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Financial Literacy: Knowing What You Need To Know To Achieve Your Financial Goals America’s financial literacy American families: The average American family spends $1.22 for every dollar it earns.

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america s financial literacy
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.
america s financial literacy3
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
financial literacy
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
achieving financial literacy
Achievingfinancialliteracy
  • Five Key Areas of Personal Finance:
    • Money and income
    • Money management
    • Spending and debt
    • Savings and investments
    • Risk management
money and income
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?
money management
Money management
  • Budgeting
  • Prioritizing
spending and debt
Spending and debt
  • Benefits and costs of spending alternatives
  • Credit as a basic financial tool
savings and investing
Savings and investing
  • Saving means not spending money.
  • Investing means that you earn a return on the money you put into it.
risk management
Risk management
  • Insurance
  • Understanding the markets
    • 50% of Americans own stocks
  • Identity theft
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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.

buying your first home
Buying your first home
  • Establish good credit
  • Understand “real costs”
  • Assess risks
getting married
Getting married
  • Understand “financial partnership”
  • Establish separate and joint credit and bank accounts
  • Create wills and trusts
  • Identify beneficiaries
  • Choose owners on title assets
financing a family
Financing a family
  • Budget
    • Education, health care, child care
  • Manage risk, insurance
  • Create wills
  • Instill financial literacy
starting a business
Starting a business
  • Understand
    • cash flow
    • expense timing
  • Manage income and expenses
planning for retirement
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.
preparing a will
Preparing a will
  • Designate beneficiaries
  • Determine asset distribution
  • Identify insurance
unexpected milestones
Unexpected milestones
  • Loss
  • Sandwich generation
  • Divorce
financial literacy education
Financial literacy education
  • Lifelong learning courses
  • Financial media
  • Internet resources
  • Your CPA
for more information
For more information
  • www.360financialliteracy.org features financial education to help consumers at every life stage.
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Financial Literacy:

Knowing What You Need To Know To Achieve Your Financial Goals