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BY TEENS FOR TEENS
MONEY SMART WEEK 2011
ON THE INSIDE
The Time Value of Money p. 7 Good Credit or Debt? p.10
College Financial Aid 101 p. 13 W hy Bank? p. 4
LETTER FROM THE EDITOR Fellow On the Money Readers, First and foremost, we invite you to par ticipate in the Money Smar t Week with us! We’ll be celebrating the 10 th year of Money Smar t Week from April 2nd-9th. Money Smar t Week is a f inancial education holiday coordinated by the Federal Reser ve Bank of Chicago through the suppor t of over 200 community par tners. The week has over 500 free f inancial classes and activities all around the city. Visit w w w. MoneySmar tWeek.org to learn more about the events offered this week and check out our listing on page 14. For Money Smar t Week’s 10 th year, On the Money Magazine is embracing the impor tance of f inancial education. We are kicking the week off with our own ar ticles concerning a variety of topics, including: investing (pages 7-9), banking (pages 3-5), credit (page 10), unique tips on paying for college (see page 11-14), and more. We hope you join us in celebrating Money Smar t Week
Klaudia Bednarczyk student editor Cover Photo: On the Money Interns Jordyn Holman & Andrea Johnson as well as On the Money Intern and Money Smart Kid Chicago 2009 Jackson Beard meet the official Money Smart Week mascot, Ben Franklin at the Federal Reserve Bank of Chicago’s Money Museum. MONEY SMART WEEK IS A REGISTERED TR ADEMARK OF THE FEDER AL RESERVE BANK OF CHICAGO.
3) 4) 5) 6) 7) 8)
Let ter from the City Treasurer of Chicago/On Want of Saving Why Bank? Saving & Interes t Rates Mad Money Match Up The Time Value of Money Ways to Inves t Your Money/Take the Plunge: Inves t In Your self 9) Teen Inves ting 101/ Why Diver sif y? 10) Good Credit or Debt? 11) Smar t Steps for College Success 12) Financial Spring Cleaning/Career Prof ile: Sales & Trading 13) College Financial Aid 101 14) 3 Of f beat Ways to Pay for College/ Preparing for College? Foundation for Success 15) Young Chicago Saves Conference/Security Los t? Credit Card Fraud 16) Take the Young Illinois Saves Challenge/ In the Know
ON THE MONEY SPRING 2011 ON THE MONEY FALL/WINTER 2010
Interns Klaudia Bednarczyk, Senior, Francis W. Parker School, Editor Kiara Hardin, Senior, Marist High School, Art/Web Editor Maribel Arellano, Freshman, University of Illinois at Chicago (Gage Park High School Graduate) Jackson Beard, Sophomore, Walter Payton College Prep Justin Banda, Senior, Homeschooled Kamal Bilal, Freshman, Whitney Young Kellin Dixon, Senior, Hales Franciscan Janet Garcia, Junior, Walter Payton College Prep Brianna Garrett, 8th Grade, South Loop Elementary Jasmine Gilliam, Senior, Walter Payton College Prep Stephanie Greene, Sophomore, Walter Payton College Prep Cedric Hakeem, Senior, Urban Prep Noni Brown, Senior, Walter Payton College Prep K’lex Hilton, Senior, King College Prep Jordyn Holman, Junior, Walter Payton College Prep Andrea Johnson, Junior, Walter Payton College Prep Jada Jones, Sophomore, Walter Payton College Prep Skyler Lemons, Freshman, Kenwood Academy Alex Mitchell, Freshmen, Whitney Young Justin Mitchell, Freshmen, Whitney Young Bria Pollard, Sophomore, King College Prep Sophia Vela, Senior, Chicago High School for Agricultural Sciences Mariah Wachtman, Senior, Lakeview High School On The Money Volunteer Writing Coaches Elizabeth Thompson (Coordinator) Danny Byrne Ryan Dolan Brian Frizzell Curtis Krumreich Teresa Lwin Sarah McGinnis Robby Schoder Jack Tench Layout & Design Santiago Torres About On The Money On The Money magazine is written by teens for other teens. On The Money covers business, finance, credit, saving and more...providing realworld experiences and resources that can help students learn to meet their money and career goals. On The Money is provided by the Economic Awareness Council through collaboration with True Star Magazine, the Office of the City Treasurer of Chicago, Stephanie D. Neely and the Chicago Public Library. About the Economic Awareness Council The Economic Awareness Council is a financial education non-profit organization that services over 9,000 individuals each year with programming for students and families. On The Money Magazine would like to thank HSBC North America and the Charter One Foundation for their sponsorship of this issue.
On the Want of By: Jackson Beard
Sophomore, Walter Payton College Prep Money Smart Kid 2009
The banking world is loaded with fantastic oppor tunities for safe saving. From basic savings accounts to more complex Cer tif icate of Deposits (CD), it is now easier than ever to put your hardearned cash in secure—and prof itable—places. Complete our Bank Char t questions below & then use the char t to pick the best type of bank account for you! YOUR BANK MATCH MAKER 1. Are you looking for high interest rates? 2. What are your ideal terms of withdrawal do you need to access your account all the time, from any where? 3. Before you look at the table, which bank account do you think is most appropriate for you right now? Take a look at the char t below: it is f illed with the basics on the most common bank accounts. See which account f its the needs you wrote out above.
*ACCOUNT DETAILS MAY VARY.
Type of account
MONEY SMART WEEK Letter from Stephanie D. Neely, Treasurer As Treasurer for the City of Chicago, I k now that money represents oppor tunity and freedom. As a mother, I k now that the habits you ins till now as young people will be with you for a lifetime. For 10 years, Money Smar t Week has helped hundreds of thousands of people get a grip on their f inancial reality. From April 2 through April 9 there are more than 500 free seminars and clinics that will help you learn how to make money, manage debt and grow your savings. Some of these are tailored especially for young people. With summer around the corner, it’s not too early to s tar t thinking about summer jobs and what to do with your summer earnings. If you don’t already have a bank account, consider opening one. Then s tash at leas t a por tion of your earnings where they are safe, earning interes t, and get ting you closer to your f inancial goals. That money can be set aside for college, a business s tar tup, a special trip or even a car. The "mos t" impor tant thing is to have a goal, and use your money sav v y to reach it. You can visit w w w.moneysmar tweek.org for more information about times and locations. And check out the Treasurer’s Of f ice website at w w w.savespendgrow.org. You’ll f ind tips for managing your money and get ting the bigges t bang out of your bucks.
Certificate of Deposit
Does it offer interest?
Usually offers Interest
Often does not offer interest
Higher Interest offered
What is it, exactly?
Allows holder to make withdrawls and deposits
Allows withdrawls & depostits and secures money for east, ondeamnd use i.e. checks, ATM’s
Who’s it best for?
Anyone who wants to save, ie. students, adults, and savvy businesss owners alike take advantage of interest earned on saving accounts
Balance cannot What can you gain much or any not do? be used directly as money, i.e. cannot write checks from account
Ideal for thsoe with businesses or large expenses, i.e. rent payment or bills
Gain much or any interest on your account
Holders deposit a sum of money, and are paid a higher inters rate in exchange; promise to allow deposit to “mature”. That is, you won’t withdrawl money until a pre-determined date.
Stephanie D. Neely Treasurer, Ci t y of Chicago
Perfect for those who don’t withdrawl money regularly, making it appealing for young students with out expenses Withdraw funds before maturity without penalty
ON THE MONEY SPRING 2011 3
BY: CEDRIC HAKEEM, SENIOR, URBAN PREP “The teen years signal the beginning of independence.” Even though teens don’t have to worr y about being as f inancially responsible as adults, it is still impor tant to know about money and how to manage it. Knowing how to manage your money is essential if you plan on having some in the future (as I am sure we all do). You must f irst approach money management with budgeting and banking. Of course the f irst question coming out of your mouth is, “I’m still a teenager, what do I need to know about banking?” Well, banking is ver y impor tant, and it is ver y benef icial even at a young age. To conf irm this I inter viewed Cara Castellana Kreisman; the chief of Policy at the Off ice of the City Treasurer of Chicago, Stephanie D. Neely. I asked Ms. Kreisman, “Should teens put their money in banks?” She answered “It is impor tant for teens to use a bank. Good f inancial behavior takes practice. It is impor tant to star t good habits early such as keeping a budget, and saving a por tion of your income. Having a bank account when you are young will also make handling many bills and college expenses easier because you will already be familiar with your bank.” Banking plays a vital role to e ver y adult’s life today. Getting star ted at a young age is get ting a head star t! Now let’s get moving! TIPS ON BANKING FROM CAR A CASTELLANA KREISMAN CHIEF OF POLICY AT THE OFFICE OF THE CITY TREASURER OF CHICAGO Bank accounts are the safest place to keep your money. The FDIC guarantees money in your bank account so that even if the bank closes down your money is safe. If you keep your money at home it can be stolen or lost and you will have no way to get it back. G
e t a s o c ia l V is it w w w s e c u r it y c a r d . .ssa.gov
Ever y bank has different requirements to open a bank account. Most require a state I.D., about $25, and a parent’s signature unless you are over 18. There are some banks that will allow you to open an account with a school I.D., and without a parent’s signature. You should visit a few banks to f ind an account that is right for you. If you are planning on moving after high school, you should consider which banks have branches where you are moving. It is expensive to not have a bank account. If you don’t have a bank account, you will have to pay to cash a check. Usually, places that will cash a check will charge you about $5 for ever y $100 you cash. That is wasted money that you would be able to keep if you had a bank account. People with bank accounts save more money the people without bank accounts. Studies have shown that people that use a bank to store their money and pay their bills have an easier time sticking to a budget and are able to save more of their income. Saving is impor tant for emergencies and for future expenses like vacations and holiday gifts.
ON THE MONEY SPRING 2011
SAVING AND INTEREST RATES by: Kiara Hardin, Senior, Marist High School
Millionaires, billionaires, and rich people in general become that way not by being famous but by saving. There are multiple ways to save, for instance CDâ€™s (Cer tif icate of Deposit), stocks, bonds, and the simplest a saving account. In order to be successful at saving, f irst there must be a set shor t or long term goal. Also, a time frame must be established. Nex t, f igure out how much you can save based on the amount of money that you make. Make sure to keep a record of your expenses and tr y to cut down on the unnecessar y ones. Budgeting your money is a huge par t of saving because you never want to wonder where your money went. The last step to saving is to open a saving account. When looking for a bank account, make sure that the bank has low or no minimum. Also, take into consideration interest rates. Interest rates are the price a borrower pays for the use of money they borrow from a lender. When you keep money in the bank, the bank is able to lend money to other consumers and they make money. The bank in turn gives customers a small percentage of ex tra money just for keeping their money in the bank. When you have money deposited in the bank, look for a high interest rate. The higher the interest the more money you will make. Sometimes bank accounts come with a debit card. People tend to confuse a debit card with a credit card. A debit card uses the money that you have in your account while a credit card is money that is being loaned to you.
Q & A FOR A BANKER â€“ TAMEKA WARD, CITIBANK 1. Do saving accounts have interest rates, if so what is a good price to look for? 1 % or more 2. When set ting up a bank account what type of account should a teenager look for? [If you are] 17 and older, you should be looking for a student account. 3. Where would you recommend a teenager to should save their money, in a saving account or a CD? You should put money in a savings account for easy access. A CD has monthly terms and you will be charged a penalty [if you pull the money out] if you are not in a grace period. Visit YoungIllinoisSaves.org for a list of local banks with minimums of $25 or less and no regular fees.
designed by: Kiara Hardin, Senior, Marist High School
ON THE MONEY SPRING 2011 5
Have you ever attempted to monitor your weekly spending? According to a study conducted by Teenage Research Unlimited, the average teen spends about $85 throughout a typical week. In a year, that adds up to over $4,000! In the hopes of TOTAL proving statistics wrong, I asked two of my friends, Diana Rodriguez and Noah Feingold, to cut their Tr y it your self. Take 7 days and track your spending spending by 2/3 from one week to the nex t. The – ever y penny! You might be sur prised how much you f irst week they went about their ever yday lives, spend. Record each item you purchase and the amount carelessly buying Quizno’s lunch and attending the above. Use ex tra paper if needed. THEN … tr y the latest hit movie. By the end of the week, Diana had challenge again the nex t week bu t tr y to reduce your spent $42.55 and Noah spent $41.75. spending by 1/2 or 2/3. Both enjoyed their f inancially frivolous activities until they were reminded they could only spend 1/3 of the previous week’s amount. MONEY SMART WEEK 2011 TEEN EVENTS Ner vously, but courageously, they embarked on their quest to become more conscious spenders. College Smar t Fair They opted to order from the dollar menu instead Wednesday 4/6 9am - 4pm 10 0 W. Randolph Street, Chicago of getting the super-sized meal. Instead of going to see a movie, Diana rented from Redbox. Noah CAREERS IN BUSINESS PANEL WITH ON THE hosted a snowball f ight at his house, which didn’t MONEY MAGAZINE cost a dime! Despite their attempts, when the Tuesday 4/5 5:30pm – 7pm middle of the week rolled around, they had spent Harold Washing ton Librar y Center Lower Level most of the money in their budgets and star ted 40 0 S. State St., Chicago, (312) 747-4780 (312) get ting frantic. 747-4780 They buckled down and refocused; they wanted to succeed. However, when the weekend Money Smar t Week Program for Teens: Meet came, Diana desperately needed some retail Nicole Jones, Entrepreneur and Author Tuesday 4/5 1pm therapy at Best Buy. Noah contemplated criminal Hall Branch, 4801 S. Michigan Avenue, (312) activity; he almost snuck into a movie theater as a 747-2541 way to stay within his weekly budget. At the end of the week, the results of their challenge were grim. Thur sday 4/7 4:30pm Both had gone over their designated budgets. Brainerd Branch, 1350 W. 89 th Street, (312) They nobly accepted their defeats, realizing 747-6291 that budgeting was a ver y diff icult endeavor. Budgeting for the week exposed them to enjoyable experiences while still saving money, showing that By: Jordyn Holman defeat also brings prof itable benef its! Junior, Walter Payton College Prep
ON THE MONEY SPRING 2011
By: Sophia Vela
Senior, Chicago High School for Agricultural Sciences
Time value of money is the idea that a specif ied amount of money received at the present date is wor th more than the same amount of money received at a future date. With a f ive percent interest rate, $100 received today would be wor th $105 in one year. Over time money that is saved compounds at a given interest rate, to increase your overall savings. This concept is impor tant for most businesses and their employees, as well as anyone who invests money, whether the money is used to purchase a car, stashed away in a savings account, or invested in mutual funds. Beginning to save as teenagers puts you one step ahead of the crowd. Saving money at a young age allows you to made mistakes while learning without it negatively affecting you. It is impor tant to save money because you never know when your circumstances will change. “It is important for students to learn about the time value of money so that they can understand the ability for money to grow over time through compounding; this institutes a sound and reasonable savings
and investment plan.” –Cynthia Sajid Agricultural Finance Teacher. If you save $150 a month star ting at the age of eighteen with an average historical return, you will have saved over $1 million dollars by age 65. If you wait to star t saving until age 25, you will only have less than $900,000 in savings. Saving at an early age is overall more benef icial then at a later age.
HELPFUL SAVINGS TIPS + KEEP TR ACK OF WHAT YOU SPEND. IT IS VERY IMPORTANT FOR YOU TO MAKE A RECORD OF ALL THE SPENDING DONE. + SPEND LESS THAN WHAT YOU EARN. MAKE SURE YOU SPEND AND EARN IN SUCH A WAY THAT YOU ALWAYS HAVE A POSITIVE NET INCOME. Overall, the money you save in a bank will gain interest. It is up to you to decide how much to save and when to star t saving. According to w w w. character-education.com 73.1% of teens have a savings account with nearly 1/3 saving more than half of their monthly incomes and 15.6% saving at least 75%. (Many are saving toward college), but 11.2% of teens aren't saving at all.
ON THE MONEY SPRING 2011 7
Invest in yourself Now! It’s senior year, the period when transitioning from high school to college. There is a constant need to create a sense of security and independence. We, as students, tr y to gain a separation from our parents by becoming f inancially secure, whether through obtaining a job or by beginning to save our weekly allowances. In senior year, you begin investing in yourself. Well, what exactly is “investing in yourself”? It’s the idea of taking those initial steps in creating a f inancially secure life. One of the easiest ways students can begin this transition is through saving and investing. By saving par t of their weekly allowance or bi-weekly salar y, students allow money to accumulate over time and have the ability to obtain funds themselves instead of having to rely on others. Investing also allows students to become independent. One former On the Money intern Myles Gage began investing while in second grade, “I got involved with investing through my former elementar y school Ariel Community Academy, Ariel was one of the few schools if not the only school in America with an investment curriculum. It allowed me to gain somewhat of background for investment banking, the career I want to pursue. I'm able to manage my money better, and it has made me a thousandaire.” A second way students can invest in themselves is when considering their perspective colleges. Constantly, students are bombarded with the notion of questioning “where am I going to college?” or “how will I pay for school?” By taking the plunge into making decisions about college based on both intellect and sound f inancial choices, you will create a plethora of oppor tunities that will help you be f inancially secure in the future. For example, according to the Chicago Public Schools website, “The unemployment rate for recent high school graduates not enrolled in school was 35.0 percent, compared with 23.7 percent for graduates enrolled in college.” Noni Brown, Senior, Walter Payton College Prep
Ways to Invest Your Money By: K’lex Hilton Senior, King College Prep
Ever wonder what to do with the money that you’re saving? Well, I have the answer to that you can invest your money. Investing means allowing your money to grow and mature over time. You can invest money into stocks, bonds, and savings accounts (or even cer tif icates of deposit). These options may allow the money you have saved to grow. Below is a table that explains what each investment option means. Check out more details at money.msn.com and money.cnn.com Type of Investment Stocks
What the investment is… When you own a share of stock, you are a part owner in the company with a claim (however small it may be) on every asset and every penny in earnings. However, if the company looses money, you might loose some or all of your investment. Bonds At their most basic, bonds are loans. When you buy a bond, you become a lender to an institution, and that institution pays you interest. While not guaranteed, lenders are paid back before investors receive any earnings. Savings Accounts (Certificate of Deposit - CD) An account in which money grows a certain percentage each year, as money is gradually placed into the account. (With CDs, this account has a set time limit, meaning that the money within the account cannot be removed until that time limit has been reached or a small penalty will be paid.) Savings accounts and CDs are generally FDIC insured which means the government stands behind money deposited.
TYPE OF INVESTMENT STOCKS Stocks, bonds, and savings accounts are places where your saved money can be kept, and grow over time. You should set shor t and long term goals for your investing. Saving and investing money is impor tant, it allows you to have money for things that you may want or need in the future.
Average Lifetime Earnings By Education Level 2.5 Individuals that have a high school degree ear n over $250,000 more than individuals that do not have a high school degree on average and individuals that have a college degree ear n over $1,000,000 more than those without a college degree on average. By taking advantages of the oppor tunities awarded to you when making smar t f inancial inves tments one secures their future and inves ts in themselves. The following website, bls.gov, will also help you discover dif ferent types of jobs, job salaries, and education required to succeed in those f ields.
ON THE MONEY SPRING 2011
2 1.5 1 .5 0
No HS DEGREE
“ Teen Investing
WHY Skyler Lemons, Freshman, Kenwood Academy Are you a planner? Are you always looking to insure that you have money for the future? If the answer to either one of those questions is “YES”, then you need to star t investing your money today! Just because you’re a teen doesn’t mean you can’t come up with the money to invest. Stop wasting money on the nex t pair of shoes or in fast food restaurants after school and star t investing! There are several main types of investments. 1) Ownership Investments where you own par t of a business. Examples of this are stocks. 2) Lending Investments involve lending money to an organization and they pay you back interest. An example of this is a bond which is when a corporation, federal agency, or the local government needs a loan today and pays you back in the future with interest. 3) Cash Equivalents, where your investment can easily be conver ted into cash like a money market. Other examples include regular savings accounts, savings bonds or cer tif icates of deposit where you have to leave your money for a set period of time or pay a small penalty. 4) Real Estate: Invest in real estate by purchasing land, a home, commercial real estate, etc. One of the most common types of investments that I highlighted above is stocks which are basically shares that you purchase within a company. When you decide to sell your stocks, you generally want to sell when the market is good and make a prof it. Remember, buy low, sell high. Personally, one stock I f ind interesting is Apple (AAPL) because Apple is always coming out with new products and their stock is often going up. However, I also f ind Pf izer (PFE) interesting because this is a pharmaceutical company which means that they come out with some of the most common medicines that are used today like Lipitor or Enbrel. With any stock, by investing instead of just spending, you’re ahead of the game and well prepared for the nex t time the market inf lates!
Learn more about investing from the United States Securities and Exchange Commission. Visit http://investor gov.
By: Alex Mitchell Justin Mitchell Freshman, Whitney Young Like the saying ‘don’t put all your eggs into one basket’, the same holds true for investing. The way to do this is by diversifying. According to Bruce Marcus, Senior Vice President of Morgan Stanley Smith Barney the def inition of diversifying is, “To put your investments into several different asset classes.” Mr. Marcus talks about four major asset classes; stocks, bonds, cash, and commodities. If one buys a stock he or she is buying ownership in a company. Out of the the asset classes this is the most risk y. It’s the most risk y because its value can f luctuate more than the other asset classes. Unlike a stock where one has ownership in a company, a bond is similar to making a loan to an organization which is then paid back with interest. Both stocks and bonds are sold in the public market place. A commodity is a tangible object that can also be bought and sold in the market place. The last asset class is cash . Mr Marcus says this asset is often forgot ten when diversifying one’s por tfolio but is actually ver y impor tant because it gives more f lexibility and the value of cash won’t go down. It is also the only one that can be used in an emergency. Mr Marcus believes that 70% of young person’s money should go into stocks because they generally have the highest return. Then, he believes that you should invest about 10% of his or her money into the other three asset classes. This leads us into the reasons to diversify. The main reason you should diversify is so you don’t have to rely on one asset. For example, if a person were to buy stock only in one company, he or she could lose all or almost of it if the company were to have bad f inancial results. Another reason to diversify is because different asset classes could be per forming differently at any given time. For example, during the 2008 recession, the price of gold actually went up. These are a couple of reasons why it is impor tant to diversify.
ON THE MONEY SPRING 2011 9
By: Kamal Bilal Freshman, Whitney Young Money Smart Kid 2010 One of the most popular ways that teenagers and young adults pay for things is with a credit card. There are many different types of credit cards but usually the outcome of having these credit cards is the same; spending your young adulthood tr ying to get out of debt. The average debt of most
college students is $4,088 according to The Grow th of Debt Among Young Americans by Tama Draut. These debts come from aimlessly spending money that you will not be able to pay off in the nex t month.
When you buy an item that you will not be able to pay off in that month, you star t to pay interest or ex tra money on that item. This interest can sometimes double or triple the original cost of that item. Additionally, if you cannot pay your monthly dues, you then get late fees, so that $200 iPod Touch can end up being a $500 purchase. A credit card however, is not always bad-you just have to know how to use it. FIRST OFF, have only one credit card. The more credit cards you have, the more things you will be able to buy, potentially causing more debt. The typical consumer has access to approximately $19,000 on all credit cards combined. (my f lco.com, 2011) However, with one credit card you can control your purchases and your budget, and you can ultimately build your credit score. SECOND, buy things that you will be able to pay off. When you cannot pay off your WHOLE bills, and continually pay the minimum balance (or the least amount you are allowed to pay), you will end up paying a lot more than the original cost of why you buy. THIRD, know your limits. If your credit card limit is, $500 and you buy something that is over $500 you can end up paying 20% of that in overcharge fees. These steps will help you make better credit cards decisions, and make your young adulthood debt free.
ON THE MONEY SPRING 2011
5 THINGS TO DO BEFORE YOU GET A CREDIT CARD 1. Successfully BUDGET your money for several months BEFORE get ting a credit card. 2. Open a CHECKING ACCOUNT and s tar t an EMERGENCY SAVINGS account. Prac tice keeping your checking account balanced and using a DEBIT card BEFORE get ting a credit card. 3. Lear n about managing credit and building a positive credit record. CHECK your CREDIT RECORD at w w w.annualcreditrepor t.com. 4. Credit cards may have dif ferent interes t rates, fees and ter ms. These dif ferences can cos t you! Read the f ine print on credit card of fer s BEFORE you sign. 5. Get jus t ONE card and make a commitment to PAY OFF YOUR BALANCE IN FULL EVERY MONTH BEFORE get ting a credit card.
Get more credit tips and infor mation at YoungIllinoisSaves.org and EconCouncil.org
Smart Steps for Success By: Maribel Arellano Freshman, UIC (Gage Park High School Graduate)
The college application process is now over and you are ready to go to the school that f its your needs and interests. Are you ready to take on the challenge? Have you thought about what steps you have to take and what changes to your lifestyle will have to happen? Students not only have to cut down on luxur y spending, but they also often have to give up cer tain leisure activities and dedicate their time to the demand and rigour of college courses. Most people cannot afford to fully pay for college and must depend on f inancial aid and/ or student loans. According to the "National Postsecondar y Student Aid Study, " 2/3 of college graduates in 2008 graduated with some loan debt. A shocking 52% of students graduated from college owing amounts from $24,600 to over $30,500. Wouldn’t you like to keep the money you owe to a minimum? “By taking the amount of loans I did from the federal government, I had to become aware that any money that I earned throughout college would have to be used to pay off the loans. I cut down on spending money on night-outs and shopping. I also realized that one should take a good amount of courses during Fall and Spring semesters in order to stay on track for graduation as opposed to higher fees for the summer.”— Nair yna Constantino, student at University of Illinois at Chicago (UIC)
Even if your student award let ter covers your tuition for your f irst year in college, this does not mean that you can put off saving money. There are lots of additional expenses at college. College classes have to be taken seriously, not only are you paying for your education, but your future depends on it. There is a whole life after college that you have to account for. Plan a budget no mat ter what your f inancial income and spending are. This will allow you to be f iscally sound and have great experience for life after graduation.
START NOW! CREATE YOUR OWN BUDGET ONLINE AT HTTP://ENGAGEMENT.ILLINOIS.EDU/ BUDGETBUILDER/ AND GET AN IDEA OF AN AVER AGE COST FOR COLLEGE.
NO DEBT DEBT
Portion of College Students in Debt
ON THE MONEY SPRING 2011
Financial Spring Cleaning Spring is here and now is the time to get ever y thing in order. While you are taking time over this break to relax and tidy your house, stop and take a minute to get your f inances in order as well. Decide what needs to be dealt with before summer. DON’T CONTINUE TO LET THE DEBT PILE UP. LAST YEAR IN 2010, 4 OUT OF EVERY 10 PEOPLE STILL OWED MONEY WHICH THEY HAD BORROWED TO FUND CHRISTMAS IN 2009. TRY TO GET RID OF PREVIOUS CHRISTMAS DEBTS AND OTHER THINGS THAT CARRIED OVER TO THIS YEAR BY CALLING YOUR LENDER AND SET UP A PAYMENT PLAN OR EVEN FIND EXTR A WORK TO PAY OFF YOUR DEBT. Look into your savings account and see what additional steps you can take to reach you goal faster. Like Kin Hubbard, the famous journalist said, “The safest way to double your money is to fold it over and put it in your pocket.” So stop spending the loose change in your jean pocket and ex tra cash laying around the house and put it to work for you. Invest it. Store it. You could even use it as a star t up for the summer. Speaking of which, begin to layout a budget for your summer wardrobe and see how much you need to save a month to reach that goal. Also don’t be afraid to tr y something new. Pick up some f inancial literacy like David and Tom Gardner’s The Motley Fool investment guide for teens: eight steps to having more money than your parents ever dreamed of. By getting your ducks in order now you’re sure to be ahead in the summers to come.
By: Jasmine Gilliam Senior, Walter Payton College Prep
Career Profile: Sales & Trading
By: Stephanie Greene Sophmore, Walter Payton College Prep
Harrison N. Greene III is an MBA student at Kellogg, the Nor thwestern School of Business. After graduation this spring, he will star t working at Rober t W. Baird & Co. in sales and trading. My inter view with Harrison helped me understand what equity research salesmen actually do. What is the day-to-day work like? We star t about six o’clock in the morning…and we have a research call. On the call analyst[s] talk about stocks that we follow. Then the day star ts, and you’re sitting at a desk f ielding calls from clients who want to buy or sell stock. My job is to get them to buy or sell large shares of stock, and create the markets… until the market closes. Then you get back on the phone with your clients and see if you can get orders that can go into the nex t day. After that you are calling on clientele in a more of a social setting… until about seven or eight in the evening. What is the best thing about working in f inance? I would def initely say it’s the fact that you never know what’s coming around the corner. It’s inf luenced by so many things; it’s inf luenced macro trends, geo-political news, perceptions and reputations. You literally never know what is going to happen until you walk into the off ice. You also get to meet a lot of interesting people. It is one of the most relationship based businesses out there. What advice would you give a high school student interested in working in f inance? You want to be a well-rounded person. You want to keep your GPA above a 3.5, it will make getting into f inance a whole lot easier. You will be competing for a relatively small number of jobs, and the differentiator is, are you someone people want to spend time with?
ON THE MONEY SPRING 2011
While ever y senior has hopefully gone through the process of f inancial aid by now, juniors are yet to embark on the exciting, yet sometimes hectic journey f illed with college visits and seemingly inf inite obstacles relating to the completion of documents. Breaking the work up is essential, especially when tackling the f inancial aid aspect. Juniors are encouraged to spend some time during the summer searching various scholarships online or through organizations.
By: Klaudia Bednarczyk Senior, Francis W. Parker School, Editor
Among the suggested organizations to research is the Posse Foundation which offers students a full ride scholarship to their par tnering schools, including Oberlin, University of Wisconsin- Madison, and Pomona. The foundation seeks out seniors during the summer and fall of their last year in high school. Anyone can be nominated as a Posse scholar and enter the rounds that follow up to the scholarship, which range from various team building exercises to inter views. Searching for monetar y scholarships on sites like f inaid.org or fastweb.com is another route you can take. These scholarships usually require essays on various topics. However, if any site demands any kind of money to enter for f inancial aid, it is a scam. It’s essential for you to be careful and war y of what sites you visit and the information you put out there. Aside from these scholarships there are also likely ones offered by the schools you’re applying to. In order to ensure that you don’t miss any impor tant deadlines, make a list of the additional documents you have to f ill out. Among the most thrown around terms include FAFSA and CSS Prof ile. The Free Application for Federal Student Aid is available online Januar y 1st and while schools require you to send the FAFSA to them in Februar y, you should submit it as soon as you can due to the fact that funds are limited. The CSS Prof ile is required by some institutions and is much more detailed than the FAFSA. Sending the form to each institution costs $16, while the initial registration $9. See your college counselor for details on how to possibly get these fees waived. The most impor tant lesson I learned from the entire process is to never fear asking questions, whether they were directed to my college counselor or the f inancial aid off ices of schools I applied to. These representatives are there to help you, so make sure to take advantage of their exper tise. Good luck!
ON THE MONEY
ON THE MONEY SPRING 2011
3 Off Beat Ways 2 Pay 4 College...... For most people, paying for college can be a stressful thing to think about. But don’t worr y, there are more ways to pay for college than your typical student loans and scholarships. Here are a few that you probably haven’t thought about before: 1. Make it personal! When applying for college grants or scholarships, go for those oppor tunities that are most geared towards your interests. For example, if you like writing shor t stories, apply for a writing scholarship by submit ting one of your stories. Or, if you’re into photography, you could submit your por tfolio and apply to win a scholarship or grant for photography. 2. Blog about it! Star t an interesting blog. If you own a blog that attracts a lot of traff ic and subscribers, you could opt to put ads on your blog. Google Adsense is one of the best programs to do this through. Depending on the response to the ads, you could rack up a suff icient amount of money. If you get good enough, eventually, you may have adver tisers and businesses asking you for your reviews of their products. 3. Look for cheaper alternatives! You might consider postponing going to a 4-year-college/ university for a year or two and enrolling in a local community college. By doing this, you might be able to save money and take your required courses for less money than at a 4 year university. Then, you can transfer to the college of your choice and f inish off your undergraduate degree. Average tuition at a
two-year college in 2010 was $2500 whereas average tuition, even at an in-state, fouryear institution was $7,000 Just be sure to plan
carefully so that your credits transfer. Bot tom Line: Apply for loans and scholarships, apply to a range of colleges and then do the math! Learn more about the f inancial aid process. Visit w w w.CollegeZone.com, a website of the Illinois Student Assistance Commission or attend the College Fair on April 6th. (More info on p. 13)
By: Andrea Johnson Junior, Walter Payton College Prep
14 1 ON THE MONEY SPRING 2011 ON THE MONEY FALL/WINTER 2010
Preparing for College? Your Foundation for Success If you’re a graduating senior, you’ve probably already f iled your FAFSA, applied to your favorite schools, and got ten your standardized test scores. But if you’re a junior, you may be panicking. What are the most impor tant things to prepare for in your upcoming senior year? First, you’ll want to sign up for either the SAT (Standardized Achievement Test) or the ACT (American College Test), come spring. “Because the SAT is more widely taken, some students are surprised to discover that they f ind the ACT to be an easier test,” explains Whitney Snowden, a junior from Cincinnati, OH. Although these tests can be pricey and ominous, most colleges won’t even consider your application without a score from one of these tests. Check with the schools you’re applying to so that you can f ind out which scores they accept. You should begin your college search in spring by researching and visiting prospective schools. “I strongly advise my clients to visit when classes are in session, when they may have the best oppor tunity to get an idea of the community of people that will become their new family,” explains Mark Montgomer y of Montgomer y Education Consulting. The best time to visit most schools is at the end of a semester. Lastly, if you’re planning on get ting government aid, you can’t forget FAFSA, or the Free Application for Federal Student Aid. This year, enrollment in FAFSA opened on Februar y 1st. Because students receive aid on a f irst-come/f irst-ser ve basis, it’s impor tant to f ile your aid form as soon as registration opens. The later you f ile the less you might receive.
These three steps—taking the ACT or the SAT, searching for and applying to colleges, and f iling your FAFSA—are the foundational steps toward star ting college on the right foot. By Justin Banda Senior, Home Schooled
The Young Chicago Saves Conference was a great event, that educated over 100 of Chicago’s youth by talking about f inancial literacy, saving, investing, entrepreneurship, and many other monetar y topics. The event was sponsored by HSBC Nor th America and was provided by Young Illinois Saves, the Economic Awareness Council, the Chicago Public Librar y and the Off ice of the City Treasurer of Chicago. This event encompassed many great speakers, such as Mar y Ann Dempsey, Librar y Commissioner; Lilia Chacon, Director of Public Relations for the Chicago City Treasurer, and Nicole Jones, Owner of Sensual Steps Shoe Salon and Nationally Recognized Entrepreneur. Also, in the conference, there were many exhibits including On the Money Magazine, Illinois Student Assistance Commission, the Chicago Park District TR ACE program and U.S. Depar tment of Education.
By Kamal Bilal, College Money Smart Kid & Speaker
Financial Sur vival Events for Money Smar t Week In suppor t of Money Smar t Week 2011, HSBC, together with the Y WCA of Metro Chicago will of fer f inancial literacy wor k shops and/or panel discussions at three of the Y WCA’s Chicagoland locations – Laura Par k s and Mildred Francis Center, Pat terson McDaniel Family Center and the Wes t Side Center. Food and give a ways will be provided at each of these events free of charge as well as a chance to win great raf f le prizes, i.e. I-Pads, I-Pods, Laptops. These Financial Sur vival Events run from April 2nd through April 9th. Visit MoneySmar tWeek.org to lear n more!
ON THE MONEY
Security Lost? A Look at Credit Card Fraud My hands move around in my bag as I anticipated feeling the hard leather y skin of my wallet. When this object did not come into to contact with the tips of my f ingers, I panicked and immediately turned my bag upside down to f ind my wallet that contained a plastic card that was capable of purchasing a Mac air with just one swipe. After raiding my room, I called my bank to put a hold on it, and before she hung up, I hesitantly asked for my balance. “Negative one hundred f ifty” she responded. As I listened to these numbers, feelings of societal and technological distrust over whelmed me and ultimately left me questioning the security of my money. In this generation, the prevalence of credit fraud brought on by technological advancements brings signif icant challenges to both victims and mediators and calls at tention to security issues. Over the last year the number of U.S identity fraud victims increased by 11.1 million people and has not been this high since 2003, repor ted Javelin Strategy & Research. Yet, as the number increases it has also been epor ted that 43% of all ID theft incidents were due to lost or stolen wallets, check books, credit, and debit cards. However, online credit fraud, is more common. It is encouraged by the progressive technological innovations meant to make purchasing faster and easier but also decreasing safety. The average loss of a fraud victim is about $6,000 dollars and depending on your credit company this money could take days to be returned back to you and might affect your credit score. Although I received all my money back, memories of the horror-like night still remind me of my constant vulnerability of possessing a little plastic card. If you become a victim of credit fraud, call to freeze your card right away. The go to your bank to clarify what has been stolen from you. Lastly, go to the police station to f ile a repor t of the fraud. Learn more at w w w.ftc.gov.
Mariah Wachtman, Senior, Lakeview High School
ON THE MONEY SPRING 2011
ARE YOU IN THE KNOW? 1) Investing in several different types of investments is called_ _ _ _ _ _ _ _ _ _ _. 2) A _ _ _ _ is an example of a lending investment (see ar ticle page 9). 3) The _ _ _ _ _ _ _ _ _ _ _ _ rate for recent high school graduates not enrolled in college was 35% compared to 23.7% for those enrolled in college (see ar ticle page 8). Word Bank BOND COLLEGE DIVERSIFYING INTEREST UNEMPLOYMENT
4) Individuals that earn a _ _ _ _ _ _ _ degree earn $1,000,000 more on average than those without one. 5) When you spend using a credit card and do not pay the full balance or ever y thing you charged that month, you have to pay _ _ _ _ _ _ _ _.
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