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FINANCIAL LITERACY SEMINAR
DECEMBER 19, 2016
Christina Massalay, Stuart Williams
For Informational Purposes Only
Where Do I Stand Financially?
For Informational Purposes Only
Statistics
 42% of American workers live paycheck to paycheck,
including 25% of those earning more than $100,000
per year
 29% of American workers have less than $1,000 in
savings
 Millennials have a savings rate of negative 2%, thanks
to factors like high student loan debt and skyrocketing
rent prices
 The average U.S. household with debt carries $15,675
in credit card debt and $132,158 in total debt
For Informational Purposes Only
What is Financial Literacy?
 The ability to understand how money works in the world: how someone manages to
earn or make it, how that person manages it, how he/she invests it (turn it into more)
and how that person donates it to help others. (Wikipedia)
 The President’s Advisory Council on Financial Literacy defines personal financial
literacy as “the ability to use knowledge and skills to manage financial resources
effectively for a lifetime of financial well being.“
For Informational Purposes Only
Why is Financial Literacy Important?
 To understand the language of money
 To reduce the significant gap between the rich and
everyone else
 To learn how to manage income and expenses
 Save, invest, negotiate costs, etc.
 To make wiser financial decisions (e.g., new car or
certified pre-owned)
 To not leave your financial decisions up to others
who are not qualified
For Informational Purposes Only
Did You Know…
 Economic Indicators (unemployment numbers, interest
rate changes) impact your finances
 Federal Reserve changing rates
 Presidential elections impact your daily finances
 Globalization impacts your finances (e.g., 401k
impacts from global companies or
election/referendum results)
 Policy changes
 DOL Fiduciary Ruling
For Informational Purposes Only
Myths about Money
 Debt is expected and unavoidable
 Saving is not necessary since tomorrow is not
promised
 I can take money out of my 401(k), TDA, etc. at any
time because it is my money
 You have to be rich to invest
 I don’t earn enough to save
 My Partner takes care of the money so I don’t have
to worry about it
For Informational Purposes Only
Debt
 Types of Debt
 Student Loans
 Health care bills
 Mortgage Loans
 Car Loans
 Credit Cards
 Causes of Debt
 Overspending/lack of financial education
 Emergency situations
For Informational Purposes Only
Credit
 Components of Credit Score (FICO)
 Payment History – 35%
 Credit Utilization – 30%
 Length of Credit History – 15%
 New Credit – 10%
 Credit Mix – 10%
 Interest rate changes
 Fed increases rates  impact on auto loan rates,
mortgage rates, credit card rates, etc.
For Informational Purposes Only
How Debt Affects your Credit
How FICO Scores Affect Mortgage/Auto Rates
760 to 850 tier 5.780% 620 to 659 tier 7.096%
700 to 759 tier 6.002% 580 to 619 tier 8.583%
600 to 699 tier 6.286% 500 to 579 tier 9.494%
For Informational Purposes Only
Budgeting
 Many say it is difficult to stick to a budget
 Create a budget
 Track expenses daily for a few months
 Create categories and allocate amounts to those categories
 Accountability partner
 Cash based lifestyle
 Minimal credit card usage
 Apps for Budgeting
 Mint Budgeting App
 You Need a Budget App
 Every Dollar – Dave Ramsey
For Informational Purposes Only
Basic Financial Products
For Informational Purposes Only
Investment Strategies
 Buy and Hold
 Indexing
 Mutual Funds
 Growth Strategy
 Value Investing
 Ben Graham/Warren Buffet
 Asset Allocation
For Informational Purposes Only
Retirement Vehicles
 Pension Plans
 401(k), 403(b), SEP (Simplified Employee Pension)
 529 Plans
 Traditional IRA vs. Roth IRA
 Life insurance plans (replacement income)
 Employee Stock Ownership Plans (ESOPs)
For Informational Purposes Only
Taxes
 Not one size fits all
 Engage a CPA who regularly performs tax returns & is
adept in changes to tax rules
 Income tax returns are not free money (instead they
are an interest free loan all year to the
government)
 Charitable donations – tax benefit
 Churches, organizations, etc.
For Informational Purposes Only
Estate Planning
 A Will
 Living Revocable Trust
 Name executor of estate
 Set up trust accounts to limit estate tax
 Establishing a guardian for living dependents
 Life insurance policies
 Set up durable Power of Attorney (POA)
 Update beneficiaries on documents (e.g., IRA)
For Informational Purposes Only
Questions?
For Informational Purposes Only

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Financial Literacy Presentation

  • 1. FINANCIAL LITERACY SEMINAR DECEMBER 19, 2016 Christina Massalay, Stuart Williams For Informational Purposes Only
  • 2. Where Do I Stand Financially? For Informational Purposes Only
  • 3. Statistics  42% of American workers live paycheck to paycheck, including 25% of those earning more than $100,000 per year  29% of American workers have less than $1,000 in savings  Millennials have a savings rate of negative 2%, thanks to factors like high student loan debt and skyrocketing rent prices  The average U.S. household with debt carries $15,675 in credit card debt and $132,158 in total debt For Informational Purposes Only
  • 4. What is Financial Literacy?  The ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. (Wikipedia)  The President’s Advisory Council on Financial Literacy defines personal financial literacy as “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well being.“ For Informational Purposes Only
  • 5. Why is Financial Literacy Important?  To understand the language of money  To reduce the significant gap between the rich and everyone else  To learn how to manage income and expenses  Save, invest, negotiate costs, etc.  To make wiser financial decisions (e.g., new car or certified pre-owned)  To not leave your financial decisions up to others who are not qualified For Informational Purposes Only
  • 6. Did You Know…  Economic Indicators (unemployment numbers, interest rate changes) impact your finances  Federal Reserve changing rates  Presidential elections impact your daily finances  Globalization impacts your finances (e.g., 401k impacts from global companies or election/referendum results)  Policy changes  DOL Fiduciary Ruling For Informational Purposes Only
  • 7. Myths about Money  Debt is expected and unavoidable  Saving is not necessary since tomorrow is not promised  I can take money out of my 401(k), TDA, etc. at any time because it is my money  You have to be rich to invest  I don’t earn enough to save  My Partner takes care of the money so I don’t have to worry about it For Informational Purposes Only
  • 8. Debt  Types of Debt  Student Loans  Health care bills  Mortgage Loans  Car Loans  Credit Cards  Causes of Debt  Overspending/lack of financial education  Emergency situations For Informational Purposes Only
  • 9. Credit  Components of Credit Score (FICO)  Payment History – 35%  Credit Utilization – 30%  Length of Credit History – 15%  New Credit – 10%  Credit Mix – 10%  Interest rate changes  Fed increases rates  impact on auto loan rates, mortgage rates, credit card rates, etc. For Informational Purposes Only
  • 10. How Debt Affects your Credit How FICO Scores Affect Mortgage/Auto Rates 760 to 850 tier 5.780% 620 to 659 tier 7.096% 700 to 759 tier 6.002% 580 to 619 tier 8.583% 600 to 699 tier 6.286% 500 to 579 tier 9.494% For Informational Purposes Only
  • 11. Budgeting  Many say it is difficult to stick to a budget  Create a budget  Track expenses daily for a few months  Create categories and allocate amounts to those categories  Accountability partner  Cash based lifestyle  Minimal credit card usage  Apps for Budgeting  Mint Budgeting App  You Need a Budget App  Every Dollar – Dave Ramsey For Informational Purposes Only
  • 12. Basic Financial Products For Informational Purposes Only
  • 13. Investment Strategies  Buy and Hold  Indexing  Mutual Funds  Growth Strategy  Value Investing  Ben Graham/Warren Buffet  Asset Allocation For Informational Purposes Only
  • 14. Retirement Vehicles  Pension Plans  401(k), 403(b), SEP (Simplified Employee Pension)  529 Plans  Traditional IRA vs. Roth IRA  Life insurance plans (replacement income)  Employee Stock Ownership Plans (ESOPs) For Informational Purposes Only
  • 15. Taxes  Not one size fits all  Engage a CPA who regularly performs tax returns & is adept in changes to tax rules  Income tax returns are not free money (instead they are an interest free loan all year to the government)  Charitable donations – tax benefit  Churches, organizations, etc. For Informational Purposes Only
  • 16. Estate Planning  A Will  Living Revocable Trust  Name executor of estate  Set up trust accounts to limit estate tax  Establishing a guardian for living dependents  Life insurance policies  Set up durable Power of Attorney (POA)  Update beneficiaries on documents (e.g., IRA) For Informational Purposes Only