Financial Planning for Women

1. The Development of Superior Investing Performance: 6 Strategies for Increasing Financial Fitness Financial Planning for Women Presented by Jean Lown Erica Abbott & Brittani Bushman Nov. 7, 2012

2. Take the Financial Fitness Test • 14 Questions • Score yourself (need to adjust score if single) < 25: Poor 25-30: Baseline 31-36: Good > 36: Very good

3. Acknowledgements • Research by David Eccles, Elizabeth Goldsmith, & Paul Ward of Florida State Univ. • The material was produced as part of a project funded by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation • www.finrafoundation.org

4. What is Financial Fitness? • Financial fitness is like physical fitness • Affects your well being & security • Physical fitness involves building muscle & aerobic capacity • Financial Fitness involves • building financial reserves • making your money work more efficiently

5. Financial Fitness is More Important than Ever • We are living longer than ever! • Average life expectancy is increasing • In U.S. Utahns live longest • Women live longer than men • This means we need more $ for retirement • Reduction in employer provided pensions • YOYO!

6. Financial Fitness • Helps cope with life’s financial challenges & increases ability to retire comfortably • Physical & financial fitness require work • Being prepared for the future • Safeguarding your family • Providing better opportunities for healthcare

7. Financial Fitness • Yes, it takes time! • Benefits far outweigh the costs though. • No more excuses! Help shape your future! • You deserve to give yourself the gift of living well through Financial Fitness

8. How Can I Increase My FinancialFitness? • We know what people should do but what do real people actually do that works? • 3 year study at Florida State University • Studied personal financial strategies that helped real people become Financially Fit & accumulate wealth • What works for you?

9. Research • Contrasted the PF strategies of householders who had similar opportunities to accumulate wealth over their lifetimes but ended up with very different amounts of wealth near retirement • Focused on the PF strategies used in “top performing” households: • Pre-retirees who were most Financially Fit

10. Study revealed six strategies:The SIMPLE 6 (Podcast) 1: Talk about it 2: Ask your employer 3: Work out what you’ll need 4: Forecast what you’ll have 5: Maximize saving & earning interest 6: Minimize debt and paying interest http://www.lsi.fsu.edu/centers/hprc/projects/finra/

11. 1. Talk about it • Communicate with your partner (if you have one) about household finances • Work out strategies together to deal with $ • Share with your partner any understanding you gain about managing finances • Two heads are better than one • If single: talk with a trusted friend

12. 15 Minute Workout: Talk about $ with partner or close friend • Communicate, communicate, communicate! • Set up regular $ talk time • Share responsibilities (or alternate years) • Each needs “pocket $” (allowance) • Don’t hide $ activity from your partner • Get help: USU FLC (435-797-1569) • Marriage & family therapy • Housing & Financial Counseling

13. What works for you? • Share your story, your advice, your experience

14. 2. Ask your employer • Financial/retirement advice & plans • Take advantage of employer resources • USU: TIAA-CREF, Fidelity & URS advisors provide free consultations • If self-employed/small business: IRA • Simplified Employee Pension (SEP) • Saving Incentive Match Plan for Employees (SIMPLE)

15. 3. Work out what you’ll need • Estimate how much money you will need to live on in retirement (www.usu.edu/fpw) • Ballpark Estimate http://www.choosetosave.org/ballpark • Consult fee-only financial professional • Beware of financial salespeople! • Certified financial planner (www.cfp.net) • www.NAPFA.org • http://garrettplanningnetwork.com/

16. 4. Forecast what you’ll have • Estimate how much money you think you will have by the time you plan to retire • $Fit HHs work out how much they would have as they near retirement & compare to what they need • online retirement calculators & FPW PPTs • www.bankrate.com/calculators • http://www.usu.edu/fpw/schedule/powerpoints.htm

17. 5. Maximize saving & earning interest • Save from every paycheck (Automate) • Build emergency fund • Online savings/CDs • I-bonds • Invest in Roth IRA every month • See FPW past presentations for specific advice on low-cost mutual funds for IRAs • Save up for big ticket purchases (vehicles)

18. 15 Minute Workout: Set up an Individual Retirement Account (IRA) • Lots of great info on FPW website • http://www.usu.edu/fpw/schedule/powerpoints.htm • What’s an IRA? • Traditional vs. Roth • Best mutual funds for an IRA • Especially valuable for non-earning spouse • Fund your IRA w/ automatic monthly transfer • Use a commitment contract! Have someone hold you responsible to follow through.

19. ROTH IRA does double duty • Roth IRA doubles as true (catastrophic) emergency fund http://www.rothira.com • you can withdraw your Roth IRA contributionsat any time without paying any taxes (you’ve already paid taxes on this money) or penalties • Early withdrawal of earnings are subject to tax & 10% penalty

20. 6. Minimize debt & paying interest • Pay household bills on time (automate!) • Pay full credit card balance each month • If not, you’re living beyond your means! • Don’t be a debt slave for life www.PowerPay.org • Build an emergency fund • Autosave in online savings

21. 15 Minute Workout: Create an Emergency Fund • How much? something is better than nothing • Save w/ automatic transfer from checking • Online savings accounts • FDIC insured • Higher rates than traditional accounts • No minimum • Once you build up emergency account • I-bonds (keep up with inflation; no state income tax on earnings; out of sight, out of mind

22. What Works for You? • How do you find $ to save? • Other ideas on places to stash your emergency savings?

23. Gender and Credit Card Behavior • Females: more costly credit card behavior than males • Compared to men, women were • 9% more likely to carry a balance • 11% more likely to pay only minimum • 26% more likely to incur a late fee

24. 15 Minute Workout: Pay credit card in full each month • When you carry a balance, everything you charge costs LOTS more than list price! • Check out repay info on your statement • Pay only min.: pay twice the price! • Required $ to pay to pay off in 3 years • Use https://powerpay.org/ or get help at USU Family Life Center: 435-797-7224 • Once you pay off: set max. $ charge/mo.

25. 6. Minimize debt continued • Pay extra on mortgage principal each month (what FF HHs did in this study) • Maybe… better to invest for retirement, save for child’s college or buy earthquake insurance or… • Refinance to today’s ultra low rates

26. Resources • Are you Financially Fit? Workbook: http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p122359.pdf • Summary brochure: http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p122356.pdf • Financial Fitness Project website: http://www.lsi.fsu.edu/centers/hprc/projects/finra/ • Podcast

27. Questions? Experiences? • What is your Personal Finance Action Plan?

28. Upcoming FPW • The Quest for 850 (credit scores) • January 30, 2013 • Al Bingham • USU TSC Ballroom • 11:30-1 pm • Alternative Gift Market • Saturday, Dec. 1, 9 am – 2 pm • Presbyterian Church, 178 W. Center

29. FPW Website & BLOG • http://ww.usu.edu/fpw • http://fpwusu.blogspot.com/ • Kiplinger Personal Finance Magazine • Money magazine • WSJ Sunday (online): http://online.wsj.com/public/page/sundayjournal.html

30. Money Girl's Quick and Dirty Tips for a Richer Life • http://lauradadams.com/ • 288 MG How to Make Decisions About Personal Finances • http://stitcher.com/s/player.php?AAKAAIH5N