1. Personal Financial Literacy
What is PFL?
What are some key terms we need to know?
Who is Dave Ramsey?

2. “The U. S. economy is the eighth wonder of the world
“The U.S. economy is the eighth wonder of the world. Americans’ ignorance of it is the ninth.”
Arthur Levitt
Former Chairman,
New York Stock Exchange

3. Today’s Teens…
Fewer than half of teenagers polled understood how to budget
College freshmen have an average debt of $1,500 on personal credit cards.
The average credit card debt for college seniors is $2,864; a 48% increase from Freshmen

4. Today’s Youth…
The average debt of graduating college seniors including student loans is $40,000.
Americans under age 25 are filing for bankruptcy faster than any other age group.

5. Personal Finance What is personal finance? JARGON
process of planning your spending, borrowing, saving & investing your money
Just as mechanics, doctors, farmers & baseball players have vocabularies unique to their skill or trade, personal finance has concepts & terms that must be understood
JARGON

6. Vocabulary of Personal Finance
Budget-
detailed list of expected revenues & expenditures
Opportunity costs-
things not purchased when money is spent on something else instead
Income-
All sources of money coming in (wages, gifts, winnings)
Assets-
any good of value that you own (home, car, jewelry, TVs)

7. Vocabulary of Personal Finance
Liquid assets-
things you own that can be easily converted into cash without significant loss (stocks, bonds, money market)
Liabilities-
things you owe – your debt (mortgage, car loan, credit card)
Net worth-
equals your total assets minus your liabilities
Equity-
difference between the market value & amount owed

8. Liquidity- Real estate- Financing- Risk- Insurance-
refers to amount of readily available cash you have access to- including liquid assets
Real estate-
Land & homes or structures attached to the land
Financing-
taking a loan to pay of majority of coast of a purchase- a form of credit (get it now, pay for it later)
Risk-
the potential of loss weighed against chance of gain
Insurance-
purchased to provide reimbursement in the event of a financial loss (auto, homeowners, health, life)

9. Components of good financial plan
Creating a budget- requires understanding of net worth, income, expenses & taxes
Managing liquidity- includes management of money & credit
Financing large purchases- how to best buy a home or car
Managing your risks- involves understanding and using insurance
Developing an investment plan- using your money to earn more $ - stocks, bonds, mutual funds

10. 6) Accumulating wealth for retirement- determining how much to set aside every year you’re working and investing it to spend after you retire
7) Communicating & keeping records- sharing your financial desires with family members and recording finances for tax & estate purposes
If you write your financial goals down you will be more likely to achieve them

11. Dave Ramsey’s financial terms
Emergency fund-
cash set aside for unforeseen expenses
Murphy’s Law-
Anything that can go wrong WILL
Investment
anything you put your $ in to get it to grow and become more $ (mutual funds)
Stupid tax-
any purchase or financial decision one makes that you later realize that was a dumb choice that cost you

12. Who is Dave Ramsey?
Dave Ramsey is an author, financial adviser, radio & TV host
3rd most popular radio show in country- over 24 million listeners
teaches Financial Peace University class on personal finance