The CHANGE in Your Pocket

This program is provided through a grant from the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and the American Library Association (ALA). The grant is distributed as part of the smartinvesting@your library® initiative, an ALA program. This project is in its sixth year of educational partnership with libraries across Colorado and the country. Marsha Yelick CFA(retired) Financial Programs Consultant myelick@estesvalleylibrary.org 970-586-8116 Ext 831 Thank you FINRA

Hope that’s why you are here. It’s the beginning of a whole new financial year (and you resolve to do things better)! It’s possible!!! Hope that’s why you are here. HAPPY NEW YEAR

Good News – so far! YEA! GREAT BEGININGS So far, this month you have not spent more than you earned. So far this month, you have not added new, unnecessary debt. You’re thinking about a balanced personal budget. You know you should save for retirement. You know you need an emergency fund. The stock market has not collapsed (at the time of this PowerPoint). GREAT BEGININGS

So let’s make financial resolutions that make sense. Sixty-two percent make resolutions. Over 50% of people who make resolutions include personal financial improvement in the top two! RESOLUTIONS

Eight percent success rate! What happens to the good intentions? Eight percent success rate! BROKE

New Year’s Resolutions FAIL because… The resolution is too difficult New Year’s Resolutions FAIL because… The resolution is too difficult. √ The resolution takes too much time. √ The resolution requires new learning. √ The habits (and attitudes) are too entrenched to change.√ REASONS FOR FAILURE

Habits and attitudes – hard to lose! 70% say they live paycheck to paycheck 17% say they do not have savings to cover 1 week’s expenses 49% say they do not have savings to cover 1 month’s expenses 22% have no money left after paying bills 62% of retirees live on less than $10,000/year 53% of Americans have less than $50,000 saved (43% of those are over 55) 60% experience financial stress 18% of households have negative net worth For indebted households: (Federal Reserve 2013) Average credit card debt: $15,279 Average mortgage debt: $149,456 Average student loan debt: $32,140 Americans and $$$

EASY QUICK UNDERSTANDABLE POSSIBLE Resolutions Your NEW New Year’s Resolutions: EASY QUICK UNDERSTANDABLE POSSIBLE Resolutions

I RESOLVE : to NOT make MORE $$$. RESOLUTION 1

EASY RESOLUTION The MYTH of MORE NO! The more money I have, the happier I will be. NO! A big income will keep me out of debt. NO! The more $ I have, the fewer worries. NO! If I had more money, I would find love, have fun, worry less, have friends, etc. EASY RESOLUTION

I RESOLVE: to understand COMPOUND INTEREST RESOLUTION 2 Free money (…from the internet) RESOLUTION 2 Free money (MAGIC)

How it COMPOUND INTEREST works (not really magic)

Watch it in ACTION MAGIC OF COMPOUNDING http://www.econedlink.org/interactives/tools/eel-compound-interest-calculator/EconEdLink-2-Compound-Interest-Calculator.swf MAGIC OF COMPOUNDING

mycalculators.com Consider Effects Play with the calculators to see effect on your own savings plan. Use different rates of return - 5 – 6- 7 -8%. Try different monthly contribution amounts. Consider Effects

to THINK about how much money I need to retire. I RESOLVE: to THINK about how much money I need to retire. People who think, are willing to save more. RESOLUTION 3 https://personal.vanguard.com/us/insights/retirement/saving/set-retirement-goals

In RETIREMENT every $100,000 you have, = We think… Experts RULE OF THUMB: In RETIREMENT every $100,000 you have, = ~$4,000 annual income or $333 /month. (4%) We think…

…and think Experts’ analysis (?) $50,000 / year would be nice. $50,000 / $4000 = 12.5 12.5 x $100,000 = $1,250,000 Just save ~$1,000 per month for 30 years and earn average of 7%) …and think

I RESOLVE: HOW IS THAT POSSIBLE? to save $4 a day ($4 x 30 days = $120) HOW IS THAT POSSIBLE? RESOLUTION 4

Saving EVERY DAY Ideas to consider…. (Little things add up!) Save your change Cook at home 2 more evenings/month Eliminate the latte (Automatic Millionaire) Drink more water (less soda) Use the Library often Save on entertainment (just a little) Combine shopping trips (save gas) Plan meals based on grocery specials Take your lunch (once or twice a week) Put planned purchases on a list – wait Pay yourself first each month Others…….. Saving EVERY DAY

Save SOMETHING! What is that worth? SAVE $4/DAY (and invest), you will have ~ $100,000 in retirement (in 30 years).

I RESOLVE: Put it on autopilot! "We never see the money, to make some savings AUTOMATIC Put it on autopilot! "We never see the money, so we don't miss it," RESOLUTION 5

- PYF (pay yourself first) (so easy in this age of internet) Ways to AUTOMATE savings - PYF (pay yourself first) (so easy in this age of internet) Automatically deposit a fixed amount of funds at specified intervals into an investment account. (Set-up with bank or investment firm) Save before you get paid – 401(k) percentage withdrawal (before or after taxes). Use a change jar (empty each month) for $120. Autopilot Techniques

I RESOLVE: You will sleep well. to take one more free financial class at the library RESOLUTION 6 Do you need to know more about budgeting? Goal Setting and Financial Planning Do you need a cheap, easy investment plan? Common Investment Types You will sleep well.

Tonight… You have accomplished what you thought was not possible. Congratulations I completed THREE (count them) New Years Resolutions I will NOT strive to make more money I will understand compound interest I will consider how much money I need to retire I have THREE simple resolutions to complete I will save $4 a day (or more) I will automate (some) savings I will sign-up for another FREE financial class

Thank you for attending Be Money Smart for Life Thank you for attending