SPREAD WITH 0.125” BLEED June 2020 YOUR MONEY, YOUR GOALS A financial empowerment toolkit Consumer Financial Protection Bureau Table of contents Introduction ......................................................................................................................................... 6 About the toolkit .......................................................................................................... 6 The power of financial empowerment ....................................................................... 7 Incorporating the toolkit into your work ................................................................... 7 Financial decisions are about more than money ..................................................... 9 Tool: Financial empowerment self-assessment ...................................................... 13 Tool: My money picture ............................................................................................. 21 Module 1: Setting Goals .................................................................................................................. 24 Hopes and dreams can be turned into goals .........................................................25 Creating effective goals ............................................................................................25 Setting goals for life events and large purchases .................................................. 26 Tool: Setting SMART goals ........................................................................................29 Tool: Putting goals into action ..................................................................................32 Tool: Planning for life events and large purchases ................................................34 Handout: Revising goals. ...........................................................................................36 Module 2: Saving .............................................................................................................................. 38 Reasons to save...........................................................................................................39 Taking the first step to saving ................................................................................... 41 Making savings automatic .........................................................................................43 TABLE OF CONTENTS 1 You can save while receiving public benefits .........................................................43 Tool: Savings plan .......................................................................................................45 Tool: Saving and asset limits ..................................................................................... 47 Tool: Finding a place for savings ..............................................................................50 Handout: Saving at tax time. .....................................................................................53 Module 3: Tracking Income and Benefits .................................................................................... 55 Income .........................................................................................................................56 Public benefits ............................................................................................................58 Getting income and benefits ....................................................................................58 Protecting the money on your prepaid card .......................................................... 59 Deductions from your pay ......................................................................................... 61 Tool: Income and benefits tracker ............................................................................ 67 Tool: Choosing how to get paid ............................................................................... 69 Tool: Increasing income and benefits ...................................................................... 74 Module 4: Paying Bills ...................................................................................................................... 77 Planning for bills ......................................................................................................... 78 Wants versus needs.................................................................................................... 78 Making paying bills easier .........................................................................................79 Protecting your information on digital money apps ............................................. 79 Tool: Spending tracker ...............................................................................................82 Tool: Bill calendar .......................................................................................................85 Tool: Choosing how to pay bills ................................................................................ 87 2 YOUR MONEY, YOUR GOALS TOOLKIT Tool: Cutting expenses ..............................................................................................91 Tool: Prioritizing bills .................................................................................................. 94 Module 5: Getting through the Month ......................................................................................... 97 Making a cash flow budget .......................................................................................98 Analyzing your cash flow ...........................................................................................98 Tool: Creating a cash flow budget .........................................................................100 Tool: Improving cash flow........................................................................................103 Tool: Adjusting your cash flow ................................................................................108 Module 6: Dealing with Debt ....................................................................................................... 110 Making sense of debt ...............................................................................................111 Co-signers: Agree to repay the loan ...................................................................... 113 Types of debt ............................................................................................................ 113 Student loan debt ..................................................................................................... 114 Medical debt ............................................................................................................. 116 Payday loans .............................................................................................................. 117 Auto title loans ......................................................................................................... 118 Rent-to-own arrangements ..................................................................................... 119 Avoiding problems with debt ................................................................................ 119 Tool: Debt log ...........................................................................................................125 Tool: Debt-to-income calculator ............................................................................. 128 Tool: Debt action plan ............................................................................................. 131 Tool: Comparing auto loans ....................................................................................133 TABLE OF CONTENTS 3 Tool: Repaying student loans ..................................................................................136 Tool: When debt collectors call ..............................................................................143 Handout: Avoiding medical debt. ..........................................................................150 Module 7: Understanding Credit Reports and Scores ............................................................. 152 Why do credit reports and scores matter? ...........................................................153 Credit reports ...........................................................................................................154 Credit scores .............................................................................................................165 Using credit ...............................................................................................................168 Tool: Requesting your free credit reports ............................................................. 171 Tool: Reviewing your credit reports ....................................................................... 173 Tool: Disputing errors on your credit reports ....................................................... 176 Tool: Getting and keeping a good credit history .................................................180 Module 8: Choosing Financial Products and Services ............................................................183 Finding and choosing financial products and services .......................................184 Opening a checking or savings account ...............................................................184 Using a prepaid card ................................................................................................189 Alternatives to prepaid cards .................................................................................