The Roadmap to Financial Success

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The Roadmap to Financial Success

• Presented By
• The Credit-Wise Cats

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Your Financial Road Map

• A six-step process
• Determine your current financial situation
• Develop your financial goals
• Identify alternative courses of action
• Evaluate the alternatives
• Create and implement a financial action plan
• Evaluate and revise the financial plan

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Where do you stand right now?

• Determining your current financial situation
• Personal Property
• Income
• Savings
• Expenses
• Debts

4
Where do you want to go?

• Develop your financial goals
• Goals should be
• Realistic
• Specific and measurable
• Related to a time frame
• Suggestive of type of action to be taken

5
Where do you want to go?

• Types of financial goals
• Short term (1 yr) Spring Break Trip
• Intermediate (2-5 yrs) New Car
• Long-Term (5 yrs) Pay off student loans
• Keep in mind
• Needs versus Wants

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Which road should you take?

• Identify alternative courses of action
• Know what options you have
• Evaluate those alternatives
• Direct and Opportunity Costs
• What is the best plan for you?

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Make your plan and make it work

• Constructing a financial plan
• Develop financial documents to be used
• Comprehensive Budget
• Net worth Statement
• Cash Flow Statement
• Spending Ledger
• Reevaluate and revise your plan
• Changes in personal, social and economic
  conditions lead to updates and changes to your
  plan

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A Budget Your Financial Direction

• Budgets are helpful for
• Assessing your current situation
• Planning your financial direction
• Implementing your financial plan
• Evaluating your financial progress
• Successful budgets are
• Well planned, Realistic, Flexible and Clearly
  Communicated

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A Budget Your Financial Direction

• Income....2000
• Rent......450
• Utilities..100
• Food..250
• Car.200
• Insurance.....150
• Clothing.100
• Entertainment......200
• Savings.200
• Credit Card Debt.300
• Remaining Income....50

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Tracking your Progress

• Track your spending
• Evaluate progress
• Identify trouble areas
• Make adjustments to budget
• Expense Tracking Tools
• Check Registers, Spending Ledgers, Bank
  Statements, Financial Software

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Consumer Credit Financial Fuel

• Three ways to finance a current purchase
• Take money from savings
• Use present earnings
• Borrow against future income
• Credit is an arrangement to receive cash, goods
  or services now, and paying for them in the
  future.

Buy now, Pay Later
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Consumer Credit Financial Fuel

• Types of Credit
• Close-ended Credit
• A Specific Purpose and Amount
• Mortgage Loan, Auto Loan, Student Loan
• Open-ended Credit
• Use as needed until reaching credit limit
• Credit Card, Home Equity Loan

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Consumer Credit Financial Fuel

• Read the small print
• APR, Finance Charges, Annual Fee, Sign-Up Fee,
  Grace Period, Credit Limit
• Free Gifts
• Incentives to apply for credit cards
• Open lines of credit
• Application and annual fees

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Consumer Credit Financial Fuel

• Advantages of Credit
• Buy now, pay later
• Cards are safer then cash
• Accepted almost everywhere
• Credit cards gives you status with merchants
• Identifies you as a qualified buyer

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Consumer Credit Financial Fuel

• Disadvantages of Credit
• Overuse. Credit cards are easy to get and easy to
  use.
• Credit cards are viewed as extra income not debt
  that must be paid off.
• Delaying payments will hurt you credit report.

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Consumer Credit Financial Fuel

• What kind of consumer are you?
• If you pay your bill in full each month
• Consider Rewards Cards or Low Fixed Cost Cards
• If you plan on carrying a balance
• Look for low interest cards
• Pay more then minimum monthly payment
• If you want to increase your credit rating
• Pay your bill in full and on time,
• Do not carry more then 2 or 3 credit cards

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Consumer Credit Financial Fuel

• Your Credit History
• A financial report card
• Consumer Info from last 7 years
• Your Credit Score
• A financial GPA
• Calculates your Credit Worthiness

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Savings The fast lane to success

• Pay yourself first!
• Let your money work for you!
• Short-term savings
• A rainy day fund
• Long-term savings
• Retirement money

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Savings The fast lane to success

• Different Avenues of Savings
• Savings Account
• Certificates of Deposits (CDs)
• Bonds
• Stock (Common and Preferred)
• Mutual Funds
• Retirement Accounts

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Savings The fast lane to success

• Evaluating risk
• Will you lose money?
• The greater the risk, the higher the potential
  for growth
• Savings Account vs. Stock
• Liquidity
• How quickly can you turn an asset into cash?
• House vs. Stock
• Savings Account vs. CD

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Savings The fast lane to success

• Retirement
• Start Saving Now!
• The earlier you start, the more comfortable you
  will be in retirement.
• Expenses will go up
• People are spending more years in retirement

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Savings The fast lane to success

• Johnny Fast
• Invests 25 65
• 300/mth _at_ 9
• At Retirement
• 1.4 Million
• Interest Income
• 1,256,000

• Jessie Slow
• Invests 45 65
• 300/mth _at_ 9
• At Retirement
• 201,000
• Interest Income
• 129,000

• Jimmy Medium
• Invests 35 65
• 300/mth _at_ 9
• At Retirement
• 550,000
• Interest Income
• 442,000

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Protecting Yourself

• Insurance
• Its better being safe than sorry
• Home and Auto Insurance
• Health and Disability Insurance
• Life Insurance
• What else can you insure?

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The Roadmap to Financial Success

• Budget and Track Spending
• Save 10 of Your Income
• Use Credit Wisely

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The Roadmap to Financial Success
Questions?