financial check-up vanessa f. bright, extension educator (field faculty), university of maryland...
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FINANCIAL CHECK-UP
VANESSA F. BRIGHT, EXTENSION EDUCATOR (FIELD FACULTY), UNIVERSITY OF
MARYLAND EXTENSION
The University of Maryland, College of Agriculture and Natural Resources programs are open to all and will not discriminate against anyone because of race, age, sex, color, sexual orientation, physical or mental disability, religion, ancestry, or national origin, marital status, genetic information, or political affiliation, or gender identity and expression.
University of Maryland Extension
• The University of Maryland Extension offers solutions in your community by bringing
research-based programs to you for practical, everyday use. The Money Smart Impact
Team is your source for unbiased, financial education.
http://extension.umd.edu/finance
Financial Check-up – Your Financial Future Today
• Set financial goals
• Financial statement
• Budget and money management
• Build credit and manage debt
• Protect wealth with insurance
• Save and invest
Make your goals smart
Cash Flow Statement (Net Gain or Loss)
Income ExpensesNet Gain
or Loss
Character: SarahJob: Mobile Phone SalesMonthly Take-home Pay: $3850
• Sarah has a well-paying job in mobile phone sales. However, she doesn’t like her job very
much. Nevertheless, her job pays her bills. Sarah has always loved photography. In her
spare time, she takes photographs of nature and people enjoying life. She wishes that she
could find a job that would pay her to do what she loves. She graduated from college with a
Bachelors in Marketing. Sarah recently got a job offer for a position photographing special
events, but the pay is not enough to cover her current bills. Her take home pay at the potential
job will be $3000. Her current gross income is $6311 and she takes home $3850 after taxes.
• Sarah’s Goal: To find a way to accept her dream job at the lower take-home rate and still
meet her expenses.
Track your spending
Date Item Cost Need or Want?
Step One: Identify Your Income
Income Sources Monthly Amount $
Wages
Interest and Dividends
Bonuses
Rental Income
Other
Total Income
Step Two: List Your Expenses
Expenses Monthly Amount $
Savings and Investments
Housing
Utilities
Phone
Insurance
Groceries
Transportation
Other
Total Expenses
Step three: Compare Your Income and Expenses
Income and Expenses Per Month $
Total Monthly Income
Total Monthly Expenses
Subtract Expenses from Income
WHAT IS A CREDIT SCORE? WHY IS IT SIGNIFICANT?
Mortgage Amount
Credit Score Best Interest Rate
Monthly Payment
$200,000 Marissa’s Score 740
3.99% $953.68
$200,000 Connie’s Score 640
4.75% $1043.29
PROTECT YOUR FINANCIAL FUTURE
• Insurance helps to protect you from a major financial loss.
• Insurance is simply a promise of reimbursement for a loss in return for a
paid premium.
• You should shop around for insurance products.
• Insurance is available for all types of risks (e.g., health, disability, auto,
home, life)
Insurance Needs Throughout life
Scenario Type of Insurance When Does it Begin?I hit a car while backing out of my driveway.
Auto When car is purchased
I fell off a ladder while painting my house and broke my leg.
My neighbor injured his back while walking up my steps with a broken rail.
The Power of Compound Interest
Year Balance Start Interest Balance at End
Now $1000 $1000 x 10% = $100 $1100
1 $1100 $1100 x 10% = $110 $1210
2 $1210 $1210 x 10% = $121 $1331
3 $1331 $1331 x 10% = $131.10 $1464.10
4 $1464.10 $1464.10 x 10% = $146.41
$1610.51
5 $1610.51
Rule of 72Years 3% 6% 12%
0 10,000 10,000 10,000
6 20,000
12 20,000 40,000
18 80,000
24 20,000 40,000 160,000
30 320,000
36 80,000 640,000
42 1,280,000
48 40,000 160,000 2,560,000
What Happens When You Start Saving Early?
JoAnn’s IRA (starts at age 22) Susan’s IRA (starts at age 31
Average annual rate of return 9% 9%
Number of years of contributions
9 34
Amount contributed $1000 per year($9000 total)
$1000 per year($34,000 total)
Future value $243,863 at age 65 $196,982 at age 65