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Rentry students 10 sound money management principles ppt.ppt
- 1. Ten Sound Money ManagementPrinciples for Students PPT Developed by Barbara O’Neill, Ph.D., CFP Revised & presented by Jean Lown, Ph.D., Family, Consumer & Human Development, USU [email protected]
- 2. What are Your$ Questions? I can’t promise to answer all of them but by knowing your questions before we start I can adjust my presentation How many parents? – Single parents? Utah Savers? – Sign up for drawing PPT on FPW website 2
- 3. 3 Money Management Principles Are timeless and time-tested Apply to everyone Work well in up & down economies Help people grow wealthy over time Need to be taught in school
- 4. 4 1. Go ForThe Goal Goals provide a “why” for saving Use goals to develop action plans Break goals into benchmarks Make your goals SMART – Specific – Measurable – Attainable – Realistic – Time-Related
- 5. 5 Invest in yourHuman Capital Get a solid education – For career satisfaction – For better health – For higher lifetime earnings It’s OK to borrow for education – There is an opportunity cost to taking too long to earn degree – Student loans are better than credit cards
- 6. 6 2. Time IsYour Friend Time: a young person’s biggest asset Compound interest is awesome For every decade that savings is delayed, the required investment triples 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
- 7. 7 More About Time Time diversification reduces investment volatility The Rule of 72 – 72/interest rate = doubling period – 72/doubling period = interest rate Advantage calulators
- 8. 8 3. Live BelowYour Means Spend less than you earn Create a spending plan – Income = Fixed Exp (including savings) + Flexible Exp + 1/12 of Occasional Expense Distinguish needs from wants “Step-down principle” Automate savings so money isn’t spent
- 9. 4. Establish EmergencyFund Aka contingency fund – Online savings accounts • No minimum • FDIC insured • 4.5% (varies) • Linked to checking account – HSBC – Emigrant – ING & many others 9
- 10. 10 Pay Yourself First:Automate Your Savings Tax-deferred employer plans – Get full 401(k) match from employer Employer credit unions Savings bond purchase plans Mutual fund Automatic Investment Plan Direct stock purchase plans
- 11. Utah Saves http://www.utahsaves.org/ Build wealth, not debt Saver Strategies Get out of debt Earned income tax credit Free income tax preparation Individual Development Accounts 11
- 12. 12 5. Buy InsuranceAccording to “The Large Loss Principle” Magnitude- not frequency- of losses Increase deductible to save $ Spend premium dollars on large potential losses: – Liability – Disability – Destruction of home – Large medical expenses – Loss of household earner’s income
- 13. 13 6. Low IncomeSaver’s Credit Refundable tax credit up to $1,000/person Contribution to retirement account: IRA, 401(k), 403(b), or SEP Couple filing jointly AGI: $50k or less Single with AGI: $25,000 or less Sliding scale: 10-50% of contribution
- 14. 14 7. Repay DebtQuickly and Borrow For Less Consumer debt ratio < 15% of net pay Consumer debt + housing < 50% of net High debt makes other problems worse Negotiate lower interest rates Always pay more than the minimum Avoid “perma-debt” Pay promptly to avoid late fees Family Life Center PowerPay analysis
- 15. 8. Earned IncomeTax Credit Refundable tax credit for workers 15
- 16. 9. Vita taxprep Provided by USU accounting students in Business building- starts Feb. AVOID instant tax refunds – High cost loans (similar to payday loans) Auto deposit Split your refund – Save a portion, pay debt, spend 16
- 17. 17 9. Buying House/Vehicle Don’t buy more house than you can afford (Subprime mortgage meltdown) – Don’t’ trust mortgage broker Don’t buy before you are really ready for the financial commitment Buy new cars every 8-10 years or buy “new used”
- 18. 18 Check Your FinancialHealth Take the Financial Fitness Quiz – http://njaes.rutgers.edu/money/ffquiz/ Least common practices – Not having a will – No written financial goals – No written budget – No net worth calculation
- 19. 19 Financial Education Resources Investing For Your Future – Home study course – http://www.investing.rutgers.edu/ Money 2000 & Beyond – http://www.rce.rutgers.edu/money2000 RU-FIT financial independence training – http://www.rce.rutgers.edu/ru-fit/ USU Extension – http://extension.usu.edu/
- 20. Spend Less, Enjoy theHolidays More http://extension.usu.edu/htm/news/articl eID=2361 Start a UESP account for your kids Spend time with important people Avoid gift cards – High fees, money can’t be saved Pay cash! Avoid debt. 20
- 21. Small Steps toHealth & Wealth http://njaes.rutgers.edu/sshw/ “This program is designed to motivate consumers to implement behavior change strategies that simultaneously improve their health and personal finances.” 21
- 22. 22 Personal Finance Magazines Kiplinger’s Personal Finance Magazine – Kiplingers.com Money Magazine – Money.com – Money 101 on-line financial mgmt course • http://money.cnn.com/pf/101/ • 23 lessons
- 23. 23 FCHD 3350 FamilyFinance Personal Financial Management DSS general education Fall & Spring semesters – Live and on-line Don’t leave campus without this class!
- 24. 24 The Financial Checkupby Alena Johnson
- 25. 25 USU Family LifeCenter Very low cost financial & housing counseling PowerPay Debt reduction computer analysis https://powerpay.org/ First time homebuyer workshops 797-7224; 495 North 700 East, Logan
- 26. 26 Financial Planning forWomen http://www.usu.edu/fpw For women of all ages & knowledge Second Wednesday (except December) – 12:30-1:30 in Family Life room 318 – 7-8:30 pm in Family Life Center Email list: [email protected] – Monthly e-news & program info Sign up sheet for FPW PPT will be posted on the website
- 27. 27 Avoid Common Mistakesof Young Adults Buying a house before you are ready Buying too much house Putting too much $ into vehicles Keeping a balance on your credit cards Waiting to invest for retirement until… Not considering the cost of kids Spending too much on eating out
- 28. 28 Closing Thought “If itis to be, it is up to me” Comments? Questions? Experiences?