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

2. 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

3. 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

4. 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”

5. 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

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

7. 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

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

9. 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

10. 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

11. 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”

12. 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

13. 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??