1. Financial Literacy: Knowing What You Need To Know To Achieve Your Financial Goals

2. America’s financial literacy
American families:
The average American family spends $1.22 for every dollar it earns.
One in five American families with annual household income of less than $50,000 is spending 40% of after-tax income to service its debt.
In 2003, the average American household owed $8,000 in credit cards, compared to $2,600 in 1989.
In 2003, 1.6 million Americans filed for bankruptcy – the highest amount in history.

3. America’s financial literacy
2 out of 3 households will probably fail to realize life goals
Financial illiteracy is passed to the next generation
Average high school senior failed 2004 financial knowledge survey

4. What is Financial Literacy?

5. Financial literacy
The ability to effectively evaluate and manage one’s finances in order to make prudent decisions toward reaching life’s goals
The understanding of:
Money
Cash flow
Basic economic/financial concepts
Debt/risk management

6. Achieving financial literacy
Five Key Areas of Personal Finance:
Money and income
Money management
Spending and debt
Savings and investments
Risk management

7. Money and income Time is money
How many hours do you need to work to pay for your mortgage, car insurance, electricity bills, extras, etc?

8. Money management
Budgeting
Prioritizing

9. Spending and debt Benefits and costs of spending alternatives
Credit as a basic financial tool

10. Savings and investing Saving means not spending money.
Investing means that you earn a return on the money you put into it.

11. Risk management Insurance Understanding the markets
50% of Americans own stocks
Identity theft

12. Financial literacy isn’t just a matter of knowing what you have and knowing your options. It is a matter of planning for life’s milestones.

13. Creating your first overall long-term financial plan

14. Buying your first home Establish good credit Understand “real costs”
Assess risks

15. Getting married Understand “financial partnership”
Establish separate and joint credit and bank accounts
Create wills and trusts
Identify beneficiaries
Choose owners on title assets

16. Financing a family Budget Education, health care, child care
Manage risk, insurance
Create wills
Instill financial literacy

17. Starting a business Understand cash flow expense timing
Manage income and expenses

18. Planning for Retirement
Determine how much money you will need.
Determine where your retirement income will come from.
Devise a budget and investment strategy to help you meet your goals.

19. Preparing a will Designate beneficiaries Determine asset distribution
Identify insurance

20. Unexpected milestones
Loss
Sandwich generation
Divorce

21. Financial literacy education
Lifelong learning courses
Financial media
Internet resources
Your CPA

22. For more information
features financial education to help consumers at every life stage.

23. Knowing What You Need To Know To Achieve Your Financial Goals
Financial Literacy:
Knowing What You Need To Know To Achieve Your Financial Goals