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Financial Basics Odysseus Lanier Jarvis Hollingsworth March 29, 2009
McConnell Jones Lanier & Murphy LLC Jarvis Hollingsworth Bracewell & Giuliani Financial Basics
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Agenda Introduction Financial Literacy Test Current Economy
Financial Soundness Life Goals Conclusion
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Financial Literacy Test
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Financial Literacy Test
A "budget" is a: Borrowing plan Savings plan Spending plan Savings and spending plan
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Financial Literacy Test
Jordan has $ and does not get paid for two more weeks. If he decides to spend $ for a second stereo, which of the following can he do this weekend? Hang out with his buddies Go to a concert with a date Buy some new CDs for his stereo Go to the movies with his friends
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Financial Literacy Test
3. True or False: When you save money in a bank account it is protected by the federal government.
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Financial Literacy Test
4. Which of the following is a loss covered by insurance? Fire A Body Part Theft A disability All of the above
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Financial Literacy Test
Interest is: A record of a person's payment activity The total amount you owe when you borrow money Payment you make for the use of borrowed money, usually a percentage of the total loan amount Whether the bank cares about you
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Financial Literacy Test
Which of the following is true about a debit card? You are charged interest on your purchase The amount of your purchase is deducted directly from your bank account You do not need a bank account to have a debit card You get a debit card when you purchase stock
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Financial Literacy Test
The maximum amount you can charge on a credit card is called the: Credit limit Capacity Credit ratio Collateral
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Financial Literacy Test
True or False: A check is a promise to pay someone money.
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Financial Literacy Test
An entrepreneur should be a hard worker and motivated. Which of the following characteristics will many entrepreneurs also have? Insecure Wealthy Pushy Risk-taker
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Financial Literacy Test
When items are bought on credit and paid for over a long period of time, the cost to the buyer: Is more than if the items were bought with cash Variable depending on the interest rate Is the same as if the items were bought with cash Is less than if the items were bought with cash
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Financial Literacy Test
True or False: You can build wealth by spending more than you earn.
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ANSWERS D. A. True E. C. B False
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Current Economy Financial Crisis Mortgage Crisis Bailout Recession
We spent more than we had Greed Mortgage Crisis Bailout Recession
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Financial Soundness Make Money Manage Money Protect Money
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Making Money
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Make Money Education Profession / Skills Entrepreneurship Work ethic
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Managing Money
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Manage Money Live within your means Budget Savings Account Investment
Pay yourself first Plan for the future Cash Investment Grow your $ Build wealth Companies, products Credit
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Savings Account Lending your $$ to a bank
Managing Money Lending your $$ to a bank Bank pays you interest on your $$ Money grows slowly but is secure Access to your $$ at any time Nest egg for future use
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Investments Stocks – Most Common Investment Buying a piece of company
Managing Money Stocks – Most Common Investment Buying a piece of company Become an "owner" of the company Purchased through the stock market Price of stock directly correlated to the company's performance Sometimes like a roller coaster with ups and downs Changes in the economy can also affect the stock price
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Other Investments Bonds Real estate Mutual Funds Direct Investments
Managing Money Bonds U.S. Corporate Real estate Mutual Funds Direct Investments
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Investing: Stock v. Savings Account
Managing Money Savings Account is safer Insured by federal government Company performs poorly, price of stock goes down Could lose some or all of money investing in stock
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Investing: Stock v. Savings Account
Managing Money Stocks Potential to grow money faster Savings account interest rate is lower so money grows slower Best to have some of each depending on your appetite for risk
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Credit Important Financial Tool Must be used wisely and carefully
Manage Money Important Financial Tool Must be used wisely and carefully Borrow $$ to pay for items with promise to pay it back Usually requires you to pay back more than you borrowed Credit history (score) impacts future ability to use credit
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Credit Manage Money Credit Cards Car loan Home loan College tuition
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Protecting Money
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Insurance Legal contract Financial protection against losses
Protecting Money Legal contract Financial protection against losses Company pays for losses in exchange for monthly premiums Health, car, home, theft, death are examples
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Money Make Manage Protect THEN Spend the Money
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Spending Money
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Life Goals Understand the business environment Entrepreneurship
Applies to all professions Workplace rules Ethics/Code of Conduct Professionalism Attire Entrepreneurship
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Life Goals Financial Goal Setting Live within your means
Manage your $$ Don't let $$ manage you Pay yourself first Plan for the future College Retirement Major purchases
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