Anne Marie Anderson, CPA & SIFE
Goal setting ◦ Short-term (< 3 months) Present for boy/girl friend Duke Nukem video game ◦ Intermediate (3 months – 1 year) iPad Phone ◦ Long-term (> 1 year) Car 4 year college
Determine your time frame Income ◦ Gross vs net pay Who is FICA and why does he take all my money? ◦ Understand all items being taken out of your paycheck
Expenses ◦ Fixed ◦ Variable ◦ Out of pattern ◦ Goals as expenses ◦ Savings ◦ Fun! Needs vs. wants
Evaluate your budget (positive/negative cash flow) Monitor over time ◦ Make adjustments as needed ◦ Be flexible
Income - ?????? --Expenses: ◦ $400,000 NJ home, 30 year mortgage, $10K taxes
Income - ?????? --Expenses: ◦ $2,800 Mortgage/Real estate tax ◦ $300 Utilities ◦ $150 Phone/Cable/Internet ◦ $250 Car/Home Insurance ◦ $200 Gas ◦ $75 Clothes ◦ $200 Food/Groceries Total Expenses = $3,975
Breakeven: ◦ Net pay = Expenses, so you must bring home $3,975 per month or $47,700 per year to breakeven $47,700 net pay is ≈ $70,000 gross pay after Federal, state, and FICA taxes What did I leave out?
Goals on index cards – put them in the cash or credit card slot of your wallet Make a picture of your goal the backdrop of your computer Tell friends/relatives of your goals so they can help reign you in Envelope system…..
Where to put what you save…. ◦ 401K ◦ Roth accounts ◦ CD’s Some places are better than others, but starting to save early is the key
1-11 Person A: Saves $2000 per year from age 22 to age 35 and then stops Person B: Starts saving $2000 per year beginning at age 35 and never stops Both earn 8% on their investments. At age 75: Person A has $1M in savings Person B has $561K in savings
College students – I don’t have money to save! ◦ Where can you cut? ◦ Break your habits! Include savings as an expense item in your budget - out of sight/out of mind Direct deposit – split a portion into savings Coins count - $15 billion in loose change
Credit cards…….. ◦ Be wary, credit card companies prey on college students. ◦ Rule of thumb – if you don’t have the cash to buy something, wait until you do! ◦ Pay more than the minimum payments – ALWAYS! ◦ Debt consolidation companies…..more harm than good? ◦ Call credit card companies directly
The average person spends money 3 times a day. Putting aside every coin you touch results in saving about $50 a month. A $5 sandwich usually has less than $1 of ingredients. Some 40% of American families annually spend more than they earn. Americans spend more than 40% of their food dollars each year eating out. One out of every four Americans believe their best chance of getting rich is by playing the lottery. The average interest rate on credit cards is 18.9%.
College Money Insider ◦ Managing your money while in college ◦ ney/tp/collegemoney.htm ney/tp/collegemoney.htm 360 degrees of Financial Literacy ◦ Students Students Debt consolidators (reputable ones…) ◦ Debt/Credit-Cards/I-m-one-of-those Debt/Credit-Cards/I-m-one-of-those Student budget calculator ◦ Spending/Budgeting-and-Saving/Student-Budget Spending/Budgeting-and-Saving/Student-Budget Feed the Pig ◦
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