jeff rall, cfp® junior achievement
TRANSCRIPT
Jeff Rall, CFP®http://www.rallfp.com
Junior Achievement
Lesson 1 Pre-Test What is personal finance? Why plan? Rule of 2000 (Hourly to Salary) Discuss Salaries (Professions), Rents (2 BR FL, 1 BR California, 3 BR
in South Carolina), Cost of Living (Mint, Quicken), Education (UCF, FL, Fla St, Miami), Total Cost of Ownership of a Car.
Timeline and Checklist Mark years of high school graduation, post secondary education – cost and dates, note your
profession, salary and lifetime earnings. University of Pittsburgh (BA in Comp Sci 1994) @ $20,000; Duquesne Univ (Exec Cert in Financial Planning 2006 @ $8,000). Software Engineer @ 75,000 x 40 (years of working) = $3,000,000
Mark Married : Plan to : Avg Cost $25,000 in 2015 Mark Children: Plan (2) : $225,000 x 2 = $450,000 (2017, 2019) Mark Housing Cost : Florida House = $225,000 (2006); Annual Maintenance Costs
Or Rent (Half of class Buy / Half Rent)
Show Total Cost of Living (Explain 80% of retirement guide): $40,000 x 70 = 2,800,000; Where are you going to live, what are the state income taxes, how many cars will you buy
Lesson 2 Pre-Test (Questions 1-4) Review Lesson 1 – Planning – Children,
Summer (Prom, Senior Trip)? Saving, Investing, Interest? Rule of 72 Activity: 2 Volunteers to come and keep
track Item 1: We are also going to decide on our job,
rent, and predict our moving costs, and utilities. Roommates (significant other)
Lesson 3 Name Tags: Add 3 Careers – Most Likely,
Dream/Fun, Great Achievement Pre-Test (Questions 6-8) Sample Budget
http://ja.org/programs/programs_high_personal_finance.shtml HS1013 Sample Budget-Excel.xlsx
Game/Scenario
Lesson 4 Name Tags: Add the percent you will
contribute towards retirement, Average annual earnings, Number of years working
Pre-Test (Questions 5,9) Using the following information to completed the table and answer the
question. Jennifer is single and earns $50,000 as a Systems Engineer. Her monthly income is $4,160 before taxes. Of that amount, $740 is withheld for taxes and she then saves $175 every month towards her savings goals of continuing her education. When creating her monthly budget, what is Jennifer’s starting balance.
Add/Subtract Amount
Monthly Income
Taxes Withheld
Sub-Total
Spousal Income
Monthly Available Income
Savings
Starting Balance
Lesson 4 (Continued) Loan Calculator
http://www.dinkytown.net/java/SimpleLoan.html Credit Report
Lesson 4/5 Review Revolving/Secure Credit
Scenario: Car 1: Cost 10k, 5 years, 10% Car 2: Cost 12k, 3 years, 8%
What if same price? What if interest rates goes down on both? What if interest rate goes down on Car 1? What if chance to refinance from 12% on 10k, to 8%?
What if when you go to sign agreement you see something called “origination or refinance fee”?
Post Test Come to me to receive your certificate Pick a Credit Card Fact Sheet or Magazine/Newspaper One minute to present the summary or your card or
magazine article – Discuss pros and cons if Credit Fact Sheet
Extra Lesson – Saving Early
Importance of Savings/ Illustrations
http://www6.ingretirementplans.com/SponsorExtranet/CostofWaiting.pdf Compounding Circumstances
Liz and Jenna, both 24, started work for the same employer on the same day. After a year, when she was eligible to participate in her employer’s plan, Liz
began making an annual contribution of $1,000. Jenna chose to wait another 10 years before joining the plan. Liz stops investing after 15 years, while Jenna continues to invest $1,000 a year until she retires at age 65.
Both contributed $1,000 a year. Both earned an 8 percent rate of return on their investment. Liz invested for 15
years and a total of $15,000; Jenna invested for 31 years and a total of $31,000 – more than double Liz’s
investment. Yet Liz still came out ahead. (See chart to the top right.) That’s the power of compounding!
http://www.goodfinancialcents.com/investing-in-your-20s-saving-for-retirement/ http://
www.360financialliteracy.org/Topics/Retirement-Planning/Retirement-Planning-Basics/Getting-an-Early-Start-on-Saving-for-Retirement
http://www.fool.com/retirement/retirement01.htm
Extra Lesson – Paycheck Part 1 Pay Check
“Gross” versus “Net” “Pre-Tax” OADSI – Old Age and Survivors Benefits
http://budgeting.thenest.com/oasdi-ee-paycheck-23185.html OASDI/EE stands for old age, survivors and disability insurance, employee's earnings. The Social Security tax has two parts, one
paid by the employee and the other paid by the employer. As of 2012, the employee's share of the Social Security tax is 4.2 percent and the employer's share is 6.2 percent. However, the lower rate for employees will revert back to 6.2 percent in 2013
Medicare Medicare tax might be abbreviated MWT or Med. This amount is withheld so you´ll be covered by Medicare
when you reach age 65. The amount withheld from your pay is 1.45% of your gross income. Your employer pays an additional 1.45% that doesn´t come out of your paycheck. There are no income limits on Medicare tax, so all covered wages are subject to Medicare tax.
401k – What Percentage is this? Usually a match
Federal Withholding Tax Brackets Taxes are Graduated/Progressive
http://www.moneychimp.com/features/tax_brackets.htm
When you get paid, numerous deductions can taken out such as taxes, 401(k) payments, insurance, Flexible Spending Accounts, Heath Savings Accounts and wage garnishments, among the most common. Some of these are taken from your check pre-tax and others post-tax. Though the pre-tax deductions lower the wages upon which your taxes are calculated, they do have other implications that should be considered.
Pre-Tax Post Tax
Extra Lesson – Paycheck Part 2 Dental Plan
Deductible: Your annual deductible is the amount you may be required to pay out-of-pocket before the insurance company will begin paying for your medical claims
Co-Payment: Your copayment, or "copay," is the specific dollar amount you may be required to pay up front for a specific type of service.
Maximum Out-of-pocket Costs: Your maximum out-of-pocket cost sets a limit to your annual financial liability.
Health Savings Account Pre-Tax Savings account for make deductible and co-payments
Medical Plan (On Parents until 21/25) If your plan covers children, you can now add or keep your children on your health insurance policy until
they turn 26 years old. Before the health care law, insurance companies could remove enrolled children usually at age 19,
sometimes older for full-time students. Now, most health plans that cover children must make coverage available to children up to age 26. By allowing children to stay on a parent's plan, the law makes it easier and more affordable for young adults to get health insurance coverage.
Your children can join or remain on your plan even if they are: married, not living with you, attending school, not financially dependent on you, eligible to enroll in their
employer’s plan
Supplemental Life Insurance Pays usually some multiplier of salary
Extra Lesson – Financial Plan Financial Plan
In today's uncertain economy, financial planning has become increasingly important. With an overwhelming number of options for saving and investing, managing your finances can be difficult.
It is about helping individuals and families, regardless of age and financial circumstances, envision and realize their dreams and goals by marshaling and managing their financial resources.
https://www.efinplan.com/
Extra Lesson – Social Security Social Security – Show Statement
Rules Sections 1-4; Highlight 3&4
Example Full Retirement Disability Family
Extra Lesson - Insurances Insurances
Health (Eligibility Family) Life
Term versus other 9-15
Disability Auto
10-18 Home Owners
10-8 Renters Long-Term Care
Extra Lesson – College Savings College Savings
7-2 to 7-18
Extra Lesson – Bonds, Interest Rates, Stocks Federal Reserve sets prime rate @ 4.75% Bank ABC: Fed Reserve Lends Money to Bank @ 5% Customer 1: Borrows Money from Bank ABC @ 6% Customer 2: Invests in a 3 Year Bond from Bank ABC at
@ 3% Customer 3: Buys Stocks hoping for 8% return with
more risk Federal Reserve raises prime rate to 9%
What happens to the rate Bank ABC lends at? What happens to the price of new 3 Year Bond? What happens to the value of the Bond of Customer 1?
Why? How can they make up for competition. What happens to investor choosing between stock and
bond?
Extra Lesson - Taxes