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Financial Literacy: What's There to Know?

There's plenty to learn when it comes to finances and how to best utilize your money. As you set off on your own, having the knowledge to appropriately budget your income and balance your expenses, as well as saving income, are key components of understanding the value of your own money and beneficial when preparing for your future goals, including your education!

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Income and Expenses

Income includes any type of funds you earn through working, investing, or saving. You can receive income from multiple sources, such as:

• your salary from a primary job

• wages from extra part-time work, such as driving for Uber, or being tipped while serving at a restaurant

• from renting property

• from investments in stock or bonds

Your AGI (Adjusted Gross Income), which is calculated for your yearly tax returns, equals your total income from all sources, minus any deductions you are deemed eligible for.

Expenses are goods or services you pay for to secure a benefit or bring about a result. In short, expenses subtract from your income. Bills, monthly spending, food and clothing, and even planning for future events, are all considered expenses.

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Budgeting

A Budget is a plan that helps you manage your money. A budget shows how much income you receive and how many expenses you have for each month. A healthy and helpful budget helps determine how much of your monthly income you need to set aside for items such as food, clothing, transportation, and daily needs, in addition to your monthly bills and payments.

Budgeting can also help you plan ahead for future events or life changes, such as moving or unforeseen emergencies. There are multiple methods available to help you budget, such as apps specifically designed to help you calculate your monthly expenses and pinpoint areas that you may need to improve upon, such as random purchases not calculated in your monthly budget.

To help create a reliable budget, make sure that you prioritize needs vs. wants, and always continue to monitor your spending habits and keep track of your monthly payment deadlines.

Of course, don't be afraid to adjust your budget as your needs change or to meet changing economic standards. Additionally, consider saving your receipts so you can more accurately determine how much money to budget for specific expenses.

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Savings Accounts

A Savings Account is an account you open with your local bank or credit union that is designed to keep your money safe, and are best utilized to help achieve short-term goals or build funds for future plans or emergencies.

How Savings Accounts Work

When funds are deposited into a Savings Account through a bank or credit union, the bank will borrow those deposited funds to lend to other consumers, or borrowers. In turn, the bank will pay the depositor back the amount they borrowed plus interest. Essentially, opening a Savings Account can help you earn additional funds on top of your originally deposited amount.

Benefits of a Savings Account

Besides accruing interest, there are plenty of other reasons to open a Savings Account with your local bank. Some of these benefits include:

• Ease of Use: If you choose to open a Savings Account with the same bank/credit union you have created your Checking Account with, you can conveniently transfer funds from one to the other without having to wait

• Protected Funds: The Federal Deposit Insurance Corporation will provide protection against bank failures up to $250,000, which means your savings are secured!

• A Safety Net: Placing funds in a Savings Account provides a safety net for emergencies or other unexpected events.

• Preparation for Future Plans: Setting aside income in a Savings Account can help you plan for future goals or events, such as trips or large purchases.

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Credit

Credit is money you borrow for goods and services that you are obligated to pay back plus an extra amount known as interest, a charge for borrowing funds. Borrowing money from lenders such as a bank or utilizing a credit card helps boost your Credit Score, which is determined by how much you've borrowed, what type of loans or credit were borrowed, available credit, your payment history, and length of time your loans have been active.

Types of Credit

There is more than one available way to build your credit. Types of credit include:

• Credit Cards: issued by a bank or financial services company that allows the cardholder to borrow funds to pay for goods or services electronically with merchants. The borrower must then pay back those funds to the bank or company, plus applicable interest.

• Educational Loans: offered through the federal government or a private lender to help cover the costs of attending higher education programs. Payments for Educational Loans are often deferred until after student is no longer enrolled. Unlike most loans, Education Loans do not involve collateral.

• Automotive Loans: a secured loan [a loan that involves a form of collateral] for purchasing a vehicle. The respective vehicle serves as the collateral for the loan and can be repossessed by the lender if the borrower fails to make payments.

• Personal Loans: an amount of funds borrowed from a bank, credit union, or online lender that can be used for a variety of purposes, such as consolidating debt, home renovations, vacation costs, medical bills, etc. Personal loans may be secured and require collateral, and vary greatly when it comes to interest rates, fees, and repayment terms.

• Mortgages: a loan used to purchase and maintain a home, plot of land, or other form of real estate. The property serves as collateral. The prospective borrower must meet several requirements to obtain a mortgage, including a credit score minimum and down payments, an amount a buyer pays upfront when purchasing an expensive good.

Maintaining a Solid Credit Score

Before accepting a personal loan or applying for a new credit card to help pay for a large purchase, consider how doing so might affect your credit score. As stated previously, your credit score determines your credit eligibility - a bad credit score may affect your ability to invest in certain goods, such as a car or house, be approved for credit cards and personal loans, and may even affect available job opportunities in certain fields! Therefore, when considering how to build credit, make sure you search for options that will not prove financially stressful or affect your ability to pay your other monthly expenses.

Your overall credit score number represents the risk a lender, such as a bank or a credit union, takes when you borrow money from them. The majority of lenders utilize the FICO score measurement system to determine a potential borrower's risk. The FICO score consists of five levels, Poor, Fair, Good, Very Good, and Excellent. Each level consists of a number range, between 300 and 850. The higher your score, the better chances you have of being approved for the desired credit or loan.

 

Therefore, to maintain a solid credit score, be sure you:

• Pay down your debt.

• Avoid late payments.

• Use any accepted credit cards lightly.

Additionally, be wary of "too-good-to-be-true offers," as these could adversely affect your credit score or even scam you out of funds. If you are interested in building your credit but aren't sure where to begin, start with your bank or credit union!

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What to Know Â鶹¹û¶³´«Ã½ the Costs of College

Budgeting Income, calculating Expenses, opening a Savings Account, and understanding the values of Credit are helpful tools that students can utilize to prepare for paying for college. As you begin scheduling college visits and considering your options, it is important to keep in mind your potential choices' estimated attendance costs, financial aid options that may be available to you, and how your aid can help pay towards your estimated college costs, both directly and indirectly.

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Cost of Attendance

Cost of Attendance (COA) is the amount it will cost a student to attend college. The majority of colleges, two and four year, calculate their Cost of Attendance to demonstrate the total cost for the current school year, which includes Fall and Spring semesters. If a college utilizes a different yearly schedule, such as 18 month certificate programs, they will more than likely include a separate COA that reflects the expenses for that schedule. Colleges will adjust their COA regularly to reflect updated estimations.

Items Reflected in a College's COA

A college's Cost of Attendance generally includes estimated yearly costs for tuition and fees, housing, meal plans, books and supplies, and personal expenses, such as transportation. COAs may also include additional information such as costs for study abroad programs and costs related to disabilities. Cost of Attendance lists also consider a student's status and living situation. For example, an In-State Undergraduate living on campus will have a different COA than an Out-of-State Undergraduate living off campus. Therefore, when viewing a university's COA, be sure you consider your student status/living situation, as well as other details, such as transportation and meal plans, that may affect your costs!

The Net Price Calculator

A majority of colleges will utilize a Net Price Calculator so students can input specific information related to their needs and status to create a more personalized Cost of Attendance estimate. If you are interested in using a Net Price Calculator, feel free to try ours! Our Net Price Calculator is currently constructed to provide estimates according to our current 24-25 school year costs, so please only utilize our Calculator as a potential estimate of costs if you are considering attending Tech during the 25-26 term.

Net Price Calculator

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Financial Aid

Financial Aid is money given to or borrowed by students that is then used to help pay for their education and cover the costs of attending. Types of Financial Aid include Federal and State Grant/Scholarships, Federal Loans, Institutional Scholarships, Outside Scholarships, and Private Loans.

Federal and State Aid

To potentially receive federal aid to help cover your college costs, students must complete and submit their for each year they intend to enroll. Aid that students can potentially receive by completing their FAFSA include awards such as the , , and need-based . Additionally, most states require that students complete and submit their FAFSA application to receive eligible state aid. Tennessee, for example, requires that you complete and submit your FAFSA application to receive your .

FAFSA Deadlines

Although the yearly FAFSA does not have a specific deadline, it is recommended that you complete and submit your FAFSA to your school(s) of choice as soon as it becomes available each year, as certain awards, like Federal Work Study, are first come first serve and are not guaranteed, even if you meet the eligibility requirements! Therefore, to make sure you complete the FAFSA as soon as it opens, consider marking it in your calendar or create a reminder on your smart phone! You can read about the 25-26 FAFSA release .

Institutional Scholarships

Institutional Scholarships are awards given to students by the institution(s) they have applied for. They are usually competitive, which means they are not guaranteed, although many institutions do offer guaranteed scholarships to first-time freshmen students who meet certain GPA/ACT requirements. Other scholarship opportunities include departmental scholarships, which are tailored to specific majors and are potentially awarded to degree-seeking students who meet certain qualifications, while others may consider a student's financial need, which is determined by the information submitted in a student's FAFSA application. Most colleges will have multiple scholarships students may receive and their own process for selecting candidates, so it is imperative that you complete and submit your scholarship applications in a timely manner and as professionally as possible! Each institution will have their own application that you will need to complete, so make sure you keep track of your selected colleges' application requirements and deadlines!

Institutional Scholarship Requirements

As stated previously, the majority of scholarships colleges offer are competitive and have specific requirements prospective students must meet to potentially receive them. Below are some requirements you may need to meet in order to potentially receive scholarships:

• A certain High School GPA Level/ACT Score

• A specific Major/Concentration

• Specific Level of Need

• Student Status

Besides the above requirements, scholarship offices may ask for Letters of Recommendation that attest to your abilities as a student or worker. Additionally, they may request that you write about your accomplishments in and outside of school and discuss your chosen career path and how you intend to succeed while enrolled in college. Therefore, make sure when completing your applications that you answer their questions to the best of your abilities!

If you are interested in reading more about Tech's Scholarship options and application process, please visit our Scholarships page!

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Direct and Indirect Costs

The cost categories listed on a college's Cost of Attendance can be split into two categories: Direct and Indirect Costs.

Direct Costs are the items your college of choice will directly bill you for each semester and what your awarded financial aid will directly pay towards. Your Direct Costs will include:

• Tuition & Fees

• Residence Hall fees

• Meal Plan expenses

Indirect Costs are items that your college of choice will not directly bill you for but are integral to your time at college. Indirect Costs that you should consider when preparing for college include:

• Your textbooks and supplies, such as writing utensils, notebooks, laptops, or any other tools you may need for class

• Transportation expenses, especially if you intend on commuting

• If living on campus, personal items such as toiletries, clothing, bed sheets, etc.

Once your Direct Costs are paid, any excess financial aid you have will be reimbursed to you, which you can then use to help pay for your Indirect Costs.

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Things to Remember Â鶹¹û¶³´«Ã½ Paying for College

There is a lot to remember when it comes to paying for college and determining what financial aid you may be eligible for, but don't worry, we've got you covered! Here are the main things to take note of:

1. Check a college's Cost of Attendance to determine how much it may cost you to attend.

2. If you're on a budget and are struggling to choose between colleges, consider comparing their Cost of Attendance information to help make a decision. Doing so will give you a better idea of how much it costs to attend and live in a college's location!

3. Apply for Financial Aid by submitting the and completing institutions' available scholarship applications.

4. Complete the FAFSA as soon as it becomes available for a better chance of receiving first come first serve federal and state aid.

5. Make note of all deadlines for scholarship applications, and make sure to answer the application questions to the best of your abilities!

6. Make note of your potential Direct Costs and Indirect Costs, and consider how your aid will help you cover these costs.

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Questions? Schedule a Meeting!

If you have any questions about Financial Literacy or would like to learn more about paying for college, don't worry, we are here for you! Our Financial Outreach Coordinator Joe Clark is available to answer any questions or concerns you or your parents may have, so please feel free to reach out to him at jclark@tntech.edu to schedule an appointment!

If you are an enrolled Â鶹¹û¶³´«Ã½ Student that has questions about your aid or would like to learn more about Financial Literacy, please schedule a meeting with Joe Clark through Tech Connect by following the link below!