Financial literacy presentation created by the Office of the Indiana Secretary of State.

1. Secretary of State
Connie Lawson
Improving Financial Literacy

2. Did you know?
• 40% of Americans say they live beyond their
means
• 50% say they live paycheck to paycheck
• Fewer than 50% of Americans have calculated
how much they need for retirement
• The average American spends 20 years in
retirement.
Are you ready?

3. What is Financial Literacy?
It is the ability to use knowledge and skills
to manage financial resources effectively
for a lifetime of financial well-being.

4. What knowledge and skills can
help you to be financially
literate?
•
•
•
•
•
•
Budgeting
Balancing a checkbook
Credit
Compound Interest
Investing
Investment Fraud

5. Budgeting
• What is budgeting?
– Spending less than you’re bringing in
– Planning for the long and short term

6. Why can budgeting fail?
•Failure to prioritize expenses
•Failure to budget practically for normal outof-pocket expenses such as groceries and
gas
•Failure to plan for unexpected events
•Spending more money than you have

7. How to budget
• List Expenses
–
–
–
–
–
The Unexpected
Annual/Semi-annual/quarterly
Monthly
Weekly
Discretionary
• Prioritize Expenses
– Necessities
– Essentials
– Car loan/car licensing
fees/fuel
– Insurance fees
– Unsecured debt
– Discretionary expenses
List total amount of each expense & date its due

8. Make your budget work for you!
• Priorities first!
• Evaluate discretionary expenses
• Cut down on grocery or personal items
• Carpool or use public transportation

9. Balancing a checkbook
• Verifies your records match the bank’s;
• Monitors for bank mistakes;
• Prevents you from running low or out of funds;
• Recognizes issues right away; and
• Evaluates your expenditures.

10. How to balance your checkbook
1. Reconcile your checks/deposits.
2. Reconcile your ATM withdrawals & debit card
purchases.
3. Record interest earned & bank fees.
4. List outstanding checks/deposits.
5. Record your bank’s ending balance.
6. Calculate your balance.

11. Credit
• Powerful tool
– Gives access to student loans, mortgages,
credit cards, auto loans, etc.
• Why is good credit important?
– Shows trustworthiness
– Saves you money/best interest rates

12. Credit
• Five Cs
– Character
– Capacity
– Capital/Collateral
– Conditions
– Credit History

13. Credit Card Management
• Limit the number of credit cards
• For debt, look into 0% transfer programs
• Be aware:
–
–
–
–
–
Maintenance fees
Service Charges
Late Fees
Annual Membership fees
Interest
• Pay at least minimum every month
• Pay extra on the card with highest interest rate (if
possible)

14. Monitor Your Credit
• Go to www.AnnualCreditReport.com;
• Call 1-877-322-8228; or
• Write to:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

15. Compound Interest
Would you rather have a million dollars right
now or a penny doubled every day for 30
days?

16. Answer
Take the Pennies!

17. Let’s do the math
Day 1 = 1 cent
Day 7 = 64 cents
Day 14 = $81.92
Day 21 = $10,485.76
Day 30 = $5,368,709.12

18. What is compound interest?
Interest is paid on original amount of deposit plus
any interest earned.
(Original $ Amount + Earned Interest) x Interest
Rate x Length of Time = Amount Earned

19. Compound Interest
Mike
Laura
Age
Contributions
Made Early
Contributions
Made Late
Age
Contributions
Made Early
Contributions
Made Late
22-30
(9
years)
$2,000 annually
$0.00
31-65
(35
years)
$0.00
$2,000 annually

20. Savings
Who
Without
compound
interest
With compound
interest (at age
65)
Mike
$18,000
$579,471
Laura
$70,000
$470,249

21. 302 West Washington Street, Room E – 111
Indianapolis, IN 46204
Phone: (317) 232 – 6681
Toll Free: (800) 223 – 8791
Fax: (317) 233 – 3675
www.IndianaInvestmentWatch.com
Indiana Investment Watch
@INInvestWatch
Connie Lawson
@SecretaryLawson

22. Questions?