Financial Literacy: Knowing What You Need To Know To Achieve Your Financial Goals
America’s financial literacy <ul><li>American families: </li></ul><ul><ul><li>The average American family spends $1.22 for...
America’s financial literacy <ul><li>2 out of 3 households will probably fail to realize life goals </li></ul><ul><li>Fina...
What is Financial Literacy?
Financial literacy <ul><li>The ability to effectively evaluate and manage one’s finances in order to make prudent decision...
Achieving   financial   literacy <ul><li>Five Key Areas of Personal Finance: </li></ul><ul><ul><li>Money and income </li><...
Money and income <ul><li>Time is money </li></ul><ul><li>How many hours do you need to work to pay for your mortgage, car ...
Money management <ul><li>Budgeting </li></ul><ul><li>Prioritizing </li></ul>
Spending and debt <ul><li>Benefits and costs of spending alternatives </li></ul><ul><li>Credit as a basic financial tool <...
Savings and investing <ul><li>Saving means not spending money. </li></ul><ul><li>Investing means that you earn a return on...
Risk management <ul><li>Insurance </li></ul><ul><li>Understanding the markets </li></ul><ul><ul><li>50% of Americans own s...
Financial literacy isn’t just  a matter of knowing what you have and knowing your options.  It is a matter of planning for...
Creating your first  overall long-term financial plan
Buying your first home <ul><li>Establish good credit </li></ul><ul><li>Understand “real costs” </li></ul><ul><li>Assess ri...
Getting married <ul><li>Understand “financial partnership” </li></ul><ul><li>Establish separate and joint credit and bank ...
Financing a family <ul><li>Budget </li></ul><ul><ul><li>Education, health care, child care </li></ul></ul><ul><li>Manage r...
Starting a business <ul><li>Understand  </li></ul><ul><ul><li>cash flow </li></ul></ul><ul><ul><li>expense timing </li></u...
Planning for Retirement <ul><li>Determine how much money you will need.  </li></ul><ul><li>Determine where your retirement...
Preparing a will <ul><li>Designate beneficiaries </li></ul><ul><li>Determine asset distribution </li></ul><ul><li>Identify...
Unexpected milestones <ul><li>Loss </li></ul><ul><li>Sandwich generation </li></ul><ul><li>Divorce </li></ul>
Financial literacy education <ul><li>Lifelong learning courses </li></ul><ul><li>Financial media </li></ul><ul><li>Interne...
For more information <ul><li>www.360financialliteracy.org  features financial education to help consumers at every life st...
Financial Literacy: Knowing What You  Need To Know To Achieve Your Financial Goals
 
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Knowing What You Need to Know to Achieve Your Financial Goals

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Knowing What You Need to Know to Achieve Your Financial Goals

  1. 1. Financial Literacy: Knowing What You Need To Know To Achieve Your Financial Goals
  2. 2. America’s financial literacy <ul><li>American families: </li></ul><ul><ul><li>The average American family spends $1.22 for every dollar it earns. </li></ul></ul><ul><ul><li>One in five American families with annual household income of less than $50,000 is spending 40% of after-tax income to service its debt. </li></ul></ul><ul><ul><li>In 2003, the average American household owed $8,000 in credit cards, compared to $2,600 in 1989. </li></ul></ul><ul><ul><li>In 2003, 1.6 million Americans filed for bankruptcy – the highest amount in history. </li></ul></ul>
  3. 3. America’s financial literacy <ul><li>2 out of 3 households will probably fail to realize life goals </li></ul><ul><li>Financial illiteracy is passed to the next generation </li></ul><ul><ul><li>Average high school senior failed 2004 financial knowledge survey </li></ul></ul>
  4. 4. What is Financial Literacy?
  5. 5. Financial literacy <ul><li>The ability to effectively evaluate and manage one’s finances in order to make prudent decisions toward reaching life’s goals </li></ul><ul><li>The understanding of: </li></ul><ul><ul><li>Money </li></ul></ul><ul><ul><li>Cash flow </li></ul></ul><ul><ul><li>Basic economic/financial concepts </li></ul></ul><ul><ul><li>Debt/risk management </li></ul></ul>
  6. 6. Achieving financial literacy <ul><li>Five Key Areas of Personal Finance: </li></ul><ul><ul><li>Money and income </li></ul></ul><ul><ul><li>Money management </li></ul></ul><ul><ul><li>Spending and debt </li></ul></ul><ul><ul><li>Savings and investments </li></ul></ul><ul><ul><li>Risk management </li></ul></ul>
  7. 7. Money and income <ul><li>Time is money </li></ul><ul><li>How many hours do you need to work to pay for your mortgage, car insurance, electricity bills, extras, etc? </li></ul>
  8. 8. Money management <ul><li>Budgeting </li></ul><ul><li>Prioritizing </li></ul>
  9. 9. Spending and debt <ul><li>Benefits and costs of spending alternatives </li></ul><ul><li>Credit as a basic financial tool </li></ul>
  10. 10. Savings and investing <ul><li>Saving means not spending money. </li></ul><ul><li>Investing means that you earn a return on the money you put into it. </li></ul>
  11. 11. Risk management <ul><li>Insurance </li></ul><ul><li>Understanding the markets </li></ul><ul><ul><li>50% of Americans own stocks </li></ul></ul><ul><li>Identity theft </li></ul>
  12. 12. Financial literacy isn’t just a matter of knowing what you have and knowing your options. It is a matter of planning for life’s milestones.
  13. 13. Creating your first overall long-term financial plan
  14. 14. Buying your first home <ul><li>Establish good credit </li></ul><ul><li>Understand “real costs” </li></ul><ul><li>Assess risks </li></ul>
  15. 15. Getting married <ul><li>Understand “financial partnership” </li></ul><ul><li>Establish separate and joint credit and bank accounts </li></ul><ul><li>Create wills and trusts </li></ul><ul><li>Identify beneficiaries </li></ul><ul><li>Choose owners on title assets </li></ul>
  16. 16. Financing a family <ul><li>Budget </li></ul><ul><ul><li>Education, health care, child care </li></ul></ul><ul><li>Manage risk, insurance </li></ul><ul><li>Create wills </li></ul><ul><li>Instill financial literacy </li></ul>
  17. 17. Starting a business <ul><li>Understand </li></ul><ul><ul><li>cash flow </li></ul></ul><ul><ul><li>expense timing </li></ul></ul><ul><li>Manage income and expenses </li></ul>
  18. 18. Planning for Retirement <ul><li>Determine how much money you will need. </li></ul><ul><li>Determine where your retirement income will come from. </li></ul><ul><li>Devise a budget and investment strategy to help you meet your goals. </li></ul>
  19. 19. Preparing a will <ul><li>Designate beneficiaries </li></ul><ul><li>Determine asset distribution </li></ul><ul><li>Identify insurance </li></ul>
  20. 20. Unexpected milestones <ul><li>Loss </li></ul><ul><li>Sandwich generation </li></ul><ul><li>Divorce </li></ul>
  21. 21. Financial literacy education <ul><li>Lifelong learning courses </li></ul><ul><li>Financial media </li></ul><ul><li>Internet resources </li></ul><ul><li>Your CPA </li></ul>
  22. 22. For more information <ul><li>www.360financialliteracy.org features financial education to help consumers at every life stage . </li></ul>
  23. 23. Financial Literacy: Knowing What You Need To Know To Achieve Your Financial Goals
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