1.Set Financial Goals Be REALISTIC!!!! Be future oriented 2.Estimate Your Income Only include guaranteed income 3.Plan Expenditures Needs then Wants Prioritize Preparing a Budget

 2/3 of GDP is made up of consumer spending  What are some things that you buy on a daily/weekly/monthly/yearly basis? Earning and Spending

1.Work wage: hourly, by unit of production - more blue collar salary: weekly/monthly/yearly - more white collar 2.Wealth rent: selling use of your property interest: selling use of your money How do we earn money?

 What types of jobs seem to pay the most?  The least?  Is a college education as necessary/worth the cost as it used to be? Jobs Research

For the initial investment, the report adds up tuition, fees and the opportunity cost of not working. For return, the authors use the average lifetime wage difference between college grads and those with only a high-school degree. The associates degree has a higher rate of return than the bachelor's because of the lower cost (of course).

What is the Value of a College Education??

 It really depends on what you plan to do… …but generally, it’s very worth the cost.  Barriers to Entry  Does correlation imply causation? What is the Value of a College Education??

Four Factors 1.Income: more $$ = more saving/investing 2.Expectations: confidence in the market = more spending, fear = more saving 3.Interest Rates: higher rate = incentive to save/invest 4.Taxes: higher taxes on investment = disincentive Wealth Accumulation

1.Safety all options carry different levels of risk Usually: high return = high risk, low return = low risk 2.Rate of Return APR = Annual Percentage Rate of interest on principal Set rate vs. Variable rate Inflation protected? Compound Interest – RULE OF 72 3.Liquidity Ease of conversion to cash Usually: high return = low liquidity, low return = high liquidity Paper Millionaires Considerations for Saving and Investing

 72 /APR = Time it takes for principal to double  Einstein referred to compound interest as the 8 th wonder of the world  How to get the most benefit:  Invest early, invest often  Commit to your goals  Try to follow (Expenses-Save/Invest-Debt)  PAY YOURSELF FIRST!  Don’t Touch It!!!! RULE OF 72

Comparison Invest $1000 at 8% $2,000 $4,000 $8,000 $16,000 $32,000 $64,000 Get $1000 Every Year $9,000 $18,000 $27,000 $36,000 $45,000 $54,000 Yrs

1.Loans College, business, car, consumer 2.Mortgage Home loan 3.Charge Accounts Macy’s, Kohls 4.Credit Cards Get ready for some mail… Types of Credit

1.Character Past history – timely and honest 2.Capacity Salary, wages 3.Capital Assets They want paid back!! Approval for Credit

Credit Cards Advantages  Immediacy  Emergency  Flexibility  Safety  Character Reference Disadvantages  Higher Cost  Impulse Buying  Overspending

24% APR **Min. payment = $25 **Spent $125 for $-76 worth of progress Balance at Beginning End of of PeriodPaymentInterestPeriod $ 2,000$ 25$ 40$ 2,015 2, ,030 2, ,045 2, ,060 2, ,076

24% APR + 5% Balance at Beginning End of of PeriodPaymentInterestPeriod $ 2,076$ ----$ 42$ 2, ,000$ 50$ 4$ 954 $ 3,076$ 3,072 $ 2,118$ ----$ 43$ 2,161 $ 954$ 50$ 4$ 908 $ 3,072$ 3,069 **Spent $100 for $7 worth of progress

Credit – Perks and Risks Me – 25 yrs. old.