SOUTH HAMILTON | BOSTON | CHARLOTTE | JACKSONVILLE
Personal Finance 101
Presented by:
Krista Peace, Financial Aid Coordinator
Financial Aid Staff:
Stacey Glidden, Director of Student Financial Services
Karen Rieck, Associate Director of Financial Aid
Tony Hoveln, Financial Aid Assistant
THINK Theologically | ENGAGE Globally | LIVE Biblically
This financial literacy presentation is
designed to give you a basic overview
and is not intended to provide specific
financial planning advice. It is
recommended that when you are
ready to begin establishing a personal
financial plan, you speak with a
financial advisor or a trusted friend
who is knowledgeable in this area.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Topics for Today
FINANCIAL GOALS… It’s important to establish financial goals
BUDGETING… Know where your money goes
SPENDING… Distinguish between needs and wants
CREDIT… Credit, credit scores, and why they are important
TAX PLANNING… Plan wisely for tax benefits
SAVINGS… Invest in your future
THINK Theologically | ENGAGE Globally | LIVE Biblically
SOUTH HAMILTON | BOSTON | CHARLOTTE | JACKSONVILLE
Creating a Budget to Plan
for Financial Goals
THINK Theologically | ENGAGE Globally | LIVE Biblically
What are your Financial Goals?
• Short Term
– Pay your tuition
– Pay rent
– Pay for children’s childcare/school
– Buy lunch
• Long Term
– Buy a car
– Pay off student loan debt
– Own your own home
– Retire
THINK Theologically | ENGAGE Globally | LIVE Biblically
Begin by Developing a Budget
• How will a budget benefit me?
– Self-discipline
– Track your progress
– Reach financial goals
•
•
•
•
•
•
Tuition & Fees
Books
Living Expenses
Food
Transportation
Insurance
THINK Theologically | ENGAGE Globally | LIVE Biblically
Where to Begin?
Creating a budget typically requires 5 steps…
THINK Theologically | ENGAGE Globally | LIVE Biblically
Step 1: Assess your Financial Situation
 Track how money comes in and how it goes out.
Common Ways Money
Comes In
• Your paycheck
• Family and friends
• Savings
• Other
Common Ways Money
Goes Out
• Rent or mortgage
• Food
• Utilities
• Clothing
• Transportation
• Insurance
• Student loan payments
• Other debts
• Miscellaneous expenses
• Savings
THINK Theologically | ENGAGE Globally | LIVE Biblically
Step 2: Identify Needs vs. Wants
 Take a look at what you have or want and determine what
you can't live without. As hard as it is, you may need to give
some things up.
NEEDS
• Food
• Clothing
• Shelter
• Medical/dental visits
• Prescriptions
• Tuition expenses
• Savings account
WANTS
• Computer, internet
• Car
• Cell phone, smart phone
• Cable television
• Movies, entertainment
• Pets
THINK Theologically | ENGAGE Globally | LIVE Biblically
Step 3: Understand your Financial
Behaviors
 Only by evaluating your current spending habits can you find
budgeting strategies that work for you.
Financial Behavior
• Impulse buying
• Buying name-brand
• Not knowing where the
money goes
• Spending your entire
paycheck
Budgeting Strategy
• Put yourself on an
allowance
• Buy generic or previously
owned
• Keep track of your
spending
• Use direct deposit to save
THINK Theologically | ENGAGE Globally | LIVE Biblically
Step 4: Create your Budget
 Creating a budget is nothing more than simple
math. Once you deduct your expenses from your
income, you'll know how much you have left to
save or spend on your "wants”.
 Budget Builder:
http://www.youcandealwithit.com/borrowers/calc
ulators-and-resources/calculators/budgetbuilder.shtml
THINK Theologically | ENGAGE Globally | LIVE Biblically
Budget Category Examples
•
•
•
•
•
•
Home/rent
Tithing
Subcategories
Utilities
Food/Groceries
Personal
Everything else
Electricity: $75
Gas/Heating: $75
Cell Phone: $140
Internet/Cable: $100
Water/Waste: $40
Auto Insurance: $78
Netflix
Clothing
Personal
Gas
Home Care
Entertainment
Medical
Gifts
Baby Supplies
THINK Theologically | ENGAGE Globally | LIVE Biblically
Jan
Total expenses
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Year
$3,040
$3,050
$2,800
$0
$0
$0
$0
$0
$0
$0
$0
$0
$8,890
$60
-$150
$280
$0
$0
$0
$0
$0
$0
$0
$0
$0
$190
Wages
$1,000
$1,000
$980
Student loan
$1,700
$1,700
$1,700
$5,100
$400
$200
$400
$1,000
$3,100
$2,900
$3,080
$870
$870
$870
Cash short/extra
Income
Miscellaneous
Total
$2,980
$0
$0
$0
$0
$0
$0
$0
$0
$0
$9,080
Expenses
Home
Mortgage/rent
Utilities
$0
Home telephone
$0
Cellular telephone
$2,610
$0
$0
$50
$50
$920
$920
$870
Groceries
$350
$370
$350
Child care
$0
Dining out
$75
$75
$425
$445
$150
$150
$75
$375
$50
$50
$50
$150
Total
$100
$0
$0
$0
$0
$0
$0
$0
$0
$0
$2,710
Daily living
Total
$1,070
$0
$150
$350
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,220
Transportation
Gas/fuel
Insurance
Repairs
$0
$0
Total
$200
$200
$125
$0
$0
$0
$0
$0
$0
$0
$0
$0
$525
$0
Total
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$150
$150
$150
$150
$150
$150
Tuition
$1,100
$1,100
$1,100
Total
$1,100
$1,100
$1,100
Gym fees
$20
$20
$20
Total
$20
$20
$20
Church
$100
$100
$150
Charity
$0
$100
$150
Health
Insurance
$450
Prescriptions
Total
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$450
Education
$3,300
$3,300
Recreation
$60
$60
Tithing
Total
$100
$350
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$350
Personal
Clothing
$75
$75
$20
Books
$50
$40
$15
Total
$125
$115
$35
$170
$0
$0
$0
$0
$0
$105
THINK Theologically | ENGAGE
Globally | LIVE Biblically
$0
$0
$0
$0
$275
Step 5: Maintain your Budget
 Track your spending to make sure it stays within
those guidelines.
 Review and revise as your situation changes.
THINK Theologically | ENGAGE Globally | LIVE Biblically
How to Keep your Budget on Track
1. Involve the entire family.
2. Make a list of short-term and long-term goals.
3. Enter payment due dates on your calendar.
4. Start your new budget at a time when it will be realistic to follow.
5. Find a budgeting system that fits your needs.
–
–
–
–
Written budget – use excel spreadsheet
Budget software– such as Quicken (http://quicken.intuit.com/)
Online budget- (www.mint.com)
Budget App – SPENDEE (http://www.spendeeapp.com/)
6. Distinguish between expenses: Essential or Discretionary
7. Avoid using credit cards to pay for everyday expenses.
8. Build rewards into your budget.
9. Stick with your plan and resist temptation of unnecessary
spending.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Backwards Budgeting (GNITEGDUB)
1. Determine the total amount you will need in order to
reach your financial goal(s).
2. Decide how much you will need to put into the
savings account every month in order to reach that
total in a specified period of time (i.e. 10 years).
3. How much do you have left after putting money into
savings?
4. Create your budget accordingly. Can you hit your
savings goals?
– If not, look for may ways to make money…freelancing,
selling goods, part time jobs, babysitting, yard sales, etc…
THINK Theologically | ENGAGE Globally | LIVE Biblically
Average Monthly Living Expenses
Housing/Utilities
33%
Transportation
20%
Food
13%
Insurance
8%
Charity
3%
Misc.
6%
Clothing
5%
Entertainment
5%
Education
4%
Healthcare
3%
Source: US Department of Labor,
Bureau of Labor Statistics
THINK Theologically | ENGAGE Globally | LIVE Biblically
Ways to Reduce Expenses
 Find free stuff
 Get a roommate
 Leave credit cards at
home
 Shop at thrift stores
 Use discount coupons
 Wait for sales and avoid
impulse purchases
 Go to matinee movies
 Cancel cable
 Use public transportation
 Be energy efficient
 Eat meals at home
 Use a grocery list
 Don’t shop for
groceries when hungry
 Avoid overdraft fees
THINK Theologically | ENGAGE Globally | LIVE Biblically
Resources
Sites that offer free tools for planning and managing
your budget:
–
–
–
–
–
–
–
–
–
www.mint.com
www.feedthepig.com
www.budgetsimple.com
www.nefe.org (National Endowment for Financial
Education)
www.foundationsu.com
www.youcandealwithit.com
Spendee app
HomeBudget app
http://www2.ed.gov/offices/OSFAP/DirectLoan/BudgetCal
c/budget.html (Federal Student Aid budget calculator
THINK Theologically | ENGAGE Globally | LIVE Biblically
SOUTH HAMILTON | BOSTON | CHARLOTTE | JACKSONVILLE
Credit & Credit Cards
THINK Theologically | ENGAGE Globally | LIVE Biblically
Understanding Credit
Credit = Borrowed money that allows you to
purchase things
• Credit Score = The likelihood that you will pay back
these loans and be approved to take out new ones
• Borrowed money can take many forms, such as a
care loan, home mortgage, student, or credit cards
for product purchases.
•
THINK Theologically | ENGAGE Globally | LIVE Biblically
What is a Credit Score?
• A rating that shows how well a person manages his or her
debt
• Ranks a person against other consumers and industry
standards
• Is used to determine how qualified a person is to receive lines
of credit or other loans.
• Helps lenders determine how much money you’ll be able to
borrow and what interest your loans will have.
• Your credit score is determined by three credit agencies
(Experian, TransUnion, & Equifax)
THINK Theologically | ENGAGE Globally | LIVE Biblically
Impact of Credit Scores
Low Scores
• Higher cost of
interest
• Might not be able
to get a loan
• May need a cosigner to obtain
credit
High Scores
• Best interest rates
provide long-term
savings
• Credit easily
accessible
• Easier access to
goods and services
THINK Theologically | ENGAGE Globally | LIVE Biblically
What’s a Good Credit Score?
800 & Above Excellent
750-800
Very good
700-749
Good
650-699
Fair
600-649
Poor
Below 600
Very Poor
THINK Theologically | ENGAGE Globally | LIVE Biblically
How to Build Good Credit History
 Set up payment reminders
– On-time payments are one of the biggest factors in credit scoring
– More recent delinquencies have greater impact on your score
 Reduce the amount of debt you have
– Pay down accounts with low balances or highest interest
 Check your credit report
– If you find errors, dispute them with credit bureau(s) and
creditor(s)
THINK Theologically | ENGAGE Globally | LIVE Biblically
How to Order a Credit Report
You have a right to request a copy of your credit report at any time and
can get one for free from each agency once per year.
Contact credit bureaus:
 Experian - www.Experian.com
Print Annual Credit Report
Request Form:
 TransUnion – www.transunion.com
www.ftc.gov/credit
 Equifax – www.equifax
Mail to:
Annual Credit Report
Request Service
P.O. Box 105281
Atlanta, GA 30348
Source: Nelnet Education Loan Servicing
THINK Theologically | ENGAGE Globally | LIVE Biblically
Student Loans and your Credit
•
•
•
•
•
•
•
•
•
Always make your loan payments on time or else your credit score will be negatively
affected!
Pay off your student loan debt as fast as possible.
Make interest-only payments while you are in school to avoid capitalization.
Graduated repayment - lower payments in the early years and larger payments later.
Extended repayment - Extend the term you have to repay your loans. Over the longer term,
you'll pay a greater amount of interest, but your monthly payments will be smaller.
Income-based repayment plans - Tie your monthly payment to your level of income; the
lower your income, the lower your payment.
If you have several student loans, consider consolidating them through a student loan
consolidation program.
If you're in default on your student loans, don't ignore them--they aren't going to go away!
Ask your lender about loan rehabilitation programs; successful completion of such programs
can remove default status notations on your credit reports.
https://studentaid.ed.gov/repay-loans
THINK Theologically | ENGAGE Globally | LIVE Biblically
Credit Cards
ADVANTAGES
• Cushion for financial
emergencies
• Instant gratification
• Build positive credit
• Convenience
• Record keeping
• Perks
• Internet purchases
DISADVANTAGES
• Overuse
• Teaser rates
• High interest rates
• High annual fees
• Fraud
• Balances can accumulate
quickly
• Can negatively impact
your credit
• Credit costs money!
THINK Theologically | ENGAGE Globally | LIVE Biblically
Credit Card Usage Tips
 Pay cash instead of using your credit card
 Set a monthly limit on charging that is based on
your budget…not your credit allowance
 Limit the number of credit cards you have
 Don’t apply for credit cards just to get a free gift or
discount
 Pay bills on time to avoid late fees or charges
 Pay more than the minimum payment
THINK Theologically | ENGAGE Globally | LIVE Biblically
SOUTH HAMILTON | BOSTON | CHARLOTTE | JACKSONVILLE
Planning your Tax Strategy
THINK Theologically | ENGAGE Globally | LIVE Biblically
Taxes and Financial Planning
• Tax planning – Taking advantage of tax benefits while
paying your fair share of taxes.
• An effective tax strategy is vital for successful financial
planning.
• Understanding tax rules and regulations can help you
reduce your tax liability.
**For more information and personalized advice, always consult
with a tax professional.**
THINK Theologically | ENGAGE Globally | LIVE Biblically
Types of Taxes
1. Taxes on
purchases
• Sales
• Excise
2. Taxes on
property
3. Taxes on
wealth
• Real estate
• Personal
property
• Federal
estate
• State
inheritance
4. Taxes on
earnings
• Federal &
State
income
• Social
Security
THINK Theologically | ENGAGE Globally | LIVE Biblically
Tax Forms
1040EZ
1040A
1040
Taxable income less than $100,000
Required to use this form if income is
over $50,000
Single or married filing jointly,
under age 65 and with no
dependents
Adjustments to income are allowed
Use if you itemize deductions
You do not itemize deductions
Earned no more than $1,500 of
taxable interest
Tax credits for child care and
dependent care are allowed
You have income that cannot be
reported on 1040EZ or 1040A
Your taxable income is less than
$100,000
http://www.irs.gov/pub/irspdf/f1040a.pdf
Least complicated; quick and easy
to file
http://www.irs.gov/pub/irspdf/f1040.pdf
You do not itemize deductions,
claim any adjustments to income or
tax credits
http://www.irs.gov/pub/irspdf/f1040ez.pdf
THINK Theologically | ENGAGE Globally | LIVE Biblically
Who Should File?
•
•
2014 filing requirements*:
IF your filing status is…
THEN file a return if your gross income was
at least…
Single
$10,150
Married filing jointly
$20,300
Married filing separately
$3,950
Head of household
$13,050
Even if you do not have to file, you should because you
MAY get money back if any of the following conditions
apply:





•
You had federal income tax withheld
You qualify for earned income tax credit
You qualify for the additional child tax credit
You qualify for the health coverage tax credit
You qualify for the American Opportunity or Lifetime Learning
credit
http://www.irs.gov/pub/irs-pdf/p17.pdf
THINK Theologically | ENGAGE Globally | LIVE Biblically
Computing Your Tax Liability
Gross Income
- Adjustments
Adjusted Gross Income (AGI)
AGI
- Deductions
- Personal Exemptions
Taxable Income
Taxable Income
x Tax Rate
Gross Tax Liability
Gross Tax Liability
- Credits
Net Tax
THINK Theologically | ENGAGE Globally | LIVE Biblically
Tax Deductions
• The purpose of tax deductions is to decrease your taxable
income, thus decreasing the amount of tax you owe to the
federal government.
Examples*:
• Job expenses that are not reimbursed by your employer: These include union dues, required
uniforms you're must purchase, and business-related vehicle expenses, such as gas and repairs.
• Student loan interest that your parents pay: If your parents don't claim you as a dependent, you
can deduct up to $2,500 of the interest your parents paid on a student loan for you. (Loan must be
in your name.) See chapter 4, page 30 of IRS Publication 970.
• Self-owned business: You can deduct office equipment, sales tax on business purchases, health
insurance premiums, anything "necessary and ordinary" to perform your business.
• Charity: To see if an organization is eligible for a tax-deductible donation, check out the IRS's
Publication 78.
• Casualty and theft: Unexpected loss of property due to theft, fire, natural disaster
• Home mortgage interest: Interest paid on your mortgage for the year can be deducted.
• State and local income or sales tax paid: Usually, deducting state income tax is better, but some
states have sales tax and no income tax. You choose one or the other to deduct.
• Personal property tax: These deductions are based on personal property taxed like boats or cars.
*For personalized and accurate advice, always consult with a tax professional.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Tax Credits
• A
tax credit is an amount subtracted directly from the amount of taxes
owed
• Tax Credit vs. Tax Deduction
– $100 Tax Credit reduces your taxes by $100
– $100 Tax Deduction reduces taxes by $28 (if you are in the 28%
bracket)
• Examples*:
– Earned Income Tax Credit
– Education Credits
– Hybrid car tax credit
– Child and Dependent Care Credit
– Adoption Credit
– Health coverage Tax Credit
– Saver’s Credit
– For more information please visit:
http://www.irs.gov/Credits-&-Deductions
*For personalized and accurate advice, always consult with a tax professional.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Tax Credits vs. Deductions Video
• http://www.investopedia.com/terms/i/incometax.asp
THINK Theologically | ENGAGE Globally | LIVE Biblically
Tax Benefits for Students
Lifetime Learning credit - A credit of up to $2,000 per
year for qualified tuition and related expenses paid.
Eligible students enrolled in undergraduate, graduate
and professional degree courses may claim credit. There
is no limit on the number of years you can claim the
credit.
Student loan interest deduction - If you graduate with
student loans, you can deduct up to $2,500 of the
interest you pay on student loans each year.
American Opportunity credit (Hope credit) - This credit is
generally worth up to $2,500 for tuition and related
expenses for the first four years of undergraduate
education, provided you're enrolled at least half-time.
http://www.irs.gov/pub/irs-pdf/p970.pdf
*For assistance or more information, consult a tax professional or IRS Publication 970, Tax Benefits for Education.
THINK Theologically | ENGAGE Globally | LIVE Biblically
SOUTH HAMILTON | BOSTON | CHARLOTTE | JACKSONVILLE
Saving & Investing Basics
THINK Theologically | ENGAGE Globally | LIVE Biblically
Why Save?





Reach financial goals
Build up a “rainy day” fund for emergencies
Save for major purchases or expenses
Develop a personal financial/investment plan
Retire
THINK Theologically | ENGAGE Globally | LIVE Biblically
 Will you save up for 4,5, or 6 months?
• Do what you can, but an emergency fund is not something to skimp on. It
is recommended that you have at least 6 months worth of income in your
emergency fund.
 Will your calculations be based on losing one income or both incomes?
• It’s up to you, but if you choose the one-income scenario, make sure it’s
the higher income
 What needs will you include in your calculations?
• Plan as if you won’t be getting any help. Calculate how much your life
costs each month.
THINK Theologically | ENGAGE Globally | LIVE Biblically
What are you worth?
• Consider paying yourself every time you get a paycheck
• What it takes…
 Commitment
 Discipline
 Delayed gratification
• Ways to do it…
 Set aside from each paycheck
 Collect change and/or set up “save the change” transfer
 Save unexpected money
Remember…the amount saved isn’t as important as
getting into the habit!
THINK Theologically | ENGAGE Globally | LIVE Biblically
What is Interest?
Earning Interest
Paying Interest
When you invest or save
money, you often earn interest.
When you borrow money, you
have to pay interest.
The amount charged, expressed as a percentage
of principal, by a lender to a borrower for the use of
assets. Interest rates are typically noted on a an
annual basis, known as annual percentage rate
(APR).
Source: Investopidia.com
THINK Theologically | ENGAGE Globally | LIVE Biblically
Simple Interest
Deposit x Interest Rate x Number of Years = Interest Earned
Example:
• You have $1,000 in a savings account that pays 1.5% simple interest.
• During the first year you would earn $15 in interest.
YEAR 1
$1000 x 0.015 x 1 = $15
$1000 + $15 = $1015 (total value)
•
After 20 years you would earn $300 in interest.
YEAR 20
$1000 x 0.015 x 20 = $300
$1000 + $300 = $1300 (total value)
THINK Theologically | ENGAGE Globally | LIVE Biblically
Compound Interest
Earning interest on your interest
– “Compound interest arises when interest is added to the
principal. From that moment on, the interest that as been added
to the principal also earns interest.” – Investopedia
Example: You have $1,000 in an account that returns 6% interest,
compounded annually, During the first year, you would earn $60 in
interest.
YEAR 1
$1000 x 0.06 = $60
$1000 + $60 = $1060 (total value)
YEAR 2
$1060 x 0.06 = $63.60
$1060 + $63.60 = $1123.60 (total value)
At the end of 10 years, you would have earned $790.85 for a total value
of $1,790.85.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Understanding Savings Products
• What are they?
– Savings Accounts
– Money Market Accounts
– Certificates of Deposit (CDs)
• How do they work?
– You can easily take money out and put money in.
– The bank pays you interest in exchange for the opportunity
to hold your money.
– Interest rate on savings is generally lower compared with
investments.
• Investments are riskier, thus higher interest rate.
• Low interest rate may not keep pace with inflation.
– Saving accounts & money markets accounts are secure!
• Insured by FDIC.
Source: U.S. Securities Exchange Commission
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically
Savings Accounts
• Able to make withdrawals and deposits.
• Interest bearing, but minimum balances required.
• Establishing an account is easy and can be initiated
by as little as a $25 deposit.
• Your savings are insured by the FDIC.
• Interest rates are low, but your savings are secure.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Money Market Accounts
• A money market account is a deposit account that
is offered by banks and credit unions. (Similar to
savings accounts).
• The accounts earn interest and checks can be
written, but with various restrictions .
• They usually pay slightly higher interest and have a
higher minimum balance.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Certificate of Deposit (CD)
Relatively low-risk investment
Typically offers a higher rate of interest than savings account.
FDIC insures up to $250,000 per bank, per owner.
You “lend” the bank a fixed sum of money for a fixed period
of time – six months, one year, five years, or more.
• When you cash in or redeem your CD at maturity, you receive
the money you originally invested plus any accrued interest.
• If you cash in your CD before it matures, you may have to pay
a “early withdrawal” penalty.
•
•
•
•
Source: FDIC
THINK Theologically | ENGAGE Globally | LIVE Biblically
Understanding Investment Products
• What are they?
– Stocks
– Bonds
– Mutual funds
• How do they work?
– All investments have higher risks but potentially higher
returns than savings products.
– Over many decades, the investment that has provided the
highest average rate of return has been stocks.
Source: U.S. Securities and Exchange Commission
THINK Theologically | ENGAGE Globally | LIVE Biblically
Stocks
• Also called “equities”
• Stocks are a share of ownership in a company
• You can make money in two ways from owning a stock.
1. Capital Gains = The price of the stock may rise if the company does well
and you make money through capital gains.
2. Dividends = Companies sometimes pay out parts of profits to stockholders.
You can keep the cash from your dividends or reinvest dividends.
• There is no guarantee that the stock you hold will grow and do
well. When the company performs poorly, you loose money.
• Risky! – Your investment could loose all value and be worth 0$
Source: U.S Securities and Exchange Commission
THINK Theologically | ENGAGE Globally | LIVE Biblically
Bonds
• A bond is a debt security.
• When you purchase a bond, you are lending money to a
government, municipality, or a corporation for a certain
amount of time.
• The issuer promises to pay you a specified rate of interest
during the life of the bond and repay the principal when it
“matures”
– Maturity is the length of time that you hold the bond.
• You can loose your entire principle if the issuer goes bankrupt.
• Not as risky as stocks but riskier than a savings account.
Source: U.S Securities and Exchange Commission
THINK Theologically | ENGAGE Globally | LIVE Biblically
Mutual Funds
• You can think of a mutual fund as a company that brings
together a group of people and groups their money together to
invest in stocks, bonds, and other securities.
• Investors purchase shares in from a mutual fund company
• Mutual funds have fees because the fund is managed by
professionals at the mutual fund company.
Source: U.S Securities and Exchange Commission
THINK Theologically | ENGAGE Globally | LIVE Biblically
Risk and Return on Investment
• The higher the risk, the higher the reward.
• Every saving and investment product has different risks and returns.
• Remember, investments are not deposits into a savings account, they can
loose value.
• Because of the risks associated with any investment, always deal with a
reputable, licensed financial advisor and research the product before you
make a purchase.
• Buyer beware! Avoid investment scams.
– Nothing is “guaranteed” or “risk free” when it comes to investing.
– If it sounds too good to be true…it probably is.
THINK Theologically | ENGAGE Globally | LIVE Biblically
Preparing for Retirement
• Life expectancy continues to rise.
• The length of retirement is increasing as the average
retirement age hovers at 63.
• The average American spends 20 years in retirement.
• Many people mistakenly believe that Social Security will pay
for all or most of their retirement needs. One should not count
solely on Social Security.
• When should you start saving for retirement? NOW!!
Source: Center for Retirement Research at Boston College
THINK Theologically | ENGAGE Globally | LIVE Biblically
The sooner you begin saving, the more time
your money has to grow.
http://money.cnn.com/retirement/guide/basics_basics.moneymag/
THINK Theologically | ENGAGE Globally | LIVE Biblically
Example – Fred vs. Steve
Fred and Steve each save $2,000 a year into an Individual
Retirement Account (IRA).
– Fred started saving at 22 and stopped at age 31 (9 years).
– Steve started saving at age 31 and will continue to do so until he retires
(34 years).
• Assuming both IRAs earn 9%, who will have more money fro
retirement at the age of 65?
– Fred will. His account will grow to $579,504. Steve’s account will grow to
only $470,247.
• How can this be? Fred invested only $18,000, while Steve will
invest $68,000.
– The answer is compounding interest! While Fred invested less money, he
started 9 years sooner than Steve did. Steve’s money just didn’t have
enough time to grow.
Source: youcandealwithit.com – Financial Management presenter’s guide, pg. 5
THINK Theologically | ENGAGE Globally | LIVE Biblically
Resources
•
Saving, Investing, & Retirement
–
–
•
Budgeting and Money Management:
–
–
–
–
–
–
–
–
•
www.studentloans.gov
www.nslds.ed.gov
Live Life Smart Guide
–
•
www.mint.com
www.feedthepig.com
www.budgetsimple.com
www.nefe.org (National Endowment for Financial Education)
www.foundationsu.com
http://www.spendeeapp.com/
HomeBudget app
www.youcandealwithit.com
Federal Student Loans & Repayment Plans
–
–
•
http://money.cnn.com/retirement/guide/basics_basics.moneymag/
http://www.investopedia.com/
http://www.nelnetloanservicing.com/library
Federal Income Tax Information & Benefits
–
–
http://www.irs.gov/
http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically
THINK Theologically | ENGAGE Globally | LIVE Biblically