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

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... to work to pay for your mortgage, car insurance, electricity bills, extras, etc? ... Manage risk, insurance. Create wills. Instill financial literacy ... – PowerPoint PPT presentation

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


1
Financial LiteracyKnowing 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.
  • 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
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 just a matter of
knowing what you have and knowing your options.
It is a matter of planning for lifes 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 Kno
w To Achieve Your Financial Goals
24
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