2. Ten Sound Money Management Principles for Students PPT Developed by Barbara ONeill, Ph.D., CFP Revised & presented by Jean Lown, Ph.D., Family, Consumer & Human Development, USU Jean.lown@usu.edu

3. What are Your $ Questions? n I cant promise to answer all of them but by knowing your questions before we start I can adjust my presentation n How many parents? –Single parents? n Utah Savers? –Sign up for drawing n PPT on FPW website 2

4. 3 Money Management Principles n Are timeless and time-tested n Apply to everyone n Work well in up & down economies n Help people grow wealthy over time n Need to be taught in school

5. 4 1. Go For The Goal n Goals provide a why for saving n Use goals to develop action plans n Break goals into benchmarks n Make your goals SMART –Specific –Measurable –Attainable –Realistic –Time-Related

6. 5 Invest in your Human Capital n Get a solid education –For career satisfaction –For better health –For higher lifetime earnings n Its OK to borrow for education –There is an opportunity cost to taking too long to earn degree –Student loans are better than credit cards

7. 6 2. Time Is Your Friend n Time: a young persons biggest asset n Compound interest is awesome n For every decade that savings is delayed, the required investment triples n Example: $500,000 at 65; 10% yield –Age 25: $ 79 per month –Age 35: $ 219 per month –Age 45: $ 653 per month –Age 55: $ 2,141 per month

8. 7 More About Time n Time diversification reduces investment volatility n The Rule of 72 –72/interest rate = doubling period –72/doubling period = interest rate n Advantage calulators

9. 8 3. Live Below Your Means n Spend less than you earn n Create a spending plan –Income = Fixed Exp (including savings) + Flexible Exp + 1/12 of Occasional Expense n Distinguish needs from wants n Step-down principle n Automate savings so money isnt spent

10. 4. Establish Emergency Fund n Aka contingency fund –Online savings accounts No minimum FDIC insured 4.5% (varies) Linked to checking account –HSBC –Emigrant –ING & many others 9

11. 10 Pay Yourself First: Automate Your Savings n Tax-deferred employer plans –Get full 401(k) match from employer n Employer credit unions n Savings bond purchase plans n Mutual fund Automatic Investment Plan n Direct stock purchase plans

12. Utah Saves n http://www.utahsaves.org/ http://www.utahsaves.org/ n Build wealth, not debt n Saver Strategies n Get out of debt n Earned income tax credit n Free income tax preparation n Individual Development Accounts 11

13. 12 5. Buy Insurance According to The Large Loss Principle n Magnitude- not frequency- of losses n Increase deductible to save $ n Spend premium dollars on large potential losses: –Liability –Disability –Destruction of home –Large medical expenses –Loss of household earners income

14. 13 6. Low Income Savers Credit n Refundable tax credit up to $1,000/person n Contribution to retirement account: IRA, 401(k), 403(b), or SEP n Couple filing jointly AGI: $50k or less n Single with AGI: $25,000 or less n Sliding scale: 10-50% of contribution

15. 14 7. Repay Debt Quickly and Borrow For Less n Consumer debt ratio < 15% of net pay n Consumer debt + housing < 50% of net n High debt makes other problems worse n Negotiate lower interest rates n Always pay more than the minimum n Avoid perma-debt n Pay promptly to avoid late fees n Family Life Center PowerPay analysis

16. 8. Earned Income Tax Credit n Refundable tax credit for workers 15

17. 9. Vita tax prep n Provided by USU accounting students in Business building- starts Feb. n AVOID instant tax refunds –High cost loans (similar to payday loans) n Auto deposit n Split your refund –Save a portion, pay debt, spend 16

18. 17 9. Buying House/Vehicle n Dont buy more house than you can afford (Subprime mortgage meltdown) –Dont trust mortgage broker n Dont buy before you are really ready for the financial commitment n Buy new cars every 8-10 years or buy new used

19. 18 Check Your Financial Health n Take the Financial Fitness Quiz –http://njaes.rutgers.edu/money/ffquiz/http://njaes.rutgers.edu/money/ffquiz/ n Least common practices –Not having a will –No written financial goals –No written budget –No net worth calculation

20. 19 Financial Education Resources n Investing For Your Future –Home study course –http://www.investing.rutgers.edu/http://www.investing.rutgers.edu/ n Money 2000 & Beyond –http://www.rce.rutgers.edu/money2000http://www.rce.rutgers.edu/money2000 n RU-FIT financial independence training –http://www.rce.rutgers.edu/ru-fit/http://www.rce.rutgers.edu/ru-fit/ n USU Extension –http://extension.usu.edu/http://extension.usu.edu/

21. Spend Less, Enjoy the Holidays More n http://extension.usu.edu/htm/news/articl eID=2361 http://extension.usu.edu/htm/news/articl eID=2361 n Start a UESP account for your kids n Spend time with important people n Avoid gift cards –High fees, money cant be saved n Pay cash! Avoid debt. 20

22. Small Steps to Health & Wealth n http://njaes.rutgers.edu/sshw/ http://njaes.rutgers.edu/sshw/ n This program is designed to motivate consumers to implement behavior change strategies that simultaneously improve their health and personal finances. 21

23. 22 Personal Finance Magazines n Kiplingers Personal Finance Magazine –Kiplingers.com n Money Magazine –Money.com –Money 101 on-line financial mgmt course http://money.cnn.com/pf/101/ 23 lessons

24. 23 FCHD 3350 Family Finance n Personal Financial Management n DSS general education n Fall & Spring semesters –Live and on-line n Dont leave campus without this class!

25. 24 The Financial Checkup by Alena Johnson

26. 25 USU Family Life Center n Very low cost financial & housing counseling n PowerPay Debt reduction computer analysis https://powerpay.org/https://powerpay.org/ n First time homebuyer workshops n 797-7224; 495 North 700 East, Logan

27. 26 Financial Planning for Women http://www.usu.edu/fpw n For women of all ages & knowledge n Second Wednesday (except December) –12:30-1:30 in Family Life room 318 –7-8:30 pm in Family Life Center n Email list: jean.lown@usu.edu –Monthly e-news & program info n Sign up sheet for FPW n PPT will be posted on the website

28. 27 Avoid Common Mistakes of Young Adults n Buying a house before you are ready n Buying too much house n Putting too much $ into vehicles n Keeping a balance on your credit cards n Waiting to invest for retirement until… n Not considering the cost of kids n Spending too much on eating out

29. 28 Closing Thought If it is to be, it is up to me Comments? Questions? Experiences?