Bodeman personal finance_presentation1-1


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Bodeman personal finance_presentation1-1

  1. 1. Managing Personal Finance
  2. 2. Finance Facts U.S. is the largest capitalist country Secret to capital (money) is SUCCESS!
  3. 3. Financial Planning Secret to a good job is a good education Typical full time worker in U.S. with a 4 year college degree earns about $50,000. (62% more than one with high school diploma) Finish college.  Government will be more likely to help with tax breaks like free education accounts. Make money, then work on saving, investing, and spending.
  4. 4. 6 steps to controlling assets 1. take an inventory of your financial assets  Develop balance sheet. (Assets=liabilities +owners equity)  List tangible assets  List liabilities  Create income statement  List revenues and expenses  Subtract expenses from revenues  Get you profit
  5. 5. 6 steps to controlling assets 2. Keep track of all expenses  List everything you spend money on  Make spending categories
  6. 6. 6 steps to controlling assets 3. Prepare a budget  Make budget for food, spending, payments
  7. 7. 6 steps to controlling assets 4. Pay off debts 5. Start a savings plan  Save money each month and put in separate account for bigger purchases
  8. 8. 6 steps to controlling assets 6. Borrow only to buy assets that increase in value or generate income.  Car repairs, health care costs
  9. 9. Building Financial Base Best way to a capitalist system is to have capital to invest Planning Sacrifice
  10. 10. Real Estate A home is an investment you can live in Once you buy a home, mortgage payments are fixed. As income goes up, mortgage is easier to pay. A home is a good asset to use when applying for a business loan. Buying older homes and fixing them up to sell is a good way for financial security.
  11. 11. Tax Deductions and Homeownership Buying a home is the biggest investment Government is willing to help  Interest on a home is tax deductible  Location is best way to get optimal return on a home.
  12. 12. What to do with savings? Worst place for young people is a savings bank Best to have 6 months of money made saved up for emergencies or other payments Best places to invest is stock market.  Greater the risk, greater the return  When stock is low, it is the best time to buy
  13. 13. Learning to manage credit Credit cards are very useful Most places require credit cards to ensure payment. Keeps track of purchases More convenient to carry Sometimes gives you 5% back. Danger with credit cards=debt!
  14. 14. Protecting your financial base: buying insurance Life insurance  Least expensive form Whole life insurance  Pure insurance and savings Variable life insurance  whole life insurance that invests the cash value of the policy in stocks Annuities  Contract to make regular payments to a person for life or a fixed period
  15. 15. Protecting your financial base: buying insurance Health insurance  Blue Cross Blue Shield  Disabilities insurance  insurance that pays part of the cost of a long-term sickness or an accident
  16. 16. Protecting your financial base: buying insurance Homeowners or renters insurance  Can have guaranteed replacement Other insurance  Most states require automobile insurance  Liability insurance  Protect against getting sued Umbrella policy  Broad insurance policy that saves you money
  17. 17. Planning Retirement Social Security  Continuous flow of money coming in and being paid out  Old age, survivors, disability insurance program established by social security act of 1935
  18. 18. Planning Retirement Individual retirement accounts (IRAs)  tax deferred investment plan that enables you to save part of income for retirement.  Tax-defered contributions  Those for which you pay no current taxes but the earnings gained from IRA are taxed as income when they are withdrawn from IRA after retirement. Roth IRA  No up from deductions from taxes but the earnings grow tax-free when they are withdrawn
  19. 19. Planning Retirement Advantage of IRAs  Cant take money from any type of IRA until 59 ½ years old without paying 10% penalty
  20. 20. Planning Retirement 401k plans  Allows you to deposit a set amount of pretax dollars and collect compounded earnings tax free until withdrawal, when the money is taxed at ordinary income tax rates.  Has 3 benefits  Your contributions reduce your present taxable income  Tax is defered on the earnings  More than 80% of employers will match your contributions.
  21. 21. Planning Retirement Koegh plans  IRA for entrepreneurs  Can invest up to $40,000 per year  Not taxed till withdrawn
  22. 22. Planning Retirement Estate planning  Ensuring everything that you own has a place to go (inheriting)  Will  Document that names the guardian for children and stated how you want your assets distributed, and names the executor for estate  Executor- person who assembles and values your estate and other taxes and distributes assets.  Prepare a durable power of attorney  Document that gives an individual you name the power to take over your finances if you become incapacitated.
  23. 23. END Get a financial planner to help if needed.