1. Your Child’s
Financial Future

2. Thank you FINRA
The Estes Valley Library is providing this program 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 library® initiative, an ALA program. This project is in its third year of educational partnership with libraries across the country
Marsha Yelick CFA(retired)
Financial Programs Consultant

3. Today’s youth face
enormous financial
issues!
TODAY’S KIDS

4. A Typical College Graduate
Credit card debt –
Revolving average $3,000
College costs –
Fees & Tuition/Year $9,000, $22,000, $30,000
Student loan debt –
Average of ~$30,000 (plus private ~$19,000)
Average starting salary –
2013 ~ $45,000
SOME FACTS

5. How to BEGIN? Financial STRESS
Imagine planning for retirement, saving an emergency fund, making mortgage payments, paying taxes, and raising children with the overhang of enormous debt.
Financial STRESS

6. BE THE EXAMPLE Things you can do! Take care of your finances
Teach money management skills
Use available tools and resources
Things you can do!
BE THE EXAMPLE

7. Take care of your finances
Talk about your money & budgeting
Have an emergency fund
Check your health insurance
Save for retirement !!!
Eliminate ALL credit card debt
Model financial SAVVY

8. DAILY LESSON 2. Teach money management skills
Money is used EVERY DAY. Every money transaction or decision is an opportunity to teach children about the use and misuse of money.
DAILY LESSON
0 - 4 years
13-17 years
5 -12 years
18-19 years

9. Financial TOOLS 3. Use available tools & resources Bank Accounts
Allowances
Brokerage Accounts
(Uniform Gift to Minors Act)
Jobs and IRAs
College Savings Accounts
529
Coverdell
Financial TOOLS

10. Financial Future: PART II
Your Child’s
Financial Future: PART II

11. PAYING YOUR
Million Dollar DEBT
WITH PENNIES
A New Perspective

12. What is THE Most Important Thing That You want for your Children/ Grandchildren?
CHOICE !
FREEDOM !

13. What is the Source of Personal Freedom?
“Choice”
Personal Freedom

14. 6/19/2018

15. Freedom’s TWO Ballot Boxes:
Economic
Ballot
Box
Political
Ballot
Box
Freedom has TWO Ballot Boxes
1. The POLITICAL BALLOT BOX — Federal: vote once every two years;
2. The ECONOMIC BALLOT BOX — The Cash Register’s Ka-ching: vote real time.
IMAGINE…… if you could only shop once every two years.
IMAGINE…… if you could only buy what the Government offered.
Imagine if you could only spend what the government allowed you to have.

16. The Delicate Balance: between The TWO Sources of Freedom
Political
Ballot
Box
Economic
Ballot
Box

17. Debt you create of your own choice. 2. Debt you inherit from others.
Two Types of Debt
Debt you create of your own choice.
2. Debt you inherit from others.
Modern Slavery

18. Debt Our Children/Grandchildren Inherit from US.
Federal Debt: $20 Trillion … ($20,000,000,000,000)
State Debt: $ 5 Trillion … ($ 5,000,000,000,000)
Entitlements: $90 Trillion … ($90,000,000,000,000)
$115,000,000,000,000
Indentured Servants
US Citizens under age 25: 105 Million … (100,000,000 People)
Inherited Federal Debt per Child:
$ 20,000,000,000,000 / 100,000,000 = $200,000 per child.
Interest on the $200,000 5% p.a. = $10,000 p.a.
50% of adults do not pay taxes…. So, $400,000 per child + $20,000 p.a.

19. OUR Children Paying OFF OUR Debt
AMOUNT OF DEBT plus 5%:
Individual: $400,000 Debt plus $20,000 p.a. interest
Husband & Wife: $800,000 Debt plus $40,000 p.a. interest
Disenfranchised
ANNUAL DEBT Payment Ammortized over 40 years plus 5%:
Individual: $10,000 Debt plus $20,000 p.a.* interest = $30,000
Husband & Wife: $20,000 Debt plus $40,000 p.a.* interest = $60,000
* As Principal is reduced interest expense will decline to an average of $10,000 and $20,000, respectively.
AVERAGE U.S. FAMILY INCOME (2012): …..$51,041

20. Two Sources of Your Children’s Economic Freedom:
Sources of Freedom =
(1) Political Freedom + (2) Economic Freedom
(1) Livelihood …….. plus …….. (2) Life’s Savings
How many have had any courses in personal investing either in school or elsewhere? Interest calculations, mutual funds, stocks, bonds?
(1) Savings ………… plus …………(2) Return on Savings

21. To Get your Child Out of YOUR Debt
Do Just 3 Things…
To Get your Child Out of YOUR Debt

22. + + = CSI COMMIT to become a millionaire.
To offset the DEBT YOUR Child inherits from YOU: MAKE YOUR CHILD A MILLIONAIRE + + =
COMMIT to become a millionaire.
Commit to SAVE (“Compound Saving”)
Commit to INVEST (“Wise Investing”)
CSI

23. On the Installment Plan.
NOW, You will learn
how to BUY
YOUR CHILD’S
Economic Freedom
On the Installment Plan.
2. SAVE

24. POWER # 1: THE POWER OF SMALL:To
Change the World.

25. POWER # 1: THE POWER OF SMALL:

26. POWER # 2: THE POWER OF YOUTH—Starting Young (Bulbs show Annual Total of Daily Savings)
$363
Age Daily Monthly Annual Total Savings to Age 65
ONE $1.00 $30.25 $363 $23,595
,260
,615
,227 61,350
,901 85,545
, ,400
, ,225
, ,080
, ,150
,607 19, ,920
,800 34, ,870
,410 65, ,200

27. POWER 2: THE POWER OF YOUTH—Starting Young
$658,200
$295,150
$118,400
$61,350
Age Daily Monthly Annual Total Savings to Age 65
ONE $1.00 $30.25 $363 $23,595
,260
,615
,227 61,350
,901 85,545
, ,400
, ,225
, ,080
, ,150
,607 19, ,920
,800 34, ,870
,410 65, ,200
$23,595

28. POWER 3: THE POWER OF COMPOUND SAVING
Simple Saving:
Saving Once.
Example: Saving $1,000 at the beginning of Year 1.
Compound Saving:
Saving Year after Year.
Example: Saving $1,000 each year.

29. POWER 3—The Power of Compound Saving:. Simple Saving:
POWER 3—The Power of Compound Saving: Simple Saving: ($1,000 saved One Time.)
$1,000

30. POWER 3—The Power of Compound Saving:. Compound Saving:
POWER 3—The Power of Compound Saving: Compound Saving: ($1,000 saved Each Year)
$40,000

31. Where does the Other $976,000 come from ?
SO, YOU USE POWERS # 1, 2 & 3:
Where does the Other $976,000 come from ?
$658,200
$295,150
$118,400
$61,350
Age Daily Monthly Annual Total Savings to Age 65
ONE $1.00 $30.25 $363 $23,595
,260
,615
,227 61,350
,901 85,545
, ,400
, ,225
, ,080
, ,150
,607 19, ,920
,800 34, ,870
,410 65, ,200
$23,595

32. COMMITMENT THREE – Investing: I OWE YOU $ 976,000
AND …
Someone writes a check to
YOU
for the amount
in yellow.
$1,000,000
You save
the amount in red...

33. COMMITMENT THREE - Investing: The Most Powerful Formula in Finance
“Compound interest
is the most powerful force
in the universe.”
Albert Einstein
Physicist
Give me a place to stand, and I will move the earth.
Archimedes
( BC)

34. COMMITMENT THREE – Investing: The Most Powerful Formula in Finance
Two Types of Interest:
Simple: Where Only Principal Earns Interest.
Compound: Where Principal and Interest Earn Interest.

35. COMMITMENT THREE – Investing : The Most Powerful Formula in Finance
SIMPLE Interest:
Year 0: $1, (Present Value)
Year 1: $1,000 + ($1,000 x 10%) = $1,000
Year 2: $1,000 + ($1,000 x 10%) = $1,000
Year 3: $1,000 + ($1,000 x 10%) = $1,000
(Future Value)
100
100
100

36. COMMITMENT THREE – Investing: The Most Powerful Formula in Finance
Compound Interest:
Year 0: $1, (Present Value)
Year 1: $1,000 + ($1,000 x 10%) = $1,100
Year 2: $1,100 + ($1,100 x 10%) = $1,210
Year 3: $1,210 + ($1,210 x 10%) = $1,331
(Future Value)

37. COMMITMENT THREE – Investing: The Most Powerful Formula. in Finance
COMMITMENT THREE – Investing: The Most Powerful Formula in Finance Dirty Little Math Secret
$1,000
Invested
once.
$45,260
$7,040

38. COMMITMENT THREE – Investing: The Most Powerful Formula in Finance
So, at this point,
the Potential Millionaire asks:
How Do I Earn 9%
Instead Of 3%?
By Investing in
Stocks, Bonds & Cash.

39. COMMITMENT THREE – Investing: Asset Class Performance
Historic Returns:
Historic:
Stocks :* Inflation % p.a. 11.0%
Bonds: Inflation % p.a %
Cash: Inflation % p.a %
* Standard & Poors 500 Stock Index
Note: Long term inflation (70 years) has run 3% p.a.
For ease of presentation, examples will assume 2%.pa.

40. Historic: Weighting Stocks : 11.0% x 65 % = 7.2 %
COMMITMENT THREE – Investing: To Reduce Risk You Buy Stocks, Bonds and Cash (You “Diversify”)
Historic: Weighting
Stocks : 11.0% x % = 7.2 %
Bonds: % x = 1.7
Cash: % x 5 = .2
BLENDED YIELD = %
* Standard & Poors 500 Stock Index
Note: Long term inflation (70 years) has run 3% p.a.

41. This seems complicated… Can you make it easy
to buy these Stocks and Bonds?
Yes, we’ll use Balanced Mutual Funds.
I have a picture of a typical millionaire to pass around.
Pass around metal mirror.

42. COMMITMENT THREE – Investing: Definition: Mutual Fund
A Mutual Fund is a basket of various investments like stocks, or bonds, or cash, or mixtures of all three (“balanced”).

43. YOUR Child’s FREEDOM

44. The Best Way to Predict the Future is to Create It …Peter Drucker
YOUR Child’s FREEDOM
FREE YOUR CHILDREN
From YOUR DEBT.

45. Thanks for attending!
BE MONEY SMART
FOR LIFE