America's Financial Events #2

This program will take about 5 minutes to complete.

NOTE: Financial education content for the program was taken from Cash Course, an interactive financial education program created by The National Endowment for Financial Education ® (NEFE ®) - an independent, nonprofit foundation committed to educating Americans on a broad range of financial topics and empowering them to make positive and sound decisions to reach their financial goals. For more than 30 years, NEFE has been providing funding, logistical support, and personal finance expertise to develop a variety of materials and programs, such as Cash Course.

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Fee
Current Events - Question 1 of 5

Current Scenario: Because of the financial crisis in 2007, many new regulations have been imposed upon banks. These banks, in turn, are trying to think of new ways to bring in money. One of these ways is through the use of debit card fees. Banks like Wells Fargo, Bank of America, and Chase briefly considered these fees before quickly canceling them due to customer protests. Now, they are instead increasing the costs of fees that already exist.

With all of these new fees, which is the best way to manage your money?

Keep most of your money as cash. This will help you to avoid banks altogether.

Read your financial contracts and know all the requirements and fine print.

Get a credit card. You can use the card as a replacement for an ATM or debit card from a bank.

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Source: CNN Money


Fees
ANSWER: Read your financial contracts and know all the requirements and fine print.

LESSON FOR YOUR LIFE:

Understanding the Importance of Reading Financial Contracts

Banking fees can really add up. Before you open an account, find out what types of fees you might be charged and how much the fees are, and then estimate how many times you might have to pay these fees. A few typical fees and what they cover include:

  • Account fee: This is a monthly fee you may pay for simply having an account with the bank.

  • Online banking fee: If you choose to do your banking online, you may be charged a monthly fee for the convenience; the fee varies from bank to bank.

  • Minimum balance fee: If your account balance falls below a certain level, even if only for a day, you may be charged a fee.

  • Overdraft protection: When you don't have enough money in your account to cover a check you write, an online bill payment, or debit card use, overdraft protection will allow the check to clear (saving you embarrassment and a bounced check fee from the store where you wrote the check).

  • ATM card fee: Many banks provide an ATM or debit card for free, but some banks charge a fee for providing the card.

  • ATM transaction fee for ATMs not owned by bank: You may pay a fee to use any ATM machines that are not owned and operated by your bank. The fee may only be a dollar or two, but if you make many ATM transactions during the month, the fees add up.

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Spending
Current Events - Question 2 of 5

Current Scenario: Winter is almost here, and with it, holiday spending. Consumers are planning to spend more money this season on gifts and decorations. With the national savings rate at a low 3.6%, much of this spending is being financed by emergency savings funds.

What is the best way to handle holiday spending?

Don?t. If you can help it, don?t spend any money on gifts or events for the holidays.

Budget carefully. Make sure that you plan ahead and decide on a reasonable amount of money that you can afford to spend on gifts.

Do use your emergency savings fund, if you have to. It should be made of 3-6 months of living expenses and is always there when you need it, especially in a case like this.

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Source: CNN Money

Holidays
ANSWER: Budget carefully. Make sure that you plan ahead and decide on a reasonable amount of money that you can afford to spend on gifts.

LESSON FOR YOUR LIFE:

Understand the Importance of Knowing What You Spend

A budget is an important financial tool. By using a budget, you are forced to think of new ways to adjust your spending habits as your financial situation changes.

Good budgeting habits also help ramp up your thinking about money. Any experience you gain by managing money over weekly or monthly time frames can help prepare you mentally for the longer-term financial planning you'll face later in life.

Budgeting doesn't have to be difficult?it's a process of simple arithmetic. Initial budgeting experience is gained through trial and error. The keys are to figure out how much you actually spend, write down your income and expenses, compare the amounts, and then make adjustments as necessary.

It's easier to plan a budget after first setting aside money for your tuition, books, student fees, meal tickets, and other large annual or semiannual costs. With the money left over, you can create categories. The money in each category is how much you have that you can spend.

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House
Current Events - Question 3 of 5

Current Scenario: Compared to 5 years ago, houses are priced lower than ever. Interest rates are also at historic lows. Yet, housing sales are still slow. Many factors are to blame. Unemployment is high and consumers are not confident in their own financial or job security and don?t want to make a major investment, no matter how low the price is.

If you are thinking about buying your first home, what should you do to be prepared?

Know your credit history. Knowing your credit history means that you will be able to estimate your credit score. This score determines the interest rate you will be able to pay on loans.

Have a large down payment, ?ideally 20% of the purchase price. Paying more money up-front means that you will have less to pay later on a loan. You will also have lower insurance fees on government-insured mortgages.

Both of the above.

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Source: Smart Money

Housing
ANSWER: Both of the above

LESSON FOR YOUR LIFE:

Know Your Credit History

Good credit is important because your credit will be checked when you apply for a mortgage. The higher your credit score, the less you will pay in interest.

Credit Score FAQ

  • Credit Score: a number representing an individual's creditworthiness based on their past and current credit files. The range of credit scores is from 300 to 850. The higher the score, the better your credit. High credit scores can help you qualify for loans at lower interest rate charges. For the best rates, your credit scores should be 720 or above.

  • Credit Report: a detailed record of your credit history. Your credit report is maintained by companies known as credit reporting agencies or credit bureaus. Lenders and creditors can use your credit report to determine your risk as a borrower.

  • For a Free Credit Report the official site is www.annualcreditreport.com where you are entitled to one credit report every 12 months from the three credit bureaus of TransUnion, Experian and Equifax. You only get the report free at this site, not your credit score.

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Grad
Current Events - Question 4 of 5

Current Scenario: On November 4, 2011, the value of stocks in the stock market fell because the monthly jobs report from the government fell short of expectations. The U.S. economy only added 80,000 jobs in October. Investors were expecting at least 98,000 jobs to be added. With few jobs being added, the job market is more competitive than ever.

What is something you can do to make yourself a better potential candidate?

Find a part-time job that will help you work on skills that are applicable to your chosen major. Be an outstanding employee - good work habits can lead to recommendations and contacts that you can use after you?ve graduated college.

Have a professional wardrobe prepared for interviews. Professional outfits should consist of neutrals and classic pieces.

Both of the above.

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Source: CNN Money

Job
ANSWER: Both of the above.

LESSON FOR YOUR LIFE:

Making Yourself Employable

When an employer interviews you for a position, they want to know you have what it takes to get the job done. A few tips that will make you ultra employable include:

  • Be ready to start: When a prospective employer asks when you might be able to start work, he or she would love it if you said "Today!" While most employers won't expect this, they will appreciate your enthusiasm and commitment, and it could be a factor in choosing between two equally qualified candidates.

  • Be a good communicator: Generally, verbal and written communication skills are important in any type of career.

  • Know to make your job a priority: This sounds obvious. However, a lot of young adults in their first jobs out of college still want to be partying with their friends at night and see that as a priority. It's fun, but it can make it hard to get up in time for work and be functioning well when you arrive.

  • Have a professional wardrobe: Use neutrals and less than three different shades per outfit to look your best. Appear neat and put-together at all times.

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Piggy
Current Events - Question 5 of 5

Current Scenario: Average student loan debt has recently climbed to over $25,000 for 2010 graduates. This record level of student loan debt is 5% more than the class of 2009 owed, according to a report from the Institute for College Access & Success? Project on Student Debt. The reason for this hike has to do with rising tuition figures.

If you need to take out loans and grants for school, what is the best order in which to take them out?

First, take out grants. Then, take out unsubsidized loans, private loans, and subsidized loans.

First, take out private loans. Then accept grants, subsidized loans, and unsubsidized loans.

First, take out grants. Then take out subsidized loans, unsubsidized loans, and private loans.


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Source: CNN Money

Piggy
ANSWER: First, take out grants. Then take out subsidized loans, unsubsidized loans, and private loans.

LESSON FOR YOUR LIFE:

Overview of Financial Aid

Free Money

  • Grants: This type of aid are generally awarded based on a need assessment determined by the federal government or a state government and in some instances combined with academic performance or program of study.
  • Scholarships: This type of free money is made available to students who demonstrate potential for distinction, usually in academic performance. Scholarships are generally awarded by the school itself or private corporations, organizations, churches, and civic groups.

Employment: Work Study

This financial aid option requires you to work while in college. The Federal Work-Study Program is a program of employment that provides jobs for students both on and off campus.

Student Loans

  • Subsidized Stafford Loans: Made to undergraduate, graduate, or professional students who demonstrate need. The federal government pays the interest during periods when repayment is not required while the student is still in school at least half time.
  • Unsubsidized Stafford Loans: Made to undergraduate, graduate, or professional students who do not demonstrate need. The student is responsible for payment of all interest that accrues from the date of the first disbursement throughout the life of the loan. Repayment of principal is not required while the borrower is enrolled at least half time in school or while the loan is in a grace or deferment period. However, interest continues to accrue and may be either paid as it accrues or capitalized (that is, added to the loan's principal balance).

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FINAL RESULTS

0-2 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.

FINAL RESULTS

3-4 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.

FINAL RESULTS

5 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.