financial literacy: knowing what you need to know to achieve your financial goals

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  • Financial Literacy:Knowing What You Need To Know To Achieve Your Financial Goals

  • Americas financial literacyAmerican families:The average American family spends $1.22 for every dollar it earns. One in five American families with annual household income of less than $50,000 is spending 40% of after-tax income to service its debt.In 2003, the average American household owed $8,000 in credit cards, compared to $2,600 in 1989.In 2003, 1.6 million Americans filed for bankruptcy the highest amount in history.

  • Americas financial literacy2 out of 3 households will probably fail to realize life goalsFinancial illiteracy is passed to the next generationAverage high school senior failed 2004 financial knowledge survey

  • What is Financial Literacy?

  • Financial literacyThe ability to effectively evaluate and manage ones finances in order to make prudent decisions toward reaching lifes goalsThe understanding of:MoneyCash flowBasic economic/financial conceptsDebt/risk management

  • Achieving financial literacyFive Key Areas of Personal Finance:Money and incomeMoney managementSpending and debtSavings and investmentsRisk management (protection)

  • Money and incomeTime is moneyHow many hours do you need to work to pay for your mortgage, car insurance, electricity bills, extras, etc?

  • Money managementBudgetingPrioritizing

  • Spending and debtBenefits and costs of spending alternativesCredit as a basic financial tool

  • Savings and investingSaving means not spending money.Investing means that you earn a return on the money you put into it.

  • Risk managementInsuranceUnderstanding the markets50% of Americans own stocksIdentity theftConsumer protection

  • Financial literacy isnt just a matter of knowing what you have and knowing your options. It is a matter of planning for lifes milestones.

  • Creating your first overall long-term financial plan

  • Buying your first homeEstablish good creditUnderstand real costsAssess risks

  • Getting marriedUnderstand financial partnershipEstablish separate and joint credit and bank accountsCreate wills and trustsIdentify beneficiariesChoose owners on title assets

  • Financing a familyBudgetEducation, health care, child careManage risk, insuranceCreate willsInstill financial literacy

  • Starting a businessUnderstand cash flowexpense timingManage income and expenses

  • Planning for RetirementDetermine how much money you will need. Determine where your retirement income will come from.Devise a budget and investment strategy to help you meet your goals.

  • Preparing a willDesignate beneficiariesDetermine asset distributionIdentify insurance

  • Financial literacy educationLifelong learning coursesFinancial mediaInternet resourcesYour CPA / accountant

  • For more information /PowerPoint Source material:

    www.360financialliteracy.org features financial education to help consumers at every life stage.

  • Financial Literacy:Knowing What You Need To Know To Achieve Your Financial Goals

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