Bennie D Waller, Longwood University Personal Finance Bennie Waller Longwood University 201 High Street Farmville, VA 23901

Bennie D Waller, Longwood University Financial Planning

Bennie D Waller, Longwood University Financial Planning The Financial Planning Process  It’s easier to spend than to save.  Personal financial planning is an ongoing process—it will change as your life changes and financial needs change.  A financial plan can help you manage and control your finances as well as to help you achieve financial and lifestyle goals.  If you don’t know where you are going, any road will get you there!

Bennie D Waller, Longwood University The importance of financial planning  Special expenses – college, weddings, vacation home  Retirement  Protect your assets  Invest intelligently  Minimize payments to Uncle Sam – minimize taxes.

Bennie D Waller, Longwood University Five basic steps to personal financial planning 1.Evaluate your financial health 2.Define your financial goals 3.Develop a plan of action 4.Implement your plan 5.Review your progress, reevaluate, and revise your plan

Bennie D Waller, Longwood University Five basic steps to personal financial planning 1.Evaluate your financial health i.How much do you currently earn? ii.What are you spending and on what? – Good financial record keeping is important. 2.Define your financial goals i.Commit your goals to papers (formalize them) ii.Attach costs to each goals iii.What is the timeframe for this goal?

Bennie D Waller, Longwood University Five basic steps to personal financial planning 3.Develop a plan of action i.Expect the unexpected (be flexible) i.Have necessary liquidity ii.Protect yourself against unforeseen factors with insurance. iii.Learn to minimize taxes 4.Implement your plan - Be tenacious in carrying out your plan- Just do it!! 5.Review your progress, reevaluate, and revise your plan – be prepared to revise your goals for changes in your life. Change will happen.

Bennie D Waller, Longwood University The Budgeting and Planning Process

Bennie D Waller, Longwood University Setting Financial Goals  Short-term—within 1 year  Paying off bills/credit cards, buying insurance, saving for emergency funds (3 months of living expenses), purchase insurance, major purchase (car, vacation)  Intermediate-term—1 to 10 years  Saving for down payment on a home, paying off large debts (mortgages), older child’s college, financing large items (wedding or vacation home)  Long-term—more than 10 years  Saving for children’s college, retirement, start a business, care for elderly parents

Bennie D Waller, Longwood University Individual Financial Life Cycle

Bennie D Waller, Longwood University Personal Financial Goals Worksheet

Bennie D Waller, Longwood University Financial Plans Four areas that should be considered in financial planning: Flexibility: Your plan should provide enough flexibility that not every dollar of income is committed when bad things, such as emergencies, or good things, such as a good investment opportunity, occur. To maintain flexibility, try to plan for the unplanned. Liquidity: Your plan should allow for access to money when needed. That is money that you can easily access or use, without loss of value. Protection: Insurance is necessary to protect from costly, unexpected expenses such as flood, fire, major illness, or death. No one can predict if, or when, but without insurance the cost could devastate your finances. Your plan should also protect you from overpriced insurance. Minimization of Taxes: Investment earnings can quickly shrink due to taxes. Plan ahead for taxes as part of your financial plan.

Bennie D Waller, Longwood University Stage 1: The Early Years – Time of Wealth Accumulation  Prior to age 54 – You should develop a regular savings pattern, determining how much you can save and where to invest? You can afford to take a few more calculated risks during these years.  Cost of raising children

Bennie D Waller, Longwood University Stage 2: Approaching Retirement – Golden Years The transition years ages – will depend on how well you saved for retirement. You will likely need to reassess goals concerning retirement and estate planning. After age 65 (after retirement) you will need to live off savings. You will choose a less risky investment strategy. May consider long-term care for yourself and spouse Estate planning, getting affairs in order. Stage 3: Retirement

Bennie D Waller, Longwood University Thinking about a major/career

Bennie D Waller, Longwood University Getting a job and being successful Have a professional resume Start looking early Do at least one internship (unpaid if that is all you can find) Prepare and practice for interviews Research the company Dress appropriately, be confident, and follow-up Develop a professional network and seek out new assignments Be ethical

Bennie D Waller, Longwood University Job Search worksheet

Bennie D Waller, Longwood University Job Search worksheet

Bennie D Waller, Longwood University Thinking about a major/career What are your interests, skills, values? - What kind of lifestyle would you like? You should research career alternatives that match your skills and interests keeping in mind potential earnings

Bennie D Waller, Longwood University Most common interview questions

Bennie D Waller, Longwood University Earnings by majors

Bennie D Waller, Longwood University What determines Income? Skills, education and martial status.

Bennie D Waller, Longwood University 10 Principles of Personal Finance 1.The best protection is knowledge-  Know the fundamentals of personal finances  Take responsibility for your financial future.  Get advice from professionals 2.Have a plan  Savings must be planned  Spending is easier  Delaying financial planning will make goals more difficult to achieve.

Bennie D Waller, Longwood University 10 Principles of Personal Finance 3. Time value of money –  A dollar today is worth more than one in the future  Understand how savings grows over time.  Understand compound interest  Be careful about buying now and paying later

Bennie D Waller, Longwood University Accumulate $1 Million by Age 67 Investing Your Money at 12%

Bennie D Waller, Longwood University 10 Principles of Personal Finance 4. Understand taxes  Know impact of taxes on investments  Don’t forget to consider investments on an after- tax basis 5. Expect unexpected (liquidity)  Plan for unexpected events  Have 3-6 months of liquidity for living expenses 6. Differentiate wants from needs  Do homework before making big purchases

Bennie D Waller, Longwood University 10 Principles of Personal Finance 7. Protect yourself  Have the right insurance before a tragedy occurs (i.e,. Rental insurance, life insurance, auto insurance) 8. Understand risk relative to return  The more risk you are willing to take, the more return you should expect to earn. But also, the more potential for loss.  Take calculated risk  Diversification

Bennie D Waller, Longwood University 10 Principles of Personal Finance 9. Don’t play financial mind games  Don’t expect to win the lottery  Don’t throw good money after bad 10. Pay yourself first  Save first before you spend  Saving early on can make a big difference.

Bennie D Waller, Longwood University Thank You