Presented by Brittney Castro, CRPC, AAMSm...
Transcript of Presented by Brittney Castro, CRPC, AAMSm...
May 22-25, 2016 Los Angeles Convention Center Los Angeles, California
How to Manage Your Money:
Personal Finance 101
Presented by
Brittney Castro, CRPC, AAMSm CFP
FM31
5/25/2016
1:15 PM - 2:45 PM
The handouts and presentations attached are copyright and trademark
protected and provided for individual use only.
How To Manage
Your Money: Personal
Finance 101Presentation by:
Brittney Castro, CFP®, CRPC®, AAMS®
Founder & CEO
Financially Wise Women
About Brittney:
Brittney Castro, CFP®, CRPC®, AAMS® and founder and CEO of
Financially Wise Women, launched her own registered investment
advisory firm in 2013 at the age of 28. In just three short years, she’s
leveraged social media to build a six-figure financial planning firm; launch
an online six-week evergreen product called The Money Class; become
a well-known financial expert for women of all ages; and land national
media recognition from CNN, CNBC, The Wall Street Journal, The New
York Times, CBS, KTLA, Fox 11 News, Glamour, Elle, Marie Claire,
Financial Planning Magazine, Investment News, and Registered Rep
Magazine and many more.
She specializes in working with busy professional and entrepreneurial
women who are passionate about life and want to gain clarity around
their money. Brittney’s mission is to help women plan and create the life
of their dreams, free from anxiety about money. She is known for her
innovative, non-judgmental, compassionate approach to financial
planning. Away from the office, you can find Brittney working out,
drinking green juice, reading, playing at the park with her dog Arya and of
course dancing.
Follow her on twitter at www.twitter.com/brittneycastro.
In this presentation you will learn how to:
• Identify how to budget your money easily and
effectively every month.
• Name the tips to save more of the money you make
without feeling restricted or deprived.
• Discuss how to build cash, pay off your debts and
improve your credit score.
• Describe the basics of investing and retirement
accounts.
• Determine the different types of protection you need
as you build and grow your net worth.
The new way to budget your
money and track your expenses
with ease.
What is a budget?
• A way to track your income and expenses over a period
of time.
Set up your budget following the
“Pay Yourself First” system:
Here is a rough guideline as to how your net income should
be allocated for your different expenses:
50% Fixed Expenses
20% Savings- “Pay Yourself First”
30% Fun/Variable Expenses
Fixed:• Mortgage, rent, utilities, health insurance, groceries
(basic), childcare, tithing, etc.
“Pay Yourself First”/Savings:• Cash cushion, extra debt payments, retirement, home
down payment, etc.
Fun:• Dining out, entertainment, shopping, travel, clothes,
etc.
Example:
Net Income is $6,000 per month:
50% =$3,000 Fixed Expenses
20 % =$1,200 Pay Yourself First=Savings
30% =$1,800 Fun/Variable Expenses
Do you: What If you:
Savings over
15 yr period
Drink 1 latte every morning?Drank 1 latte every other day
(3x/week)?$14,812
Spend $2,500 per year on
clothes, shoes, etc?
Saved $20 per week from
shopping?$32,915
Go out for lunch every day during
the week?
Brown- bagged your lunch
3x/week?$49,372
How does it all add up?Took the money you would
have spent and invested it?$97,099
Little changes really do add up:
Assumptions: Lattes save $9 per week, Shopping saves $20 per week, Brown Bag saves $30 per week. Take savings and invest
monthly for 15 years (monthly Compound interest). All of the above savings use the average annual return of the S&P index for the
past 76 years of 9.92%
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of
returns used do not reflect the deduction of fees and charges inherit to investing. The S &P 500 is an unmanaged index and cannot
be investing into directly. Past performance is no guarantee of future results.
Schedule weekly “Money Dates”
1. Choose day/time for your money dates.2. Update your budget, track, manage, forecast, review.3. Make them fun and consistent.4. Budgeting tools- bank apps, mint.com, level money app, quicken, etc.5. HAVE FUN!
Build cash, pay off debts and
improve your credit score.
Build a cash cushion:
• Typically you want 3-6 months of committed
expenses in cash accounts.
Why?
• Emergencies
• Opportunities
• Investing- need staying
power
• Insurance deductibles
• Business owner
Set up your bank accounts to work for you:
Checking Account
Savings Account
High yield savings, CD, Money Market,
etc.
Structure your bank accounts:Checking Account:
• Deposit income, pay bills, track expenses.
Savings Account:
• Keep for bigger expenses, emergencies, to
protect against overdraft fees.
CD/Money Market Account/High Yield
savings:
• Use for majority of Cash Cushion, can still
access but more “out of sight, out of mind.”
Pay off debts effectively:1. Acknowledge the debt you have.
2. Accept the debt you have and forgive yourself.
3. Create a game plan.
4. Make additional payments.
5. Celebrate mini milestones.
Acknowledge the debt you have:
• We live in a debt nation.
• You are not a bad person because you have debt.
• Get clear about the facts.
• List out all your debts- type, balance, interest rate,
minimum payment.
Accept the debt you have and forgive yourself:
• Forgive yourself from the past.
• Be present with what is.
• Write a letter to your debt.
• Set an intention for paying off your debts.
Choose a debt reduction game plan:The Snowball Method:
• Start by paying the minimum on all debts and
allocate additional debt payments toward the
debt with the lowest balance while
simultaneously paying the minimums on the rest
of your debts.
The Avalanche Method:
• Start by paying the minimum on all debts and
allocate any additional debt payments toward the
debt with the highest interest rate while
simultaneously paying the minimums on the rest
of your debts.
Make additional debt payments:
• How much of your 20% can be allocated toward
extra debt payments?
• Work with your financial planner to help you figure
this out.
• Make your extra debt payments automatic.
Celebrate mini successes:
• Set up mini goals to stay motivated.
• Remember your intention for being debt free.
Debit card vs. secured card vs. credit card:Debit card:
• Connected to your checking account.
• Overdraft fees may apply.
• ATM to withdrawal and deposit money.
Credit Card:• Borrow money from credit card company up to a limit.
• Charged an interest rate for any unpaid balance.
• Affects your credit score.
Secured Card:• Acts like a credit card except you attach money to the
account to act as collateral if you don’t pay off your bill
every month.
• Affects your credit score.
The best way to use credit cards:
• Charge expenses that you KNOW you can PAY OFF every month.
• This will help your credit score.• Bankrate.com• Dinkytown.net
Understand your credit report:• Your credit report is like a file on you and your
credit history.
• It basically tells lenders how risky of a
borrower you are.
• So when it comes time to purchasing your
new home or new car, you want your credit
report and credit score to be in top financial
shape!
Understand your credit score:
• Credit score, also known as your FICO score, is
calculated using the information from your credit
report.
• Can range from 300-850.
• Over 760 considered excellent.
• Request your credit report today by logging onto
one of the three different credit reporting bureaus:
Equifax, Experian, or TransUnion.
• You can also visit creditkarma.com to view your
credit score for free on a regular basis.
The 5 factors that contribute to your credit score:
• Payment History- 35% of your score.
• Total Amount Owed- 30% of your score.
• Length of Credit History- 15% of your score.
• New Credit- 10% of your score.
• Types of Credit Used- 10% of your score.
The goal is for your score to be above 760.
This means you have excellent credit.
Why do you need to invest your
money?
Investing basics:
The effect of inflation
$0
$50,000
$100,000
$150,000
$200,000
$250,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Purchasing power of $200,000 at 3% annual inflationTo
da
y's
Do
lla
rs
Year
Investing basics:
The effect of compounding
$0.00
$100,000.00
$200,000.00
$300,000.00
$400,000.00
$500,000.00
$600,000.00
$700,000.00
$800,000.00
20
23
26
29
32
35
38
41
44
47
50
53
56
59
62
65
Beginning at age 20 Beginning at age 35 Beginning at age 45
$3,000 annual investment at 6% annual growth, assuming
reinvestment of all earnings and no tax.
This is a hypothetical example and is not intended to reflect the actual performance of any
investment.
$120,000$254,400
$679,500
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Year
Investing basics:
The effect of
compounding • $5,000 invested annually
• 6% annual growth rate
• All earnings reinvested
This is a hypothetical
example and is not
intended to reflect the
actual performance of
any specific investment.
Investment fees and
expenses, and taxes are
not reflected. If they
were, the results would
have been lower.
“Rule of 72”
72 ÷ Rate of Return = Years Needed to Double in
Value
Growth of annual $5,000
investments
Rule of 72
4%
18 yrs 9 yrs
8%72 72
Year Amount
1 10,000
19 20,000
37 40,000
55 80,000
Year Amount
1 10,000
10 20,000
19 40,000
28 80,000
37 160,000
46 320,000
55 640,000
*The rule of 72 is a mathematical concept and does not guarantee investment results nor
functions as a predictor of how an investment will perform. It is an approximation of the impact of
a targeted rate of return. Investments are subject to fluctuating returns and there is no assurance
that any investment will double in value.
In summary, investing allows us to grow
our money faster than inflation
overtime.– Don’t put off investing
– The sooner you start, the longer your investments
have to grow
– Playing “catch-up” later can be difficult and expensive
Basic Investing Tips
Asset Allocation
Portfolio Performance *
• 91.5% Asset Allocation
• 4.6% Security Selection
• 1.8% Market Timing
• 2.1% Other Factors
*Source: “Determinants of Performance”, Brinson &
Beebower
Financial Advisor Picks:
Diversification
$100,000 Invested at 8% for 25 Years
$684,848
The Power of Diversification
At 15%At
10%
At 7%At 5%
The Power of Diversification
Investing Do’s and Don’ts
Do:
1. Your research
2. Read about investment options
3. Invest for the long-term
4. Understand the risks of investing
5. What to expect when investing
6. Hire help when needed
Don’t:
1. Invest blindly
2. Invest for short term goals
3. Allow your emotions to get involved
4. Listen to all chicken little
5. Compare your investment plan to
others
6. Be afraid to ask more questions
Types of Retirement
Accounts
Traditional IRA Roth IRA
NO Taxes Ø
Tax deduction
(pre-tax
contribution)
TAXES $
No Tax
Deduction
(after-tax
contribution)NO Taxes
Ø
Tax
deferred
growth
NO Taxes Ø
Tax deferred
growth
TAXES $
Fully taxable
(ordinary
income taxes)
59 ½ yrs old
NO TAXES Ø
Income tax
free
59 ½ yrs old
*Note future tax laws can change at any time and may impact the benefits of Roth IRAs. Their
tax treatment may change.
IRA vs. Roth IRA
Steps to opening up an investment
account:
1. Choose a brokerage firm.
2. Open up the account.
3. Fund the account.
4. Buy investments within the account.
5. Review every 6 months.
How to get the right insurance
policies in place to protect your
family.
Get the right insurance in place.
• Health insurance.
• Disability insurance.
• Life insurance.
• Liability insurance.
• Property insurance.
• Worker’s compensation insurance.
• Key employee insurance.
• Long-term care insurance.
Disability insurance:
• What happens if you are too sick or injured to work?
• Review your options at work and enroll in disability
insurance coverage.
Life insurance:
• Simply put, you get life insurance if you love someone or
owe someone.
• Types- Group term, individual term, whole life, universal
life, etc.
Long-term care insurance:
• LTC Insurance is like health insurance, it's for a really big
events, the kind that could cause you to use up all your
savings and assets.
• "The #1 fear retirees have is the fear of running out of
money.“ - Forbes Magazine
Here’s what you learned in this presentation:
• Identify how to budget your money easily and effectively
every month.
• Name the tips to save more of the money you make without
feeling restricted or deprived.
• Discuss how to build cash, pay off your debts and improve
your credit score.
• Describe the basics of investing and retirement accounts.
• Determine the different types of protection you need as you
build and grow your net worth.
Additional resources:
• Financially Wise Toolkit which includes:
• Dream Worksheet
• “9 Steps to Becoming…” eBook
• Life Stage Financial Checklists
• Weekly videos with finance tips
www.financiallywisewomen.com
Call To Action:
• Take action on one thing you learned today in the
next 48 hours.
Thank you!
Brittney Castro, CFP®, CRPC®, AAMS®
CERTIFIED FINANCIAL PLANNERTM practitioner
Founder & CEO
Financially Wise Women
8391 Beverly Blvd. #375
Los Angeles, CA 90048
P: 323.852.3182
F: 323.852.3183
http://www.financiallywisewomen.com/
www.twitter.com/brittneycastro
www.facebook.com/financiallywisewomen
www.facebook.com/brittneycastro
www.youtube.com/brittneycastro
Financially Wise Women is a registered investment adviser offering advisory
services in the State of California and in other jurisdictions where exempted.
The opinions voiced in this material are for general information only and are not intended to
provide specific advice or recommendations for any individual. To determine which investment(s)
may be appropriate for you, consult your financial advisor prior to investing.
There is no assurance that the techniques and strategies discussed are suitable for all investors
or will yield positive outcomes. The purchase of certain securities may be required to affect some
of the strategies. Investing involves risks including possible loss of principal. This information is
not intended to be a substitute for specific individual tax or legal advice. We suggest that you
discuss your specific situation with a qualified tax or legal advisor.
This is a hypothetical example and is not representative of any specific situation. Your results will
vary. The hypothetical rates of returns used do not reflect the deduction of fees and charges
inherit to investing. The S &P 500 is an unmanaged index and cannot be investing into directly.
Past performance is no guarantee of future results.
All performance referenced is historical and is no guarantee of future results. All indices are
unmanaged and may not be investing into directly.
Your opinion matters!
Please take a moment now to
complete the evaluation.
Thank You!