Today, we will cover,5 steps to Financial Freedom: Net Worth and Financial Goals Budget Analysis Spending Plans Wise use of Credit Savings
Where are you now?Take the One-Minute Financial Quiz…
Assess Your situationNEVER= 0 points SOMETIMES- 1 point ALWAYS=2 points0-10 Points: Indicates a need to take control of your finances. Develop and practice better money management skills.10-15 Points: Reflects a good effort to effectively manage your money. Determine what changes can be made to improve your financial well- being16-20 Points: Demonstrates ability to successfully manage your finances. Continue to make money management a priority.
Benefits of Managing MoneyFree up time Do things you enjoyLess stress Better healthAchieve goals SatisfactionGreater control Peace of mind
TIPS to Achieve Financial IndependenceSpend less than you earnWrite it down (track what you have and what you owe)Work with professionals (accountant, financial advisors,credit unions and those you trust)Do your own research: (study, listen, research)Define financial freedom: What is your definition?Dream big. How would you spend your life if youwere financially independent?
Your Net Worth Net worth, not income, not lifestyle, is a true measure of your financial health Subtract what you OWE from what you OWNAre you going ahead?Are you falling behind?
Establish Financial Goals Short-term(within the next six months) Intermediate-term (within the next one to five years) Long-term(more than five years away)
Set Clear Financial GoalsDream! SMART GOALSReduce dreams to writing Specific(SMART goals) MeasurableOrganize your dreams AdjustablePut plan in action RealisticCelebrate Time-Orientedaccomplishments
Budget Analysis A blueprint of your day to day personal finances: Two key components: – Income – Expenses
Budgeting: Know what you are spending vs. earning Income all sources Expenses Housing Pets Utilities Clothing Food Investments Health & Medical & savings Transportation Miscellaneous Debt Payments Entertain/Recreation Surplus/ Shortage
Where does your money go?The little things add up…
Methods to tracking expensesReceipt methodEnvelope methodCheckbook ledgerAccount bookComputer programFinanceWorks
Determine monthly expensesHow do you spend money now? Fixed (mortgage, car payment) Flexible (food, clothes, utilities, gifts) Periodic (insurance, taxes)
Spending Plan Guidelines 25% 35% Housing Savings Transport Debt15% Other 10% 15%
Use Credit WiselyBad debt means borrowing money strictly forconsumption purposes:Necessary debt means borrowing money to obtain ahome, a vehicle, or an asset needed in your work.
Credit Card Balances Under 15%: RELAX 15%-20%: BE CAUTIOUS Over 30% DANGER
Use Credit WiselyOnly charge what you can pay in fullEliminate late payment fees; pay on timeUnderstand terms and conditions of each cardNever skip a paymentRead the APR on your statementAvoid credit card check offers!Know when to use credit vs. debit cards
The Cost of CreditOutstanding balance $1,000Interest rate 16.9%Minimum monthly payment $20.00 (2%)Years to pay off 7 YEARS!Interest cost over loan period $742.00
The Cost of CreditOutstanding balance $1,000Interest rate 16.9%Minimum monthly payment $45.00Years to pay off 2 years and 3 monthsInterest cost over loan period $208.00By paying just $25.00 more than the minimum, youwould save over $525 and be paid off 5 years earlier!
Savings43% of Americans live paycheck to paycheck50% of Americans have less than $1,000 in liquid assetsPay yourself first… if you wait to see what’s left over, youwont ever begin saving
Reasons to SavePrimary reasons to save: Retirement College Education Home Purchase Travel Emergency Fund“If you have a purpose for saving, you are most likely to save…”
3 Keys to ALL SavingsSpend less than you earnSpend less than you earnSpend less than you earnSavings is an Insulation From the shocks life hands out From natural anxiety about future From loss of integrity From loss of dignity
Watch your Savings Grow 76,301Save $50a Month With a5% Yield 29,775 7,764 3,400 614 1 year 5 year 10 year 25 year 40 year The key to successful saving is starting early
Financial Freedom “Money is only a tool.It will take you wherever you wish, but it will not replace you as the driver” -Ayn Rand.
THANK YOU!Questions?Please Fill out the Evaluation Form