Seven Things Young Adults Need to Know About Money

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Seven Things Young Adults Need to Know About Money
PRESENTERS
Darren Pries-Klassen Mennonite Foundation of
Canada Madalyn MetzgerMMA
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1 Money talks God is listening

• What does money mean to you?
• What impact does money have on the decisions we
  make?
• College
• Career and work

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1 Money talks God is listening

• What is society hearing from you?
• They will know we are Christians by our love.
• But what about by how we spend our money?
• What types of products do you buy? Specific
  brands? Specific styles? Specific corporate
  values?

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1 Money talks God is listening

• What is God hearing from you?
• Does your spending reflect your faith, values,
  and ethics?

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2 Are you consuming culture?

• Or is culture consuming you?
• How does advertising influence you?

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2 Are you consuming culture?

• Are you coerced?
• Is this coercion always a good or bad thing?

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3 Find contentment

• They exchanged the truth of God for a lie, and
  worshiped and served created things rather than
  the Creator (Romans 121-23, 26 NAS)

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3 Find contentment

• What is contentment?
• Culture tells us that it is
• Spending money you havent earned to buy things
  you dont need to impress people you dont know.

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3 Find contentment

• We are diminished spiritually any time we put our
  faith in things other than God.

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3 Find contentment

• Needs vs. wants
• Define your needs
• Define your wants
• Some things can be both a need and a want and
  thats ok.
• It all depends on why you want them and how you
  use them.

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Avoid the bug

• The three-step approach to a financially healthy
  future.
• The time to start is now.
• Spend less than you earn
• Save now buy later
• Know debt

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4 Spend less than you earn

• Understand your paycheque
• Dont buy on impulse
• Plan your spending

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4 Spend less than you earn

• keep your lives free from the love of money and
  be content with what you have (Hebrews 135 NAS)

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4 Spend less than you earn

• Understanding your paycheque

• Taxes 20

• Consuming 20

• Giving 10

• Saving 50

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5 Plan your spending

• Establish a spending plan (including what you
  plan to tithe/give).
• Open a chequing account.
• Track all of your spending.
• Review your chequebook or debit card statement
  every month.
• Consult with your parents and/or significant
  others before any major purchases.
• Start earning your own money.

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6 Save now. Buy later.

• Short-term savings
• Long-term savings
• The power of compounding

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6 Save now. Buy later.

• there is precious treasure and oil in the
  dwelling of the wise, but a foolish man swallows
  it up (Proverbs 2120 NAS)

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6 Save now. Buy later.

• Think ahead
• Short-term savings spring break, a car
• Long-term savings college or university,
  retirement

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6 Save now. Buy later.

• The power of compound interest
• Lauren, 25, contributes 2,000 a year for 10
  years, then stops. Total contribution 20,000.
  Total earnings upon age 65 334,996.
• Jason, 35, contributes 2,000 a year for 30
  years. Total contribution 60,000. Total
  earnings upon retirement 246,692.

• Lauren

• Jason

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7 Know debt

• Student debt
• Credit card debt
• Your credit score

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7 Know debt

• the borrower is servant to the lender
  (Proverbs 227 NAS)

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7 Know debt

• Student debt
• The average university graduate owes 19,500 in
  student loans.
• The average outstanding balance on university
  credit cards is 2,169.
• Twenty-one percent of students pay off all cards
  each month.
• One in 10 university students carries a balance
  of over 7,800.
• Federal aid is decreasing while college costs are
  increasing.

Block, Sandra. USA Today. Nellie Mae Library
Research.
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7 Know debt

• Credit card debt
• 8 billion total credit debt in the United
  States in 1968.
• 880 billion total credit card debt in the
  United States in 2006.
• 49.8 billion total amount of debt on VISA and
  MasterCard in Canada in 2003.

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7 Know debt

• Four average number of credit cards per consumer
  in the United States.
• Less than one average number of credit cards per
  consumer in Canada in 1983.
• More than two average number of credit cards per
  consumer in Canada in 2003.
• 40 percent American families spending more than
  they earn.

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7 Know debt

• 2 million number of American homes that carry
  more than 20,000 in credit card debt.
• 55 percent household debt-to-income ratio in
  Canada in 1983.
• 105.2 percent household debt-to-income ratio in
  Canada in 2003.
• 116 percent increase in average credit card debt
  per American household in the last 10 years.
• 9,312 average amount of credit card debt per
  American household in 2004.

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7 Know debt

• Credit card dangers

• 877 purchase bike (1,000 including tax) with
  credit card

• 2.5 percent (of balance) minimum payment

• 18.9 percent (standard rate) interest rate

• How long until the bike is paid off?

• 13 years and 6 months time to pay it off

• 1,258 interest cost

• 2,258 total cost (more than twice the purchase
  price)

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7 Know debt

• Credit card dangers whats the cost?

• That is after-tax money!

• 29 percent tax rate means 29 cents of every
  dollar earned goes to Federal and Provincial
  governments.

• You need to earn 2,912.85 (654.82 tax bill) to
  purchase the bike.

• At 10/hour wage 292 hours or 7.5 weeks of
  full-time employment.

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Ynow?

• Todays financial decisions affect tomorrows
  realities.
• www.mmaYnow.com