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Financial Literacy Presentation


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This presentation is from GapCafe's Financial Seminar where participants learn how to become more financial astute and financially empowered.

Published in: Economy & Finance
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Financial Literacy Presentation

  1. 1. FINANCIAL LITERACY SEMINAR DECEMBER 19, 2016 Christina Massalay, Stuart Williams For Informational Purposes Only
  2. 2. Where Do I Stand Financially? For Informational Purposes Only
  3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 12. Basic Financial Products For Informational Purposes Only
  13. 13. Investment Strategies  Buy and Hold  Indexing  Mutual Funds  Growth Strategy  Value Investing  Ben Graham/Warren Buffet  Asset Allocation For Informational Purposes Only
  14. 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. 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. 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
  17. 17. Questions? For Informational Purposes Only