1. Money Management 1-2-3 2 Achieving financial goals A project of Consumer Action | www.consumer-action.org Funded by Consumer Action’s Money Management Project © 2010 Rev. 2/16

2. Money Management Two: Achieving financial goals Money Management 1-2-3 Achieving Financial Goals

3. Updating your budget Money Management 1-2-3 Achieving Financial Goals

6. Saving for a purpose Goal Total needed Current savings Need to save Target date Savings/ month Savings/pa y period Buy a computer $800$240$56010 months$56$28 Pay off credit card $3,000$0$3,000 30 months (2½ yrs) $100$50 Home down- payment $30,000$0$30,000 60 months (5 yrs) $500$250 Money Management 1-2-3 Achieving Financial Goals

7. Savings vehicles Passbook or statement savings account Money market account (MMA) Certificate of deposit (CD) Individual development account (IDA) U.S. savings bond Money Management 1-2-3 Achieving Financial Goals

8. The power of starting early Investor:DwayneDan Monthly deposit:$50$100 Starting age:3050 Ending age:7070 Years of deposits:4020 Annual return*:8%8% Total invested:$24,000$24,000 Final balance:$174,575$58,907 Dan would have to save $300/month to achieve the same balance as Dwayne. *Compounded monthly Money Management 1-2-3 Achieving Financial Goals

9. Saving vs. investing Annual returnBalance in 10 yearsTypes of investments 1%*$11,051Savings accounts 3%$13,493Longer-term CDs 5%$16,470Certain bonds 7%$20,096Stocks 9%$24,513Stocks Value of $10,000 in 10 years at hypothetical rates of return * All rates are hypothetical; for example, interest rates on standard savings accounts and MMAs at the time of publication ranged from around.01% to around 1% Money Management 1-2-3 Achieving Financial Goals

10. Life stage investing Asset30s50s70s Cash5%10%20% Bonds10%20%45% Stocks85%70%35% Hypothetical asset allocation through life stages Money Management 1-2-3 Achieving Financial Goals

12. Individual retirement account (IRA) TraditionalRoth No income limits on contributionsIncome limits on contributions Tax-deductible contributions*After-tax contributions Tax-deferred growthTax-free growth Min. required distributions at 70½No required distributions Taxable withdrawalsTax-free withdrawals Money Management 1-2-3 Achieving Financial Goals *For those who meet requirements

13. Retirement plan advantages Targeted monthly savings:$125 Years until income needed:30 Hypothetical rate of return:8.00% Your current tax rate:15% After-tax value in 30 years:$125,327 Tax-deferred value in 30 years:$187,536 Assumes a 15 percent federal tax rate. Taxes must be paid on the earnings when you withdraw the money from the tax-deferred account. Source: Tax deferred investment calculator, http://www.advisorlinks.com Money Management 1-2-3 Achieving Financial Goals

15. Key considerations for investors Objective Time frame Expected return Risk tolerance Tax consequences Money Management 1-2-3 Achieving Financial Goals

17. Lenders Loan types Loan terms Loan approval Mortgages Money Management 1-2-3 Achieving Financial Goals

18. Successful homeownership Money Management 1-2-3 Achieving Financial Goals

19. Protecting your assets

20. Money Management 1-2-3 Achieving Financial Goals Be covered

21. Money Management 1-2-3 Achieving Financial Goals

22. Congratulations! You’ve completed Part 2 of the Money Management 1-2-3 training. Money Management 1-2-3 Achieving Financial Goals