Your Cash

Discussion Topics Understanding how to manage you money wisely can mean the difference between success and personal stress. Overview Earning Money Taxes & Inflation Budgeting Saving Investments Warning Signs

Overview Managing your money well involves: –Keeping your day-to-day spending within your means: satisfaction vs. stress. –Being honest with yourself and realistic regarding your wants vs. your needs. –Choosing and reaching long-term goals (e.g. paying for college expenses). –Building a financial safety net: protecting yourself from financial disasters.

Earning Money Your current and future earnings are affected by the level of study that you complete. On average, a person with a professional degree earns over $95,000 each year. The area of study you choose also affects your financial future. Investment in your education can pay off later. E.g.: Degree Bachelor's Master's Doctorate Electrical Engineer $51,910 $63,812 $79,241 Biomedical Engineer $47,850 $62,600 $81,221 Aerospace Engineer $46,918 $59,955 $64,167 Systems Analyst $52,723 $61,453 $72,500

Taxes & Inflation You won’t take home all you earn. –federal, state, and local taxes take a bite out of your paycheck Count on Inflation. –For example, after 20 years of 3% inflation, an original earning of $100,000 would have the buying power of only about $58,000 in today's dollars.

Budgeting If you don’t control your money, it will control you. Prioritize. Whatever you earn, a budget is the most important step in keeping your money working for you. Identify your financial goals first; divide them into near-term and long-term goals. Maintain a cushion: e.g., 3 months of expenses. Pay yourself first - try 10% of gross pay.

Budgeting Your personal budget should: –Be realistic –Have a time frame –estimate income and expenses –compare plan and reality Remember to: –Be flexible –Expect change –Don’t be discouraged –Reward yourself Tips for maintaining your budget: –Shop sensibly: look for value for you money –Think before you spend –Keep good records –Review every month

Temptation Credit cards are a very expensive tool. Feeling impulsive? Take a look under the hood and sleep on it before you buy. Advertisers are not your friend. Instant gratification doesn’t last.

A Sample Budget

Saving Because of inflation, cash under the mattress is a bad idea. Investment returns are important. Saving is difficult when earnings are small, but you should always pay yourself first - invest in yourself and your future. How much…? Rule: Most teens find themselves spending 70% of what they earn, saving 20% for big ticket items and saving 10% for long-term needs.

Investments Think in terms of Risk and Reward. Consult with an expert and understand before you buy - you work hard for your cash. Savings accounts and the government bonds are the safest bets. Mutual Funds: hiring a professional to manage your investment and diversify risk. Picking your own stocks and bonds - don’t invest more than you can afford to lose! There is still no free lunch. Debt can be an investment: what is the return on your education?

Warning Signs A well thought out financial plan and a clear head will keep you on track; watch for, and change, bad habits early: You don’t know how much you owe. You don’t know how much you spend. You spend more than you earn. You pay bills late and incur finance charges. You only pay the minimum balance due on your credit card. You are a compulsive spender.