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Money Wi$e Workshop Build Wealth Not Debt $$ Wealth Creation $$ Budget to Save $$ Take Control of Debt $$ Save and Invest Get the facts !! Accumulating wealth is the key to obtaining financial independence. It is necessary to understand the language of money and have a systematic approach to saving and investing in order to meet your financial goals. Building wealth requires having the right information, planning, and then making MoneyWi$e choices. The Language of Money S____ ave pend o_r S____ Net Worth Assets – Liabilities = Net Worth Or Wealth It’s YOUR Choices Courage Education Vocation Family Lifestyle Frugality Here’s how to Build Wealth not Debt Determine Short Term Goals Determine Long Term Goals 1. Pay yourself first. 2. Spend less than you make. 3. Know the difference between needs and wants. 4. Know the difference between good debt and bad debt. Pay Yourself First 1. At least 10% of your Income Saving – Emergency Fund and Short Term Goals Investing – Retirement and Long Term Goals Spend Less than you Make What determines your WEALTH is not how much you make but how much you keep of what you make!! Before you spend money ask yourself three questions: 1. Is it a need, want or a luxury? 2. How much of my life is this worth? (How many hours do I have to work to pay for it?) 3. If I spend this money which of my goals is it advancing? In other words where is it getting me? (Am I only receiving instant gratification or am I making progress toward building wealth?) Know the difference between needs and wants 1. Opportunity Cost 2. Time Value of Money Opportunity Cost There is a cost and consequence to any money decision you make. The cost is the best forgone opportunity. What else could you have done with the money and what opportunity have you given up because you do not have the money to invest in an asset? Good decisions require a clear understanding of alternatives. It’s all about choices – manage your choices and you will manage your life!! Cost Benefit Analysis Cost/Benefit Substitute How much does it cost? What is the benefit? Something different I can choose. Benefit I will receive Time Value of Money The secret to becoming a Millionaire Invest $166 a month in the S & P 500 in a tax-deferred retirement fund. From age 24 to 65 – never touch it History says you will earn 10% on your investment. With the Magic of Compounding At age 65 you will be a $$$ MILLIONAIRE $$$ Know the difference between GOOD debt and BAD debt The only thing you borrow money for are things that appreciate in value. 1. Education 2. Real Estate 3. Your Business Lead the Field by Earl Nightingale The Socioeconomic Pyramid Education attainment for Stephens County 59.4% 22.7% 13.8% 4.2% High School Diploma or less Some College/Technical Bachelor’s Degree Graduate or Professional Degree Top 5% Over $100,000 Upper Middle Class $30,000 - $100,000 Lower Middle Class Oklahoma’s average income: $29,200 Source: Okla. Dept. of Commerce Low Income Poverty level for a family of four: $18,200 Source: Census Bureau People who need to be helped by the rest of us, Elderly – Disabled - TANF What section of the pyramid do you want to live in? You have the freedom to choose your lifestyle. The desire to succeed and education (either formal or self-directed learning) will get you to the top. It’s up to you to make the choices that determine your future. What Bankers Evaluate Character – TRRFCC Trustworthiness – Responsibility – Respect Fairness – Caring - Citizenship Capacity to Pay Based on your income, employment history, expenses, debts, credit report and credit score. www.myfico.com and www.annualcreditreport.com Capital The amount of cash you have and your debt to income ratio 33% or below. If you have three times as much debt as capital – history says you will fail. What Bankers Evaluate Collateral Assets pledged to secure the loan; like a car or real estate. You don’t pay they take away. Conditions General economic conditions is the economy growing or are we in a recession. HSH Associates – Financial Publishers www.hsh.com Resources www.creditcompass.com www.mindyourfinances.com www.mapping-your-future.org www.entrepreneurU.org Jackie Jacobi, Business Trainer Red River Technology Center 3300 W. Bois D’Arc Duncan, OK 73533 (580) 255-2903 Ext 271 [email protected]