STATEMENT OF FINANCIAL POSITION AND INCOME AND EXPENSE STATEMENT ADVANCED LEVEL

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona AGENDA Primer: What is Net Worth? an Asset? a Liability? Statement of Financial Position Income and Expense Statement Net Worth Activity

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 3 MONEY MANAGEMENT TOOLS What is my financial position today? Work together to help you objectively evaluate your past, present, and future financial decisions What is my future money management plan? Statement of Financial Position Income & Expense Statement Spending Plan How have I managed my money in the past? Reach net worth level desired

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona WHO IS WEALTHIER? Tom BradyPeyton Manning Let’s learn more to answer this question! Income - $14,120,000 Net Worth - $120 Mill Income - $19,200,000 Net Worth - $115 Mill

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Net WorthWealth Is an objective measure of financial wealth Indicates the monetary value of all possessions that a person or household owns, minus the total amounts owed to others

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona NET WORTH VS. INCOME Net WorthIncome A person may have high income and low net worth or vice versa Depends on how a person manages their income Money received such as wages earned from working for pay

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona WHO IS WEALTHIER?

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona HOW DO YOU DETERMINE WHAT YOUR NET WORTH IS? Statement of Financial Position - A financial statement that describes an individual or family’s financial condition on a specified date by showing assets, liabilities, and net worth Shows a person’s net worth Similar to a net worth statement or balance sheet

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona THREE COMPONENTS 1.Assets 2.Liabilities 3.Net Worth

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona WHAT IS AN ASSET? Asset - Everything a person owns with monetary value Cash Value of personal possessions

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona WHAT ARE LIABILITIES? Liabilities – A debt or obligation owed to others Loans (mortgage, automobile, student) Balance on a credit card

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona LIABILITIES VS. EXPENSES LiabilitiesExpenses Definition Characteristics Example Money owed to others Money spent Total amount owed Bills paid on a regular basis Automobile loan - $5,490 owed Monthly payment to repay that automobile loan - $180/month

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona HOW CAN YOU INCREASE NET WORTH? How do you increase assets and/or decrease liabilities? Evaluate how you manage your money Liabilities Assets

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona SUMMARY Statement of Financial Position is an important money management tool that shows net worth Assets – Liabilities = Net Worth Net worth is an objective measure of wealth Net worth is your “financial thermometer” to objectively measure your financial position To increase net worth you will have to increase assets or decrease liabilities

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona otdDJYY1JMakpnOWlNNDZ6SDZERkJXRkE&hl=en#gid=0 otdDJYY1JMakpnOWlNNDZ6SDZERkJXRkE&hl=en#gid=0

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona NET WORTH ACTIVITY Step 1 Let’s read the handout together about a recent college graduate and highlight and underline important financial information Step 2 Go to the PCs and find the Mommy’s Net Worth Calculator on the Anfindsen Global Drive Complete the spreadsheet using the Biography When done check your answers

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona START DAY 11

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona THE COSTS ADD UP How much do you think each item would cost if purchased every day for one month? Item Average Cost of Item Approximate Cost Per Month if purchased every day Approximate Cost Per Year if purchased every day 16 oz. soda $ $2.00 $ $60.00 $ $ oz. energy or sports drink $ $3.00 $ $90.00 $ $ Candy bar $ $1.25$22.50 – $37.50 $ $ oz. Latte’ or flavored coffee $2.50 -$3.50 $ $ $ – $

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Income and Expense Statement - lists and summarizes income and expense transactions that have taken place over a specific period of time, usually a month or year THE INCOME AND EXPENSE STATEMENT

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona THREE COMPONENTS Income Expenses Net gain or net loss

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Income – money received WHAT IS INCOME?

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona INCOME CATEGORIES Unearned income – income received from sources other than employment Received Income from Government Programs – offer a form of income, usually temporary Earned income – any money earned from work

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Expenses – money spent WHAT ARE EXPENSES?

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Taxes Saving and Investing Insurance Housing Transportation Food Other EXPENSE CATEGORIES Expenses will vary for every person

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona EXPENSE CATEGORIES Variable Expenses are those that change each time period Fixed Expenses are expenses that remain the same each time period

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona IncomeExpenses Net Gain or Net Loss NET GAIN OR NET LOSS Net gain Net loss

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona FIND A TRACKING METHOD THAT WORKS FOR YOU A written system is more effective than a mental system – like Evan you can trick yourself into thinking you spend less than you do! Record in writing Smartphone Keep receipts Depository institution account statements Money management computer software program

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Statement of Financial Position Income & Expense Statement Spending Plan What is my financial position today? What is my future money management plan? How have I managed my money in the past? Net GainNet Loss A spending plan will help you plan your spending Use that money for savings or other expenses Increase income and/or decrease expenses

2.2.3.G1 © Take Charge Today –August 2013– Statement of Financial Position – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona SUMMARY Tells you where your money is coming from and where it is going Three components: income, expenses, and net gain/loss Use a tracking method that works best for you Customize income and expense categories