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Rentry Students: 10 Sound $ Management Principles
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Rentry Students: 10 Sound $ Management Principles

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