Take a few minutes to write
down your answers to the following:

My parents taught me about money, how it
works, and the importance of financial
planning. (Yes/No)

The most important thing to me about money
is:

My family always had enough money (Yes/No)

The yearly income I need to support my
lifestyle is:

The amount of money I want to have in my
savings account to feel comfortable is:

The amount I want to have for retirement is:

The amount I'd like to donate to charity
each year is:
*The above is adapted from
Raines, Sherry & William Austin. “Dollars and
Sense: A Guide to Financial Security”.
Step 1: Calculate Your Net Worth
Assets (what you have) –
liabilities (what you owe) = net worth
Example: Joe Rich has a car
worth $12,000, a savings account with $2,000 and
an investment fund started by his parents when
he was born with a cash value of $10,000. He
owes $11,000 in student loans, $8000 in car
loan, and $2000 in credit cards.
Joe's assets total
$__________.
Joe's liabilities total
$__________.
Joe's net worth is
$__________.
Primary goals:
1.
Net
worth should be growing over time
2.
The
ratio of liabilities to net worth should be
decreasing with assets to net worth increasing.
Step 2: Budget Your Money
a. How do you attain your
5year goals?
b. Wants vs. needs:
I _________ to make my
student loan payment
I _________ to buy a new car
I _________ to pay my rent
I _________ to buy a new pair
of jeans
c. Spend Wisely
The “latte factor” – David
Bach: 1 latte = $5 a day
At 5% compounded monthly =
$__________ in 10 years
At 5% compounded monthly =
$__________ in 25 years.
At 10% compounded monthly =
$__________ in 25 years.
With 45 years left to
retirement those lattes cost
$___________________.
The power of compound
interest!!
d.
Manage credit card debt
The power of compound interest
can also work against you.
Suppose you have a $1000
balance on your credit card. Let's assume for
simplicity you make minimum payments of 2% of
the balance per month and the interest is 18%.
How long will it take you to pay off this debt?
_________________
What is the total amount this
debt will cost you over that time?
$_____________
www.bankrate.com
à calculators
à credit card
minimum payment calculator.
Check out the credit card
payment calculator as well.
e. Pay yourself first.
Age

Starting salary

% Saved

$ Saved monthly

Amount in account
at
end of year

22

40,000

2%

67

824

23

41,600

4%

139

2,573

24

43,265

6%

216

5357

25

44,995

8%

300

9315

26

46,795

10%

468

15538

27

48,666

12%

487

22312

28

50,612

12%

506

29664


“

“

“

“

50

84272.70

12%

843

446,980

65



1833

1,345,703

f. Take full advantage of
employer matching contributions.
Calculators (located within each of the links
across the top of the page):
http://www.bankrate.com/
Student loan repayment plans:
http://biz.yahoo.com/special/youngearn06_article2.html
“How to Invest with $500 or less”:
http://www.kiplinger.com/columns/starting/archive/2005/st0310.htm
Questions? Feel free to
contact:
Lisa Frank, Ph.D.
Finance Department
Vance Academic, Room 462
8608323261
franklic@ccsu.edu