finacial freedom 12/13/2011
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TRANSCRIPT
Presented by
FINANCIAL FREEDOM
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 situation
NEVER= 0 points SOMETIMES- 1 point ALWAYS=2 points
0-10 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 yourmoney. Determine what changes can be made to improve yourfinancial well- being
16-20 Points: Demonstrates ability to successfully manage yourfinances. Continue to make money management a priority.
Benefits of Managing Money
� Free up time � Do things you enjoy
� Less stress � Better health
� Achieve goals � Satisfaction
� Greater control � Peace of mind
TIPS to Achieve Financial Independence
�Spend less than you earn
�Write 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 truemeasure of yourfinancial health
� Subtract what you OWEfrom what you OWN
Are 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 Goals
� Dream!
� Reduce dreams to writing(SMART goals)
� Organize your dreams
� Put plan in action
� Celebrateaccomplishments
SMART GOALS
� Specific
� Measurable
� Adjustable
� Realistic
� Time-Oriented
Budgets and Spending Plans
Budget Analysis
A blueprint of your day today personal finances:
Two key components:
– Income
– Expenses
Budgeting: Know what you are spending vs. earning
�Income
all sources
�ExpensesHousing 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 expenses
� Receipt method
� Envelope method
� Checkbook ledger
� Account book
� Computer program
� FinanceWorks
Determine monthly expenses
How do you spend money now?
� Fixed (mortgage, car payment)
� Flexible (food, clothes, utilities, gifts)
� Periodic (insurance, taxes)
Spending Plan Guidelines
35%
10%15%
15%
25%
Housing
Savings
Transport
Debt
Other
Use Credit Wisely�Bad debt means borrowing money strictly for
consumption 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 Wisely
� Only charge what you can pay in full
� Eliminate late payment fees; pay on time
� Understand terms and conditions of each card
� Never skip a payment
� Read the APR on your statement
� Avoid credit card check offers!
� Know when to use credit vs. debit cards
The Cost of Credit
� Outstanding balance $1,000
� Interest 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 Credit
� Outstanding balance $1,000
� Interest rate 16.9%
� Minimum monthly payment $45.00
� Years to pay off 2 years and 3 months
� Interest cost over loan period $208.00
� By paying just $25.00 more than the minimum, youwould save over $525 and be paid off 5 years earlier!
DANGER!
Savings
�43% of Americans live paycheck to paycheck
�50% of Americans have less than $1,000 in liquid assets
�Pay yourself first… if you wait to see what’s left over, youwont ever begin saving
Reasons to Save
Primary 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 Savings
� Spend less than you earn
� Spend less than you earn
� Spend less than you earn
� Savings 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
6143,400
7,764
29,775
76,301
1 year 5 year 10 year 25 year 40 year
Save $50 a Month With a
5% Yield
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