Earning, Budgeting, & Spending Wisely Personal FInance Earning, Budgeting, & Spending Wisely

Key Questions What is your personal comparative advantage? What personal attributes are associated with success in any job? What is the purpose of a budget? Key Questions

Discover your comparative advantage What can you do better than 90% of the human population? How can you spend more of your time doing these things, and less time doing things that others can do better than you? Studies show that businesses work better if the individuals that operate them focus on what they’re best at, working with other specialists to accomplish everything they need. Discover your comparative advantage

CA: Not Just for countries Def: the qualities, skills, experience and knowledge that set you apart from your peers YOU own it. It’s up to you to discover, enhance, build, nurture Human Capital If you are going to build a new house you don’t hire a bunch of workers who have some skill in every aspect of building but have not mastered any, you hire a general contractor who brings in specialists – plumbers, electricians, HVAC, drywallers, etc. ? “Jack of all trades, master of none”

More than education Where does your passion lie? Do what brings you the most fulfillment Join social networking groups Job fairs Clubs and organizations Take internship positions Study abroad Continuing education Update knowledge Seek diverse experiences Stay ahead of changes in your industry

Cultivate skills, attitudes, and entrepreneurship that increase productivity and make your services more valuable to others

You need More than CA Develop success oriented attributes Honesty, dependability, persistence, reliability, trustworthiness, respect for others, desire to learn and improve, and ability to work with others Cultivate an entrepreneurial way of thinking Identify and act on attractive opportunities overlooked by others Have a willingness to take risk Have high rates of saving and investment Have a willingness to work long hours because you love what you do

Use budgeting to help you spend your money effectively and save regularly

What is a budget? Def: a written record of the money that flows in and out of your household every month Budgeting is the first step on the road to financial success Budgeting is an ongoing process, not a one time event Create an initial budget Track spending and make adjustments

Importance of savings Saving and investment should be specific items in your budget, not whatever is left at the end of the month Unexpected debts Down payments Achievement of goals Retirement Consuming less and saving more today pays off in the future Saving and investment builds wealth

Steps for successful budgeting Start now! Don’t fool yourself into thinking budgets are only for people who have jobs or high salaries, or that you’ll “start later” Set goals Short, intermediate, and long term planning Get tools to assist with budgeting Don’t recreate the wheel – websites, apps, spreadsheets Create a plan of action Include actual and proposed items in your budget It’s not rocket science!” “80% of budgeting is behavior, only 20% is knowledge”

Creating a Budget Know your expenses Track your expenses Fixed Which are essential? (Needs v. wants) Track your expenses Fixed Rent or mortgage Insurance (home & auto) Car payments Taxes School loans Variable Car maintenance Gas Food Utilities Phone

Financial Goals Short Term (less than a year) Mid Term (1 to 3 years) Long Term (more than 3 years) Goals must be Specific How much should I save? How long will it take me? Realistic Mid term goal : Goal: $3,000 vacation When: 18 months How much? $167 per month Realistic??