INTRODUCTION TO PERSONAL FINANCE

WHAT DOES MONEY MEAN TO YOU?

SURVIVAL

POWER

ACCOMPLISHMENT

FREEDOM

STATUS

PURCHASE NICE THINGS

DO THINGS YOU LIKE TO DO!!

DO THINGS FOR OTHERS

QUOTATIONS ABOUT MONEY A wise man should have money in his head, but not in his heart -Jonathan Swift

QUOTATIONS ABOUT MONEY Do not be fooled into believing that because a man is rich he is necessarily smart. There is ample proof to the contrary. -Julius Rosenwald

QUOTATIONS ABOUT MONEY It is not easy for men to rise whose qualities are thwarted by poverty. -Juvenal

QUOTATIONS ABOUT MONEY Money can’t buy happiness, but neither can poverty -Leo Rosten

QUOTATIONS ABOUT MONEY The love of money is the root of all evil. -Bible

QUOTATIONS ABOUT MONEY The only way to not think about money is to have a great deal of it. -Edith Wharton

HOW MONEY WILL AFFECT YOU!

LIFE CYCLE OF FINANCIAL PLANNING

FINANCIAL PLANNING Many people follow a similar financial pattern during their life BUT Everyone has an individualized financial plan

FINANCIAL PLANNING Financial planning - a tool used to achieve financial success based upon the development and implementation of financial goals Financial goals - specific objectives to be accomplished through financial planning Financial Goals should be SMART goals

SMART FINANCIAL GOALS S pecific – state exactly what is to be done with the money involved M easurable - write the exact dollar amount A ttainable – determine how it can be reached R ealistic – must be a goal that is realistic T ime Bound – specifically state when the goal will be reached

FACTORS THAT INFLUENCE FINANCIAL PLANNING Many factors influence a person’s financial plan These factors can be expected or unexpected Values, goals, and personal choices Major life events Lifestyle conditions Life cycle needs

EXAMPLES OF LIFESTYLE CONDITIONS THAT MAY AFFECT A PERSON’S FINANCIAL PLAN Marital Status – are you single, married, divorced, widowed Employment Status – employed, unemployed Income – amount of income Age – age of family members Number of Dependents – children, spouse, parents Economic Outlook –interest rate, salary rates Education – education level of family members Health Status – health of all family members

FINANCIAL LIFE CYCLE Life Cycle – a series of stages through which an individual passes during his or her lifetime

LIFE CYCLE STAGES AND NEEDS Stage 1 – Basic Wealth Protection Beginning of the cycle Person beginning to earn money, continuing their education, starting their career, starting a family Focus should be on building financial security

LIFE CYCLE STAGES AND NEEDS Stage 2 – Wealth Accumulation Giving money to self Person has reached peak earning years and is accumulating wealth

LIFE CYCLE STAGES AND NEEDS Stage 3 – Wealth Distribution Giving money to your chosen ones Consuming wealth (usually during retirement) Estate Planning – how money will be distributed during the end of life and after death

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS High School Developing a plan for eventual independence Preparing for a career Evaluating future financial needs and resources Exploring financial systems – banking, etc Developing a personal system of record keeping

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Young Adult – Ages Establishing a household Training for a career Earning financial independence Determining insurance needs Establishing credit Establishing savings Creating a spending plan Begin investing in retirement Developing a personal financial identity

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Adult With or Without Children – Ages 25 – 34 Child-bearing Child-raising Expanding career goals Investing in retirement Managing increased need for credit Discussing an managing additional insurance needs Creating a will Starting an education fund for children

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Working Parent or Adult, Ages Upgrading career training Developing protection needs for head of household Investing in retirement Establishing retirement goals Building on children’s education fund Need for greater income due to expanding needs

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Middle Age – Assisting with higher education for children Investing in retirement Updating retirement goals and plans Developing estate plans

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Pre-retirement – Consolidating assets Re-evaluating property transfer Investing in retirement Evaluating expenses for retirement and current housing Planning future security Investigating retirement part-time income or volunteer work Meeting responsibilities of aging parents Planning for long-term care insurance and medical care for retirement

TRADITIONAL AGE GROUP FINANCIAL PLANNING NEEDS Retired – 65 and older Re-evaluating and adjusting living conditions and spending as related to health and income Adjusting insurance programs for increasing risks Finalizing will or letter of last instructions Acquiring assistance in management of personal and financial affairs Finalizing estate plans