Posts Tagged With: Financial Planning

Innovation for Improved Financial Health

Mobile start-up companies and other organizations are working with financial institutions to assist consumers with apps and websites that address various financial tasks and concerns.  These include:

  • Albert (www.meetalbert.com) is a mobile app to guide your financial decisions with the assistance of various financial institutions.
  • EARN (www.earn.org) is a national nonprofit to help low-income families create a habit of saving and break the cycle of financial instability.
  • eCreditHero (www.getcredithero.com) is designed to fix errors that appear on an estimated 80 percent of the credit reports of Americans.
  • Scratch (www.scratch.fi) helps borrowers to better understand, manage, and repay loans.
  • WiseBanyan (www.wisebanyan.com) is a free financial advisor that suggests and manages investment plans for various financial goals, such as savings for retirement, creating an emergency fund, and buying a home.

For additional information on innovative financial planning apps, click here.

Teaching Suggestions

  • Have students search for a website or app that would be of value of improved personal financial planning.
  • Have students talk to others about the financial concerns they face. Ask students to propose an app or website that would address a personal finance concern.

Discussion Questions 

  1. What personal financial planning areas provide people with the most difficulty?
  2. Describe potential apps or websites that might be created to assist people with their personal financial planning activities?
Categories: Chapter 1, Chapter 2, Financial Planning | Tags: , | Leave a comment

Smart Money Moves for January

With a new year, many people hope to get a fresh start with changes in their financial planning activities. To do so, the following actions are suggested:

  • Maintain or increase the amount of money in your emergency fund.
  • Pay off high-interest credit cards and other expensive loan accounts.
  • Set goals that will contribute to long-term financial security.
  • Review your cash flow (spending and income) from the previous year in an effort to increase saving by avoiding unnecessary payments.
  • Merge various banking, investment, and retirement accounts into one low-cost account.
  • Determine if changes are needed in your estate plan.
  • Increase your retirement account contributions.
  • Revise your tax withholding, as needed

For additional information on January money moves, click here.

Teaching Suggestions

  • Have students talk to various people about which actions they believe to be most valuable for long-term financial security.
  • Have students create a brief presentation describing the value of one of these suggested money actions.

Discussion Questions 

  1. Describe the January money actions that you consider to be most valuable for long-term financial security.
  1. What are some other money moves that you would recommend?
Categories: Chapter 1, Chapter 2, Financial Planning | Tags: | Leave a comment

Financial Fears

According to the Northwestern Mutual Planning and Progress Study on financial well-being, Americans have several worries.  Based on interviews with 2,646 adults, 85 percent of respondents reported financial anxiety in some form.  Approximately two-thirds of those surveyed indicated that financial anxiety negatively affected their health.  In addition, 36 percent of those responding had increasing levels of financial anxiety over the past three years.

In the study, the greatest financial fears were:

  1. Having an unplanned emergency
  2. Having unplanned medical expenses
  3. Having insufficient savings for retirement
  4. Outliving retirement savings
  5. Becoming a financial burden
  6. Not able to afford healthcare
  7. Loss of a job
  8. Identity theft
  9. Extended unemployment
  10. Death/loss of primary wage earner
  11. Having poor credit
  12. Having to file bankruptcy
  13. Being a victim of a financial scam

To address these concerns, the study recommends the following actions:

  • build an emergency fund for unplanned expenses
  • invest properly for retirement and long-term financial security
  • review your finances regularly to revise goals and savings activities

These actions can help to reduce the financial anxiety reported by a large portion of Americans.

For additional information on financial anxiety, go to:

Link #1

Link #2

Categories: Chapter 1, Chapter 2, Financial Planning | Tags: , | Leave a comment

The 1-Page Financial Plan: 10 Tips for getting what you want from Life

Carl Richards, author of The One Page Financial Plan, knows the financial mistakes–including the ones he has made–that people make.  Based on his experience as a financial planner, he provides 10 tips to help people get what they want from life.  Note:  An explanation and examples to illustrate each tip are provided in this article.  His tips are:

  1. Ask why money is important to you.
  2. Guess where you want to go.
  3. Know your starting point.
  4. Think of budgeting as a tool for awareness.
  5. Save as much as you reasonably can.
  6. Buy just enough insurance today.
  7. Remember that paying off debt can be a great investment.
  8. Invest like a scientist.
  9. Hire a real financial advisor.
  10. Behave for a really long time.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Illustrate how each tip provided in this article could affect an individual’s financial plan.
  • Encourage students to read the entire article to help determine what’s really important in their life.

Discussion Questions

  1. It’s often hard (or maybe close to impossible) to determine what you value and where you want to go in the next 20 to 30 years with perfect accuracy. Still, experts recommend that you establish a long-term financial plan.  What steps can you take to make sure your plan will meet your future needs?
  2. Why is it important to evaluate your plan on a regular basis and make changes if necessary?
Categories: Chapter 1, Chapter_14, Financial Planning, insurance, Retirement Planning | Tags: , , , | Leave a comment

How the Presidential Election Will Affect Your Investment Strategy

“The sky is falling!  If my chosen candidate doesn’t win, the markets are doomed and so are my investments.”

In this article, Bijan Golkar points out that a presidential election can cause excitement or despair depending on if you are a Republican or a Democrat and who the major parties nominate for the highest and most powerful office in the world.

The article discusses market returns both before and after a presidential election year and some of the underlying reasons for market volatility.  Then the article stresses the importance of a person’s long-term goals and a plan for long-term growth as opposed to “emotional investing.”  Finally, the article discusses the pros and cons of our economy that could affect investment values.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the importance of a long-term investment plan that will take advantage of the time value of money.
  • Describe some of the pitfalls of “emotional investing.”

Discussion Questions

  1. What are the typical characteristics of an emotional investor? Of a long-term investor?
  2. What are the advantages of a long-term investment program when compared to “emotional investing?”
Categories: Chapter 1, Chapter_11, Economy, Financial Planning, Investments, Savings | Tags: , , | Leave a comment

How to Find a Financial Advisor

“Finding your next financial advisor is as easy as counting from one to five.  You just need to know where to look and what to ask.”

The information in this article is provided by the National Association of Personal Financial Advisors (NAPFA) and was developed to help people find a financial advisor.  Specific suggestions include

  1. Before beginning a search for a financial advisor, have a conversation with your loved ones to determine what is important, what you value, and what you want to accomplish.
  2. To develop a list of potential advisors, talk to friends and relatives and visit websites like http://www.napfa.org.
  3. Narrow your list to the top three contenders then do your homework. Visit company websites and read each advisors biographical sketch, check information available on the SEC website (www.sec.gov), and develop a list of questions that you want to ask when you meet each advisor.
  4. Request a meeting with each potential advisor. Ask questions to help assess your comfort level with each advisor.  For help, visit the NAPFA website (www.napfa.org) and click on “Tips and Tools.”
  5. Often the key to building a relationship with a financial advisor is communication. Review your relationship with a financial advisor over time.  Don’t just look at investment results, but also determine if the advisor (and her or his firm) is helping you achieve your important goals.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Remind students that it is better to start financial planning earlier rather than later in life.
  • Stress that even beginning investors or investors with little money can still use a financial advisor.
  • Encourage students to visit the National Association of Personal Financial Advisors website (www.napfa.org). There is a great deal of quality information available with a click of a mouse.

Discussion Questions

  1. Often, the first step when choosing a financial advisor begins before you actually meet a potential advisor. How can determining your goals and what you value help you start financial planning?
  2. While many investors think that financial advisors are only for the rich, beginning investing or investors with little money can benefit from professional help. What steps can you take to find the right financial advisor to help you obtain your goals?
Categories: Chapter 1, Chapter_11, Financial Planning, Retirement Planning | Tags: , | Leave a comment

Financial Security and Longevity

While Americans are living longer and healthier lives, they also are facing more financially fragile situations. Uncertainty related to financial health in the later years of life has become more common. Lower, less predictable incomes among those retiring within 10 years has resulted in difficulty paying their bills. This group also reports a lower net worth. In 2013, the typical 56- to 61-year-old had an average of $17,000 in retirement savings. This lower level of net worth is partially the result of higher levels of debt than the previous generation. This debt is in the form of higher mortgages and education loans, including amounts owed for their children’s education.

To address these concerns, several policy actions are proposed:

  • Requiring and supporting strategies for to build effective financial capability, including coaching and workforce development programs.
  • Tax policies and other incentives that encourage savings and investment among lower-income and lower-wealth families.
  • Policies to increase educational opportunities without excessive debt.
  • Efforts for protection from financial difficulties caused by medical catastrophe.
  • Policies for improved housing stability of both owners and renters.

For additional information on financial security and longevity, click here.

Teaching Suggestions

  • Have students interview people to determine common actions used to save for retirement.
  • Have students create a presentation to suggest action for improved financial security for various income levels.

Discussion Questions 

  1. What are some financial pressures faced by households as people approach retirement age?
  2. What actions might government and business take to reduce the financial pressures of people approaching retirement age?
Categories: Chapter 1, Chapter_14 | Tags: , | Leave a comment

Eight Measurements of Financial Health

The Center for Financial Services Innovation has identified eight indicators to measure financial health. These measurements can serve as a framework for guiding individuals and financial service providers toward an improved quality of life for consumers.

The eight indicators of financial health, presented in four categories, are:

SPEND

  1. Difference between income and expenses
  2. Percent of bills that are paid on time and in full

SAVE

  1. Number of months of living expenses in liquid account balances
  2. Amount of one’s long-term savings, assets, and investments

BORROW

  1. Debt-to-income ratio
  2. Credit score or credit quality tier

PLAN

  1. Type and extent of insurance coverage
  2. Behaviors that demonstrate future financial orientation

For additional information on financial health indicators, click here.

 

Teaching Suggestions

  • Have students ask people to describe what is meant by “financial health.”
  • Have students create a list of actions that might be taken to achieve financial health.

 Discussion Questions 

  1. What are additional factors that might be considered when measuring a person’s financial health?
  2. What actions are you taking to achieve financial health?
Categories: Chapter 1, Financial Planning | Tags: , , | Leave a comment

Finances for Newlyweds

An estimated one-third of recently married couples are surprised by the financial situation of their spouse.  A similar number (36 percent) are not aware of their partner’s spending habits.  Based on a study by Experian Plc, only 40 percent knew the credit score of their partner.

Men more often hid money from spouses.  About 20 percent of men had secret bank accounts about which their partners didn’t know; compared to 12 percent of women. Regarding the maximum amount that they would spend before consulting with their spouse, men replied $1,259; women said $383.   Hidden financial information can have a significant adverse effect on the relationship of a newly married couple.

For additional information on newlywed finances, click here.

For additional information on the survey results, click here.

Teaching Suggestions

  • Have students survey newly-married people about their disclosure of financial information to their spouse.
  • Have students create a list of problems that might arise between newly-married people who do not inform their spouse about their personal financial information.

Discussion Questions 

  1. What financial information would be most important for newly-married people to disclose to their spouses?
  2. How could a lack of disclosure of financial information to a spouse create relationship difficulties?
Categories: Budget, Chapter 1, Chapter 2, Financial Planning | Tags: , , | Leave a comment

The Gig Economy

Online selling, personal taxi services such as Uber, and renting a spare room to tourists, are examples of an increasing number of people generating or supplementing their incomes by trading goods and services online.  This trend is often replacing traditional employment.

Measurement of the “gig economy” (working outside a formal work environment with temporary, short-term employment by independent workers) is difficult.  Many situations are not reported in current labor statistics. In recent years, the fastest growth for self-employed workers has been in hairdressing, cleaning, and management consulting. While these services may be in the gig economy, this trend may also indicate growing formal self-employment in these fields.

Gig economy activities may start as temporary work due to a lay-off or a need to supplement household income. However, as time goes by, these self-employment positions can become a person’s ongoing employment status.

For additional information on the gig economy, click here.

Teaching Suggestions

  • Have students describe examples of the “gig economy.”
  • Have students explain the “gig economy” to others (including different generations) and get their reactions.

Discussion Questions

  1. What factors influenced the development of the gig economy?
  2. How might the gig economy affect a person’s financial planning activities?
Categories: Career, Chapter 1, Financial Planning, _Appendix B | Tags: , | Leave a comment

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