskentire.
pdf From the National Futures Association.
SavingforCollege.com - http://www.savingforcollege.com/ Financial Aid Basics, Guide to 529 plans and
more.
Saving our Futures - http://www.americaspromise.org/Resources/Financial-Responsibility
Program about financial responsibility developed for middle and high school students. Curriculum
available in English and Spanish.
Smart Investing – Getting Started - http://www.finra.org/Investors/SmartInvesting/GettingStarted/
How to get started on your investment program from the FINRA Foundation.
VI. Financial Recovery
Financial Recovery Assistance
www.211.org - to identify and learn about local, state, and national assistance programs or call 211.
www.recovery.gov - for more information about initiatives resulting from the new recovery law.
www.govbenefits.gov - for details on the broader array of federal loan programs, and to determine if you
are eligible for government benefits.
www.makinghomeaffordable.gov - to determine if you are eligible for programs that help you avoid
foreclosure or overcome obstacles to refinancing your home loan.
Credit Reports
www.annualcreditreport.com - to order your credit report from. This is the only online source
authorized to do so. Beware of other sites that may look and sound similar.
153

Identity Theft
www.ftc.gov/idtheft - the FTC’s Identity Theft Hotline or call 1-877-IDTHEFT (438-4338).
www.ftccomplaintassistant.gov - to file a complaint with the FTC or call using the online
complaint form or call 1-877-IDTHEFT (438-4338).
Paying your Creditors
www.ftc.gov/bcp/menus/consumer/credit.shtm - visit this FTC website with information on
consumer rights if you feel you are being harassed or treated unfairly by creditors. Report any
problems you have with a debt collector to the Massachusetts Attorney General’s office
http://www.mass.gov/ago/ and the FTC www.ftc.gov.
Bankruptcy
The law now requires that you receive credit counseling before filing for bankruptcy. You should
also seek sound legal counsel before filing for bankruptcy. For more information on bankruptcy
visit:
www.ftc.gov/bcp/edu/pubs/consumer/credit/cre41.shtm
www.uscourts.gov/bankruptcycourts/bankruptcybasics.html
Credit Counseling
For information on choosing a credit counselor visit:
www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm.
154

American Consumer Credit Counseling
130 Rumford Avenue, Suite 202
Auburndale, MA 02466
consumercredit.com
800-769-3571
Community Resources
Offers confidential credit counseling, debt management and financial education services.
Asian American Civic Association (AACA)
87 Tyler Street, 5th Floor
Boston, MA 02111
aaca-boston.org
617- 426-9492
Offers Boston residents classes in English language, basic computer skills and financial literacy.
Jewish Family & Children’s Service
1430 Main Street
Waltham, MA 02451
jfcsboston.org
781-647-5327
Offers assistance to refugees during their initial adjustment and provides ongoing support to
individuals and families in the Boston community. Citizenship application help available.
Massachusetts Educational Financing Authority (MEFA)
160 Federal Street
4th floor
Boston, MA 02110
mefa.org
800-449-MEFA (6332)
Offers assistance with saving and planning for college.
Massachusetts Office of Consumer Affairs and Business Regulation
10 Park Plaza, Suite 5170
Boston, MA 02116
mass.gov/ocabr
617- 973-8787
Call hotline listed above for questions or complaints on consumer issues, tenant rights, banking and
insurance.
155

Metropolitan Boston Housing Partnership
125 Lincoln Street, 5th Floor
Boston, MA 02111
mbhp.org
617-859-0400
Helps individuals and families find and retain affordable housing. Provides rental housing vouchers
and free workshops on apartment search and utilities workshops.
Newton Community Service Center
492 Waltham Street
Newton, MA 02465
617 969-5906
ncscweb.org
Offers a range of programs to the community including preschool and child care, drop-in centers for
teens, volunteer opportunities for seniors (SOAR 55), family counseling, parenting education and a
home-based literacy program.
Saheli Boston
PO Box 1345
Burlington, MA 01803
saheliboston.org
1-866-4SAHELI
Provides support and resources to South Asian women in the Boston area on health, legal, economic
and family issues.
The Second Step
P.O. Box 600213
Newtonville, MA 02460
thesecondstep.org
617-965-3999
Offers transitional housing, advocacy, safety planning, mentoring, children’s programs, legal case
management, and an array of supportive services for families transitioning away from abuse.
156

Nationwide Resources (from American Consumer Credit Counseling)
American Consumer Credit Counseling
130 Rumford Ave, Suite 202 Auburndale, Ma
02466
800-769-3571
Credit Reporting Agencies
Experian
www.experian.com
800-682-7654
Equifax
www.equifax.com
800-865-1111
Transunion
www.transunion.com
800-916-8800
FICO Scores
To purchase your FICO scores; one from each
bureau.
www.myFICO.com
800-319-4433
Free Annual Credit Report
This website enables you to order a free copy of
your credit report from each of the credit reporting
agencies
www.annualcreditreport.com
877-322-8228
Federal Deposit Insurance Corporation
You can find resources provided by the FDIC
protect and educate consumers
www.fdic.gov
877-275-3342
Federal Trade Commission
www.ftc.gov
Internal Revenue Service
The nation’s tax collection agency where you can
find information on tax related information
www.irs.gov
800-829-1040
Social Security Benefits
To order earnings and benefits statement or to
report fraudulent use of SS#
www.ssa.org
800-772-1213
Affordable Care Act
Information on the Affordable Care Act and
various health care options can be found here.
www.healthcare.org
Medicare
www.medicare.com
800-MEDICARE (633-4273)
Medicaid
www.cms.gov
800-633-4227
Making Homes Affordable
If you are having trouble making your mortgage
payments or have missed a payment, contact to see
what options are available to you.
www.makinghomesaffordable.gov
888-995-4673
Credit Card Offer Removal List
The national credit bureaus offer a toll free
number for you to opt out of all preapproved
credit card offers with just one phone call.
888-5OPT-OUT (888-567-8688)
Federal Reserve
www.federalreserve.gov
157

Direct Mail Removal List
The Direct Marketing Association has developed
a tool to help manage your mail. To be removed
from mailing lists including catalogs, newsletters,
donation requests, and more.
www.dmachoice.org
212-768-7277
National Credit Union Association
You can learn more about how to join a credit
union and financial self sufficiency
www.ncua.gov
703-518-6300
Safelink
A government supported program that provides
free cell phone and air time to income eligible
participants. www.safelinkwireless.com
800-977-3768
Check Systems
You can order a report to learn what information,
if any, is listed in your consumer file at
ChexSystems. www.consumerdebit.com
800-428-9623
TeleCheck
To report fraudulent use of your checks you may
file a report with TeleCheck. You may also order
a file report if you believe that there may be
inaccurate or incomplete information.
www.telecheck.com
Government Benefits
Online access to government benefits and
assistance programs. www.benefits.gov
USA Government Made Easy
A-Z resources through the government’s official
www.usa.gov
800-333-4636
Student Loans
Department of Education (Student Loans,
Forgiveness, grants and more)
www.edu.gov
800-621-3115
158

This publication is made possible by a grant from the FINRA Investor Education Foundation
through Smart investing @ your library®, a partnership with the American Library Association.
The mission of the FINRA Investor
Education Foundation is to provide
underserved Americans with the knowledge,
skills and tools necessary for financial
success throughout life.
The FINRA Foundation envisions a society characterized by universal financial literacy.
Established in 2003, the FINRA Foundation supports innovative research and educational projects
aimed at segments of the investing public that could benefit from additional resources. Since
its inception, the Foundation has approved more than $63 million in investor education and
protection initiatives through a combination of grants and targeted projects. For details about grant
programs and other FINRA Foundation initiatives, visit www.finrafoundation.org.
Established in 1876, the American Library Association is the oldest and largest library association
in the world. It strives to provide leadership for the development, promotion and improvement of
library and information services and the profession of librarianship in order to enhance learning
and ensure access to information for all. For more information, visit www.ala.org.
Smart investing @ your library® is administered by the Reference and User Services Association
(RUSA) which is the foremost organization of reference and information professionals who make
the connections between people and the information sources, services and collection materials
they need.
A Legacy for Literacy
330 Homer Street • Newton, MA 02459
www.newtonfreelibrary.net July 2012