Learn how to wisely save money now and be a millionaire midway through your career through sound financial planning.

1. Money RX
Your Prescription for Sound
Financial Health
Jerry Love, CPA/PFS, CFP
AICPA Personal Financial Planning
Executive Committee

2. Starting at the End
• “Let’s start with the end in
mind.” -Steven Covey
• For most people, that’s
retirement
November 9, 2010 Money Rx Slide 2 of 20

3. America’s Financial Literacy
• The average American family spends $1.22 for every dollar
it earns
• One in five American families with annual household
income of less than $50,000 is spending 40% of after-tax
income to service its debt
• Average card debt among people who have at least one
card is $9,205
• In 2003, 1.6 million Americans filed for bankruptcy – the
highest amount in history
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4. The Problem
• Average per household debt in the U.S., not
counting mortgage or debt on cars, is about
$14,500
• A typical credit card purchase ends up costing
112 percent more than if cash were used
• About 60 percent of active credit card accounts
are not paid off monthly
• A typical American family today pays about
$1,200 annually in credit card interest
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5. Living Paycheck to Paycheck
• Some 40 percent of American families annually
spend more than they earn
• The average college student has $2,700 worth of
credit card debt by the time they graduate
• The median debt for school loans for college
graduates in 2006 was $17,125
• The average graduate student has six credit cards
and one in seven owes more than $16,928 (plus
school loans in excess of $40,000)
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6. You must understand…
YOU CAN BORROW MORE
MONEY THAN YOU CAN
AFFORD TO REPAY
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7. Financial ABCs
• Attitudes – “Pay myself first”
• Behaviors – “I’m saving every payday”
• Control and Confidence – “I can do this”
• This reduces financial distress and increases
one’s sense of financial well-being
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8. A Sound Financial Plan Helps You…
• Be in control so you can:
– Pay down debt
– Budget (spend less than you earn)
– Establish some basic financial goals
– Create a revolving savings fund
– Save for short-term goals
– Make contributions to long-term savings
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9. THE PROVERBIAL CARROT
DANGLING IN FRONT OF US
Comfortable retirement is like…
November 9, 2010 Money Rx Slide 9 of 20

10. Do the Math
• Net worth basics
– Determine your average income
for the most recent 10 years
– Multiply by your age
– Divide by 10
• This is your target net worth
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11. Target Net Worth Illustration
• Assume Family Income
of $70,700
• Assume 2% annual raises
• Saving 15.1% annually
starting age 24
• Investments earning 7.5%
annually
November 9, 2010 Money Rx
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Age
35
Age
45
Age
50
Age
55
Age
65
Net Worth
Slide 11 of 20

12. What You’ll Earn
November 9, 2010 Money Rx
Saving 15.1%
each year
will fund it
with:
•$1,657,930 at 55
•$3,736,679 at 65
Retire
at 55
•Family income of $130,625 the
year before retirement
•Need $5,261,978 for 33 years of
retirement (w/o Social Security)
Start
career at
24
•Earn $3,126,851
over 32 years
Slide 12 of 20

13. Questions to Ask
• When do you want to retire?
• Where do you want to live after you retire?
• How much money will you need to have the
type of life you want to lead?
• Who will share your retirement with you or
otherwise depend on you financially?
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14. What You’ll Need to Save
• General rule of thumb for retirement expenses
will be 60 to 80 percent of your pre-retirement
income
• That means you’ll need to have $1,655,930 at
the time you retire
• Must save $472,154 or an average of $14,755 per
year (15.1%)
November 9, 2010 Money Rx Slide 14 of 20

15. THEIR MONEY IS WORKING
FOR THEM, NOT THE
OTHER WAY AROUND
People have peace of mind when
spending 80% and saving 20% because
November 9, 2010 Money Rx Slide 15 of 20

16. Spending Plan Basics
• Setting up a spending plan
• Monitor expenses
• Mortgage payment, insurance and property
taxes should not be more than 28 percent
• Maximum total monthly debt shouldn't be
more than 36 percent
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17. IT IS A MATTER OF
PLANNING FOR LIFE’S
MILESTONES
Financial literacy isn’t just a matter of knowing
what you have and knowing your options…
November 9, 2010 Money Rx Slide 17 of 20

18. Seek Professional Guidance When:
• Getting married or divorced
• Having a baby or adopting a child
• Paying for your child's college education
• Buying or selling a business
• Changing jobs or careers
• Planning for retirement
• Developing an estate plan
• Coping with the death of your spouse
• Receiving an inheritance or a financial
windfall
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19. KNOWING WHAT YOU
NEED TO KNOW TO ACHIEVE
YOUR FINANCIAL GOALS
Financial Literacy:
November 9, 2010 Money Rx Slide 19 of 20

20. Need More Information?
• Contact me: jlove@dkcpa.com or
www.DKCPA.com
• www.ValueYourMoney.org – free TSCPA
consumer website
• www.360financialliteracy.org – free AICPA
consumer website
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