Financial and Career Planning

Tutorial

November

11.16.09

Objectives

• Students will:– Understand the importance of financial

planning

– Learn the process of renting an apartment

– Learn about revolving credit lines

– Understand how education impacts earnings

Key Terms

• Financial Goals• Net Pay• Gross Pay• Fixed Expenses • Variable Expenses• Revolving Credit• Security Deposit• Lease agreement• Utilities

Financial Goals

• Setting financial goals is exciting – It’s your opportunity to decide what you truly

want to do with your money, and to achieve those goals without having to borrow for them.

• Set specific goals – Financial goals are specific rather than vague.

Before you start to save, determine exactly what you want, when you want it, and how much it will cost.

Three Basic Goal Types

1. short-term (achievable in under a year)

2. mid-term (achievable in two to five years)

3. long-term (achievable in five-plus years)

Financial Goal Setting

• How much do I need to save each month?– The flat screen TV you want is $800, and you

would like it in 6 months. To reach that goal, you will need to set aside $133 per month ($800/6 = $133).

• How long will it take me to buy it?– The flat screen TV you want is $800, and you

can only afford to save $100 per month. Therefore, you will need to save for 8 months ($800/$100 = 8).

Long Term Goal?

Reality Check!!

Revolving Credit

• Revolving credit is a line of credit that doesn't have to be paid off each month but gathers interest when it's not.

• In this case, we are talking about a LOAN• Banks and credit card companies let you borrow

money when you use their cards• When you say “CHARGE IT” you’re really going

into debt• You will have to pay the money back with

interest

Advantages vs. Disadvantagesof Revolving Credit

• Able to buy items now• Don’t have to carry

cash• Bails you out of

emergencies• More convenient than

checks• Gives you time to pay

• Way too tempting• Pay interest• Increased impulse

buying• Debt Increases• Mental sickness• Addiction to shopping

About College Student Debt

• 78% of college students have credit cards• 32% of college students have 4 or more

credit cards• Average credit card debt of these

students: $2,748• Nearly 1 in 4 college students owes more

than $3,000• College students owe almost half of the

nation’s $285 billion credit card debt

Value of Education

• Education level (i.e.: a college degree) correlates directly to salary level

• Employers have increasingly used diplomas and degrees as a way to screen applicants

• On average, a person with a Master’s degree earns $31,900 moremore per year than a high school graduate

• A differencedifference of as much as 105%105%

Average Lifetime Earnings for Full-Time Employees (in $ millions)

• Professional Degree $4.4• Doctoral Degree $3.4• Master's Degree $2.5• Bachelor's Degree $2.1• Associate's Degree $1.6• Some College $1.5• High School Graduate $1.2• Some High School $1.0

Making a lifetime of Difference

• A person with a Bachelor’s degree will earn, on average, almost twice as much as workers with a high school diploma ($2.1 million compared to $1.2 million)

• Why?• Higher starting salaries for people with

higher education levels, but also the sharper earnings growth over the course of their careers

Average Annual Earnings for College Grads and Non-Grads

• Professional Degree $109,600• Doctoral Degree $89,400• Master's Degree $62,300• Bachelor's Degree $52,200• Associate's Degree $38,200• Some College $36,800• High School Graduate $30,400• Some High School $23,400

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