Chapte*PERSONAL FINANCIAL MANAGAMENT POWERPOINT

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1. Chapter 8 Personal Financial Management

2. Few things in life are guaranteed there are few absolutes .Thus there is no promise that these financial ideas will work for you. A part of being successful is learning to have power over our money rather than letting our money have power over us.

3. George Washington- was better able to serve his country because he was financially independent”. The first step toward managing the finances of a business in the agricultural industry is becoming of a better able to manage your personal finances.

4. J. Paul Getty billionaire oil magnate once said” No man’s opinions are better than his information “we help you form accurate ,well-founded opinions about money management and wealth accumulation. It includes discussion of how to budget ,tips on money management how to potentially retire as a millionaire and achieving financial security through agricultural Enterpeneurship .

5. Earning money the career or type of work you choose and now you choose to work once you get your Job, you must plan your work and then work your plan. Gross versus Net pay these are include taxes and optional employee benefits, which are deducted from each individuals paycheck .the total earned before deductions is called Gross pay ,the amount of money left after deduction is called Net pay .

6. Mandatory Deduction- Money is with held from an employee’s pay to cover the cost of government mandated taxes and programs. Income taxes- (federal, state and local)these taxes are based on the amount of money earned on a job or through investment income. Income taxes are used by federal state and local governments to provide public good and service for the benefit of the community as a whole. Thus includes funding for education ,military ,roads ,the legal system and police and fire departments.

7. Social security tax -Taxes required by the Federal Insurance Compesation Act (FICA) are used to provides retirements or disability income for individuals or their survivors who have contributed to the funds. Unemployment insurances- This insurances provides income for qualities individuals whole employment has been terminated. Worked compensation insurances- This insurance protects individuals in the event of injury or illness that happens on or because of a job.

8. Life Insurance -pays a beneficiary (designated ) by the employee ,usually who become disebled and are unable to work. Employees benefits long-term insurances-provides income for employees who become disabled are unable to work.

9. Long-term disability Insurance -Provides employees with an who become disabled and are unable to work. Medical Insurance – covers some portion of employee and /or family medical and dental expenses. Retirements saving plan -provides employees with an opportunity to same money on a tax-deferred basis Profit Sharing -allows employees to share a portion of the profits the company markets.

10. Taxes and Benefits Summary –Federal state and local taxes are deducted by with holding this is simply a means of spreading taxes out the year. Selecting a financial Institution –financial institutions help consumers manage, protect and increase their money. Type of Institutions Bank Credit unions saving/loan(S/L’s) Brokerage firms Brokerage -Firms brought and sold stock and bonds on behalf of their customers.

11. Mandatory taxes and Benefits Deduction Federal income tax- funds service provided by the federal governments such as defense, human services and the monitoring and regulation trade. State income tax- fund service by states governments such as roads ,safely and health (net all states levyan income tax. Local income tax- funds services provide by the city or other local government such as school ,police and fire protection (not all arears levy an income tax).

12. Social security tax(FICA)- provides income and others retired or disabled employees or their survivors. State unemployment insurance- provided income and other benefits to qualifield people who have cost their jobs. Worker’s compensation insurances- provides protections in the event that an employee sustain an injury or illness in the course of a job or because of it.

13. Employee Benefits Life insurance –pays a beneficiary in the event that an employee dies. Long term disability insurance- provides benefits in the event that an employee is completely disabled. Medical insurances- employee and family insurances coverage for medical care expenses including hospitalization, physician services surgery and major medical expenses.

14. Dental Insurances- Preventive diagnostic basic major and orthodontic services. Retirements Saving Plan- A tax deferred saving plan for retirements Profits Sharing- A distribution of company profits to employees. Factors to consider in choosing a financial institutions Types of services convenience costs relationship security customer qualifications

15. CHECKING ACCOUNTS Use Caution –The convenience and safety of paying by checking instead of cash the biggest caution about keeping a checking –book concern being rushed. People become hurried and forget to record the proper amounts, especially when they are in a grocery store or some other busy checkout line. Reasons for writing checks- many people use check as their accounting procedure to determine expenditures ,especially in produce to determine expenditures especially in production in agriculture.

16. Pointers to remember when writing credit 1.write in ink 2.write in clearly 3.fill in all blanks 4.never sign a black check 5.keep your checkbook in a safe ,protected place use the correct date 6.place the decimal correctly 7.write the amount in words as far to the lets as possible on the space given fill in the unused portion with a way line. 8.Do not cross out on the name our estate anything on the check if you make a mistake near up the check and write another.

17. Keeping a checkbook register - is the small booklets that you keep with your checkbook for deposits made and checks written. 1.Shows your balance at all times 2.Helps avoids over drafts 3.Keeps a record of checks written 4.Keeps a record of deposits made 5.Provides a record to compare with bank statements

18. Balancing-(reconciling) your checkbook- complete record of all the activity in your amount (deposits and withdrawals)this process it called balancing a checkbook. Importance of Balancing your Account Monthly- although banks do maker mistake the monthly account statements is an accurate picture of how much money is really in your account and available to be spent. There may be a step financial penalty for over drawing your account. If you overdraw you account often it could affect yoiur ability to get credit the bank may even ask you to close account.

19. Unauthorized use of your automated teller machine (ATM) Card will go unnoticed that unreported Bank errors an can go unnoticed -it is your re- sponsivility to notify the bank of these errors in a timely manner. May actually have money available of which you You have not aware.

20. Where your money goes? Dave Ramsey- in his book Titled financial peace “said that money is similar to a beautiful horses. It is very powerful and always moving and in action but if not trained when young it will become an out of control dangerous animals when it grows to maturity”.

21. Handling Money takes Discipline- Handling money takes discipline however you will achieve peace of mind and avoiding financial stress in your life if you are willing to make the effort to become a disciplined money manager. Fixed Expenses- is a set amount of money due on a set date, As a rule fixed expenses must be paid when due. Although we do not have control over the type of fixed expenses ,we do have same control over their amounts. Mortgager or Rent payment –the opportunity to borrow for a house purchase. Include; property tax and Insurances if these are a part of your house payments.

22. Other real estate payments- these could includes a second mortgage ,home improvement loan, storage rental ,pasture for horses or some other items. Income and property Taxes- this refers to taxes not taken directly out of your paycheck . example are federal and state taxed ,past taxes and property taxes not includes in your house payments. Installments contract payments- Many financials counselors advice against incurning debt. includes payments on contracts for purchase of car ,furniture appliances and many other iterms .

23. Insurance -some insurances is not taken directly out of the paycheck and not includes in the houses payments these payment can be real budget busters. Regular contributions –steel magnate Andrew Carnegie spent the first half of his life attaining wealth and the second half giving it away. Due - this type of job you have determine whether dues will be a fixed expenses, Teacher, Doctor, Lawyers and real estate agents pay dues to professional organization ,Many hourly workers pay dues to labor unions.

24. Savings - if you do not build an emergency fund you are destined for pain, embarrassment and potential disaster. Variable expenses -you must develop power your purchase rather that letting your purchases gain power over you. Utilities -Telephone and water bills can also be monitored Garbage, sewage and cable TV are other possible utility charges. Change Accounts -Credits cards are everywhere today you can obtain credits cards for departments stores and gas stations. The emotional detachment experienced when .you user a credit card is referred to as plastic prosperity disease.

25. Medical/dental Bills not covered by Insurances- even with Insurances unless you have an emergency fund set aside medical and dental bills can cause financial hardship ,prescriptions office calls eyeglasses are also included in this category. Transportation -car payments are a fixed expenses however gas ,oil repair license plate and registration your driver’s license and servicing must also be considered when you are drawing up a budget.

26. Household Maintenance and Repair- some expenses in this area. Includes; Gardening cleaning supplies appliance and TV repairs ,electrical repair and the dreaded unexpected expenses such as a new road or water heater. Child care -Beside food and clothing there will be some babysitting expenses. Food -Funding the food and eating out categories which cash has been found to reduce spending by more than $100 per month.

27. Personal Maintenance -such expenses are clothing purchase laundry barber and beauty salon visits and grooming and health products. Self-Improvement /Education- Leader continually try to improve themselves and learn. Examples; of Educational Expenses are books, magazines, newspapers seminars music lessons ,tuition and travel and conference expenses.

28. Recreation/Entertainment- are very important should be Included; in a budget –movie sport ,restaurant visits vacations parties CD’s and photographs. Other Expenses- There are always unexpected expenses so budget for them .Ex,(Graduation birthday wedding).

29. Planning and Preparing A Budget- A budget is a plan for spending and saving money , by failing to plan wen are planning to fail and there will always be too much month left at the end of the money, Benefits of a Budget- Budget may appear to restrict you and in the begging may seem like torture to prepare with time however the process gets easier and you will find that your gain confidence in your ability to take control of your finanies .

30. A budgets puts you in controls of you financial future. A budget ensures that you do not spend more than you earn. A budget helps you prepare for major periodic expenses such as can insurances medical insurances and vocations. Family Budget -allowing some discretionary income for flexibility or as a cushion in your budget is wise and will ensure that the budget process works for you.

31. Financial Management and Security tips Here are 16 tips to helps you better manage your money. Limit Debt Do not use Credits Cards. Credit cards Alternative Credit Score Save big MONEY ON HOME Mortages . 1-5 year rathe than 30 year loans Pay an Additional payment per year. Divide the total into two monthly payments. Increasing Retirements benefits,

32. Live within and below your income -you must limit your syle of living figure out what your income us and live far below that mark. Paying cash for a car versus being into debt in his book financial peace ,Dave Ramsey gives the following examples. Negotiate and buy only Big bargains- strive to create a “win-win situations in the better terms and sellers wins by getting a necessary here are seven basic principles of negotiating. 1.Always tell the truth 2. use the power of cash 3.Understand and use walk “away power. 4.Talk Sparingly 5.thats not good enough 6.good guy-bad guy 7.if I give I also take

33. Build an Emergency Fund- a good financial planner will tell you that from the start, you should have three to six months of income in savings that are available (liquids)for emergencies. Ex. Liquid income is a simple bank savings account or a money find on which you can write checks. Manage your Budget Buster- Payment that are made on a nonmonthly basis can destroy your budget unless they are planned for. If you convert them to monthly basis and use the Envelope System.

34. Envelop System- the time honored envelope System of cash management is a budgeting system recommended by most good financial counselors. Have Enough Insurance – By having enough Insurance you will have greater controls overt your destiny and show other that you are competent and capable. Master the magic of compound interest- you do not have to have a fortune to invest to enjoy the magic of magic of compound interest .you can accumulated a substantial amount of money by investing in a small way.

35. Use an Automatic Saving plan- if you get a raise put a percentage of your raise in saving this is an excellent way to build your emergency fund. Take Advantages of Matching Stock Purchase -some large corporations offer their employees an opportunity to buy stock in their companies. Use your hobby to make money -Stock purchases some large corporations offer their employees an opportunity to buy stock in their companies.

36. Retiring as a Millionaire- if you thank you can you can maker them happen .if you think you cannot ,you cannot your attitude determits your altitude. Plan two Buy a used can instead of a new one and invest the different- Despite what advertisers lead you to believe ,driving a new car will not make you feel better or be more successful. Key Factors is Making the Millionaires plans work –A farmer does not simply plant a seed and let it grow ,hoping fort an abundant harvest its or she has to work on it.

37. Manage investment to achieve a 12 percent interest rate-there are many types of investment strategies take courses. 1.Mutual funds-were invested to make investment expertise available to ordinary people. 2.Money magazines publishes an annual year book that gives mutual fund data . 3.Prospectus-Before you can invest with any mutual funds. 4.Select a mutual fund on the basis of whether the fund has a sales charge, 5.Monitor your mutual fund closely. 6.Diversify your mutual funds.

38. Type of mutual funds- As you select and monitor investment be aware of the type of mutual funds. Aggressive growth Long-term growth Grow and income Tax- Deferred saving - tax deferred saving allows an individuals to postpone taxes a while building an investment.

39. Amount invested- In a regular IRA you receive only part of the benefits of your investment earnings because part will ends up going to the government in the form of taxes. Required Distributions – the required distributions rules do not apply to the Roth IRA as a result the Roth IRA may enhance your postretirement investment earnings. Earning Distributions – No matter how well you plan you may need to withdraw money from your IRA before retirements.

40. When Do I Get my Money? Withdraw from such plans are designed to occurs at retirements as you withdrawals according to your tax bracket. Financial Security- the best way to get rich quick but we cannot tell you how to do that by ethical ,illegal or moral means. The best way to get rick quick is to get rich slowly. (SAEP)-Supervised Agricultural Experiences Program

41. Assumptions for Reaching Financial Security- 1.think part –time (avocational)enterprises. 2.Emphasize marketing the key to a profits in avocational enterprises. 3.Develop new ways of thinking 4.Mange Investment- Investment portfolio as to an avocational enterprise. 5.Get tough and stay focused – self discipline hard work and perseverance.

42. Selecting Part- time Agricultural Enterprises- Farmer who said his form and want in search of demands Many Agriculture student go searching for diamond and gold arty they do not realize that they are already sitting on gold mine. The$4,000 work –unit approach high interest payments high machinery costs depreciated land value inadequate market.

43. Levels of financial Managements –the more levels of financials you can attain the better of you will be at retirements. Line within a budget social security retirements benefits through your job life insurances universal life insurances term life insurances one of four plans to retire as a millionaires.

44. THANK YOU Plant a tree to grow a success.