Air Education and Training Command Financial Management 5

Air Education and Training Command Financial Management 5 September, 2002 MSgt Nick Kopcho HQ AETC/XPRI DSN: 487 -8035 Integrity - Service - Excellence

Overview • • Financial Planning Value of Time Common Misconceptions Developing Your Plan When to Begin How to Begin Tips for Success Final Thoughts – "When it is a question of money, everyone is of the same religion. “ – Voltaire, French writer and philosopher TEAM RANDOLPH NCO ORIENTATION COURSE

FINANCIAL PLANNING • “When it is a question of money, everyone is of the same religion. ” – Voltaire, French writer and philosopher TEAM RANDOLPH NCO ORIENTATION COURSE

FINANCIAL PLANNING • Plan First – "Though usually overlooked, setting up a good personal budget is the first step to any money management activity. Without it, you cannot control your finances and will always fall short of your goals. ” - Mark J. Randall, Certified Financial Planner – No one plans to fail, they just fail to plan • Planning is crucial to achieve a desired result TEAM RANDOLPH NCO ORIENTATION COURSE

FINANCIAL PLANNING • Benefits of Financial Planning – Awareness – Control – Organization – Communication – Opportunistic – Timesaving – Less Waste TEAM RANDOLPH NCO ORIENTATION COURSE

VALUE OF TIME • Compounding—your money’s best friend – Age 21—$100/Month X 10 Yrs = $12, 000 – B – Age 35—$100/Month Till Age 65 = $36, 000 – 8% Annual Growth till Age 65 • A = $300, 053 • B = $150, 030 – If “A” continued $100/Month till Age 65 = $52, 800 – + 8% Annual Growth = $489, 120 • Start now—something is better than nothing – “The best place to start is where you are with what you have. ” - Charles Schwab, Industrialist/Banker TEAM RANDOLPH NCO ORIENTATION COURSE

COMMON MISCONCEPTIONS • You must suffer to maintain a budget – You are already “Budgeting” – Reactive not Proactive – Free up money—eliminate waste • Budgets are for those in financial trouble – Avoid trouble – Handle crises • Takes more time – Upfront work – Easier in the long term TEAM RANDOLPH NCO ORIENTATION COURSE

DEVELOPING YOUR PLAN • • • Keep it simple and easy Communicate with and involve family Define goals—plan is roadmap to achieve goals Understandable—Primary and Alternate Customizable—Flexible Build in fun—rewards Organization—not penny-pinching Knowledge and Understanding—not rules Should let you know how much you have now TEAM RANDOLPH NCO ORIENTATION COURSE

WHEN TO BEGIN • • • NOW!! A change in your marital status An addition to the family • NOW!! A new job • NOW!! A PROMOTION, or a raise A new home • NOW!! Retirement A major purchase January 1 st (or the beginning of any month) TEAM RANDOLPH NCO ORIENTATION COURSE

HOW TO BEGIN • Where does your money go? – Look up the past • Bills • Checkbook • Bank Statements – Track your spending for one – three months • • Keep a log of every penny At least one full cycle of your money Eye-opening experience You will be surprised TEAM RANDOLPH NCO ORIENTATION COURSE

HOW TO BEGIN • Get Organized – Current Working Files—used on a routine, billpaying session basis – Reference Files—standard information – Safety Files—important original documents – Archival Files—repository of old papers. • Balance your checkbook!! • Establish the Habit TEAM RANDOLPH NCO ORIENTATION COURSE

TIPS FOR SUCCESS • Make impulse buying difficult—leave checkbook, credit cards at home • Make savings an "expense" item • Make debt repayment an "expense" item—this is what credit counselors do for you – Pay off the highest interest rate cards first – Don't use credit cards again until balance is paid off – After a loan is paid off, keep paying the loan amount to yourself—make a vacation fund, or next car fund TEAM RANDOLPH NCO ORIENTATION COURSE

TIPS FOR SUCCESS • • Have some fun money for each family member Budget for a fun item Plan with one income Don't divide couple's paychecks functionally Don't over categorize your budget—simplicity Use an interest-bearing checking account Set aside money monthly, for bills that are due quarterly, semi-annually, or yearly TEAM RANDOLPH NCO ORIENTATION COURSE

TIPS FOR SUCCESS • Reconcile your budget at least once a month; when reconciling your checking statement • Make sure to mark your last reconcile point in your budget • Try to get utilities or banks to change due dates of bills to make your work easier • Remember: just the act of identifying your expenses is extremely valuable • Be Proactive—not reactive TEAM RANDOLPH NCO ORIENTATION COURSE

TIPS FOR SUCCESS • Keep future in mind • Involve everyone • Review annually or when there is a change TEAM RANDOLPH NCO ORIENTATION COURSE

FINAL THOUGHTS • Plan for your future – Budget is a tool – Roadmap to your goals • Start NOW!! – Benefits of compounding – Establish a habit for life • Be proactive TEAM RANDOLPH NCO ORIENTATION COURSE

FINAL THOUGHTS • Define Goals – Develop plan to achieve goals – Keep it easy and understandable – Involve entire family • Get organized and get started TEAM RANDOLPH NCO ORIENTATION COURSE

Questions? TEAM RANDOLPH NCO ORIENTATION COURSE

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