Financial plan = road map1. Simple2. Uses realistic income and expense

estimates3. Reviewed periodically4. Adjusted to reflect changes

Financial Planning ProcessInfluenced by:

Personal valuesGoalsWantsNeeds

Four Steps—Financial Planning1. Identify financial goals.

Needs Wants Short-term goals Medium-term goals Long-term goals

Action: Set a date How much is required

Four Steps—Financial Planning2. Determine Net Worth

Assets-Liabilities = Net Worth

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Four Steps—Financial Planning3. Income and Expense Statement

Keep records for two or three months Know where your money is being spent Periodic expenses—broken down monthly Balancing income and expenses = challenge

Four Steps—Financial Planning4. Implement and Modify the Plan

Personal debt—20% of take-home pay Pay yourself first Asset allocation—mixture of stocks, bonds, cash Review, modify—on-going

Employer Sponsored Retirement Plans401K403B—employed by government457—employed by government

Tax deferred

Personal Retirement Plan

IRA—Individual Retirement Account

Roth IRA—free of taxes

Financial ProfessionalsStockbrokerInvestment adviser—financial plannerAsk the method and amount an adviser is

being paid

Central Registration DepositoryComputerized database that contains

information about most brokers, their representatives, and the firms for whom they work.

State Securities RegulatorU. S. Securities and Exchange Commission

Compensated--have to register Over $25 million Less than $25 million—State Securities Regulator Form ADV—online at

http://www.adviserinfo.sec.gov

Social Security Retirement PlanEmployer and employee fundedGovernment programBase-level retirement incomeSupplement

Employer-based retirement savings plan Personal savings IRAs