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[click] Welcome to the “Financial Planning” presentation. My name is ______. [Introduce yourself and your position.]

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Presentation on theme: "[click] Welcome to the “Financial Planning” presentation. My name is ______. [Introduce yourself and your position.]"— Presentation transcript:

1 [click] Welcome to the “Financial Planning” presentation. My name is ______. [Introduce yourself and your position.]

2 When it comes to money, everyone’s finances shape up differently
When it comes to money, everyone’s finances shape up differently. Maybe one of your dreams is to arrive on Easy Street someday. If so, this presentation can help. No matter what your past relationship to money has been, expanding your knowledge can lead to greater financial empowerment down the road. [click]

3 • Your “Financial Planning” booklet
For today's presentation you will need [click] your “Financial Planning” booklet and a pen or pencil. [click] If anyone doesn't have a booklet or something to write with, please raise your hand. [Pass out items to the people who need them.] Is everyone ready to get started? Great! [click] • A pen or pencil

4 • Develop a positive relationship to money
• Create a budget that works • Develop a savings plan • Learn about investing All of us have needs and dreams that money can help us achieve. Whatever your goals, financial planning can help you achieve them. Components of financial planning include [click] understanding and developing a positive relationship to money, [click] learning how to create a budget that works, [click] developing a savings plan, [click] and learning about investing. [click]

5 1. What does money mean to me? 2. How do I feel about budgeting?
3. What are some of my savings goals? 4. What investing success have I had? If everyone would turn to page 3 of the workbook, we’re going to start with some questions that will help you better understand your personal relationship with money. [click] 1. What does money mean to me? [click] 2. How do I feel about budgeting? [click] 3. What are some of my savings goals? [click] 4. What investing success have I had? Please take a moment to write down your thoughts. [Give audience a few minutes to think about it and write down answers.] Everyone done? Great! We will be referring to these answers as we go through this presentation. [click]

6 If you leave here today with just one new idea, I hope it’s a new way to consider your relationship to money. [click]

7 • What does money mean to me?
Power Happiness Self-worth Social status Freedom Here’s a question you may want to ask yourself: [click] “What does money mean to me?” This is such an important question to consider and understand. Does anyone want to share their answer to this question? [Give audience a few minutes to share.] Great. For some people, money equates [click] to power, [click] or happiness, [click] or self-worth, [click] or social status, [click] or freedom. It will probably take some time to consider your feelings. You might want to consider how your family or your spouse thinks about money and how this affects your ideas and your spending habits. We all know how money issues can affect relationships. Clearly understanding what money means to you and how that relates to how you spend and manage your money can be the beginning of a more conscious relationship to money. [click]

8 • A relationship takes understanding, patience, and time
• An exchange of energy • A relationship takes understanding, patience, and time • Begin with small steps Developing a new relationship to money may mean starting with a new definition of what money is. One way to think about money is as an exchange of energy. [click] You work hard, and in exchange for your work you receive money, which you can exchange for goods and services that someone else has put their energy into. Seeing money as a by-product of your expended energy may help you begin to have a more empowered relationship with money. [click] Another way to think about money is in terms of a relationship. Just like any relationship, creating a positive relationship to money takes understanding, patience, and time. Many people spend little quality time considering money issues. It can seem overwhelming and complex. [click] Begin with small steps. Take your time and just try to enjoy the process you’ve already started by coming here today. Maybe ask your spouse or close friends what their opinion of money is. This could be a great exercise to see things that you might not otherwise consider. [click]

9 As you develop a more positive relationship with money, then our next step, budgeting, becomes easier. Many people may look at budgeting as giving something up. But through budgeting you can actually become more empowered, because you can have the funds to spend on the things that matter most. It’s similar to managing your time. You make choices each day about how to allocate your time to create the right balance. [click]

10 • Money comes in every month—your income
• Money goes out every month—your expenses • Know where it all goes • Spend less than you make Having a budget just means knowing how much money comes in every month—your income [click]—and how much goes out every month— your expenses [click]—and knowing where it all goes. [click] The goal of budgeting is very simple. You want to spend less than you make! That’s it. [click] Budgeting can help you to do it. Over time you’ll be able to hone your budget to save more and turn your dreams into reachable financial goals. [click]

11 • Have an all-cash month • Collect receipts • Record everything
An easy way to start budgeting is to turn some of that exchange of energy we talked about into plain old dollars and cents. [click] Having an all-cash month—using money direct from your bank accounts rather than using credit or debit cards—can really help you become aware of your inflow and outflow. Just spend one month tracking every penny for an honest look at your spending habits. There are a number of easy ways to keep a record of your expenses. [click] You can collect receipts for everything that you purchase and keep them in an envelope that you keep with you at all times. The next step is to put the receipts into categories—such as food, entertainment, gas—and add them up. [click] It’s important to keep track of everything. It’s the little things that can add up quickly. Take a look at the chart on page 7 of your booklet to see just how quickly! [click]

12 Here’s a small sample budget worksheet
Here’s a small sample budget worksheet. It lists fixed expenses, which are expenses that don’t change each month, like your home mortgage, and flexible expenses, which are those expenses that change each month. The trick to budgeting is spending only what you intend in both the fixed and flexible expenses. In this sample budget worksheet, the grocery budget was set at $250 for the month. After collecting and adding up the receipts, you spent only $200. Congratulations! No one is a perfect budgeter when they get started. Be sure to congratulate yourself for the small steps. And keep in mind, just being aware of what you spend can help you stay way ahead. [click]

13 • Credit card finance charges
• Dry cleaning • Parking charges • Vending machines • Magazines • Postage • Movie rentals • Credit card finance charges Before we leave the budgeting section, here’s a list of items you may have forgotten to include because they seem insignificant or they don’t occur every month. [Click through and read each bullet point.] When you’re looking for ways to afford to save, it’s really not difficult to see how your budget can be a roadmap. You might notice the last bullet point on our list, credit card finance charges. [click]

14 • Consider curbing your impulse shopping
• Try to maintain responsible credit • Establish good credit For many of us, a big part of budgeting will be to [click] consider curbing our impulse shopping and using the credit cards to pay for things that might not be in our budget. Credit cards can be a useful convenience. [click] But we should try to maintain “responsible credit” when budgeting. If you have outstanding credit card payments, you might consider paying down or eliminating this debt as part of your budgeting priority, especially if the interest payments are high. [click] Establishing good credit is important to help you make large future purchases, like buying a home. This means establishing good credit and keeping track of your credit rating are important aspects of financial planning. You can speak with me after this session if you need help establishing good credit. [click]

15 Our next section is designed to help us learn about savings principles and vehicles and to develop an effective savings plan. [click]

16 • Short-term savings • Mid-term savings • Long-term savings
Many people are confused about where to put their savings and how to save money for all of their future needs. One helpful savings strategy is to divide all your savings needs into three time horizons: [click] short-term [click] mid-term [click] and long-term. [click]

17 Your short-term savings might include financial goals for the next one to five years, [click] such as money for a new car or vacation. [click] Also in your short-term savings should be extra money in case of emergencies. Financial experts suggest that it is good to have from three to six months of income saved for life’s unexpected emergencies. [click]

18 Your mid-term savings might be for goals extending 5 to 10 years out
Your mid-term savings might be for goals extending 5 to 10 years out. [click] Maybe you want to put a down payment on a new house one day, [click] or purchase a big-ticket item such as a boat or R.V. [click]

19 Finally, the long-term savings
Finally, the long-term savings. [click] Your long-term savings may include college education for children, but it should always include your retirement savings. [click] Recent studies indicate that you may need to rely on your savings and investments for more than half of your retirement income. In other words, you can’t rely on Social Security to cover all of your retirement needs. [click]

20 Retirement is often a saving goal that younger people are tempted to ignore. But planning now for retirement makes saving so much easier than waiting until later. The power of compound interest can really pay off. Just a few dollars invested every day can mean your financial independence at retirement. [click] Take a look at this chart. Mary and Bob work at the same time for the same $30,000 annual wage. Mary starts investing 10% of wages into her employer’s 401(k) plan right away, contributes to the plan for 25 years, then stops contributing and leaves the $124,938 of contributions and earnings to compound in the plan. Bob waits 10 years, then starts contributing 10% as well and contributes a total of $184,940. [click] Both earn an average 8% return, and get the same annual raises, averaging 4% per year. So who do you think has more money on their 35th anniversary? You’re right! Even though Mary contributes $60,000 less than Bob, she has [click] over $220,000 more than Bob. So you see, starting early and saving for the long term is one of the best ways to retirement success.

21 Once you’ve identified your savings goals, it’s time to consider savings vehicles and investment options. This is our fourth principle of successful money management. We’re all experienced investors, because investing is not limited to money. Can anyone share your investment experiences you jotted down on page 3? [Field audience response.] Good. Thanks. Now let’s bring savings and investing together and look at some savings vehicles. Just like all vehicles, each savings vehicle is a little different. The trick is to find the one that best matches your needs. [click]

22 • Types of investments:
• Easy accessibility • Sample needs: Car, vacation, 6-month emergency fund • Savings vehicles: Savings accounts One of the considerations, especially for your short-term savings, is easy accessibility. [click] You might need to get to your money right away, especially for emergencies [click] like if the car breaks down, or if you need a vacation, or for all those financial emergencies that seem to crop up. In this case, one of the best savings vehicles may be a traditional savings account. [click] Types of investments that you could put in this vehicle could be a money market investment, or a short-term CD (certificate of deposit) for money that you don’t mind tying up until the CD matures, in 6 months, 1 year, or 2 years. Fifth Third offers many different types of savings accounts and investments for all your short- term needs. [click] • Types of investments: Passbook savings account, money market, CDs

23 • Types of investments:
• Sample needs: New home, boat • Savings vehicles: Traditional savings account, investment account • Types of investments: The money we allocate to mid-term savings won’t need immediate access, since the money probably won’t be used for the next 5 to 10 years. Examples of mid-term savings needs might be a new home or a boat. [click] For this vehicle you might want to use a traditional savings account or you may start considering an investment account [click]— allowing you to invest your money in something like [click] mutual funds. Mutual funds are simply investments that pool the money of many investors to invest in a fund with a common investment objective. Many of you may be familiar with mutual funds from investing in your 401(k) plan. [click] Mutual funds

24 • Types of investments:
• Sample needs: Retirement, college education • Savings vehicles: Retirement: 401(k), IRA College: 529, Coverdell ESA • Types of investments: For the long term, you might consider investment vehicles that are designed for money that you won’t touch for many years. This might include retirement and college education needs. [click] There are several different options available to you, through investment vehicles like your 401(k) or IRAs for retirement savings, [click] and 529 plans or Coverdell Education Savings Accounts for college savings. These vehicles often use mutual funds for longer-term growth. [click] Let’s take a closer look at these long-term investment vehicles. [click] Mutual funds

25 • The Web site has more info at
• Retirement: 401(k) IRAs • College: 529 Plan Coverdell ESA Remember that one of the biggest goals for our long-term savings is retirement savings. [click] One of the best vehicles available to you for retirement savings may be your employer’s 401(k) plan. [click] A 401(k) allows your money to grow tax deferred and it can offer numerous advantages, such as automatic deductions and other tax incentives to help you save. [click] You might also consider an IRA—an individual retirement account— which can be easily set up to help you put aside money each year. There are several types of IRAs, such as Traditional and Roth IRAs. Each one has different tax incentives. Funding an IRA can be ideal for supplemental retirement income needs after you have maximized a 401(k) plan. [click] You might also consider special investment vehicles for your college needs, such as a 529 or Coverdell college plan. These plans can help you put more money aside for your children’s college tuition by offering certain tax advantages. To learn more about investing for your retirement or making financial plans for your child’s college education, you can visit the Fifth Third Web site at [click] • The Web site has more info at

26 We’re on the home stretch for developing savings strategies
We’re on the home stretch for developing savings strategies. Let’s take a look at how Bud developed a personal savings allocation. [Explain chart to audience.] [click] Bud is 40 years old and has 10-year-old Bud Jr. he is also concerned about, so he has listed all the things he wants to save for in different time horizons. [click] Then he took his $100 savings for the month and allocated $40 to short-term savings, so he could build up his emergency fund and save for his new Ford truck, $20 goes to his mid-term savings to help pay for Bud Jr.’s college, and $40 goes to his long-term savings, for his retirement. [click]

27 Now let’s put it all together so we can see the vehicles and investments that Bud decided to use. In his short-term plan, Bud uses a bank account so he can access the money quickly and easily. Bud puts his $20 a month into a 529 plan for little Bud. He invests that money into a balanced fund within the 529 college plan. [click] For Bud’s retirement money he uses his 401(k) as his savings vehicle to take advantage of pre-tax savings and tax-deferred compounding. He uses mutual funds provided by his company and divides that into cash, bond, and stock funds, according to his retirement asset allocation. [click]

28 • Investing involves some risks • Risk can be managed
Time horizon Diversification Asset allocation The next step on the cruise through Easy Street is a buzz through basic investing strategies. When you save something, you put it aside for future use. When you invest money, you expect to receive a financial return. [click] Investing involves some risks. In general, the greater the risk you’re willing to take, the greater the potential return on your investment. But just like other kinds of risk, investing risks can be managed. [click] Understanding concepts like time horizon, diversification, and asset allocation can help you manage risk. Let’s take a closer look at each of these. [click]

29 • Longer time—more risk you can take
• The amount of time you have before you need to begin withdrawing money • Longer time—more risk you can take • Shorter time—less risk you can take The first investing strategy is time horizon [click]. Your time horizon is just the number of years your money can remain invested before you withdraw it. Generally, investors with longer time horizons may choose to invest more aggressively. They are willing to accept greater risks because they have more time to recover if their investments should fall in value. Investors with shorter time horizons generally invest in more conservative investments.

30 • Put money into more than one investment
• Mutual funds are automatically diversified to help you manage risk The second risk management idea is diversification. You know the old saying, “Don’t put all your eggs in one basket?” In investing, this is called diversification. It means you should put your money into more than one investment [click], so that if one investment declines, others may take up the slack. [click] Mutual funds are examples of investments that are by nature diversified. [click]

31 • Spreading your investment dollars over different types of investments
• Investment types: Stocks Bonds Cash equivalents The third risk management idea is asset allocation. Asset allocation means spreading your investment dollars among different types of investments. This is a powerful strategy for managing risk. There are three major investment types: stocks, bonds, and cash equivalents. Let’s do a quick review of these topics. [click]

32 Stocks represent shares of ownership in a company
Stocks represent shares of ownership in a company. When you buy a stock, you are buying a small piece of a company. [click] Bonds are like an IOU. You lend your money to a government agency or corporation, and in exchange for borrowing your money, the bond pays you interest. [click] Cash equivalents are investments that are designed to be turned into cash anytime without losing much, if any, of their original value. [click]

33 We’re almost done with today’s presentation, and by coming here today, you’ve gotten that much closer to Easy Street. Let’s take a look at some of the things we’ve learned today, so you’ll know what steps to take. [click]

34 • Developing a positive relationship to money
• Creating a budget that works • Developing a savings plan • Learning about investing strategies Today, we covered some important principles of financial planning. They are: [click] Developing a positive relationship to money … [click] Creating a budget that works … [click] Developing a savings plan, and [click] Learning about investing. [click]

35 • Make the commitment to start a budget • Begin your savings account
• Increase your 401(k) contribution • Consolidate your retirement accounts I’d like to encourage you all to take action today. One step you can take is [click] make a commitment to start a budget. This would also be a good time to [click] begin your savings account. You can start with a small amount of money by opening a savings account at Fifth Third. [click] You might also consider increasing your 401(k) contribution. This is one of the best ways to get closer to Easy Street. Increasing your contribution by even 1% can mean thousands more in retirement. Finally, you may want to [click] consolidate some of your retirement accounts with Fifth Third. I can help any of you who wants to do that now. I want to thank you all for coming, and I am available for any questions you may have. [click to end]

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