Rentry Students: 10 Sound $ Management Principles

447 views
438 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
447
On SlideShare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Rentry Students: 10 Sound $ Management Principles

  1. 1. Ten Sound Money Management Principles for Students PPT Developed by Barbara O’Neill, Ph.D., CFP Revised & presented by Jean Lown, Ph.D., Family, Consumer & Human Development, USU [email_address]
  2. 2. What are Your $ Questions? <ul><li>I can’t promise to answer all of them but by knowing your questions before we start I can adjust my presentation </li></ul><ul><li>How many parents? </li></ul><ul><ul><li>Single parents? </li></ul></ul><ul><li>Utah Savers? </li></ul><ul><ul><li>Sign up for drawing </li></ul></ul><ul><li>PPT on FPW website </li></ul>
  3. 3. Money Management Principles <ul><li>Are timeless and time-tested </li></ul><ul><li>Apply to everyone </li></ul><ul><li>Work well in up & down economies </li></ul><ul><li>Help people grow wealthy over time </li></ul><ul><li>Need to be taught in school </li></ul>
  4. 4. 1. Go For The Goal <ul><li>Goals provide a “why” for saving </li></ul><ul><li>Use goals to develop action plans </li></ul><ul><li>Break goals into benchmarks </li></ul><ul><li>Make your goals SMART </li></ul><ul><ul><li>Specific </li></ul></ul><ul><ul><li>Measurable </li></ul></ul><ul><ul><li>Attainable </li></ul></ul><ul><ul><li>Realistic </li></ul></ul><ul><ul><li>Time-Related </li></ul></ul>
  5. 5. Invest in your Human Capital <ul><li>Get a solid education </li></ul><ul><ul><li>For career satisfaction </li></ul></ul><ul><ul><li>For better health </li></ul></ul><ul><ul><li>For higher lifetime earnings </li></ul></ul><ul><li>It’s OK to borrow for education </li></ul><ul><ul><li>There is an opportunity cost to taking too long to earn degree </li></ul></ul><ul><ul><li>Student loans are better than credit cards </li></ul></ul>
  6. 6. 2. Time Is Your Friend <ul><li>Time: a young person’s biggest asset </li></ul><ul><li>Compound interest is awesome </li></ul><ul><li>For every decade that savings is delayed, the required investment triples </li></ul><ul><li>Example: $500,000 at 65; 10% yield </li></ul><ul><ul><li>Age 25: $ 79 per month </li></ul></ul><ul><ul><li>Age 35: $ 219 per month </li></ul></ul><ul><ul><li>Age 45: $ 653 per month </li></ul></ul><ul><ul><li>Age 55: $ 2,141 per month </li></ul></ul>
  7. 7. More About Time <ul><li>Time diversification reduces investment volatility </li></ul><ul><li>The Rule of 72 </li></ul><ul><ul><li>72/interest rate = doubling period </li></ul></ul><ul><ul><li>72/doubling period = interest rate </li></ul></ul><ul><li>Advantage calulators </li></ul>
  8. 8. 3. Live Below Your Means <ul><li>Spend less than you earn </li></ul><ul><li>Create a spending plan </li></ul><ul><ul><li>Income = Fixed Exp (including savings) + Flexible Exp + 1/12 of Occasional Expense </li></ul></ul><ul><li>Distinguish needs from wants </li></ul><ul><li>“ Step-down principle” </li></ul><ul><li>Automate savings so money isn’t spent </li></ul>
  9. 9. 4. Establish Emergency Fund <ul><li>Aka contingency fund </li></ul><ul><ul><li>Online savings accounts </li></ul></ul><ul><ul><ul><li>No minimum </li></ul></ul></ul><ul><ul><ul><li>FDIC insured </li></ul></ul></ul><ul><ul><ul><li>4.5% (varies) </li></ul></ul></ul><ul><ul><ul><li>Linked to checking account </li></ul></ul></ul><ul><ul><li>HSBC </li></ul></ul><ul><ul><li>Emigrant </li></ul></ul><ul><ul><li>ING & many others </li></ul></ul>
  10. 10. Pay Yourself First: Automate Your Savings <ul><li>Tax-deferred employer plans </li></ul><ul><ul><li>Get full 401(k) match from employer </li></ul></ul><ul><li>Employer credit unions </li></ul><ul><li>Savings bond purchase plans </li></ul><ul><li>Mutual fund Automatic Investment Plan </li></ul><ul><li>Direct stock purchase plans </li></ul>
  11. 11. Utah Saves <ul><li>http://www.utahsaves.org/ </li></ul><ul><li>Build wealth, not debt </li></ul><ul><li>Saver Strategies </li></ul><ul><li>Get out of debt </li></ul><ul><li>Earned income tax credit </li></ul><ul><li>Free income tax preparation </li></ul><ul><li>Individual Development Accounts </li></ul>
  12. 12. 5. Buy Insurance According to “The Large Loss Principle” <ul><li>Magnitude- not frequency- of losses </li></ul><ul><li>Increase deductible to save $ </li></ul><ul><li>Spend premium dollars on large potential losses: </li></ul><ul><ul><li>Liability </li></ul></ul><ul><ul><li>Disability </li></ul></ul><ul><ul><li>Destruction of home </li></ul></ul><ul><ul><li>Large medical expenses </li></ul></ul><ul><ul><li>Loss of household earner’s income </li></ul></ul>
  13. 13. 6. Low Income Saver’s Credit <ul><li>Refundable tax credit up to $1,000/person </li></ul><ul><li>Contribution to retirement account: IRA, 401(k), 403(b), or SEP </li></ul><ul><li>Couple filing jointly AGI: $50k or less </li></ul><ul><li>Single with AGI: $25,000 or less </li></ul><ul><li>Sliding scale: 10-50% of contribution </li></ul>
  14. 14. 7. Repay Debt Quickly and Borrow For Less <ul><li>Consumer debt ratio < 15% of net pay </li></ul><ul><li>Consumer debt + housing < 50% of net </li></ul><ul><li>High debt makes other problems worse </li></ul><ul><li>Negotiate lower interest rates </li></ul><ul><li>Always pay more than the minimum </li></ul><ul><li>Avoid “perma-debt” </li></ul><ul><li>Pay promptly to avoid late fees </li></ul><ul><li>Family Life Center PowerPay analysis </li></ul>
  15. 15. 8. Earned Income Tax Credit <ul><li>Refundable tax credit for workers </li></ul>
  16. 16. 9. Vita tax prep <ul><li>Provided by USU accounting students in Business building- starts Feb. </li></ul><ul><li>AVOID instant tax refunds </li></ul><ul><ul><li>High cost loans (similar to payday loans) </li></ul></ul><ul><li>Auto deposit </li></ul><ul><li>Split your refund </li></ul><ul><ul><li>Save a portion, pay debt, spend </li></ul></ul>
  17. 17. 9. Buying House/Vehicle <ul><li>Don’t buy more house than you can afford (Subprime mortgage meltdown) </li></ul><ul><ul><li>Don’t’ trust mortgage broker </li></ul></ul><ul><li>Don’t buy before you are really ready for the financial commitment </li></ul><ul><li>Buy new cars every 8-10 years or buy “new used” </li></ul>
  18. 18. Check Your Financial Health <ul><li>Take the Financial Fitness Quiz </li></ul><ul><ul><li>http://njaes.rutgers.edu/money/ffquiz/ </li></ul></ul><ul><li>Least common practices </li></ul><ul><ul><li>Not having a will </li></ul></ul><ul><ul><li>No written financial goals </li></ul></ul><ul><ul><li>No written budget </li></ul></ul><ul><ul><li>No net worth calculation </li></ul></ul>
  19. 19. Financial Education Resources <ul><li>Investing For Your Future </li></ul><ul><ul><li>Home study course </li></ul></ul><ul><ul><li>http://www.investing.rutgers.edu/ </li></ul></ul><ul><li>Money 2000 & Beyond </li></ul><ul><ul><li>http://www.rce.rutgers.edu/money2000 </li></ul></ul><ul><li>RU-FIT financial independence training </li></ul><ul><ul><li>http://www.rce.rutgers.edu/ru-fit/ </li></ul></ul><ul><li>USU Extension </li></ul><ul><ul><li>http://extension.usu.edu/ </li></ul></ul>
  20. 20. Spend Less, Enjoy the Holidays More <ul><li>http://extension.usu.edu/htm/news/articleID=2361 </li></ul><ul><li>Start a UESP account for your kids </li></ul><ul><li>Spend time with important people </li></ul><ul><li>Avoid gift cards </li></ul><ul><ul><li>High fees, money can’t be saved </li></ul></ul><ul><li>Pay cash! Avoid debt. </li></ul>
  21. 21. Small Steps to Health & Wealth <ul><li>http://njaes.rutgers.edu/sshw/ </li></ul><ul><li>“ This program is designed to motivate consumers to implement behavior change strategies that simultaneously improve their health and personal finances.” </li></ul>
  22. 22. Personal Finance Magazines <ul><li>Kiplinger’s Personal Finance Magazine </li></ul><ul><ul><li>Kiplingers.com </li></ul></ul><ul><li>Money Magazine </li></ul><ul><ul><li>Money.com </li></ul></ul><ul><ul><li>Money 101 on-line financial mgmt course </li></ul></ul><ul><ul><ul><li>http://money.cnn.com/pf/101/ </li></ul></ul></ul><ul><ul><ul><li>23 lessons </li></ul></ul></ul>
  23. 23. FCHD 3350 Family Finance <ul><li>Personal Financial Management </li></ul><ul><li>DSS general education </li></ul><ul><li>Fall & Spring semesters </li></ul><ul><ul><li>Live and on-line </li></ul></ul><ul><li>Don’t leave campus without this class! </li></ul>
  24. 24. The Financial Checkup by Alena Johnson
  25. 25. USU Family Life Center <ul><li>Very low cost financial & housing counseling </li></ul><ul><li>PowerPay Debt reduction computer analysis https://powerpay.org/ </li></ul><ul><li>First time homebuyer workshops </li></ul><ul><li>797-7224; 495 North 700 East, Logan </li></ul>
  26. 26. Financial Planning for Women http://www.usu.edu/fpw <ul><li>For women of all ages & knowledge </li></ul><ul><li>Second Wednesday (except December) </li></ul><ul><ul><li>12:30-1:30 in Family Life room 318 </li></ul></ul><ul><ul><li>7-8:30 pm in Family Life Center </li></ul></ul><ul><li>Email list: jean.lown@usu.edu </li></ul><ul><ul><li>Monthly e-news & program info </li></ul></ul><ul><li>Sign up sheet for FPW </li></ul><ul><li>PPT will be posted on the website </li></ul>
  27. 27. Avoid Common Mistakes of Young Adults <ul><li>Buying a house before you are ready </li></ul><ul><li>Buying too much house </li></ul><ul><li>Putting too much $ into vehicles </li></ul><ul><li>Keeping a balance on your credit cards </li></ul><ul><li>Waiting to invest for retirement until… </li></ul><ul><li>Not considering the cost of kids </li></ul><ul><li>Spending too much on eating out </li></ul>
  28. 28. Closing Thought “ If it is to be, it is up to me” Comments? Questions? Experiences?

×