Steps to Financial
Freedom
PRESENTED BY GREENPATH
How do you set financial goals?
How do you create a budget?
How do you use credit wisely?
John Doe
Certified Consumer Credit Counselor
STEP 1:
YOUR MONEY PERSONALITY
Turn to page 2 in your workbook.
STEP 1:
YOUR MONEY PERSONALITY
Discover your money personality:
1. List products and services
you spend your money on
2. List ways are you a “good”
spender
3. List changes you would like
to make in your spending
habits?
Turn to page 2 in your workbook.
How do I set
financial goals?
STEP 2: SETTING GOALS
• Specific
• Measureable
• Reasonable and Realistic
Turn to page 3 in your workbook.
STEP 2: SETTING GOALS
Turn to pages 3-4 in your workbook.
STEP 2: SETTING GOALS
List out your short, mid and long-term goals:
1. What are some goals you would
like to accomplish within the
next 1 to 2 years?
2. What are some goals you would
like to accomplish in the next 2
to 5 years?
3. What are some goals you would
like to accomplish in more than
5 years?
Turn to page 4 in your workbook.
How do I create
a budget?
STEP 3: BUDGETING
1. Income
A. Gross vs Net
2. Expenses
A. Fixed
B. Variable
C. Periodic
3. Debts
Turn to page 5 in your workbook.
STEP 3: BUDGETING
Once you have created your budget, be sure to
compare it to the financial guidelines financial experts
recommend. Most people tend to underestimate their
expenses by about 25%.
Turn to page 5 in your workbook.
STEP 4: SAVING TO ACHIEVE
• Make it part of the budget
• Start with an emergency
savings account
• Save to make most purchases
Turn to page 5-6 in your workbook.
STEP 4: SAVING TO ACHIEVE
Calculate your emergency
savings
Turn to page 6 in your workbook.
What are
some ways I
can use credit
wisely?
STEP 5: USE CREDIT WISELY
• Good debt, bad debt
• Review your credit report
• Handling debt problems
Turn to page 6-9 in your workbook.
STEP 6: HOME SWEET HOME
• The American Dream
• How much can I buy?
• Qualifying ratios
Turn to page 10-12 in your workbook.
STEP 6: HOME SWEET HOME
Calculate your qualifying ratios:
If you don’t own a home:
1) How much house can you
afford?
2) How’s your debt to income ratio?
If you own a home
1) How do your ratios look if you
were to buy a house today?
Housing debt-to-income ratio = 28% of gross income
Monthly debt-to-income ratio = 36% of gross income
Turn to page 10-12 in your workbook.
STEP 7: INVEST FOR YOUR FUTURE
• Stocks, bonds, and cash
• Replenish emergency
savings
• CD’s and saving bonds
• IRA, 403(b), 401(k), mutual
funds
• Tax vs. tax-advantaged
Turn to page 12-13 in your workbook.
STEP 8: TAKE ADVANTAGE
OF TAX ADVANTAGES
• Tax-free vs. tax-deferred
• Securities
• Home equity loans
• Pre-tax dollars
• Charity
Turn to page 14 in your workbook.
STEP 9: INSURANCE
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•
•
•
Life
Health
Auto
Disability
Turn to page 14-15 in your workbook.
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•
•
•
Homeowners
Renters
Long term care
Umbrella policy
STEP 9: INSURANCE
Questions to ask yourself:
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•
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Do you have enough coverage?
Do you have too much coverage?
Are there any gaps?
What do you own of measurable value that you
can’t easily or economically replace without
insurance?
Review your insurance plans and coverage
annually!
Turn to page 14-15 in your workbook.
STEP 10: KEEP GOOD RECORDS
• Home files- Keep it simple
• Write a financial plan
Turn to page 16-17 in your workbook.
GOOD ADVICE
• Learn as much as you can on
your own
• Communicate with family
members
• Be smart, seek guidance
• Use available resources
• Have some fun
Turn to page 17 in your workbook.
THANK YOU
John Doe
Certified Consumer Credit Counselor
[email protected]