Take Charge and Reach Your Goals

1. Take Charge and Reach Your Goals

2. Budgeting and Financial Priorities The PICPA • Pennsylvania Institute of Certified Public Accountants • PICPA is a professional association of more than 20,000 members working together to improve the profession and serve the public interest.

3. Budgeting and Financial Priorities Financial Planning Process • Identify your values and goals • Consider finances, current needs and concerns, future goals, risk tolerance and time horizons • Analyze all the factors that may arise while you try to meet your goals • Develop a suitable strategy to achieve those goals

4. Budgeting and Financial Priorities First Priority • Insurance Planning • Life insurance • Health insurance • Disability insurance • Long-term care insurance

5. Budgeting and Financial Priorities First Priority • Estate Planning • Wills • Durable power of attorney • www.picpa.org/estateplanning for more.

6. Budgeting and Financial Priorities Second Priority • Budgeting and Debt Management • Assess your spending habits • Create and maintain an emergency fund • Retirement Planning • Calculate how much you’ll need and evaluate your current plan • College Planning • Look into 529 plans

7. Budgeting and Financial Priorities Budgeting Basics • Assess yourself: • What is working? • Where can I improve? • Where are you today, and where do you want to be in the future?

8. Budgeting and Financial Priorities Prioritize Values • Imagine you are financially secure and have more than enough money to take care of your needs – now and in the future. • How would you live your life? • What would you do with your money? • Describe a life that is complete and fulfilling. • Developed by George Kinder and the Kinder Institute of Life Planning

9. Budgeting and Financial Priorities Budgeting • Wealth Accumulation • How much you earn has almost no bearing on whether or not you will build wealth and meet your financial goals. • It doesn’t matter how much you make, it matters how much you spend.

10. Budgeting and Financial Priorities Budgeting • Your life is not a quest to make more money • Money is a tool in the quest to live the life you want • Your budget will help you reach this goal

11. Budgeting and Financial Priorities Recurring Fixed Expenses • Expenses that generally do not keep us from saving more. They are easily tracked and the amount can usually be predicted. • Not necessarily “mandatory” expenses • Exceptions: overweighed housing and/or automobile costs.

12. Budgeting and Financial Priorities Discretionary Expenses • Not as predictable but much more manageable in terms of reducing spending and budgeting guidelines for yourself and your family.

13. Budgeting and Financial Priorities Unexpected Expenses • Why we need a cushion in our budget: • Set aside some of your earnings for the unexpected things that come up in life • Set up a separate savings accounting for your emergency fund

14. Budgeting and Financial Priorities Goal in Budgeting • Income less expenses equals positive cash flow • Positive cash flow can be used for: • A financial cushion • Debt repayment • Charitable endeavors • Gifting to others

15. Budgeting and Financial Priorities Balancing Debt and Savings • Don’t wait until your debt is paid off to start saving! • Determine how much potential positive cash flow you have available and allocate between debt repayment and savings.

16. Budgeting and Financial Priorities Emergency Savings • In your savings fund you should have at least enough money to cover three months of expenses • Keep the savings liquid • Cash savings accounting • Money market • Line of credit

17. Budgeting and Financial Priorities Savings • Savings for long-term future: retirement • Savings for a financial cushion: the unexpected expenses • Savings for short-term goal: vacation, home improvements, car purchase • Plan ahead for the next few years

18. Budgeting and Financial Priorities Savings Tips • Prioritize and keep your eye on the prize • Prize is reaching your goals for short and long-term savings, debt repayment, charitable and gifting • Determine “your” room for improvement • Start paying cash – you can reduce spending by up to 50% by doing so

19. Budgeting and Financial Priorities Savings Tips • Never spend more than $100 (for example) without taking 48 hours to think about it – this will help with impulsive spending • Systemize your plan

20. Budgeting and Financial Priorities Take Action • Determine the amount you’re allocating to savings goals and debt repayment goals • Set up savings and debt payments automatically • Payroll deductions to checking and savings accounts • Online banking automatic payments • Automatic transfers

21. Budgeting and Financial Priorities Take Action • Other things won’t get in the way if the plan has been systemized • If we wait for what’s “left over” nothing will be there • Pay yourself (your goals) first every month

22. Budgeting and Financial Priorities Questions?