10 Steps to Financial Freedom

PRESENTED BY

The Foundation for Financial EducationA 5 0 1 ( C ) ( 3 ) N O N P R O F I T O R G A N I Z A T I O N

Participants will learn about:

− Finding your “money view”

− How to create a budget

− How to get out of debt

− Creating an abundance mentality

− Saving & investing

− Making a difference

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Objectives

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10 Steps to Financial Freedom

1. Find your net income2. Calculate your expenses and profit3. Set a financial goal4. Create a budget5. Set a price limit on spontaneous

purchases6. Avoid financing anything that loses value7. Shift from credit to cash8. Roll-down debt reduction9. Differentiate between investment and expense10. Focus on quality of life and peace of mind

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#1 Find Your Net Income

• Gross Income: Income before taxes

• Net Income: Actual amount of money received after state, federal, social security and other taxes have been taken out.

• If-Come: Doesn’t count

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#2 Calculate Your Expense and Profit

• Expenses: Anything you spend money on that does not make money for you

• Profit: What is left over after you subtract your monthly expenses from the monthly net income

• Net Income – Expenses = Profit

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#3 Set a Financial Goal

• Find A Financial Mentor/Coach

• A financial goal is a way of keeping track of how you are doing, just like a scoreboard

• You should set at least 3 types of goals:

• Short Term – Monthly

• Mid-Term – 6 Months to 1 Year

• Long Term – 5 to 10+ Years

It is very important to write down your goals and put them where you can read them everyday!

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#4 Create A Budget

• Budget – A detailed step by step plan to help you reach your goals

• Track all expenses

• Categorize expenses

• Evaluate your spending, then figure out where you can reduce your spending

You need to be living on 70-75% of your net income

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#5 Set Price Limit on Spontaneous Purchases

• Set a spending limit on spur-of-the-moment purchases

• Wait at least 24 hours before making a purchase over the limit• Sleep on it!

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#6 Avoid Financing Anything that Loses Value

• What Loses Value?• Vehicles• Furniture• Electronics

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#7 Switch from Credit to Cash

• Practice Delayed Gratification• Wait to buy something until you

have enough money to buy it in cash!

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#8 Roll-Down Debt Reduction

• Pay yourself first• Make a list of all debts• Arrange debt by lowest balance owed

and highest interest rate• Review plan with mentor• Pay off the smallest debt first• Roll additional payment into next

debt – “Snowball Effect”• Repeat the last 2 steps until you’re

debt free• Feel confident you pay things off

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#9 Difference Between Investment and Expense

• Investment:• Something you put money into and

expect to make more money or gain value from it

• Always consult mentor

• Expense:• Something you spend money on,

but expect no financial gain

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#10 Focus on Quality of Life and Peace of Mind

• What does quality of life mean to you?

• What is peace of mind?

• Be a blessing to others

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10 Steps to Financial Freedom

1. Find your net income2. Calculate your expenses and profit3. Set a financial goal4. Create a budget5. Set a price limit on spontaneous

purchases6. Avoid financing anything that loses value7. Shift from credit to cash8. Roll-down debt reduction9. Differentiate between investment and expense10. Focus on quality of life and peace of mind

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The Path to Wealth Accumulation

• Budget• Emergency fund• Debt Consolidation• Real Estate strategies• College savings• Tax Strategies• Life insurance• Investments

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Road Blocks to Financial Freedom

• Lack of a plan• Taxes• Inflation• Fees and expenses• Sequence of Returns Risk –

Losing 30% in one year• Market Volatility and what it

means

• Lost opportunity costs– the opportunity given up by spending money

• Not having a plan for finance in retirement• Lack of estate planning• Maximizing charitable giving to take full

advantage of taxes• Understanding Wills and Trusts and which one

you need

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Thank you!CONFIDENTIAL INFORMATION

The information presented in this presentation is confidential and expected to be used solely in support of the delivery of services to Magellan members. By receipt of this presentation, each recipient agrees that the information contained herein will be kept confidential and that the information will not be photocopied, reproduced, or distributed to or disclosed to others at any time without the prior written consent of Magellan Health, Inc.

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