Personal Finance Basics April 27 th , 2019 Lauren Vanderlugt, CPA - - PowerPoint PPT Presentation

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Personal Finance Basics April 27 th , 2019 Lauren Vanderlugt, CPA - - PowerPoint PPT Presentation

Jan 07, 2024 526 likes •764 views

Personal Finance Basics April 27 th , 2019 Lauren Vanderlugt, CPA Income & Expenses Values based analysis Adjusting expenses Increasing your income Agenda Saving & Investing Resources Discussion Income March

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Personal Finance Basics

April 27th, 2019

Lauren Vanderlugt, CPA

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Agenda

  • Income & Expenses
  • Values based analysis
  • Adjusting expenses
  • Increasing your income
  • Saving & Investing
  • Resources
  • Discussion
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Income & Expenses

https://jamesclear.com/core-values

Income March 2019 Primary job $3,000 Investment Interest $5 Side gig - Uber $400 Total Income $3,405 Expenses Rent & utilities $1200 Groceries $300 Restaurants $250 Car payment & gas $500 Miscellaneous $100 Total Expenses $2,350

Net Income $1,055

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Values Based Analysis Step 1: Write down you values & goals

https://jamesclear.com/core-values

Values Family Honesty Health Service Leadership Goals Get married and have a wedding next year Retire by 55 Climb Mount Kilimanjaro Buy a house

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Values Based Analysis Step 2: calculate your real hourly wage

Weekly income & costs Weekly salary $962 Benefits $100 Commuting by car ($100) Coffee, snacks, lunches ($50) Clothes & shoes ($20)

Weekly net income $892

Time Commitment Hours Working hours 45 Commuting 5

Total hours 50

Annual Salary = $50,000

Real hourly wage $892 / 50 hours = $17.84/hr

Adapted from: Your Money or Your Life, Vicki Robin & Joe Dominguez

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Values Based Analysis Step 3: tally expenses and calculate hours spent

Category Spending Hours Rent & utilities $1200 67.3 Groceries $300 16.8 Restaurants $250 14.0 Car payment & gas $500 28.0 Miscellaneous $100 5.6

Total 2,350 131.7

Adapted from: Your Money or Your Life, Vicki Robin & Joe Dominguez

Real hourly wage $892 / 50 hours = $17.84/hr

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Values Based Analysis Step 4: ask questions

Category Spending Hours Rent & utilities $1200 67.3 Groceries $300 16.8 Restaurants $250 14.0 Car payment & gas $500 28.0 Miscellaneous $100 5.6

Total 2,350 131.7

Is the value I’m getting from this expenditure worth the hours? Is this expenditure furthering my goals or my life’s purpose? Is this expenditure in harmony with my values?

Adapted from: Your Money or Your Life, Vicki Robin & Joe Dominguez

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Adjust your spending

  • Focus on your goals & values, within reason
  • Continue to track your expenses (and your income!)
  • Apps – Mint, You Need A Budget
  • Monthly review
  • Focus on big items first
  • Budgeting
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Increase your income

  • At your primary job
  • Raise or promotion
  • Internal transfer
  • Look elsewhere
  • Consider “real” hourly wage
  • Goals & values
  • Side gigs
  • Temporary
  • Long-term
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Extra cash – what should I do with it?

  • Build an emergency fund
  • Pay down debt
  • Save for short term goals
  • Invest for long term goals
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Emergency fund

  • 1-6 months of expenses
  • Essentials only
  • Consider using a separate savings account
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Debt

  • Know your debt
  • Current balance
  • Interest rate
  • Minimum monthly payments
  • Paying it off
  • Snowball method
  • Avalanche method
  • Interest rates
  • >7%: pay it off as soon as possible
  • <7% interest rate: work on paying it off, but consider other priorities
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Save for short term goals

  • Less than 5-10 years
  • Keep savings accessible in a high interest savings account
  • Usually 1.5-2.0% interest rate
  • Examples
  • Down payment
  • Home repairs
  • Education
  • Car
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Invest for long term goals

  • More than 5-10 years away
  • Examples
  • Retirement
  • Children’s education
  • Elderly care
  • Tax Advantaged Accounts
  • 401(k), 403(b)
  • IRA
  • HSA
  • Roth vs Traditional
  • Brokerage Accounts
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Types of Investments

  • Stocks
  • Bonds
  • Funds
  • Mutual Funds
  • Index Funds
  • Active vs passively managed
  • Real estate
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The stock market

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

Dow Jones Industrial Average 1915-2019

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Saving vs investing

Contributing $300 per month for 40 years

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Investing: getting started

  • 401k or 403b
  • Employer match
  • $19K annual max
  • IRA
  • Vanguard, Fidelity, Charles Schwab
  • $6K annual max
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Review

Income & expense analysis (monthly) Emergency fund High interest debt 401k or 403b match Other debt Short term savings goals Long term investing goals

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Resources

  • Books
  • Get A Financial Life: Personal Finance in Your 20’s & 30’s by Beth Kobliner
  • Broke Millennial by Erin Lowry
  • Your Money Or Your Life by Vicki Robin
  • The Simple Path to Wealth by J.L. Collins
  • Your Complete Guide to a Successful & Secure Retirement by Larry

Swedroe

  • Websites
  • Nerdwallet.com
  • reddit.com/r/personalfinance
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Thank you!

  • Q & A
  • Contact me: laurenvanderlugt@gmail.com