portant. im is y e n g my mo ge me.” “Managin my money mana t I won’t le Living Within Your Means in a New Economy Living Within Your Means Defined If by “means ” we are referring to someone’s financial resources, you could say that someone living “below” his or her means is spending less than he or she can actually afford to spend given what he or she earns. This means that some money is being saved, and not all of it is being spent. Someone who is living within his means, on the other hand, would be spending all he earns, but no more. But living “within”, “below” or “above” ones’ means can mean different things to different people. For example, if someone is sustaining his or her lifestyle by regularly racking up credit card bills, that may be termed as living above ones’ means. Basically, living within your means can be broken down into: 1. Making regular savings a priority. 1st to build a reserve to help deal with normal financial setbacks in life, and 2nd to support yourself later in life. 2. Control your debt. Know the difference between good debt (borrowing for something you truly need or that can enhance your financial security); and bad debt (borrowing for things you can do without). Of course there are other things that contribute to living within ones means, such as working hard, managing your career, investing, monitoring finances regularly, and living within a budget. This session looks to our 2011 FIC Scholarship applicants to learn how they perceive living within their means, and how their credit unions can help them get there. There are several direct quotes from 2011 FIC essays included in this handout. Here is one applicant that adequately describes living within ones’ means: “A good example of ‘living within your means’ would be to figure out the differences between your wants and needs; also to prioritize and evaluate your financial decisions.” Another 2011 FIC applicant outlines key factors to living within ones’ means: • Educate yourself regarding finances and investments • Plan and manage your money wisely • Know the importance of credit • Save money and avoid impulse shopping So is it that simple? Today we will hear from people in various stages of their lives, and learn how they perceive the concept of Living Within Your Means. Online/Mobile Resources Students listed these online CU products as being helpful in achieving their financial goals. • • • • • • • • • Online budgeting tool Online checkbook balancer Online banking and bill pay eStatements Student budget calculator –to help students understand and track spending for college Text message account alerts – for example, when members’ balances get below a certain amount Online with financial tips Monthly electronic newsletter tailored towards college students and young adults. Topics could include student loans, credit, budge ing, tax advice, investing, scholarships and savings tips. Online Chats Education Efforts in a Group Setting Applicants shared ideas on financial workshops or seminars that could be offered by credit unions in a group setting with topics such as: • How to Develop a Savings Plan; what prod- • Money Management • Budgeting – development of weekly/monthly • • • • • • • • budgets; how to build a reasonable budget and stick to it Debt Management – Borrowing Responsibly Credit Reports: How to Establish a Credit Rating; What is in my Credit Report “Living within your means” seminar, and bring in experts outside of the CU such as tax advisors, estate planning, or financial planning Teen Budgeting Identifying Needs vs. Wants What I am worth (financially) • • • ucts and services are offered by the credit union to help people achieve their financial goals Teens: Identity Theft Concerns for Teens Young Adults: How to rent an apartment; How to pay for college; What to expect with your finances while in college Parents and Older Adults – Raising money smart kids How to apply and interview for a job Help students organize their finances and highlight all of the services offered Today we will ask our panelists about their interest in education offered by their credit unions in a group setting, and what would entice them to participate in workshops or seminars. Notable Quotes From 2011 FIC Scholarship Applicants “Improving the financial well-being of members is in the very Mission Statement of my credit union.” “Being wise with your money is not only smart, but it will pay off in the end. Live within your means; don’t buy things you cannot afford. Be absolutely true to your budget.” “Without a doubt, if you want to live within your means, your credit union should be your first stop to get on the right path to a healthy financial future.” “My credit union helps me live within my means by empowering me with the knowledge, resources, and support to build security in my life.” “Credit Unions can be powerful tools when trying to live within one’s means. They are in themselves assets in the financial realm.” “The number one tool my credit union can give me is their advice. I trust what they have to say about living within my means and this will be the first place I turn to when I have questions or concerns about what’s happening with my money.” One-On-One Education with Members Interestingly, the 2011 FIC applicants repeatedly discussed how their credit unions could help them by offering one-on-one financial education. Here were some of their ideas on individual education that could be provided: • Offer individual or family budget planning. Sit down with an individual or family and look at all of their bills and see exactly where all of their money is being spent. Then, help them identify the maximum that should be spent per pay check or monthly on each category such as bills, food, clothing, savings etc. • Credit union employees should meet with members individually to help them financially plan. It would be helpful to offer templates, or help students make their own personal chart to track spending. • Credit union employees should provide instructions to members on how to balance a checkbook; smart saving prac- Credit Union Products to Help Members—from FIC Applicants Best Practices Financial Reality Fair Held in conjunction with the GAC, (March 2012) about 40 students attended this fair and said it changed the way they will save and spend money. This hands on experience helped students indentify career choices and starting salaries, then complete a budget requiring them to live within their monthly salary while paying for basics such as housing, utilities, transportation, clothing and food. Additional expenditures such as entertainment and travel were factored in as well. Students had to make decisions on how to balance their spending based on their wants and needs to live on their own. Students visited various booths that covered the components of independent living. Once students balanced their respective budgets, they met with financial counselors to review their findings. Learn more at: http://www.ncuf.coop/home/news/ subnews/reality_fair_2012_gac.aspx Florida Commerce CU: iLiveFIT! Financial soundness is the goal of Florida Commerce CU’s iLiveFIT! Program. Members who enroll receive a free personal financial assessment from a trained financial service officer. Once a member’s fitness level is been determined, they are provided with a “prescription plan” outlining the steps to financial independence. A member’s prescription is specific to his or her needs and may include free courses, debt management plans, or systematic savings plans. Not only is this program free, but as members obtain levels of financial fitness, they are rewarded with bonus points towards CDs, points off a loan, gift cards and other prizes. Learn more at: http://www.floridacommerce.org/ about_us/promotions/ilivefit Page 2 tices; how to establish a credit rating; and tips on borrowing responsibly. • Advise members on healthy consumption/spending practices and how to budget successfully. Learn from credit union staff how to save and become a financially knowledgeable adult. • Learn from credit union employees how to distinguish between wants and needs, which can shape the way members define how to ‘live within ones means’. Dupaco Community Credit Union Dupaco CU’s employees will sit down with members one-on-one and look for ways to cut costs and free up money for daily living and long-term systematic saving. They also offer a Tools & Education section on their website to help educate kids and adults in basic financial literacy. Money Makeover: They take a look at the member's total financial picture to identify opportunities to painlessly “make over” their finances to cut costs and build savings. Whether it's total reconstruction or simple cosmetic changes, a Dupaco Money Makeover artist will sit down with you one-on-one to review your entire financial picture—at no cost. Credit History Lessons: They teach members how to drive up their credit scores and pay less—especially if they’ve experienced a few bumps in the road. Learn more at: http://www.dupaco.com/page.php? page=87 TopLine Federal Credit Union They are offering a weeklong open house along with youth financial literacy sessions, April 22-28, during National Credit Union Youth Week. They will also visit interested schools or other groups to present age-appropriate lessons about money management. Their goal is to help kids and their parents learn to save and build a strong relationship with money, emphasizing the importance financial literacy and general money management skills. The three youth seminars are divided by age group: Building Dreams, for kids K-4th grade; Dollar Power, for grades 5-8; and Dollars and Sense, for high school teens. Learn more at: https://www.toplinecu.com/ Financial_Education.asp?Docid=81 • “Emergency Funds” savings account • “Step-up” CD – after investing for 12 months or longer, give a higher rate • Student loans, free checking, overdraft protection, holiday clubs, payroll deduction or automatic savings transfers • Accounts to promote/incent money savings skills • Share-secured credit card that must be paid off monthly • Increasing the number of student-banking services at the CU. The CU may want to have an on campus bank or set up a booth at local colleges to recruit more student members. • Rewards program that promotes responsible budgeting, and provides incen ives for students who are trying to live within their means • Develop a program to assist members with expense tracking and saving money • Incentives for not overdrafting accounts • 1% interest rate reduction once student pays off 10% of the loan • Create a student account that requires a certain dollar amount to be added monthly, and that is untouchable, unless dire need is proven Mission SF Federal Credit Union YCUP (Youth Credit Union Program) Developed in 1996, YCUP is California’s first ever youth-run credit union program. YCUP offers unique leadership and job development opportunities to its members. Employees of this credit union must be between 6 and 18 years old; live in specific areas within San Francisco; and want to learn how to manage a youth credit union. They have 2 types of accounts to Help members save: Short-term accounts that allow members to make deposits or withdrawals when they like; and long-term accounts that allow members to decide how long they want to save money for a certain goal. Once a term is chosen, members can’t access the money until the term is up. Also, YTEP (Youth Trainers for Economic Power) is their newest program and is made up of 8 youth trainers who train over 500 other youth per year about personal finance and social justice. Learn more at: http://www.mission.coop/youth/ services.html Living Within Your Means in a New Economy