Category Chapters

Sep 16 2023

UNDERSTANDING YOUR MONEY SCRIPT

A money script, based on a person’s early experiences with finances, can create a better understanding of financial behavior. Researchers using psychology and sociology have identified four money scripts:

  1. Money avoidance involves negative ideas related to finances and wealth. These people tend to not allow themselves to do well or save much, believing that having less is morally good.
  2. Money worship concerns people who believe wealth is the key to solving their problems and finding happiness. Money worshippers overestimate the sense of satisfaction and meaning obtained from buying things.
  3. Money status, these status seekers mix their net worth and self-worth. Those who grew up in households with financial struggles tend to use money to seek status and are prone to overspend and often have higher credit card debt.
  4. Money vigilance involves those who are alert, watchful, and concerned about their financial health. They believe that having enough money is important with an emphasis on saving.

Frustrations with your financial life can be reduced by reflecting on money attitudes and behaviors obtained in childhood. Take time to talk to family members and others. Try to determine reasons for family beliefs about money.  Awareness of these past beliefs can help to modify a person’s current relationship with money.

For additional information on money scripts,

Link #1

Link #2

Teaching Suggestions

  • Have students talk to family members or others to learn about their personal money attitudes and financial behaviors.
  • Have students create a visual proposal (poster, slide presentation, or video) to suggest actions that would help people better manage their finances based on each of the four money scripts.

Discussion Questions 

  1. How could knowing your money script help a person make better financial decisions?
  2. Describe actions people might take to better understand their money attitudes and financial behaviors.   
Sep 2 2023

Retirement ahead? Think about your insurance

If retiring is in your near future, congratulations!

Before the cake is cut, ask some questions about your insurance to make sure you have the coverage you need.

#1) Will you have health insurance?

There are several ways you can get health insurance after you retire:

a. Through your employer.

b. Through your spouse’s employer.

c. Medicare if you’re 65 or older or have a disability.

d. Buy your own plan from an insurance company or HealthCare.gov.

#2) Do you have retirement and savings accounts?

Ask your employer for a statement of any accounts you’ll take with you. These could be retirement accounts, annuities, life insurance, or long-term care insurance.

#3) Do you need life insurance?

If you have life insurance, consider whether you still need it. If no one is relying on you for income, maybe you can sell your policy or stop it. If your policy has cash value, you can get the money you built up. Ask about any charges or fees before stopping or selling a policy.

#4) Do you need long-term care insurance?

Not everyone needs long-term care insurance. It’s usually a good idea if you have significant assets you want to protect. Premiums get higher as you get older, so don’t wait too long to buy it if you want it.

#5) Keep your family or a trusted source informed

Share your insurance policies and cards with anyone who is – or who is planning to – help manage your money as you age. This ranges from health, long-term care, and life insurance to car and home insurance policies.

For more information, click here.

Teaching Suggestions:

  • Ask students if life insurance is needed during retirement. If so, under what circumstances life insurance might be needed?
  • Ask students if long-term insurance is as important as health insurance. Why or why not?

Discussion Questions:

  1. What are several ways you can get health insurance after you retire?
  2. What might be cheaper options for funeral expenses?
  3. Why is it important to keep your family or a trusted source informed about your insurance policy and insurance cards?
Aug 19 2023

10 Ways to Protect Your Personal Information

Identity theft affects millions of people each year and can cause serious harm. Protect yourself by securing your personal information, understanding the threat of identity theft, and exercising caution.

Here are 10 things you can start doing now to protect yourself and your loved ones from identity theft: 

  1. Protect your Social Security number by keeping your Social Security card in a safe place at home.
  2. Be careful when you speak with unknown callers.
  3. Create strong, unique passwords so others can’t easily access your accounts.
  4. Never give your personal or financial information in response to an unsolicited call or message, and never post it on social media.
  5. Shred paper documents that contain personal information, like your name, birth date, and Social Security number.
  6. Protect your mobile device from unauthorized access by securing it with a PIN, adding a fingerprinting feature, or using facial recognition.
  7. Regularly check your financial accounts for suspicious transactions.
  8. Avoid internet threats by installing and maintaining strong anti-virus software on all your devices—including your mobile device and personal computer. Use a virtual private network (VPN) to stay safe on public Wi-Fi.
  9. Protect yourself on social media by customizing your security settings and deleting accounts you no longer use.
  10. Never click on any link sent via unsolicited email or text message—type in the web address yourself. Only provide information on secure websites.

The Social Security Administration encourages you to create your own personal my Social Security account to track your earnings record. For more information, read Social Security Administration (SSA} publication, Protecting Personal Information. Contact SSA if you see suspicious work activity on your record–you could be a victim of identity theft.

For more information, click here.

Teaching Suggestions

  • Ask students if they, their friends, or relatives have been a victim of an identity theft? If so, what was their experience?
  • How often do you check your credit reports and why should you check your credit reports at least once a year?

Discussion Questions

  1. What actions have you taken to protect your personal information from being stolen by scanners?
  2. Why is it not advisable to carry your Social Security card in your wallet or your purse?
Aug 5 2023

RICH VS. POOR MONEY HABITS

Successful money management can result from simple actions.  A major difference between the rich and the poor is their habits and attitudes toward money. Increased financial literacy and changed behaviors can result in increased prosperity. A transformed financial future can result from these actions:

  • Believe you can control many aspects of your life rather than viewing yourself as a victim of circumstances.
  • Create goals to clearly maintain your focus and an action plan to build wealth.
  • Focus on opportunities looking for new ways to create value and grow wealth rather than being preoccupied with problems and barriers.
  • Avoid jealousy; learn from those who have already achieved wealth.
  • Emphasize cash-flow assets; acquire investments that generate income to build lasting wealth.
  • Commit to an increasing net worth and a positive cash flow.
  • Continue to learn since knowledge is power; seek to expand an understanding of finances, investments, and business.

In addition, people who are successful in managing their finances avoid spending money on these things:

  • bank fees
  • credit card interest
  • lottery tickets and other gambling
  • late fees
  • extended warranties
  • designer label clothing
  • impulse purchases
  • video games, televisions 
  • prepaid cash cards with various fees

For additional information on the money habits of rich and poor people, go to:

Link #1

Link #2

Teaching Suggestions

  • Have students interview a family member or another person to determine recommended actions for successful money management.
  • Have students create a visual proposal (poster, slide presentation, or video) with actions a person might take for reduced spending and for an improved financial situation.

Discussion Questions 

  1. Which attitude or behavior discussed in the article do you believe could make a difference in the financial life of most people?
  2. Describe actions a person might take to change attitudes and behaviors that could result in an improved financial situation.
Jul 22 2023

Saving for Retirement

Retirement requires a lot of planning and consideration. In addition to finances, you need to think about when and where you’ll retire. Experts advise that you may need as much as 80 percent of your pre-retirement income to continue your current standard of living. The exact amount will depend on your individual needs. 

Questions To Ask Yourself before Retiring

As you plan retirement, consider these important questions:

  • At what age do you plan to retire?
  • Can you participate in an employer’s retirement savings plan? This includes 401(k) plans and traditional pension plans. 
  • If you have a spouse or partner, will they retire when you do?
  • Where do you plan to live when you retire? Will you downsize, rent, or own your home?
  • Do you expect to work part-time?
  • Will you have the same medical insurance you had while working? Will your insurance coverage change?
  • Do you want to travel or pursue a costly, new hobby?

Tools to Help You Prepare for Retirement

To begin planning for your retirement:

For more information. Click here.

Teaching Suggestions

  • Ask students if they have considered saving for retirement yet? If not, encourage them to start saving at least 20 percent of their income towards retirement.
  • Do you know what sources of income will be when you retire? How much to expect from each source, and when?

Discussion Questions

  1. Why is it important to start planning for retirement while you are still in college?
  2. What are the easiest ways to boost your retirement savings?
Jul 8 2023

CHAT GPT FOR MONEY MANAGEMENT

You may ask if artificial intelligence (AI), such as ChatGPT, can be beneficial to guide your money management activities and financial decisions. AI is assisting students and others with everything from identifying research topics and preparing reading summaries to creating recipes and translating foreign languages.

ChatGPT and similar platforms are designed to understand and respond to questions and creative inquiries. When asked a question or given a prompt, a reply is generated based on the previous learning of the AI program.

Using ChatGPT for personal finance can provide a person with easy-to-understand information as well as suggested money actions related to budgeting, saving, and investing.  However, beware not to depend completely on AI advice since:

  • responses may contain fictionalized information or a biased point of view.
  • results can produce grammatically correct text but with flawed logic or facts.
  • up-to-date tax information and current financial data may be lacking.
  • citations may not be correct and may include made-up sources.
  • calculations may lack accuracy due to limited math algorithms.

ChatGPT and similar AI programs can be useful in your personal financial planning with:

  1. Understanding basic financial concepts.  As a starting point, ask how to improve financial literacy and inquire about fundamental personal finance topics related to budgeting, debt, insurance, and investing.  If a response is too complex for your current level of understanding, ask for a simplified explanation. Or, if a response is too general, resubmit your inquiry with more specific parameters.
    Sample ChatGPT prompt: What advice from financial planners might be the basis of wise money management?

2. Tracking spending and budgeting. Controlling your finances and knowing where your money is going are the foundation of financial success. Creating a budget (spending plan) allows you to tell your money where it needs to go. ChatGPT can suggest appropriate budget categories and amounts as well as possible adjustments when needed. Other AI uses may include use of the 50/30/20 budget rule and guidelines for using the envelope method or budgeting apps.
Sample ChatGPT prompt: What budget categories and allocated amounts are recommended for a household of four people with an income of $67,000?

    One person’s experience with creating a budget using Chat GPT may be viewed at:  https://www.youtube.com/watch?v=hl6pOtaSMR4

    3. Monitoring and improving your credit score.  Your credit score can influence many aspects of your financial life. ChatGPT is available to suggest actions for improving a credit score. Also of value would be information on how to dispute errors in a credit report.
    Sample ChatGPT prompt: Propose a plan to pay off $6,400 of credit card debt.

    4. Achieving savings goals. Long-term financial success is dependent on saving money.  ChatGPT can recommend financial goals based on your life situation and finances. In addition, ask for an explanation of compound interest and how it applies to your savings plan.
    Sample ChatGPT prompt: Recommend a step-by-step action plan to create an emergency fund of $8,000 within the next two years.

    5. Investment advice and retirement planning.  The array of investment vehicles overwhelms most people. ChatGPT can explain stocks, bonds, exchange-traded funds, cryptocurrencies, derivatives, and others in simple terms.  For long-term investing, retirement planning options and estimated future living needs can be the basis for suggested savings amounts.
    Sample ChatGPT prompt: Propose a diversified investment portfolio for a 30-year-old person with plans to retire in 35 years.

    6. Preparing for filing your taxes. To overcome the intimidation associated with taxes, ChatGPT is available to remind you of deductions, tax credits, and needed documents for your financial situation. AI can also guide you with the best sources for filing your taxes. 
    Sample ChatGPT prompt: What is the difference between tax-deferred income and tax-exempt income?

    7. Wise spending and shopping suggestions. Guidance for buying can range from meal planning and shopping location to coupon sources and travel schedules. The suggestions offered can prevent overspending through carefully planned buying.
    Sample ChatGPT prompt: Create a one-week grocery shopping list of nutritious foods for three people with a weekly food budget of $160.

    For the Personal Finance classroom, consider using ChatGPT to:

    • Obtain creative in-class activities and field research projects.
    • Generate discussion prompts and questions.
    • Develop rubrics to evaluate assignments.
    • Create assessments and quizzes.
    • Implement state and national curriculum standards.
    • Construct trivia questions and classroom games.
    • Suggest ideas for skits or role-play scenarios.
    • Create personalized writing prompts based on student interests and abilities.
    • Use as a personal tutor to explain complex concepts or calculations

    Will AI create wiser consumers and more effective money managers?  Yes, but only if a person follows the advice offered after carefully considering the validity of the suggestions.

    For additional information on ChatGPT for money management, go to:

    Link #1

    Link #2

    Teaching Suggestions

    • Have students talk to others about how they might use ChatGPT and other AI platforms to increase their financial literacy.
    • Have students research alternatives to ChatGPT and obtain reviews to determine other AI platforms they might consider.

    Discussion Questions 

    1. What benefits and concerns are associated with ChatGPT and other AI platforms?
    2. Describe actions that might be taken to verify the responses received when using AI.
    Jun 24 2023

    Stop the Robocalls

    Tired of getting endless robocalls? Robocalls aren’t just a pain to get, they’re often pushing scams for bogus services such as fake extended auto warranties and debt relief. But robocallers can’t do it alone. That’s why the Federal Trade Commission is taking action against Stratics Networks, a company that supplied the technology for telemarketers to make tens of millions of robocalls. But that’s not all — the FTC is also suing the debt relief companies that hired Stratics to make robocalls for their illegal debt relief services.

    According to the FTC,  Stratics delivered illegal robocalls for telemarketers promoting offers for credit card and student debt relief, home buying, health insurance, and cable TV discounts. Many robocalls were “ringless voicemails” — where your phone doesn’t ring but you get a voicemail with a robocall message.

    Here’s what to know: a robocall trying to sell you something is illegal unless the company has your written permission to call you. Scammers use robocalls to get your money or your personal information so they can steal your identity. They might try to convince you the call is from the government, tech support, or your auto warranty company. Don’t buy it. Even if the name or number on the caller ID looks real, it could’ve been faked.

    If you get an illegal robocall:

    For more information, click here.

    Teaching Suggestions

    • Make a list of common scams that target personal information and discuss how to detect and stop illegal robocalls.
    • Ask students what they do when they receive unwanted calls, emails, and text messages that are annoying, might be illegal, and are probably scams?

    Discussion Questions

    1. Why should one think twice before buying an extended auto warranty from a robocaller? Or, a debt relief service?
    2. What actions can you take to minimize the number of robocalls you receive from scammers? How can you fight back and lower your risk of being a victim?
    Jun 10 2023

    BUDGETING AND SAVING WITH “CASH STUFFING”

    Before credit cards, debit cards, and apps, people used budget envelopes to see where their money was going. Today, a variation called cash stuffing is being used by many, especially young people who became familiar with the system through online videos. This system is helping people cope with inflation and other financial difficulties by controlling their spending.

    The main benefits of cash stuffing are: (1) increased spending awareness; (2) reduced credit card use to prevent debt; (3) controlled spending – once cash is gone for a budget item, you can’t spend any more – which can result in higher amounts for saving; (4) improved budgeting for holiday spending, birthday gifts, and children’s school activities; and (5) decreased stress with a greater sense of financial control.

    Possible drawbacks of cash stuffing include: (1) the danger of lost or stolen cash; (2) the time needed to withdraw, sort, and organize cash into envelopes; (3) the temptation to overspend by moving cash to other budget items; and (4) lost interest by not having the money in a bank account.

    When using cash stuffing, consider these steps:

    1. Allocate your income, based on recent spending patterns, into budget categories, including fixed expenses, variable expenses, debt repayment, and savings.  

    2. Label envelopes, folders, or a pocket portfolio with your spending categories.

    3. Each payday, obtain cash to place into each category.

    4. As you spend money for each category, be sure the envelope doesn’t become empty before the end of the month.

    5. Repeat this process each month; adjust amounts as your needs and spending changes.

    Paying cash for everything is often not practical, such as online payments for rent, utilities, or other items. Instead, consider a hybrid or blended method, in which you use cash stuffing for only some spending areas. This would allow you to make online payments and earn interest on money on deposit while controlling spending for some budget categories. Also consider budgeting apps that simulate envelopes so you can visually see how your money is being spent.

    Other items to note when using cash stuffing:

    • Consider starting small, using the system for three or four budget items for which you would like to better control.
    • Be safe in keeping and carrying large amounts of cash. You might use slips of paper or play money (that you can buy online) in your budget envelopes, which will still give a tangible experience.
    • Search for “cash stuffing” online videos. These often feature colorful, personalized cash binders with compartments labeled for different categories — such as rent, food, savings and sinking funds. 
    • Make a commitment. Cash stuffing will not stop you from overspending. You must commit to only spending the amount you set. Use the system you create to be able to trust yourself.

    For additional information on cash stuffing,

    Link #1

    Link #2

    Teaching Suggestions

    • Have students talk to two or three others to learn about the budgeting systems they use to control their spending.
    • Have students create a visual (poster, slide presentation, or video) with suggestions for effective budgeting.

    Discussion Questions 

    1. What benefits and difficulties are associated with cash stuffing (budget envelopes)?
    2. Describe actions a person might take to effectively use cash stuffing. 
    May 27 2023

    “Buy Now, Pay Later” Users

    The Consumer Financial Protection Bureau (www.consumerfinance.gov) recently conducted a study of Buy Now, Pay Later (BNPL) users.  While many of the respondents did not encounter significant financial stress, BNPL users were much more likely to:

    • be highly indebted; have lower credit scores.
    • have high credit card utilization rates and revolve the balance on their credit cards.
    • have delinquencies with traditional credit products.
    • use high-interest financial services such as payday, pawn, and overdraft compared to non-BNPL borrowers.

    BNPL borrowers generally have access to traditional forms of credit, using credit and retail cards, personal loans, student debt, and auto loans. The report estimates that a majority of BNPL borrowers would encounter annual credit card interest rates between 19 and 23 percent.

    BNPL users tend to be younger. About 22 percent of consumers under age 35 borrowed using BNPL, while approximately 10 percent of those over the age of 65 used the service. Renters (22 percent) were more likely to be a BNPL user compared to homeowners (15 percent).

    BNPL borrowing is viewed as less costly than other credit sources, such as credit cards or payday loans. However, consumers need to be aware of the potential concerns. While advertised as “no interest,” late or missed payments can trigger high fees, which can result in paying more than the original cost. BNPL will not improve your credit score, but it could damage it due to missed or late payments. BNPL can be a doorway to financial difficulties, especially if you use it for more than one purchase at a time.  

    For additional information on buy now, pay later, click here.

    Teaching Suggestions

    • Have students talk to someone who has used BNPL to learn about the person’s experience with this credit source.
    • Have students create an audio file or podcast with a summary of the benefits and drawbacks of BNPL borrowing.

    Discussion Questions 

    1. What features of BNPL services are most attractive to consumers?
    2. What advice would you give a person who is considering using BNPL?
    May 13 2023

    Consumers Lost Nearly $8.8 Billion to Scams in 2022

    Newly released Federal Trade Commission data show that consumers reported losing nearly $8.8 billion to fraud in 2022, an increase of more than 30 percent over the previous year.

    Consumers reported losing more money to investment scams—more than $3.8 billion—than any other category in 2022. That amount more than doubled the amount reported lost in 2021. The second highest reported loss amount came from imposter scams, with losses of $2.6 billion reported, up from $2.4 billion in 2021.

    The FTC received fraud reports from 2.4 million consumers last year, with the most commonly reported being imposter scams, followed by online shopping scams. Prizes, sweepstakes, and lotteries; investment related reports; and business and job opportunities rounded out the top five fraud categories.

    The FTC’s Consumer Sentinel Network is a database that receives reports directly from consumers, as well as from federal, state, and local law enforcement agencies, the Better Business Bureau, industry members, and non-profit organizations. Sentinel received more than 5.1 million reports in 2022.

    The FTC uses the reports it receives through the Sentinel network as the starting point for many of its law enforcement investigations, and the agency also shares these reports with approximately 2,800 federal, state, local, and international law enforcement professionals.

    For more information, click here.

    Teaching Suggestions

    • Ask students what actions they have taken to keep their security software, internet browser, and operating system up to date.
    • Suggest that students use multi-factors authentication for extra security when they log into their accounts.

    Discussion Questions

    1. What is the purpose of Consumer Sentinel Network  and why does it provide free data to any federal, state or local law enforcement agencies?
    2. Do you know how to lock down your smart phones, network, and information?