1. Basics of Money Management

• Definition: Managing money means making informed decisions about earning, saving, spending, and investing.
• Core principles:
  • Spend less than you earn.
  • Build an emergency fund (3–6 months of expenses).
  • Track income & expenses.
  • Set financial goals (short, medium, long-term).
  • Protect wealth (insurance, retirement planning).

2. Budgeting & Saving

• Why budget? Keeps you in control, reduces overspending, helps achieve goals.
• Popular budgeting methods:
  • 50/30/20 Rule: 50% needs, 30% wants, 20% savings/debt repayment.
  • Zero-based budget: Every dollar is assigned a purpose.
  • Envelope system: Physical or digital "envelopes" for spending categories.
• Tips to save money:
  • Automate savings.
  • Cut unnecessary subscriptions.
  • Buy in bulk for essentials.
  • Track small daily expenses.

3. Credit & Debit Cards

• Debit Card:
  • Linked to checking account.
  • Money comes directly from your balance.
  • No interest charges.
  • Safer for avoiding debt, but limited fraud protection compared to credit.
• Credit Card:
  • Borrowed money, must be repaid monthly.
  • Offers fraud protection, rewards, and builds credit history.
  • Interest applies if balance isn’t paid in full.
• Credit Score Factors (FICO Model):
  • 35% Payment history.
  • 30% Credit utilization.
  • 15% Length of credit history.
  • 10% Credit mix.
  • 10% New credit inquiries.

8. Avoiding Debt & Building Good Credit

• Avoiding debt traps:
  • Pay credit card balances in full.
  • Avoid payday loans & high-interest lenders.
  • Don’t borrow more than you can repay.
• How to build credit:
  • Get a secured credit card or credit-builder loan.
  • Keep utilization below 30%.
  • Make payments on time, every time.
  • Keep accounts open to lengthen credit history.