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Take Control of your "MONEY"

Take Control of your "MONEY"

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  • Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
  • HABITUAL SPENDING AND BORROWING: Falling back into old habitsINCOMPLETE SOLUTIONS: Fixing only part of the financial problem SELF-MANAGEMENT: Trying to do it yourself, first reaction: deprive yourself in every categoryQUICK FIX: Going for a fast solutionMARKETING MIRE: Seeking advice from a big name, using a neighbor’s solution for your unique problem

Time & Money Time & Money Presentation Transcript

  • The 5 Worst Mistakes You Make with Your Personal Finances
    How to overcome fear, uncertainty and doubt about your present and future finances
  • © Time & Money, LLC - 2010
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    Researched and produced by
    Sponsored by
    Time & Money, LLC
  • Why did Money Mastery commission a study?
    © Time & Money, LLC - 2010
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    Because of today’s economic conditions, many people are looking for ways to improve their financial security
    So, we hired an independent research company to study what is happening to families today as well as uncover strategies that will help them to succeed financially
    We are pleased to share this study with you!
  • Areas Covered
    Personal financial problems in America today
    Five mistakes that keep you from achieving financial security
    Five ways to combat those mistakes and change your financial future
    © Time & Money, LLC - 2010
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  • Personal financial problems in America today
    © Time & Money, LLC - 2010
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  • National household debt
    © Time & Money, LLC - 2010
    In 1980, household debt amounted to $1.6 billion
    By 2009, that amount had increased to $14 billion
    Then in 2010, despite the recession, it only dropped by $500 million to $13.5 billion
    Source: Household Sector: Liabilites: Household Credit Market Debt Outstanding, Federal Reserve Bank of St. Louis, accessed August 26, 2010
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  • Lack of financial management skills
    © Time & Money, LLC - 2010
    A report from the Financial Crisis Inquiry Commission recently stated that the majority of Americans lack basic math skills and knowledge of fundamental economic principles
    Interestingly, the report also showed that those surveyed believed they had much more financial and math knowledge than the tests actually revealed
    Source: Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
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  • What’s your financial IQ?
    © Time & Money, LLC - 2010
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    In a recent financial IQ quiz, the average score earned by those tested was “D+”
    Areas of lowest scoring:
    Credit management
    Cash flow management
    Source: Household Financial Management: The Connection between Knowledge and Behavior, Federal Reserve Bulletin, July 2003
  • For example, how much do you know about your mortgage?
    © Time & Money, LLC - 2010
    A mortgage is one of the most complex and important contracts into which we enter
    However, 4.4 million mortgage borrowers report not knowing the interest rate they are paying on their mortgage!
    Sources: Joint center for Housing Studies of Harvard University, 6/25/10; Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
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  • Lack of personal savings
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    In 1982, the personal savings rate was nearly 11% of disposable income
    In contrast, by 2005 personal savings dropped to 1.4% of disposable income
    Then in 2009, personal savings had inched up to only 4.3%
    Source: Personal Savings Up, National Savings Down, Federal Reserve Bank of Cleveland, March 19, 2010
  • Complex tax code
    © Time & Money, LLC - 2010
    In 1913, the Federal Tax Code contained 400 pages of rules
    By 2010, the number of pages had increased to over 71,680
    Source: Issues, Randy Hultgren for Congress, accessed August 26, 2010
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  • The link between finances and divorce
    © Time & Money, LLC - 2010
    Money trouble is a top reason for divorce in America, second only to abuse
    Couples who reported disagreeing about finances on a weekly basis were over 30% more likely to divorce than couples who reported disagreeing about finances only a few times a month
    Sources: Money Fights Predict Divorce Rates, The New York Times, December 7, 2009; Real Estate: Home Mortgage Crisis May Boost Divorces in U.S., Experts Say, divorce360, 2009
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  • Are you ready to retire?
    © Time & Money, LLC - 2010
    A study revealed that two out of three boomer households are financially unprepared for retirement
    The percentage of workers planning to work after they retire has increased to 72% in 2009 (up from 66% in 2007)
    The average 401(k) retirement account fell 24.3% in 2008
    Sources: Not Ready to Retire?, Entrepreneur Magazine, March 2009; The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer,” EBRI Issue Brief, no. 328, April 2009; 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2008, Investment Company Institute via Business Exchange, October 2009
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  • What does this all mean?
    © Time & Money, LLC - 2010
    Americans carry too much debt and have too little saved
    We don’t understand our debts nor do we understand the tax laws that could hurt or even help us
    Too many of us are allowing financial problems to ruin our marriages and credit
    Too few will be ready to retire and too many will need to continue working during their golden years
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  • The 5 Worst Mistakes
    © Time & Money, LLC - 2010
    Habitual spending and borrowing
    Incomplete solutions
    Doing it yourself
    Looking for a quick fix
    Going with the crowd
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  • MISTAKE #1: habitual spending and borrowing
    © Time & Money, LLC - 2010
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  • Getting ourselves into this mess . . .
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    Excessive spending and borrowing leads to living paycheck to paycheck
    61% of workers say they live paycheck to paycheck
    20% save nothing each month
    42% of workers believe if they had $500 more per month, they would live comfortably
    HOWEVER, 30% of those making over $100,000 say they live paycheck to paycheck
    Sources: More Upper-Income Workers Living Paycheck to Paycheck, CNBC, September 16, 2009; Living paycheck to paycheck, CNN, October 8, 2008
  • Living in denial
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    The rude reality of being so far behind on bills coupled with our inability to purchase necessities can together create denial — we continue racking up debt despite our hopeless financial predicament
    In a recent survey, 7 in 10 respondents found their investment statements incomplete or hard to understand
    Many Americans live in a constant state of financial ignorance and denial
    Sources: 2008-2009 Winter Issue: Dealing With Debt, Consumer Action News, January 30, 2009; Understanding Your Account Statement, investorED survey cited by The Globe and Mail, 4/16/09
  • Spending is emotional, not mathematical
    © Time & Money, LLC - 2010
    Many people buried by credit cards and loans are in this position due to the emotional and psychological aspects of spending money, not necessarily a momentary lapse in mathematical ability
    So how do we then get ourselves out of this mess?
    Source: The Best Way to Pay Off Debt, U.S. New & World Report via Yahoo! Finance, July 28, 2010
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  • mistake #2:incomplete solutions
    © Time & Money, LLC - 2010
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  • A crash (spending) diet?
    © Time & Money, LLC - 2010
    Poor economic conditions have prompted more people to limit their use of credit — as of June 2010, Americans had cut credit card use for 21 straight months
    However, spending is only one piece of the puzzle
    Other important aspects of the financial puzzle that are tied with how we spend are:
    Debt
    Savings/retirement
    Taxes
    Source: Credit-Card Delinquencies Slump In 2Q; Balances At 8-Year Low, The Wall Street Journal, AUGUST 25, 2010
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  • Debt is only one aspect of one’s financial troubles
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    Worse yet, debt elimination programs are less successful than we may think:
    The current completion rate of debt management plans is roughly 20%
    Completion rates from debt counseling programs are as low as 21%
    Source: The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy, How to Get Out of Debt, June 17, 2009
  • Throw in the towel?
    © Time & Money, LLC - 2010
    Will filing bankruptcy really solve your problem and change your behavior?
    Many Americans think this is the solution
    From 2007 to 2010, the number of personal bankruptcies more than doubled from 751,056 to over 1.5 million
    Source: Bankruptcy Statistics 1980-2010, BankruptcyAction.com, August 17, 2010
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  • mistake #3:Doing it yourself
    © Time & Money, LLC - 2010
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  • Making decisions on your own
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    Many will agree that making financial decisions today is even harder than it was in the past — today’s financial markets are far more complex
    Managing day-to-day finances can not only be more difficult today, but “getting it wrong” can pose greater risks than ever before
    Source: Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
  • Are we financially savvy enough to go it alone?
    © Time & Money, LLC - 2010
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    A report recently stated that the majority of Americans today lackcriticalknowledge of important financial concepts such as:
    How inflation works
    Financial risk
    Investing for the future
    Source: Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
  • Results of our lack of knowledge
    © Time & Money, LLC - 2010
    The report further stated that one in five Americans have used alternative and costly borrowing methods (payday loans, advances on tax refunds, pawn shops, etc.) in the past five years
    Because of our lack of knowledge, too many Americans will have to work past retirement age, are overpaying taxes, paying too much interest or earning too little interest on their investments
    Source: Americans’ Financial Capability, Report Prepared for the Financial Crisis Inquiry Commission, February 26, 2010
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  • Are we preparing for the future?
    © Time & Money, LLC - 2010
    We know Social Security could run out in less than 27 years
    Younger generations will have to rely mostly on self-directed retirement accounts yet 58% of those surveyed have never even tried to calculate how much they should be saving to retire
    Source: McKinley, K. (2009, June 21). Five Social Security Questions Baby Boomers Should Ask Before They Retire. Retrieved June 23, 2009
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  • mistake #4:Looking for a quick fix
    © Time & Money, LLC - 2010
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  • Taking the easy way out
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    Many Americans want to pick up a book and fix their financial problems in an instant
    In 2008, the self-help book industry made an estimated $8 billion in the U.S. alone
    Source: Is Modern Self-Help Just a Massive Money-Making Scam?, PsyBlog, January 9, 2008
  • But is it working?
    © Time & Money, LLC - 2010
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    Despite their continuing popularity, self-help books have faced fierce criticism over the years
    Respected psychologists have argued that self-help books “will clearly not help people to become thin, rich and well-adjusted; indeed they probably have no effect whatsoever”
    How much success have you seen from a self-help resource?
    Source: Is Modern Self-Help Just a Massive Money-Making Scam?, PsyBlog, January 9, 2008
  • Paying someone else to make your problems go away
    © Time & Money, LLC - 2010
    Maybe you or someone you know has paid someone to provide debt relief?
    Those who sign on with debt relief or debt settlement companies often end up with more debt than when they started
    Desperate consumers are paying thousands of dollars with no guarantee that even one penny of their debts will ever be settled
    Source: Be wary of promises from debt relief companies, MSNBC, July 8, 2010
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  • mistake #5:going with the crowd
    © Time & Money, LLC - 2010
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  • Whom do you ask for financial advice?
    © Time & Money, LLC - 2010
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    A study has shown that heads of households primarily obtain their financial knowledge from experience, friends, family and media rather than from financial experts
    Source: Household Financial Management: The Connection between Knowledge and Behavior, Federal Reserve Bulletin, July 2003
  • But do all advisors have YOUR best interests in mind?
    © Time & Money, LLC - 2010
    Reports show that most people get financial advice from many different types of professionals:
    Real estate agents
    Mortgage brokers
    Sellers of financial products
    High sales quotas tend to cause providers to promote products that can exploit a consumer’s tendency to behave irrationally
    Source: How About a Stimulus for Financial Advice?, The New York Times, January 17, 2009
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  • Mainstream financial gurus: are they the best choice for YOU?
    © Time & Money, LLC - 2010
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    Popular financial “experts” have lots of good ideas, but rarely the actual experience in the field to back those theories
    Usually they specialize in one area of finance but are weak in others
    Their expertise is generally in motivation, not education
    Sources: Is Dave Ramsey A “Financial Expert”, Money Smarts, June 3, 2009; Suze Orman comes out, Instant Pride, November 17, 2008
  • Compulsive spending and borrowing can be counterproductive as they are usually very emotional and habit-forming
    Your finances will likely not improve if you address only one part of your money problem
    Short-term fixes and “crash diets” rarely help
    Self-help books and your neighbor’s advice are generally not specific enough to help you with your unique financial predicament
    So what can we do to fix the problem?
    Bringing it all together…
    © Time & Money, LLC - 2010
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  • Five Ways To Combat Your Financial Mistakes And Change Your Future
    Decide to change your financial cycle for good
    Realize this process may take time
    Fix the whole problem
    Create a solution that fits your unique needs
    Find the best financial program and coach for you
  • Step #1:Decide to change for good
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  • Make a commitment, once and for all
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    Recognize that money matters are emotional
    Resist going with the status quo or choosing to do nothing at all
    Resolve that this time will be different — take action now!
    Source: Why Habits Are Hard to Change (And Printers Hard to Buy), Psychology Today, March 18, 2010
  • Difficult decisions require self-efficacy
    © Time & Money, LLC - 2010
    Self-efficacy — the belief that you can make a change and overcome obstacles — is one of the best indicators of successful change
    What is the source of your motivation to succeed?
    What will give you the confidence that you will need to see you through?
    Source: Why Habits Are Hard to Change (And Printers Hard to Buy), Psychology Today, March 18, 2010
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  • Step #2:Take the timeto do it right
    © Time & Money, LLC - 2010
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  • Give yourself time
    © Time & Money, LLC - 2010
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    You can’t always go on a “crash budget” to solve your financial troubles
    A daily action like eating fruit at lunch or running for fifteen minutes takes an average of sixty-six days to become a solid habit
    Spending and saving are daily habits that take time to change and develop
    Source: Stop Expecting to Change Your Habit in 21 Days, Psychology Today, October 21, 2009
  • You can learn from your mistakes
    © Time & Money, LLC - 2010
    73% of people with the highest scores on a recent cash-flow and credit management survey reported having learned better habits from personal experience
    Source: Household Financial Management: The Connection between Knowledge and Behavior, Federal Reserve Bulletin, July 2003
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  • Step #3:Fix the wholeproblem
    © Time & Money, LLC - 2010
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  • The big picture
    © Time & Money, LLC - 2010
    See your finances as one large picture, not as individual pieces of a puzzle:
    Debt
    Spending
    Savings/retirement
    Taxes
    Understand that everything a person needs to know to be successful financially is contained within these four areas
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  • How to put the puzzle back together
    © Time & Money, LLC - 2010
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    Regain control of these four areas
    Understand that they are interrelated
    Cause these areas to work together in harmony
  • Step #4:Tailor a solution for YOU
    © Time & Money, LLC - 2010
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  • Is popular advice the best choice?
    © Time & Money, LLC - 2010
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    Financial “gurus” that market a few feel-good tools may not have the total solution YOU need
    Having someone personally SHOW you how to apply financial management principles specific to your needs could be the key to your success
  • How do YOU learn best?
    © Time & Money, LLC - 2010
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    You might also consider financial programs containing books, workbooks, CDs, DVDs, and seminars with live speakers which can reach out to various types of learners:
    those who learn from reading
    those who learn from watching
    those who learn from listening to speakers and asking questions
    Source: Some Thoughts on Personal Finance Coaching, The Simple Dollar, November 14, 2008
  • Coaching can be an effective tool
    © Time & Money, LLC - 2010
    Many simply thrive on having someone motivate them to make better choices, such as dietitians and personal trainers
    In a recent study, households that had participated in just one personalized financial counseling session…
    Were less likely to be late with payments
    Had higher credit scores
    Had better credit management
    Sources: Some Thoughts on Personal Finance Coaching, The Simple Dollar, November 14, 2008; Household Financial Management: The Connection between Knowledge and Behavior, Federal Reserve Bulletin, July 2003
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  • Case Study: A long-term coaching relationship can really pay off
    © Time & Money, LLC - 2010
    A recent financial planning study categorized participants as either (a) self-directed, (b) advice-supported or (c) comprehensive planning participants
    The comprehensive planning participants engaged in an ongoing relationship with a financial planner which included a written plan encompassing at least three major aspects of their financial lives
    Source: Financial Planning Yields a Sense of Direction, 2008 Financial Planning Association Study, Conducted June-July 2008
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  • Getting ahead financially
    Comprehensive planning participants were found to be nearly twice as likely as those in the other two categories to:
    Regularly save the amount needed for retirement
    Save at least 8% of their annual gross income
    Be on track to save enough for a college education either for themselves or their children
    Source: Financial Planning Yields a Sense of Direction, 2008 Financial Planning Association Study, Conducted June-July 2008
    © Time & Money, LLC - 2010
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  • Step #5:Find the optimal program and coach for YOU
    © Time & Money, LLC - 2010
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  • Look for a financial program that . . .
    © Time & Money, LLC - 2010
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    Has the tools and techniques to help you to permanently change your behavior for the better
    Has a time-tested, well-proven program for success
    Uses a holistic solution
    Treats the root of the problem, not just the symptoms
  • The right tools
    © Time & Money, LLC - 2010
    To leapfrog you over any learning roadblocks, consider a program with varied tools such as:
    Books and guides
    Software
    Audio CDs
    Planners and organizers
    Diaries and tracking tools
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  • Time-tested program
    © Time & Money, LLC - 2010
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    Consider seeking out a program that is led by experienced professionals
    An ideal program will have an excellent track record of “helping people help themselves” out of the financial holes they are in
  • Well-balanced approach
    © Time & Money, LLC - 2010
    Make sure the program you select addresses all aspects of finance:
    How to spend money
    How to save money
    How to pay off debt
    How to not overpay taxes
    And most importantly, how to do all these in the right order
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  • Treat the root of the problem
    © Time & Money, LLC - 2010
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    Look for a program that is interested in helping you create good financial habits
    Find someone who makes you feel you can make these changes
    Great coaches have a way of building one’s self esteem — anyone can improve their financial outlook if they first believe in themselves
    Source: Debt Settlement Coaching – How To Get Free Debt Settlement Advice Online, PRLog, August 19, 2010
  • Who here feels they’ve learned a great deal today?
    © Time & Money, LLC - 2010
    Our hope is that you learned to pay more attention to your financial health
    That you learned more about how to best address the whole problem
    That you have learned and understand the purpose and need for the correct mentor and program that can tailor a solution to your individual needs
    This presentation was sponsored by Time & Money, LLC, let us tell you a bit about the Money Mastery® program.
    We have a three-minute overview
    60
  • Today’s educational insights were brought to you by:
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    © Time & Money, LLC - 2010
    Time & Money, LLC
  • © Time & Money, LLC - 2010
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    The Money Mastery® system developed by Time & Money is proven to be a solution to the mistakes described in this study
    We would like to show you what sets us apart from the rest
    Real answers…solid advice
  • © Time & Money, LLC - 2010
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    Our Mission
    Our purpose is to educate, inspire, and motivate people to make significant changes in their lives through the application of ten proven financial principles — the Money Mastery® principles!
  • © Time & Money, LLC - 2010
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    Has the tools and techniques to permanently change your behavior
    Uses a holistic solution
    Has robust program material and plenty of support tools
    Treats the root of the problem, not symptoms
    Has a time-tested, well-proven program for success
    Is developed and led by true professionals
    Benefits of our Financial Program
  • © Time & Money, LLC - 2010
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    Testimonials
    “The Money Mastery program works! We pay our bills on time, contribute to our 401(k)s, have money in savings, did not borrow money to send our child to college, and all without declaring bankruptcy!”
    — Mike M., Utah
    “A few months ago, we had 14 revolving accounts and owed real estate taxes. Today, we have just four open accounts. Our debt is $65,000 less than before and $4,000 per month goes toward debt!” 
    — Gary & Carol O., Oregon
    “We had no savings, no retirement, and were living check-to-check. In one year, we’ve started a 401(k), a money market account, a mutual fund, a regular savings account, and have paid off three cars and two furniture loans. Thank you!”
    — Ken & Barbara R., New York
  • © Time & Money, LLC - 2010
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    Our Offer
    Personalize yourFinancial Master Plan!
    Your 30-minute Master Planning Session with a Financial Literacy Coach will uncover hidden daily practices that prevent financial freedom. Tailored to your unique situation, this personal analysis will detail simple lifestyle changes you can make today for fiscal-fitness!
    For only $379:
    Discover your signature money “busters”
    Debrief your personal “financial IQ” assessment
    Learn the surprising 10 principles to financial readiness
    Design an easy-to-follow and FUN financial strategy
    Realize new perspectives on how you spend, borrow, save, and pay taxes
  • 67
    Are you ready to get started?
    Knowing is half the battle!
    When reviewing your current situation with a Personal Master Plan consultant, you will find yourself in the RIGHT place to begin doing something about it… NOW!
    CALL NOW
    (888) 292-1099
    Or visit
    www.MoneyMastery.net
    © Time & Money, LLC - 2010