10 Steps toFinancial Success

Your income does not determine how successfulyou are – your choicesand priorities do.

Financial Success = Being in Control of Your Money

• Identify needs and wants

• Be specific:

- When will you reach it?

- How much will you need?

• Be realistic:

- Can it be done with currentor proposed resourcesand expenses?

Step # 1 –Establish Goals

• Determining where you stand allows you to establish a starting point

• What you own - what you owe = your net worth

Step #2 –Take Stock

4

• Income

• Expenses- Tracking- Budget Busters

• Savings

• Debt

• Bottom line

Step #3 – Createa Spending and Savings Plan

• Increase income

• Prioritize spending- Reduce

- Substitute

- Postpone

- Forego

Step #4 – LiveWithin Your Means

Suggested Budget Guidelines

35%

25%

15%

15%

10% Housing - 35%

Other - 25%

Debt - 15%

Transportation - 15%

Savings - 10%

• Saving enables youto reach your goals

• Save at least 10% ofyour income

• Weigh instant gratification against ultimate gratification

Step #5 – PayYourself First

Short-term Medium-term Long-term

Liquid account –emergency savings, debt

repayment

Semi-liquid – goals

2-5 years

Invested – retirement, education 5+ years

3-Tiered Saving Plan

Taxed-Deferred Vs. Taxed Investments

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

15 Years 20 Years 25 Years 30 Years

Taxed

Tax Deferred

• Start now – decide how

much to put aside and have

it auto-deducted

• Compounding interest only

works over a period of time

• Your future is worth

spending a little less today

Quit Procrastinating!

Harness the Power of Time

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

15 Years 20 Years 25 Years 30 Years

Start Now

Wait 10 Years

• Live a cash-only lifestyle

• Reduce interest

• Increase payments

• Aggressively repay yourmost expensive debts

Step #6 – Delete Your Debt

13

Bad Debt vs. OK Debt

OK debt Increases in value- Home, business, education1

2 Decreases in value- Clothes, meals, vacationsBad debt

“The abuse of credit is a leading cause of financial failure”

• Advantages: build equity over time and get tax breaks

• Start saving now and building good credit score

• Homeownership is notright for everyone

- Only do it if you can afford it

Step #7 –Buy a Home

• Weigh risk against return- Stocks- Bonds- Cash

• Mutual funds

Step #8 –Diversify

Market Performance

Average annual market return of stocks, bonds, and cash (1926 – 2014)

Data is based on the S&P 500 index for stocks, aggregate indexes

for bonds, and 30-day U.S. Treasury bills for cash.

10.12%

4.60%

2.30%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

Stocks

Bonds

Cash

• Health

• Disability

• Life

• Liability

• Auto

• Renter’s

• Homeowner’s

Step #9 – Plan Ahead: Insurance

18

Plan Ahead: Estate Planning

• Wills- Determine your executor- Decide distribution and alternate beneficiary- Choose a guardian- Include a residuary clause

• Trusts

• Document wishes for life-saving measures

• Use a professional- Financial institution

- Financial planners

- Estate planners

• Learn on your own- Internet

- Seminars

- Books and magazines

Step # 10 – Get Help

“An investment in

knowledge always pays

the best interest.”

- Ben Franklin

BALANCE is a financial education and counseling service. Services include money management counseling, debt repayment options, credit report review, and more.

Call toll-free 888.456.2227 or visit www.balancepro.org

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