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

2.
America’s financial literacy
American 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.

3.
America’s 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 one’s finances in order to make
prudent decisions toward reaching life’s 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 isn’t just
a matter of knowing what you
have and knowing your options.
It is a matter of planning for
life’s milestones.

13.
Creating your first
overall 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.org features financial
education to help consumers at every life stage.

23.
Financial Literacy:
Knowing What You
Need To Know To Achieve
Your Financial Goals