2. Where Do I Stand Financially?
For Informational Purposes Only
3. Statistics
42% of American workers live paycheck to paycheck,
including 25% of those earning more than $100,000
per year
29% of American workers have less than $1,000 in
savings
Millennials have a savings rate of negative 2%, thanks
to factors like high student loan debt and skyrocketing
rent prices
The average U.S. household with debt carries $15,675
in credit card debt and $132,158 in total debt
For Informational Purposes Only
4. What is Financial Literacy?
The ability to understand how money works in the world: how someone manages to
earn or make it, how that person manages it, how he/she invests it (turn it into more)
and how that person donates it to help others. (Wikipedia)
The President’s Advisory Council on Financial Literacy defines personal financial
literacy as “the ability to use knowledge and skills to manage financial resources
effectively for a lifetime of financial well being.“
For Informational Purposes Only
5. Why is Financial Literacy Important?
To understand the language of money
To reduce the significant gap between the rich and
everyone else
To learn how to manage income and expenses
Save, invest, negotiate costs, etc.
To make wiser financial decisions (e.g., new car or
certified pre-owned)
To not leave your financial decisions up to others
who are not qualified
For Informational Purposes Only
6. Did You Know…
Economic Indicators (unemployment numbers, interest
rate changes) impact your finances
Federal Reserve changing rates
Presidential elections impact your daily finances
Globalization impacts your finances (e.g., 401k
impacts from global companies or
election/referendum results)
Policy changes
DOL Fiduciary Ruling
For Informational Purposes Only
7. Myths about Money
Debt is expected and unavoidable
Saving is not necessary since tomorrow is not
promised
I can take money out of my 401(k), TDA, etc. at any
time because it is my money
You have to be rich to invest
I don’t earn enough to save
My Partner takes care of the money so I don’t have
to worry about it
For Informational Purposes Only
8. Debt
Types of Debt
Student Loans
Health care bills
Mortgage Loans
Car Loans
Credit Cards
Causes of Debt
Overspending/lack of financial education
Emergency situations
For Informational Purposes Only
9. Credit
Components of Credit Score (FICO)
Payment History – 35%
Credit Utilization – 30%
Length of Credit History – 15%
New Credit – 10%
Credit Mix – 10%
Interest rate changes
Fed increases rates impact on auto loan rates,
mortgage rates, credit card rates, etc.
For Informational Purposes Only
10. How Debt Affects your Credit
How FICO Scores Affect Mortgage/Auto Rates
760 to 850 tier 5.780% 620 to 659 tier 7.096%
700 to 759 tier 6.002% 580 to 619 tier 8.583%
600 to 699 tier 6.286% 500 to 579 tier 9.494%
For Informational Purposes Only
11. Budgeting
Many say it is difficult to stick to a budget
Create a budget
Track expenses daily for a few months
Create categories and allocate amounts to those categories
Accountability partner
Cash based lifestyle
Minimal credit card usage
Apps for Budgeting
Mint Budgeting App
You Need a Budget App
Every Dollar – Dave Ramsey
For Informational Purposes Only
13. Investment Strategies
Buy and Hold
Indexing
Mutual Funds
Growth Strategy
Value Investing
Ben Graham/Warren Buffet
Asset Allocation
For Informational Purposes Only
14. Retirement Vehicles
Pension Plans
401(k), 403(b), SEP (Simplified Employee Pension)
529 Plans
Traditional IRA vs. Roth IRA
Life insurance plans (replacement income)
Employee Stock Ownership Plans (ESOPs)
For Informational Purposes Only
15. Taxes
Not one size fits all
Engage a CPA who regularly performs tax returns & is
adept in changes to tax rules
Income tax returns are not free money (instead they
are an interest free loan all year to the
government)
Charitable donations – tax benefit
Churches, organizations, etc.
For Informational Purposes Only
16. Estate Planning
A Will
Living Revocable Trust
Name executor of estate
Set up trust accounts to limit estate tax
Establishing a guardian for living dependents
Life insurance policies
Set up durable Power of Attorney (POA)
Update beneficiaries on documents (e.g., IRA)
For Informational Purposes Only