Financial plan = road map 1. Simple 2. Uses realistic income and expense estimates 3. Reviewed periodically 4. Adjusted to reflect changes

Financial Planning Process Influenced by: Personal values Goals Wants Needs

Four Steps—Financial Planning 1. Identify financial goals. Needs Wants Short-term goals Medium-term goals Long-term goals

Action: Set a date How much is required

Four Steps—Financial Planning 2. Determine Net Worth Assets-Liabilities = Net Worth (copy page 3/16)

Four Steps—Financial Planning 3. Income and Expense Statement Keep records for two or three months Know where your money is being spent Periodic expenses—broken down monthly Balancing income and expenses = challenge

Four Steps—Financial Planning 4. Implement and Modify the Plan Personal debt—20% of take-home pay Pay yourself first Asset allocation—mixture of stocks, bonds, cash Review, modify—on-going

Employer Sponsored Retirement Plans 401K 403B—employed by government 457—employed by government Tax deferred

Personal Retirement Plan IRA—Individual Retirement Account Roth IRA—free of taxes

Financial Professionals Stockbroker Investment adviser—financial planner Ask the method and amount an adviser is being paid

Central Registration Depository Computerized database that contains information about most brokers, their representatives, and the firms for whom they work.

State Securities Regulator U. S. Securities and Exchange Commission Compensated--have to register Over $25 million Less than $25 million—State Securities Regulator Form ADV—online at

Social Security Retirement Plan Employer and employee funded Government program Base-level retirement income Supplement Employer-based retirement savings plan Personal savings IRAs