FINANCIAL PLANNING 101 The Basics:

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FINANCIAL PLANNING 101The Basics

• Susan Schayes M.D
• Assistant Professor-CT
• Family Medicine, Emory University School of
  Medicine

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Learning objectives

• Learn about the Millionaire next door
• Learn about the principles
• of accumulating wealth
• Learn how to get started with basic financial
  estate planning

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Learning objectives

• Pop Quiz

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The Millionaire Next Door7 Factors

• 1. They live well below their means

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The Millionaire Next Door7 Factors

• 2. They allocate their time, energy, and money
  efficiently in ways conducive to building wealth

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The Millionaire Next Door7 Factors

• 3. They believe that financial independence is
  more important than displaying high social status

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The Millionaire Next Door7 Factors

• 4. Their parents did not provide economic
  outpatient care

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The Millionaire Next Door7 Factors

• 5. Their adult children are economically
  self-sufficient

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The Millionaire Next Door7 Factors

• 6. They are proficient in targeting market
  opportunities

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The Millionaire Next Door7 Factors

• 7. They chose the right occupation

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The Millionaire Next DoorWealth- rule of thumb

• Multiply your age times your realized pretax
  annual household income from all sources.
• Divide by 10
• This is what
• your net worth should be

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The Millionaire Next DoorWealth- PAW vs UAW

• PAW- prodigious accumulator of wealth
• To be well positioned in this category you
• must have twice the level of wealth expected
• UAW- under accumulator of wealth
• One half or less than expected for all those
  in his age/income category

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The Millionaire Next Door Foundation for
building wealth

• PAW- prodigious accumulator of wealth
• Frugal, Frugal, Frugal
• Websters- behavior characterized by or
  reflecting economy in the use of resources

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The Millionaire Next Door Foundation for
building wealth

• Being frugal is the cornerstone of
  wealth-building
• Millionaires do so by budgeting and controlling
  expenses, and they maintain their affluent status
  the same way
• Lavish lifestyles are promoted and
  sensationalized in American society so being
  frugal isnt sexy

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The Millionaires creed

• To build wealth, minimized your realized
  (taxable) income, and maximize your unrealized
  income
• (wealth/capital appreciation without a cash
  flow)

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What ever

• But Dr. Schayes
• I am up to my eyeballs in student loans and debt
  to pay for my education
• This is so far from my reality I plan on sleeping
  the rest of the lecture

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The Baby steps

• 1. Operate your household on a monthly and
  annual budget-stick to your budget. Live within
  your means

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The Baby steps

• 2. Pay yourself first
• 3. Stop consuming

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The Baby steps

• 4. Stop using credit cards, use cash
• 5. Be goal oriented and have clearly defined
  daily, weekly, monthly, and lifetime goals

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The Baby steps

• 6. Spend more time learning/planning your
  financial future
• -playground learner

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The Baby stepsGetting spending under control

• Know what you earn
• Track what you spend
• Pay cash
• D/C credit cards
• Never spend more that 100 on anything without
  taking 48 hours to think about it

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Wealth Building Strategies

• 1. Buy a house
• 2. Maximize your retirement savings
• 3. Control spending
• 4. Pay down high interest debt

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Compound InterestHow to be a latte millionaire
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Compound InterestHow to be a latte millionaire
Daily saving of 2 compounded daily starting at
age 20, at 12 will yield 1,000,000 by age 65
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Compound Interest

• Start saving early
• -use automatic deductions
• Save maximally
• -maximize RRSP contributions
• CASH is KING

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Credit Reporting

• Determines your ability to borrow money, get
  services,and at what rate
• Never late/miss payments

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Credit ReportingGetting started

• Experian
• Equifax
• TransUnion
• Central Source
• www.annualcreditreport.com
• 1-877-322-8228

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Financial planningGetting started

• www.fidelity.com
• www.yahoo.com
• finance
• Businessweek
• The millionaire next door- Stanley/Danko
• Smart Women finish rich/Smart Couples finish
  rich/The Automatic millionaire-Bach

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Estate Planning StrategiesThe Basics

• Will
• Name a guardian for
• minor children
• Living will
• Power of attorney
• Beneficiary designation
• forms
• Transfer on Death Registration
• 529 plans

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Estate Planning StrategiesThe Basics