knowing what you need to know to achieve your financial goals

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

2. Americas financial literacy

  • American families:
    • The average American family spends $1.22 for every dollar it earns.
    • Onein 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.

3. Americas financial literacy

  • 2 out of 3 households will probably fail to realize life goals
  • Financial illiteracy is passed to the next generation
    • Average high school senior failed 2004 financial knowledge survey

4. What is Financial Literacy? 5. Financial literacy

  • The ability to effectively evaluate and manage ones finances in order to make prudent decisions toward reaching lifes goals
  • The understanding of:
    • Money
    • Cash flow
    • Basic economic/financial concepts
    • Debt/risk management

6. Achieving financial literacy

  • Five Key Areas of Personal Finance:
    • Money and income
    • Money management
    • Spending and debt
    • Savings and investments
    • Risk management

7. Money and income

  • Time is money
  • How many hours do you need to work to pay for your mortgage, car insurance, electricity bills, extras, etc?

8. Money management

  • Budgeting
  • Prioritizing

9. Spending and debt

  • Benefits and costs of spending alternatives
  • Credit as a basic financial tool

10. Savings and investing

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

11. Risk management

  • Insurance
  • Understanding the markets
    • 50% of Americans own stocks
  • Identity theft

12. Financial literacy isnt justa matter of knowing what you have and knowing your options.It is a matter of planning for lifes milestones. 13. Creating your firstoverall long-term financial plan 14. Buying your first home

  • Establish good credit
  • Understand real costs
  • Assess risks

15. Getting married

  • Understand financial partnership
  • Establish separate and joint credit and bank accounts
  • Create wills and trusts
  • Identify beneficiaries
  • Choose owners on title assets

16. Financing a family

  • Budget
    • Education, health care, child care
  • Manage risk, insurance
  • Create wills
  • Instill financial literacy

17. Starting a business

  • Understand
    • cash flow
    • expense timing
  • Manage income and expenses

18. Planning for Retirement

  • Determine 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.

19. Preparing a will

  • Designate beneficiaries
  • Determine asset distribution
  • Identify insurance

20. Unexpected milestones

  • Loss
  • Sandwich generation
  • Divorce

21. Financial literacy education

  • Lifelong learning courses
  • Financial media
  • Internet resources
  • Your CPA

22. For more information

  • www.360financialliteracy.orgfeatures financial education to help consumers at every life stage .

23. Financial Literacy: Knowing What YouNeed To Know To Achieve Your Financial Goals 24.