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Financial Literacy

Financial Literacy

What Is Financial Literacy?

Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.

When you are financially literate, you have the essential foundation for a smart relationship with money. This can help start a lifelong journey of learning about the financial aspects of your life. The earlier you start to become financially literate, the better off you'll be because education is the key to a successful financial future (

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Budgets empower you to take control of your financial life. By comparing what you make and spend, a budget gives you the financial knowledge to spend your money on what you want while alleviating stress. Not sure where to start? We can help!

Track Your Expenses

For the next month, track your expenses to see where your money actually goes. Don’t forget to account for cash purchases and ATM withdrawals.

Determine Your Needs

Based on your actual expenses, separate your wants from your needs. A needed expense includes things like rent, food, and bills. These are things you need to survive. A want is something you’d like to have, like dinner at a restaurant or new clothes.

Write Down Your Goals

Write down your short- and long-term financial goals. This will help you stay on track as you follow your budget.

Create Your Budget

Using your actual expenses, create a budget and stick to it. Keep in mind that not every month will look the same. Account for irregular expenses that occur once or a few times a year, for example, car insurance. If your insurance is $600 and due in six months, you should budget $100 a month toward it until it is due.

Track, Review and Adjust

As months pass, track your spending and adjust your budget as necessary. Paying off debts frees money up to go toward other expenses or to put in savings. You also can use what you have tracked to project future income and expenses. Soon, your budget will be aligned with your financial goals!

Budgeting Resources:


Using an app, computer program, or bank service to help track and manage your expenses can simplify the process. Here are a few tools: Budget Worksheet

Credit Karma connects with your bank account and automatically organizes spending habits.

Check with your bank. They may have a tool or app to help you stay organized.

There are many ways to stay within your budget-more than we can list here. But these helpful hints will get you started:

  • Cook for yourself instead of eating out.
  • Go to thrift stores for vintage clothing and household items.
  • Use your student ID for discounts around town and online.
  • Take advantage of campus resources and events.

These organizations provide information on money management and connect you to resources that can help with debt relief.

Understanding Your Credit Report

What is Credit?
Credit is your reputation as a borrower. It is made up from the information on your borrowing history and it stays with you for a very long time. If you abuse your credit, you can lose your ability to get more credit.

What is a Credit Report?
Your credit report is like your academic transcript, but for money. It shows your credit history. Lenders send information about your borrowing history to agencies called credit bureaus. There are three major credit bureaus: Experian, Equifax, and TransUnion.

You can get a free copy of your credit report every year. That means one copy from each of the three companies that writes your reports.

The law says you can get your free credit reports if you:

What is my Credit Score?
A credit score is a number based on your credit history, but it does not come with your free credit report unless you pay for it. A high credit score means you have good credit. A low credit score means you have bad credit. Different companies have different scores. Low scores are around 300. High scores are around 700-850.

Do I need to get my credit score?

It is very important to know what is in your credit report. But a credit score is a number that matches your credit history. If you know your history is good, your score will be good. You can get your credit report for free.

It costs money to find out your credit score. Sometimes a company might say the score is free. But if you look closely, you might find that you signed up for a service that checks your credit for you. Those services charge you every month.

Before you pay any money, ask yourself if you need to see your credit score. It might be interesting. But is it worth paying money for?

Savings Account

Saving money takes discipline and sacrifice, but it provides you freedom and financial security while allowing you to take risks later on. Not only does a savings account give you a place to safely store money for the long term, but it also helps your money grow with regular interest payments. Don’t wait until graduation-start saving money now.

How to Save:

  1. Pay Yourself First: Set aside an amount for savings before paying bills or buying other things. Treat it like a bill and make automatic deductions.
  2. Start with a Small Amount: There is no minimum amount for savings. Start small and increase over time. compound interest helps even small amounts grow.
  3. Write a Shopping List: Avoid impulse buying by writing down a shopping list before you head to the store. Base it on your needs and budget. Then here’s the hard part - stick to it!

Choosing the Right Banking Institution

Banks and credit unions not only store your money, but also sell financial services, like car or home loans. Choosing the right financial institution is an important factor in getting the right services and features to meet your financial goals.

Banks and Credit Unions Both Offer:

  • Checking and savings accounts
  • Loans (personal, auto, mortgage)
  • Credit cards
  • Certificates of deposit (CDs)

However, a bank is a for-profit organization, while a credit union is owned by its members. Because of this, banks usually have more services and a larger network of branches, but they may also have higher fees and lower interest rates than credit unions.

It’s important to compare the services offered by different banks and credit unions before choosing one. Additionally, you should look for:

  • Great online reviews
  • Digital capabilities, like online banking
  • FDIC insurance
  • No balance minimums
  • No costly fees, like returned check, overdraft, monthly, and ATM fees

Debt Reduction

Debt management involves living within your means to pay off debts, particularly unsecured debts, like credit cards. Among other benefits, effective debt management can improve your credit score. It’s important to understand the terms and risks associated with each type before taking it on.

Types of Debt

Revolving Debt- This means there is not a fixed monthly payment.

Secured Loans- Secured loans are backed by collateral or assets you own, like a car or house.

Unsecured Loans- An unsecured loan is one that is not backed by collateral or assets, meaning the lender is taking a larger risk.

Credit Cards - Credit cards are a form of revolving debt. Interest rates can be high and failure to make payments can negatively impact your credit score.

Consumer Loans - Sometimes called personal loans, consumer loans are typically unsecured loans. This may lead to higher interest rates than other types of loans. Your interest rate and loan terms depend on your credit history and are determined by the bank.

Payday Loans - Payday loans are small, short-term loans that come with very high interest rates and fees. They are typically a dangerous and expensive form of credit.

Automobile - Automobile loans are secured debts. Auto loans can have high monthly payments and interest rates, and purchasing a car with payments higher than you can afford can quickly become a financial burden.

Home Loans - Home loans, or mortgages, are another form of secured debt, as your house can be used as collateral for missing payments. Rates can be either fixed or variable.

College Loans - There are two types of student loans: federal and private loans. Federal loans are owned by the U.S. Department of Education and have a fixed interest rate. Private loans are owned by financial institutions. Interest rates for private loans vary depending on your credit history.

Managing Your Debt
You can manage your debt with a little patience and focus. Here are a few tips to get you started:

Identity Theft

Identity theft happens when someone uses your personal information to take out loans, buy things, or receive medical care in your name. This can harm your credit report and financial future. To reduce the risk of identity theft you can:

  • Protect your personal information
  • Regularly check your bank and credit card statements for discrepancies
  • Shred documents with personal information on them
  • Opt out of receiving prescreened offers of credit and insurance
  • Use Uni-Ball pens, which trap ink on the paper, to deter identity thieves

Types of Identity Theft

  • Phishing - This is when someone sends an email to a user and falsely claims to be a legitimate establishment. Forward all spam requesting your financial information to
  • Skimming - This is a phony card reader attached to a device that captures all of your personal information.
  • Shoulder Surfing - This is when someone gathers information while standing over you at the ATM. It is also when your card becomes trapped in the ATM, and they remove your card once you leave.
  • Cell Phone Camera Scam - This happens when someone takes your wallet and takes photos of all your information. They then return your wallet with everything inside.
  • Mail Theft - Mail theft is when someone steals your outgoing mail. It’s safest to deposit mail at the post office. If you suspect your mail has been tampered with, contact the post office.
  • Jury Duty Scam - Jury duty scams are when someone calls you saying you missed jury duty. They ask for your name, social security number, date of birth, and address. Note that most contact for jury duty will come through the mail.
  • Dumpster Diving - Dumpster diving is when an identity thief goes through your personal trash or a business's trash looking for personal information.
  • Student Loan Scams - Some scammers claim to be able to reduce your student loan debt. Avoid paying upfront fees to companies that claim they can reduce or eliminate your student loan debt. These companies may be scams, as it is illegal for them to take money before they help you. If you believe you have been scammed, report it to your state Attorney General’s Office.

Recovering From Identity Theft
Fixing the damage can be simple or it can take months – it all depends on you. Take these steps as soon as you can to recover quickly.

  1. Notify the credit bureaus (Experian, TransUnion, and Equifax) and let them know you want a fraud alert placed on your credit record and consider a credit freeze
  2. Contact law enforcement and government agencies
  3. Close the fraudulent accounts
  4. Deal with debt collectors
  5. Continue to monitor your credit reports

Credit cards can be a great way to pay for things you need and build your credit, but they can also be a source of financial trouble if not used correctly. It’s important to understand the pros and cons of credit cards before deciding to apply for one.

Credit Card Pros

  • Convenient - you don’t have to carry cash
  • Trackable - Through monthly statements you have an accurate record of your spending
  • Member Perks - Some cards come with a range of discounts based on purchase
  • Purchase protection - Your credit card can assist in returning defective products
  • Building Credit - Responsible use and repayment helps establish a good credit rating

Credit Card Cons

  • Fees - Some cards have annual or cash advance fees
  • Interest Charges - If you do not pay off your credit card each month, you will accrue interest and pay more in the long run
  • Temptation - The convenience of credit cards can lead to overspending

To ensure responsible credit card use, commit to your budget and leave the plastic at home when you don’t need it. This will help cut spending temptation. It’s also a good idea to pay off outstanding balances quickly to reduce the amount of interest you pay, and to allow for more money in your budget for other things.

  • 2-1-1 Texas – This free, anonymous hotline connects you with resources throughout Texas that can be used for food, housing, childcare, crisis counseling, and substance abuse treatment.
  • Hands On Banking - Get free 24/7 access to self-paced financial courses.
  • Smart About Money - Courses to help you make sound financial decisions.
  • Texas Benefits - Apply for health care, food, financial benefits, and more.
  • - Get easy-to-read insight on managing your money.