2019-06-03 FSW Lesson 4 PDF

Reeta Wolfsohn, CMSW
CENTER FOR FINANCIAL SOCIAL WORK
http://www.financialsocialwork.com/
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WORKBOOK 4 Saving & Investing Basics
Table of Contents
Welcome to Workbook #4 of the Financial Social Work Certification Program. ........................ 3
Financial Goal Setting ........................................................................................................................ 5

Goals Matter Because They… .............................................................................................................................. 5
S.M.A.R.T. Goals – S is for Specific ..................................................................................................................... 6
S.M.A.R.T. Goals – M is for Measurable ............................................................................................................ 7
S.M.A.R.T. Goals – A is for Achievable .............................................................................................................. 7
S.M.A.R.T. Goals – R is for Relevant ................................................................................................................... 7
S.M.A.R.T. Goals – T is for Time .......................................................................................................................... 7
Four Important Steps to Achieving Your Goals .............................................................................8

Step #1: Take Action................................................................................................................................................ 8
Step # 2: Reinforce ................................................................................................................................................... 9
Step # 3: Assess & Reassess ............................................................................................................................... 10
Step # 4: Update & Adjust ................................................................................................................................... 11
Goal Success Grid ............................................................................................................................. 12
Money Mission Statement ...............................................................................................................14
Create A Money Mission Statement ............................................................................................... 15
Money Mission Work Space............................................................................................................. 16
My Money Mission Statement ......................................................................................................... 16
Saving ..................................................................................................................................................18
U.S. Inflation Table (2000-2014) ................................................................................................... 30
Participant Story................................................................................................................................32
Investing .............................................................................................................................................35
Risk Tolerance ......................................................................................................................................................... 43
Financial Plan ........................................................................................................................................................... 46
Dollar Cost Averaging .......................................................................................................................................... 47
© Reeta Wolfsohn, CMSW 2014 Page 1 of 111

The Center for Financial Social Work
The Rule of 72 .......................................................................................................................................................... 48
Beginning Financial Plan................................................................................................................. 50

Qualified Retirement Savings Plans ............................................................................................................... 54
Non-Qualified Retirement Plans ..................................................................................................................... 54
Regular Investing.................................................................................................................................................... 54
IRAs (Individual Retirement Plans) Always subject to change........................................................... 55
Stocks .......................................................................................................................................................................... 57
Blue Chips.................................................................................................................................................................. 59
Mid-Cap ...................................................................................................................................................................... 59
Small-Cap .................................................................................................................................................................. 59
Money Market Deposit Accounts.................................................................................................................... 62
Certificates Of Deposit ......................................................................................................................................... 62
Practice Portfolio ............................................................................................................................. 69
Practice Portfolio Tracking Form ...................................................................................................72
Example 1: The Price of Waiting and the Difference of a Higher Interest Rate ...................... 77
Example 2: The Price of Waiting and the Difference of a Higher Interest Rate ......................78
Example 3: The Price of Waiting and the Difference of a Higher Interest Rate ..................... 80
Insurance ........................................................................................................................................... 82
Estate Planning ................................................................................................................................. 85
Participant Story............................................................................................................................... 85
Personal belongings.............................................................................................................................................. 87
Emergency Contact List .................................................................................................................. 88
Net Worth Statement ....................................................................................................................... 91
Participant Story............................................................................................................................... 94
Personal Financial Inventory .......................................................................................................... 96
Summary.......................................................................................................................................... 102

Welcome to Workbook #4
of the Financial Social Work
Certification Program.
“The most popular labor saving device is still money.”

Eleanor Roosevelt
T his is where you will learn the basics of saving and investing – the steps that transport
you out of the past and into a more financially stable future. This is important because
asset building is at the core of financial wellness.
It is your assets which allow you to achieve your hopes, dreams and wishes (your goals).
That’s why it is so important to know your goals. Before focusing on saving and investing,
this workbook gives you the opportunity to learn about financial goal setting. The more you
know about financial goal setting, the more you will understand the relationship between
your goals, your assets, and your current financial circumstances.
Having begun to change your relationship with your money, it is time for you to begin
saving – and to never stop saving! Financial passivity is a dead end road littered with
abandoned hopes and dreams that steal your passion, sense of purpose and, on occasion,
even your life. The price is just too high.

Take your life in a new and better direction by beginning to save and to invest. As a “saver”
you will quickly discover that the comfort, security and peace of mind of having savings
more than outweighs any “sacrifices” you made to build them. As a “saver” you will interact
with your money differently and have a greater appreciation for your better relationship with
your money.
Investing puts your money to work with the opportunity and potential to grow and to
increase more than it can in a savings account. It’s important to understand that when your
money works hard for you, then you don’t have to work so hard for it.
As you grow more proactive and positive with your finances, you will experience a new
sense of purpose and accomplishment. These feelings will keep you connected to your
commitment and engaged in the process of taking control of your money and life. They will
also lead you in the direction of emotional stability and economic self-sufficiency to a much
healthier, physical and fiscal space in your life.

Financial Goal Setting

Goals Matter Because They…
• Provide the need and opportunity to plan for the
future.
• Make life more interesting because success brings

satisfaction.
• Are inherently solution-oriented; they create

unconscious, as well as conscious movement in
their direction.
• Are personal and individual; not determined by another person or mandate.
• Motivate achievement and, once identified, their constant life presence requires
attention, incentivize action when accompanied by a plan, Teach patience, facilitate
a new way of thinking and living, Can be simple or complicated – whichever best
meets an individual’s needs.
Without goals, life lacks direction. Without direction, life is only a series
of days unlikely to provide fulfillment, joy or improvement.
Without goals you plan to fail by failing to plan!

Goal setting offers perspective on the past (along with the opportunity to learn from it),
addresses the present, and provides a fresh, new, more hopeful point of view for the future.
Goal setting isn’t for everyone. It’s only for people who want to succeed.
Goals are your hopes, dreams and wishes – in writing. Putting the things you want most in
your life into words is the first step towards turning them into reality.
Goal setting lays out the path to a more emotionally- stable future –
a future which results from improved financial circumstances.
Goals clarify what it is you want and define those wants in ways that are believable and
achievable. Once clarified and defined, it is easier to identify the steps necessary to move in
their direction.
Goal Setting involves the following:
• Understanding where you are today.
• Identifying where you want to be in the future (Goals).
• Recognizing which of your behaviors do/don’t support your goals.
• Replacing sabotaging behaviors with more positive ones.
• Developing a strategy for success.
Goal Setting requires the following:
1. An honest assessment of where you are today.
2. A clear understanding of where you want to be tomorrow.
3. Identifying the steps to make achieving your goals “doable” and “actionable.”
The “best known” and most popular goal setting method is called “S.M.A.R.T.” goal setting.
S.M.A.R.T. Goals – S is for Specific

The first step in S.M.A.R.T Goal setting is to identify a specific action or event that will occur.
This provides the Who or What the goal is about.

S.M.A.R.T. Goals – M is for Measurable

S.M.A.R.T. and Successful goals require a very specific goal statement CLARIFYING the
measurements which will determine whether specified outcomes have been achieved. This
is the HOW portion of S.M.A.R.T. Goals.
S.M.A.R.T. Goals – A is for Achievable

Goals should make you s-t-r-e-t-c-h but never further than your outer most limits. They
must be appropriate as well as achievable.
S.M.A.R.T. Goals – R is for Relevant

Successful outcomes depend on setting goals that are relevant (timely and important) to you
and to your life. This is the WHY portion of S.M.A.R.T. Goals.
S.M.A.R.T. Goals – T is for Time

Time is your commitment to WHEN your goal will be achieved/completed. Success depends
upon doing the best you can to “GUESSTIMATE” how long it will take to accomplish your goal.
The majority of people don’t set goals and those who do often struggle to achieve them. Not
employing the S.M.A.R.T. goal setting approach may be one reason people experience
difficulties. S.M.A.R.T. goal setting facilitates the goal setting process by providing a clear
and simple outline to follow for both the creation and implementation of your goals.
It’s better to decide upon two or three realistic goals you can keep than four or five very
challenging goals that you are less likely to be able to keep. Attach a date to each goal
specifying what you intend to accomplish by when. Include short term goals for a few
months, intermediate goals (three to six months) and long-term goals for a year or longer.
Pay attention to your goals. They need to be reviewed and revised regularly. They also need
to be worded in the way that is most meaningful to you. Therefore, take the time to
experiment with how you express your goals until you find the wording that feels just right.
Putting your goals in writing puts them out into the universe and makes them more
believable and achievable. When your goals aren’t in writing, you tend to keep them to
yourself. This, in turn, makes your goals easier to ignore, forget about and not follow
through on.

Four Important Steps to Achieving

Your Goals
Step #1: Take Action

• Share the Journey with a TRUSTED
Friend
− A relatively new concept is an

“Accountability Partner.”
− You may have different goals,

but as long as you are both
committed, you can motivate
and support each other.
− Provide encouragement to
each other.
− Hold each other accountable.
− Help each other refocus should one falter.
• Put Technology to Work for YOU
Use Apps to alert you to…
• Use the time you’ve scheduled with your money.
• Pay bills that are due.
• Address the “To Do Lists” of your life, etc.
• Set incentives and consequences.
• Reduce Temptation.
− Avoid situations which might sabotage your efforts to achieve your goals.
− Goal Achievement requires supporting new, different and better behaviors.

Step # 2: Reinforce
• Your personal motivation will drive your success, but finding ways to reinforce your
internal resolve is a necessity.
• Anticipate and prepare for setbacks and failure; forget about self-blame when you falter.
• Avoid setting yourself up for failure by doing the following:
− Not practicing an all-or-nothing attitude.
− Identifying times in the past when you made mistakes and grew as a result.
− Making time to determine what you learned from past mistakes.
− Remembering times when you’ve thrived in the face of adversity.
− Trusting that you’ve been resilient in the past and can be resilient whenever you
need to be.
− Focusing on times you previously made effective, long-lasting changes.
• Consistently work to renew and to strengthen your motivation.
• Continue to work at turning new, more positive behaviors into long-term HABITS
which contribute to successful outcomes!
• Success is an outcome of PROGRESS, not perfection.
• Recognize and celebrate your PROGRESS in ways that do not cost money.
• Visualize Your Goal
− What will it look like?
− How will you feel when you achieve it?
− How will your life be different?
− How will you benefit?
− Why does it matter?
• Focus on Progress NOT Perfection
− Progress is achieved incrementally over time.
− Break your goals into smaller steps to be achieved daily, weekly and monthly.
− Successfully implementing mini-goals builds confidence and reinforces

commitment.
Step # 3: Assess & Reassess

• Know on a MONTHLY basis where you are in the goal process for each of your goals.
• Appreciate and Learn from Failure.
− Failure helps you to identify where/how you need to adjust your plans and is an
important part of the assessment process.
• Appreciate and Learn from Success.
− Successful outcomes result from practicing healthy financial behaviors. Always

make time to understand what you did to achieve success so you can continue to
focus on those behaviors.
• Forget about self-blame when you falter; practice self-forgiveness.
• Expand your ability to cope/respond to disappointment.
• Remember Goals NEED to be SPECIFIC.
If your goal is to Pay Off Debt and to Save Money, then…
− Details Matter:
→ Pay off how much debt over what period of time?

→ Save how much money over what period of time?
• KNOW WHY.
− Do you want to save money for…
→ A vacation?
→ A car?
→ A house?
− Do you want to save money to…
→ Reduce stress?
→ Sleep better at night?
→ Improve your quality of life?

• Match Your Goal(s) to Your Time and Your Income.
− Paying off $10,000 to $15,000 in credit card debt in one year on a $40,000 annual
income is most likely unreasonable.
− A more reasonable [achievable] goal may be to reduce your debt by 50% [or by a
lower percentage than 50% if that is too high a target for one year].
Step # 4: Update & Adjust

• Do ONE Thing Differently each day with your money.
• Schedule Time with Your Money!
• Counteract spending triggers!
• Get Organized.
• Make saving a habit.
• Start an EMERGENCY Fund.
• Pay down existing debt.
• Don’t build new debt.
• Pull your Credit Report – www.annualcreditreport.com
• Know your FICO Score. www.myfico.com
• Track monthly spending.
• Reduce expenses.
• Reduce spending.
• Create and use a Spending and Saving Plan.

Goal Success Grid

Use this grid to begin setting your goals.
Write each of your goals in

the space below. Identify R–
the words, numbers, etc., S M A T
Realistic
which make it S.M.A.R.T., in Specific Measurable Achievable Timely
the right boxes@ right of Relevant
goal.
Word 1 Start Date:

Target Date:
Goal 1 Achieved Date:
Word 1 Start Date:

Target Date:
Word 1 Start Date:

Target Date:
Word 2 Start Date:

Target Date:
Word 2 Start Date:

Target Date:
Word 2 Start Date:

Target Date:
Word 3 Start Date:

Target Date:
Word 3 Start Date:

Target Date:
Word 3 Start Date:

Target Date:

Create the following goal cards and keep them with you to stay conscious and connected to
your financial goals.
Short Terms Goals (3-6 months)
1. .............................................................................................................................................................
2. .............................................................................................................................................................
3. .............................................................................................................................................................
Intermediate Terms Goals (1 to 3 or 4 years)
1. .............................................................................................................................................................
2. .............................................................................................................................................................
3. .............................................................................................................................................................
Long-Terms Goals (4 years and beyond)
1. .............................................................................................................................................................
2. .............................................................................................................................................................
3. .............................................................................................................................................................

Money Mission Statement

Having completed the first three workbooks, you know that changing behavior, especially
financial behavior, takes time, effort, thought, discipline and commitment. It begins with the
connection between you and your money because that connection forms the core of your
relationship with your money. It is your relationship with your money that drives your
financial behavior, and it is your financial behavior which ultimately shapes your financial
circumstances.
Our Drives
relationship our Financial
with our financial circumstances
money behavior
One excellent tool for making this critical connection and for helping
you to achieve your financial goals is a money mission statement.
According to Wikipedia, “A mission statement is a statement of the purpose of a company or

an organization. The mission statement should guide the actions of the organization, spell
out its overall goal, provide a path, and guide decision-making. It provides the framework or
context within which the company's strategies are formulated.”
As you can see, a mission statement is a strategic part of both corporate culture and not for
profit success. Similarly, it can facilitate individual success by helping you identify what you
want your money to do for you and how you can achieve specific and improved outcomes.

Create A Money Mission Statement

In fifty words or less, identify your purpose for becoming more money-wise. This will
become your personal financial commitment (money mission statement) to yourself and
help guide all of your financial decisions. Your money mission statement will help you align
your spending with your dreams and wishes if you make certain to ask yourself whether or
not every expenditure you make supports your money missionstatement.
Example: I am responsible for my own financial future, and I am ready to make it

wonderful.
Example: My money can help me do the things I want for myself and my children.
Example: I choose to be more money-wise to improve my life and my future.
Example: I become more money-wise each day and bring balance and harmony into my
life and my financial choices.
Creating your money mission statement may take time in order for you to capture the
perfect wording which will make it the valuable financial tool it is meant to be. You will
know it is right when you are able to refer to it each time you decide to spend money, and it
helps you to determine whether making the purchase will help you to create a better
financial future.
Decorate/design it and make copies to put in places where you will see them often.
The more you see, read, repeat and integrate your mission statement
into your life, the better your financial future will be.

Money Mission Work Space
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My Money Mission Statement

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What are three things you learned about yourself by creating a “Money Mission Statement?”

1. .............................................................................................................................................................................................
2. .............................................................................................................................................................................................
3. .............................................................................................................................................................................................
What surprised you the most about this process?
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Your “Money Mission Statement” provides the motivation to start saving and investing by
connecting you to your money and to what you want your money to do for you. This
knowledge will ultimately facilitate your recognizing the need to save and invest.

Saving
Your “Personal Spending & Saving Plan” includes your income and expenses.
Increasing your income and/or reducing your expenses will do the following:
• Allow you to have money left over at the end of the month or pay period.
• Facilitate you having money to save, so you can become your own banker.
• Enable and empower you to become an investor.
• Transport you out of the past and into the future.
• Simplify your becoming a saver and living a more stable financial life.
A secure financial future is rooted in systematic savings – Beginning Today!
Your future financial security depends on your understanding that economic self-sufficiency
looks like this:
A more secure financial future

=
Reducing expenses + Increasing savings & investments!
Regardless of how difficult your financial problems are, there is a certain comfort in their
familiarity.
That comfort makes it tempting to remain where you are and to resist change. Many people
may take the more frequently traveled road of financial passivity, but anyone taking this path
is going in the wrong direction.
The only way to have more money to save and to invest is to increase your income, spend
less of your income, reduce your expenses and/or eliminate debt. The goal of your
“Personal Spending & Saving Plan” is to help you determine where to reduce your outflow
(spending) to enable you to have more of your income to save and to invest.

Now is the time to learn about and take the most rewarding more money-wise action step –
SAVING money. Think about the word SAVE. According to the dictionary, it means to
rescue, preserve, protect, safeguard, conserve, economize and store.
If you were to save, what would you be saving?
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What would you be saving for?
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Whom or what exactly might you be trying to save?
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What do you think about when you think about saving? Saving your children from danger,
saving the world, saving a relationship or saving your job?
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Financial security is built upon the desire to save yourself,

save for yourself and save for your own future.

Your savings need to be internally (rather than externally)

driven, to be financially prudent and capable of moving
you toward economic self-sufficiency.
Financial responsibility begins with saving money for YOUR future.
You save money today to provide yourself with more money to spend in the future.
The past is gone along with whatever reasons you had for spending rather than saving.
Today and tomorrow are here and now, and they bring with them the opportunity to
Become a Saver. Today, in the present, you can choose to become a saver by taking
responsibility for your money and making a commitment to not relinquish that
responsibility to anyone, for any reason, at any time, ever again.
The more you save, the more money you will have for building assets, and the more stable
your emotional and financial future will be.
The sooner you begin saving, the sooner you will reduce/eliminate financial stress.
Some people experience financial stress when they have less than $15 in their wallets.
Others feel financially stressed when they have less than $500.
What dollar amount in your wallet, checkbook, or on your credit card causes you financial
stress and worry? $..............................................
A small amount of cash in your wallet and a large amount of debt on your credit cards will
usually be stress, worry and fear provoking.
Financial stress affects your attitude toward everything. Don’t allow past financial behavior
to sabotage your current hard work. If you weren’t as proactive and positive as you could
have been in the past, now is the perfect time to begin practicing those behaviors. You can
do it if you want to badly enough!
Becoming a Saver may prevent you from experiencing the instant gratification you’ve
grown accustomed to, but you will quickly discover that the comfort, security and peace of
mind that come with having savings easily outweighs any potential “sacrifices” your
unfulfilled wants create.

Debt keeps you stuck where you are.

Savings keep you moving in the direction of financial stability.
You may not be interested in accumulating great wealth, but having debt or no/low assets
probably isn’t your first lifestyle choice. Do you feel deserving of financial security? If you’ve
worked on the self-awareness component of this program, you know that giving away
everything you have is an unhealthy behavior that leaves you with nothing for yourself or
with anything to share with those you care about (emotionally, physically, financially, etc.).
Don’t sabotage your efforts to become more financially capable with the belief that “people
with money are materialistic, selfish, unkind and different.” That thinking supports the
rationale that “I” don’t want to be that way so “I don’t want or need money.”
Money isn’t bad. It isn’t the enemy.

It isn’t the root of all evil.
Money has no special powers other t
han the ones you give it.
Money enables you to do and have certain things and opportunities. What is bad about that?
Some people believe it is better to be poor, dependent and/or to struggle than to have
financial stability and some degree of comfort. Are you one of them?

Check any of the following that you would do if you had more money.
 Have medical care (better medical  Get divorced

care)  Get married
 Be healthier  Buy a house
 Have more free time  Buy a more reliable car
 Travel  Avoid debt
 Have more peace of mind  Attend cultural activities
 Be happier  Be more active in your children’s lives
 Have more self-esteem  Spend more time with your family or
 Contribute more to worthy causes grandchildren
 Return to school  Retire sooner
 Quit work  Other
 Work less  Other
 Have more household help  Other
 Start your own business  Other
What is wrong with any of the above possibilities? What is wrong with having more as long
as you are the one who has provided it? What makes having any of the above selfish?
NOTHING! There really is nothing wrong – and EVERYTHING right – with taking care of
yourself and providing for yourself and for your family’s financial well-being. Becoming a
Saver is the way to do so.
What do you think a successful saver looks like?
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When you look in the mirror, you see a man or a woman who has the potential to become a
successful saver – you! It doesn’t matter what your heritage is, nor does it matter whether
you are tall, short, thin, fat. It doesn’t matter whether you are old or young, bold or shy, an
aunt, an uncle, a mom, a dad, a daughter, a son, a wife, a husband, a sister, a friend or a lover.
EVERYONE has the ability and responsibility to Become a Saver.

Do you think you can recognize savers when you see them?
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Do you think you know any successful savers?
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Do you think a successful saver would be the person with the most expensive clothes and
shoes, most upscale hairstyle or a designer briefcase? He or she may be, but chances are he
or she is not.
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Successful savers don’t spend their money on things and stuff.
Successful savers save and enjoy their money.
Successful savers save for the possibility of a rainy day, but prefer to save for a sunny day.
They prefer to save for the day when their money can help them achieve their hopes,
dreams and wishes.
What will you look like when you are a saver?
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Beside the correct gender figure below, write a description of yourself as “a Saver.”
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Describe how…
• You will be different inside and out
• What you will wear
• What you will do
• What you will have
• How you will feel
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What does a successful saver know that you need to know?
1. Successful savers know to pay themselves first.
The best way to save is to always to PAY YOURSELF FIRST!
PAY MYSELF FIRST BOOKLET
Month: ……………….. Amount: ……………. Date mailed/deposited: ……….…………………..

Where Saved/Paid to: .....................................................................................................................................
Previous Balance: .............................................................................................................................................
Amount Paid/Saved This Month: .............................................................................................................
Interest/Dividends ............................................................................................................................................
New Total: ...........................................................................................................................................................

New Total: ...........................................................................................................................................................

New Total: ...........................................................................................................................................................

“Pay Yourself First” means the following:

• No matter what bills or expenses you have, you always pay yourself (E.g., your
savings account) before you pay anyone else.
• You consider your savings account an expense item on your Personal Spending &
Saving Plan, and you pay it regularly.
• You understand if you don’t pay yourself first, then you are unlikely to pay yourself
at all!
• You value your life and honor your future.
The above “Pay Myself First Booklet” is provided for your convenience to enable you to
have a method of reminding yourself to pay yourself first. Make as many copies of the
coupons as you feel you need. Each month use one coupon to pay yourself in the same
way that you would pay off a loan or a debt. This demonstrates your commitment to
becoming a saver.
Saving is delayed spending with the bonus of extra money (interest).
One important goal of your Personal Spending & Saving Plan is to help you identify where
you can reduce your expenses to give you the money you need to become a Saver.
Without a Personal Spending & Saving Plan, you are only planning to save. Planning to
save is like planning to lose weight – it just doesn’t happen. You may think that you are
different. However, you will see that if you don’t pay yourself first, then you will most likely
never pay yourself.
Planning to pay yourself last sets you up to fail to pay yourself at all.
Paying yourself first demonstrates your commitment to saving. Everyone can live on 90% of
his or her income – allowing 10% of income for savings. If you currently struggle to cover
your expenses on 100% of your income, you may think it isn’t possible. It is. It may not be
easy, but it can be done and it is important. It is the quickest and best way to become a
saver.
Try the following:
As soon as you get paid, write a check to yourself for as much as you feel comfortable
saving (aim for 10% of your income or less if you have to). Hold onto the check until your
next payday to make certain you can manage without it. The next time you get paid,
deposit that check into your savings account. As you get used to living without that amount

of money, continue to increase the amount of your savings check until it is 10% or more of
your income.
If you are serious about becoming a Saver, you will do what needs to be done to become
one. If you have credit card debt that is costing you 12% -22% or more in interest payments,
eliminate that debt first. As soon as you pay off your cards, roll the money you were using
to pay down your debt into your savings.
Start SAVING and Never Stop!
Saving is a habit. If you must reduce your savings due to an emergency or crisis, absolutely
do so, but try to save even a minimal amount so that saving is second nature.
2. Successful savers know: The first thing to save for is an

EMERGENCY fund.
An emergency fund is money that you have available to you in case of an emergency
including:
• Loss of job
• Unexpected illness
• Unanticipated car repair(s)
• Unforeseen expenses, etc.
Your emergency fund should consist of enough money to “tide” you over, or cover your
expenses, in case of an emergency. When you have an emergency fund, you don’t have to
borrow money or charge it to your credit card and pay additional interest fees. An
emergency fund allows you to become your own banker. You are able to address the
emergency without the additional trauma or stress of worrying about how to pay for it.
If you’ve never had an emergency fund, then you will probably be excited to have any
amount of money in one, and you will feel good about starting your emergency fund.
However, your actual goal with an emergency fund is to try to accumulate about three to six
months' worth of living expenses. That way, you would have enough money to cover your
rent/mortgage, debt repayment, food, insurance premiums, car payments and other
expenses for that period in case you were to become unemployed, ill, etc.
When you tap into your emergency fund, begin to replace it as soon as possible so that you
always have this security blanket to fall back upon.

3. Successful savers know:
Every time they get a salary increase they need to save at least some portion of the increase.
They understand that they have lived without this money before and should be able to
continue to live without it.
ALWAYS try to save a part of any raise or salary increase. This way your money works hard
for you and you don’t have to work as hard for your money – especially later in life.
It is ok to start small with your savings, if you are unable to begin with the full 10% of your
income. Like any new habit, you must first begin before you can expand it. As you discover
the benefits of being a saver and the positive feelings that accompany saving, you will
appreciate being one. These, in turn, will make you more likely to remain one.
When you start, your goal may be more about the process than the amount. As time passes
and you identify with being a saver, you will discover you want to save more rather than less
because you know you should save more. That is when you know you have truly become a
Saver!
Save as much as you can, but always save money no matter how small an amount.
It is important to keep their emergency fund “liquid” where they have access quickly, easily
and without penalty. They also know that the interest on a savings account is minimal and
unlikely to outpace inflation. In other words, over time their purchasing power may
decrease. They do their best to make certain their emergency fund money is working as
hard as possible for them to enable them to not have to work as hard in the future. They
consider using a high-interest yield savings account, money-market fund or CDs (although
these do have an early withdrawal penalty) whenever possible in order to earn as much
interest as they can.
The cliché about only two things you can be sure of: death and taxes – has more than a few
elements of truth to it. Savers know you only die once, but you owe the US Government
part of your income EVERY year. (Did you know the average citizen didn’t file a tax return, or
pay taxes – before 1940? At that time, the gross income required for filing was reduced

from $5,000 to $800. Until the Tax Reform Act of 1986, tax law change generally meant
new deductions and credits).
Successful savers are tax savvy and know that if they get a large tax return each spring it
means they have made an “interest free” loan to the government for the entire previous
year, which is not a good thing. Successful savers don’t want to pay taxes each April, but
they also don’t want a large refund because that means their money hasn’t been earning
interest (working hard for them).
Inflation is the result of increasing prices. The increase in the cost of a car five or ten years
ago and the cost of the same/similar car today is mostly the result of inflation. The impact of
inflation depends on many variables, but people with relatively fixed incomes, particularly
those in low-income groups, suffer during accelerating inflation. Inflation usually averages
between 2%-5% annually. (1940’s inflation = 5.4%, 1950’s = 2.2%, 1960’s = 2.5%, 1970’s = 7.4%,
1980’s = 5.1%, 1990’s = 2.9%)

U.S. Inflation Table (2000-2014)

Source: http://usinflation.org/us-inflation-rate
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave
2014 1.6% 1.1% 1.5% 2.0%
2013 1.6% 2.0% 1.5% 1.1% 1.4% 1.8% 2.0% 1.5% 1.2% 1.0% 1.2% 1.5% 1.5%
2012 2.9% 2.9% 2.7% 2.3% 1.7% 1.7% 1.4% 1.7% 2.0% 2.2% 1.8% 1.7% 2.1%
2011 1.6% 2.1% 2.7% 3.2% 3.6% 3.6% 3.6% 3.8% 3.9% 3.5% 3.4% 3.0% 3.2%
2010 2.6% 2.1% 2.3% 2.2% 2.0% 1.1% 1.2% 1.1% 1.1% 1.2% 1.1% 1.5% 1.6%
200 0.0 - - - - - - - - -
0.2% 1.8% 2.7%
9 % 0.4% 0.7% 1.3% 1.4% 2.1% 1.5% 1.3% 0.2% 0.4%
200
4.3% 4.0% 4.0% 3.9% 4.2% 5.0% 5.6% 5.4% 4.9% 3.7% 1.1% 0.1% 3.8%
8
2007 2.1% 2.4% 2.8% 2.6% 2.7% 2.7% 2.4% 2.0% 2.8% 3.5% 4.3% 4.1% 2.8%
200
4.0% 3.6% 3.4% 3.5% 4.2% 4.3% 4.1% 3.8% 2.1% 1.3% 2.0% 2.5% 3.2%
6
200
3.0% 3.0% 3.1% 3.5% 2.8% 2.5% 3.2% 3.6% 4.7% 4.3% 3.5% 3.4% 3.4%
5
200
1.9% 1.7% 1.7% 2.3% 3.1% 3.3% 3.0% 2.7% 2.5% 3.2% 3.5% 3.3% 2.7%
4
2003 2.6% 3.0% 3.0% 2.2% 2.1% 2.1% 2.1% 2.2% 2.3% 2.0% 1.8% 1.9% 2.3%
200
1.1% 1.1% 1.5% 1.6% 1.2% 1.1% 1.5% 1.8% 1.5% 2.0% 2.2% 2.4% 1.6%
2
2001 3.7% 3.5% 2.9% 3.3% 3.6% 3.2% 2.7% 2.7% 2.6% 2.1% 1.9% 1.6% 2.8%
200
2.7% 3.2% 3.8% 3.1% 3.2% 3.7% 3.7% 3.4% 3.5% 3.4% 3.4% 3.4% 3.4%
0
Your money isn’t likely to earn enough interest in a passbook savings account. Therefore,
you may lose money each year because the cost of goods is increasing, but the value of
your money is not.
In other words, your purchasing power is DECREASING. The dollar you had last year will
only buy you $ .97 worth of goods this year and $ .94 worth next year. The $100 dollars you
have today will only buy you $85 worth of merchandise in five years and $70 worth of goods
in ten years.

That is why you need and want your money working hard for you and earning more interest
than the rate of inflation. That way you will have the $130 you’ll need in ten year, to buy
what your $100 buys you this year.

Social security matters. Social Security programs were established under the Social Security
Act in 1935. These programs were designed to provide income and services to individuals in
the event of retirement, sickness, disability, death or unemployment.
If you work, you already contribute to Social Security. Your contribution is listed as FICA
(Federal Insurance Contributions Act) on your payroll stub. In most cases, you need ten
years (40 quarters) of work to qualify for Social Security benefits. Since the start of the 21st
Century, the earliest you can collect a retirement benefit is age 62. However, the benefit is a
reduced one. A spouse is eligible to receive benefits based on his/her own work record or
half of the other spouse’s benefits – whichever is greater. The benefit you receive when you
retire is generally based on the average of your 35 highest salary years. Social Security is
adjusted annually for cost of living increases (COLA).
Social Security is a complex system. You need to be familiar with it because the available
benefits are important when you retire. There are concerns whether there will be enough
money in social security to cover the payments to the growing aging population in
coming years.

There are benefits to having their paychecks deposited directly into their checking and
saving accounts. When you have money (even as little as $25 per paycheck) automatically
deposited into your savings, money market account, stocks or mutual funds, the money will
add up over time. You are unlikely to miss that money because you never had it to spend in
the first place. However, eventually you could accrue a significant amount of money that
you will have to spend later!
What does a saver do that you haven’t done?
 Savers set saving priorities and look for every possible way to save money.
 Savers save all of their change and then deposit it into their savings accounts.
 Every day savers take one (or more) dollar bills (or a $5 or a $10 bill) from their wallets
and set it aside to be deposited into a savings or other account. They know that by
saving a $100 a month for 20 years, at 5.5% interest, it is possible to save over $36,000. It
adds up.
 Savers embrace the ability to save rather than feeling deprived by it. Savers are clear on
their hopes, dreams and wishes and use them as motivation to continue to find money
to save.
Participant Story
Having raised her daughter (Beth) alone from the age of 4 years old, Sandy really missed
Beth when she went to college. The house seemed so quiet without her. Beth seemed so
grown up and independent when she returned home for her first visit. Sandy found
having a daughter in college to be somewhat of a difficult adjustment to make.
On parent’s weekend when Sandy visited her, Beth asked her if she had any quarters. It
seemed Beth never had enough quarters to do all of her laundry at the local laundromat.
That was when Sandy decided she would begin to save quarters for her daughter’s
laundry.
Whenever Sandy bought something, instead of giving the right change for the purchase
she always broke the extra dollar bill and saved whatever quarters she ended up with.
Over the next four years, every time she visited, Sandy gave Beth a baggie filled with
quarters. Sandy figured she gave Beth several hundred dollars in quarters during that
period.
When Beth graduated college, Sandy found she missed having what she had come to
know as the “quarter connection,” with her daughter. Since Sandy had already
established the quarter saving habit she decided to continue saving her quarters. Instead
of giving them to her daughter she opened a savings account and deposited them... After
three years she had a quarter nest egg of over $330.
Savers don’t spend more than the disposable income they allot per pay period. Instead,
they often try to spend less, so they can deposit the remainder into savings or use it to
pay down debt.

What do savers think that could help you to think more like a saver?
Savers think powerful, positive thoughts because they know…
You are what you think.
Savers know that their thoughts control their behavior and their lives. As a result, they
do whatever they can to fill their days with inspiration and motivation.
Change YOUR thoughts. Change YOUR behavior. Change YOUR life.
Savers know the value in the following:
• Sitting with their own thoughts and feelings, learning to hear their own voice.
• Finding their own voice and valuing what they have to say.
• Reaching beyond their comfort zone. Risking failure, risking success and
understanding what each has to teach them. Preparing for the adventure and
anticipating the journey. Trusting they can always change their mind.
• Making their own choices, hearing suggestions and listening to ideas. Being willing
to listen to what others have to say, but knowing that their choices are about their
own lives. Knowing what they know!
• Living a life without regrets and letting go of what might have been to make room
for what is. Accepting life with all its imperfections, but being willing to strive for
improvement. Knowing that when you do the best you can, whatever happens is for
the best; believing that life unfolds as it is meant to.
• Honoring the courage it’s taken to get where she or he is; celebrating the courage
she or he possesses to move in the direction of a more emotionally stable and
financially secure future.
• Picturing what is possible and forgetting the impossible. Knowing no limits, making
the future be whatever she or he wants it to be, and viewing life as an adventure to
create and navigate. Living with intention. Accepting nothing less.

• Honoring and rejoicing in personal growth. Acknowledging and honoring their

uniqueness and respecting their differences.
REMEMBER the following:
• Never strive to be like others.
• Never strive to fit in or conform.
• In the entire world, there is only one you. Lucky you!
• Don’t allow fear to prevent you from succeeding or failing.
• Don’t allow the “what if’s” and unknowns of your life to keep you stuck.
• Fear has a place and purpose in life, but dominating your life isn’t that place.
• Make fear your friend.
• Tiptoe through your fear and come out ahead of it.
Dream. Dream boldly. Dream daringly. See yourself in your dreams. Believe in your
dreams. Follow your dreams. Color your dreams in the shades of your life. Live the dreams
that are yours alone to dream and yours alone to make come true.
Be who you are. Become who you want to be. Know no limits. Know no boundaries. Be
short. Be tall. Be Loud. Be soft. Be right. Be wrong. Be here. Be there. Be up. Be down.
Be ready to go. Be ready to stay. Be ready for what is. Be ready for what will be. Be willing.
Be unwilling. Be open to all you are and all you can be. Be content with today. Be hopeful
for tomorrow. BE!
Savers know the following:
 Saving is the foundation upon which a better financial future is built.
 Saving is different than investing, but saving is the first step in the direction of investing.
 Why they are saving.
 What they are saving for.
 The importance of saving.
 Today is the day to become a Saver.
 To celebrate being a saver because it is the way to improve their lives forever after.

Investing
The following information is provided for
educational purposes only. You are advised to
consult credentialed financial experts for the
purpose of investing and making major
financial decisions about your future.
The money management messages

delivered by so many books, newspapers,
magazines, Internet sites, television and
radio programs are very clear – you need
to be investing. While this is true enough,
it is also incomplete. While some form of
investing should probably be a part of
almost everyone’s financial plan, there are certain financial steps and decisions that
precede investing. These include:
• Understanding your thoughts, feelings, attitudes and relationship with your money.
• Having organized financial records.
• Reducing/eliminating credit card debt (If you have credit card debt, the interest rate
on that debt would most likely exceed the interest any investments could earn).
• Have started building an emergency fund.
Investing can play an important role in your financial future. However, it is best to hold off
from investing until you do the following:
• Have a basic financial plan in place.
• Know your risk tolerance level (how much risk you are comfortable with).
• Understand what you want your investments to do for you.
• Are knowledgeable, clear and comfortable with what you are investing in.

Investing without knowing, having or doing all of the above may cause more financial harm
than benefit.
Even if you aren’t ready to begin investing,

you’re ready to begin learning about investing.
Knowledge and information are the keys to successful investing. Educating yourself before
beginning to invest is how to become an investor with a higher likelihood of more profitable
investments and more positive outcomes.
It is a very wise individual who begins learning about

investing before beginning to invest.
The rest of this workbook focuses on investing. It describes what investing is, what it
means, and how it might affect your life. It explains various investment terms as well
as how, where and when to get started. Investing isn’t something you can learn in
one workbook, one month or one year. It requires ongoing study and research.
You invest your money to make it work hard for you, and eventually, you won’t have
to work as hard for it. However, when you put your money to work (invest), you
must always remain an active partner in the effort. You work hard for the money
you will be investing. Therefore, it is imperative you always know what’s happening
with and to your investments (money).
When your money works hard for you, you don’t have to work as hard for it!
Investing and managing your investment portfolio will open up a new and exciting world to
you that can change your life. If you invest wisely, you will have the opportunity to create a
more financially secure life. Financial security is an important and fundamental financial
objective.
You may be surprised to discover yourself growing more interested in the world of finance,
how the world does business, how the economy works and how the political environment
affects your investments. If you do become engaged in this manner, it will most likely
broaden your investment horizon. If you don’t find investing very interesting, then you may
choose to build assets in a different manner. Hopefully, you will choose a different approach
with just as much potential for achieving your goals (dreams and wishes).

The investment process engages everyone differently and to different degrees. Regardless
of how much or how little this process interests you, this workbook will provide you with a
better grasp of what it means to invest and the role investing plays in creating financial
security.
Investing may change the way you look at the world and function in it. It may even change
the way you feel about yourself, your life and your money. Regardless of how you feel
about investing, it is important to understand that it is instrumental to economic self-
sufficiency. You don’t have to embrace it, but it is necessary for you to be willing to learn
more about it.
This workbook also provides an overview of the different types of insurance. It includes
overviews of a number of additional topics that are part of the overall financial planning
process.
It is often too easy to ignore insurance because of the cost. However, there are some types
of insurance you can’t afford to be without. It’s important to at least be familiar with various
insurance options because of the role they play in your fiscal and physical well-being.
Estate Planning is one essential financial topic. If you feel you don’t have enough assets to
merit a will, or that you have too many other stresses in your life to spend the time, money
or effort on a “non-existent” estate, then you could be hurting yourself (or your loved ones).
A net worth statement is another valuable financial tool with the ability to provide an
overview of your financial situation at any one moment in time. It shows what you OWN
and what you OWE at that particular moment in time. Subtracting what you owe from what
you own allows you to know whether you are meeting your financial obligations and
objectives.
Finally, you will also work with a Personal Financial Inventory – a very useful organizational
tool.
As you know, Financial Social Work is success oriented. To be successful, you must know
how you define success and how it could change your life. This helps you be…
 Clear about what you want.
 Focused on attaining what you want.

In Workbook #1, you defined success for yourself. Could you restate your definition of
success here? If you are unable to do so, please go back to Workbook #1 and revisit your
definition of success. Reinforce it by writing it down below. This will also serve to remind
you WHY you are working to become more money-wise.
My definition of success is:
..................................................................................................................................................................................................
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Check off any of the statements below which best align with your feelings about investing.
Investing is something I…
• Want to learn about ____
• Can’t conceive of learning, understanding or doing _____
• Believe is critical to financial security ____
• Think is strictly for others ____
• Have no interest in ____
• Have some interest in ____
• Am beginning to think it might be worth learning more about ____
• Other
• Other
• Other
Remember that your thoughts guide your behavior. Whether you think you can or can’t,
whether you think you will or won’t – those thoughts are integrated into your belief system.
They drive your behavior and determine your financial circumstances. It is your behavior
that determines the outcomes of your beliefs.
You are what and who you think you are.

You will become what and who you think you will become.

Think positively to act positively. Picture yourself

as more money-wise and know that you are well
on your way to becoming more money-wise.
Trust that you can change. Trust the change
process and trust yourself to know what you
know and do what needs done. You can do
anything you put your mind to doing.
Think positively to act positively.
Think of all the challenges you’ve met in the past

and connect to that inner-strength. Build on your
strengths and desires. Use the work you are doing
to support and to guide you in the direction of
your hopes, dreams and wishes.
Television, magazines, newspapers and the Internet influence what we think, how we feel
about ourselves and how we behave. They deliver both subtle and overt messages
regarding the following:
• What is good and bad
• What is attractive and unattractive
• What we should and shouldn’t do
Pay attention to the programs or advertisements you see that feature individuals who are…
• Younger • Poorer • Smarter
• Older • Thinner • Successful
• Richer • Fatter • Not successful, etc.
You may be surprised at just how vulnerable you are to media influence. Try to observe
how you feel when you watch or read about these men and women. Notice how they affect
your feelings about yourself because they affect everyone’s feelings about themselves.
Advertisements, in particular, are specifically designed to make us feel inferior in one way or
another in order to motivate and to convince us to purchase products we do not need.

Recognize the messages you are receiving and the behaviors those messages are attempting
to elicit. Once you are aware of the messages and their intent, you will be better able to
process and evaluate their merit and use that information on your own behalf.
The financial industry does extensive marketing through “Free” educational financial
seminars. That isn’t necessarily a bad thing, but it has the potential for negative outcomes
for individuals who don’t understand the following:
1. Financial seminars are traditionally more about marketing and less about educating.
2. What you would be investing in should you invest with that company.
Today the media is filled with images of successful investors who appear to be…
 Financially secure.
 In control of their money.
 Knowledgeable about investing.
 Reaping the benefits of their investment portfolios.
Do you feel that way, or are you…
• Struggling with “math anxiety”?
• Focused more on day-to-day survival?
• More focused on your personal appearance?
• In denial about your debt and financial problems?
• Waiting and hoping for someone to rescue you?
• Willing to work harder rather than to learn more about money management and
your personal finances?
How do you feel when you see images of investors who appear knowledgeable about
investing and reaping the benefits of their investment portfolios?
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Where do you fit into that picture?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
Where do you want to fit into that picture?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
Do you think that investing is an important part of a better financial future?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
Is there a difference between saving money and investing?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
Of course, there is! Do you know what the difference is?
It is important to distinguish between saving and investing.

Investing is…
• Taking calculated risks in an effort to increase the returns on your investment.
• Putting your money to work with the opportunity and potential to grow and to
increase more than in a savings account.
You invest your money with the expectation of making more money.
The reason your investments “MAY” make more money for you than the savings you have
in a savings account or a Certificate of Deposit (CD) is because investing involves more RISK.
Your savings account is insured for up to $250,000.00.
Your investments are not insured at all. Of course, savers do risk losing purchasing power
due to inflation.
Risk is the possibility that your investment will not perform the way you had hoped and
expected (not increase in value). You take the Risk in the hope that your money will
increase in value. There are numerous ways to counter or balance the Risk factor but none
to eliminate it.
The “RISK” factor prevents and inhibits many men and women from investing.
Men traditionally view money as a source of prestige and power.
Women very often view money as a source of SECURITY.
Many individuals don’t want to sacrifice their security (E.g., women may be more “risk
averse” because they are more security driven); therefore, they avoid the risk of investing.
Unfortunately, not investing may jeopardize your financial future by failing to provide
sufficient money for later in life.
In life, as in investing, there is no real way to avoid risk. No matter what choice you make,
there is always the risk that it is not the best choice. In life, as in investing, when you avoid
the potential opportunity to improve your situation or circumstances because of the risk
involved, you often pay a very high price.
In life, as in investing, nothing is perfect. Nothing is guaranteed.
Life and investing are always about risk vs. reward.

No Risk, No Reward!
No matter how much you want to be safe, or choose to play it safe, there are always
circumstances beyond your control. The best you can do is try to control the areas where
you are more likely to affect the outcomes.
There are many things you can’t control in your life and your finances, but there are some
areas you can control.
Do all you can to positively influence the areas of your life

where YOU can make a difference.
Never do anything that exceeds your level of comfort with respect to risk.
Know and respect your risk tolerance level and invest within it. As you learn and study more
about investing, your risk tolerance may change.
Risk Tolerance
If someone gave you a package containing $10,000 and told you that you could keep it – no
strings attached – OR-- you could choose one of two other packages.
• One package with $5,000 (you would be sacrificing or risking $5,000).
• One package with $100,000 (a potential gain of an additional $90,000).
(Of course, you wouldn’t know which of the other two packages had the $100,000 in it.)
Would you keep the package with the $10,000 or return it and pick one of the other two
packages?
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..................................................................................................................................................................................................
..................................................................................................................................................................................................

How willing are you to risk the known for the unknown?
The majority of people would stay with the original package (the $10,000) rather than risk
losing $5,000 in order to possibly end up with $100,000.
The above was a very simple risk tolerance test.
Other factors that might indicate how well you cope with risk would be your willingness to…
• Change jobs
• Relocate
• Start your own business
• Meet new people
• Get a divorce
• Marry/remarry
• Change careers
Past financial difficulties may be indicators for the need to change your behavior and
relationship with your money in the present.
True change begins with commitment.
The better you know yourself, the more likely you are to do the following:
• Honor your commitment to yourself.
• Feel more comfortable with the person you are.
• Be more confident in your ability to grow and learn in every area of your life –
including the financial area.
The goal of this part of the workbook is to teach the basics of investing and money
management. It is not to make you a millionaire or turn you into an investment guru. If you
appreciate and accept that investments play an important role in the journey to financial
security, identify below two reasons you think investing is for you. If you aren’t certain
investing is for you, identify two reasons for your uncertainty.

1. .............................................................................................................................................................................................
2. .............................................................................................................................................................................................
The two answers you provided should help you understand your feelings about investing
and determine how best to proceed.
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The good news about investing is that you don’t need special training in order to become a
good investor. You do need to know the following:
• Why investing is important
• Your hopes and wishes for the future
• How investing can improve the quality of your life
• You have the right and ability to become a good investor
• There are professionals to help you with your investments
The not so good news about investing is that too many people don’t invest and those who
do invest often tend to invest too conservatively (particularly women). When you invest too
conservatively, you may not have enough money to live in comfort and dignity as you age.
For much of the 20th Century, the traditional “retirement stool” was considered to have three
legs.
1. Pension
2. Social Security
3. Investment Portfolio
Anyone missing any of the legs in the “retirement stool,” inevitably had a wobbly stool.

Which of the legs do you have?
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Which of the legs are you missing?
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Financial Plan
The traditional “retirement stool” has actually changed more recently. Today fewer and
fewer people have pensions. Pensions have given way to defined contribution plans (401k /
403b) to which employees contribute funds and employers may (or may not) match to
some extent. This change has altered the lives of many aging Americans.
You need a Financial Plan to guide you on your journey to a more stable financial future.
Don’t be intimidated by the term Financial Plan. While a Financial Plan could be a formal
document prepared by a professional financial planner, it doesn’t have to be. Your Financial
Plan can be a simple list of the following:
 The things you’d like to be able to afford in the future.
 A broad time line for when you would like to have them.
 The possible financial choices you might use to achieve them.
The success of your financial plan will depend upon…
• The AMOUNT of money you invest.
You need to invest enough money for it to grow significantly. That doesn’t mean you have
to invest it all, or all at once, but you do have to invest some money regularly to ultimately
provide you with the “nest egg” for your future.

Dollar Cost Averaging

The best way to help your “nest egg” grow is through Dollar Cost Averaging. Dollar cost
averaging is the investment version of the “pay yourself first” rule you learned for becoming
a saver.
Dollar cost averaging – Investing a specific amount of money, on a regular basis (weekly,
bi-weekly, monthly) in a variety of investment vehicles (stocks, mutual funds, etc.). Your
commitment to dollar cost averaging is a commitment to building a better financial future.
Dollar cost averaging provides you with...
1. Consistency
2. Discipline
Consistency and discipline allow you to take advantage of market highs as well as market
lows because you are buying more when prices are low and less when prices are higher.
• HOW much time you invest in learning about investing.
Investing isn’t something you can become an expert in by taking one course. One
workbook, hour, month or year of studying can’t provide the knowledge gained from
years of investing, learning about investing, managing your investment portfolio and
learning about the economy. The time you devote and the knowledge you glean from
your efforts will, however, serve you far better than spending your time managing your
debt or trying to survive from one paycheck to the next.
• WHEN you invest—the sooner the better.
The power of compounding is why investing early and continuously are true secrets of
long term financial security. You’ve already learned how your debt grows over time
based on your interest rate and the monthly payments you make to reduce your debt.
When you have debt, the power of compounding works against you as you are paying
the interest.
Investing puts the power of compounding to work for you instead of against you!
With investments, compounding means that the interest you receive on your savings and
investments earns additional interest for you. With debt, compounding means you pay
more interest on top of more interest.

Here’s an Example:
If you had $100 (your principal, or the amount of money you invest) earning 10% interest per
month, then it would look like the following:
• 10% of $100 is $10
• At the end of the first month, you would have $100 + $10 = $110.
• The next month you would earn 10% interest on $110, which would be $11 in
interest.
• Then you would have $110 + $11 = $121.
• The following month you would earn 10% interest on $121, which would be $12.10
• You would now have $121 + $12.10 = $133.10.
Your interest is earning interest in addition to your principal!
The Rule of 72
The more time you have your money invested, the more money you accumulate –
assuming it is invested well and wisely. Remember, there is no guarantee your money will
grow when it is invested.
The Rule of 72 is an approximation to determine the length of time needed for a balance to
double.
The Rule of 72 allows you to estimate how long (how many years) it would take for your
investment to double in value. To figure this out, you would divide the number 72 by the
percentage rate of your investment or your debt.
Here’s an Example:
You have a savings account with $5000 deposited in it. The interest rate on the
account is 6%. Divide 72 by 6 (your interest rate) to find approximately how long
your money will take to double. In this example, it would take 12 years and you
would anticipate having $10,000 in 10 years (if you make no additional deposits
or withdrawals). This is not a guarantee – just an estimate.

If you had that same $5,000 in credit card debt instead of in savings, at a 12% interest rate,
and you failed to make any payments toward your debt, that $5,000 would increase to about
$10,000 ($9,869 is the actual answer) in only 6 years (because of the higher interest rate).
The more times your money doubles, the more money you will have.
Would you rather have your investments double or your debt double?
Look how your money increases every time it doubles.
$1 X 2= $2
$2 X 2= $4
$4 X 2= $8
$8 X 2= $16
$16 X 2= $32
$32 X 2= $64
$64 X 2= $128
$128 X 2= $256
The higher your interest rate, the faster your money doubles. Unfortunately, the same
holds true with your credit card debt. The higher your interest rate, the faster your debt
builds.
Now you are ready to work on your Financial Plan. Study the example of a basic Financial
Plan below. Take the time to understand it. Then, proceed to the next page where there is a
Financial Plan for you to complete. Fill in the “Hopes, Dreams and Wishes” column first.
You can fill in the “Possible Investment Choices” later after you complete the investment
section.

Beginning Financial Plan

Name ……………………………………………………………. Date ………………………………………
The success of your financial plan will depend upon the following:
The AMOUNT of money you invest.

HOW much time you invest in learning about investing.
WHEN you invest—the sooner the better.
Short-Term Goals Might Include Possible

Specific investment • New or used car
Investment Choices
decision for the next six • House down payment • Treasury bills
months to two years. • Start up money for a • CD’s
business • Money Market
• Vacation
• Wedding
• Furniture
Mid-Term Goals Might Include Possible

Specific investment • Child(ren)
Investment Choices
decisions for the next two • Education • Conservative stocks
years to six years. • New home • Conservative funds
• Vacation home • Corporate bonds
• Travel • Treasury notes
• Returning to school
• Insurance
Long-Term Goals Might Include Possible

Specific investment • Retirement
Investment Choices
decisions for beyond the • Long-term care • Growth stocks
next six years. • Leaving an inheritance • More aggressive mutual
• Second home funds
• Long term bonds

Beginning Financial Plan

Name: ..................................................................................................................................................................................
The success of your financial plan will depend upon the following:
The AMOUNT of money you invest.
Short-Term Goals Might Include Possible

Specific investment Investment Choices
decision for the next six
months to two years.
Mid-Term Goals Might Include Possible

decisions for the next two
years to six years.
Long-Term Goals Might Include Possible

decisions for beyond the
next six years.
In the early stages of investing the best advice is to: KEEP IT SIMPLE!

The same can be true at any stage of investing, but if you find yourself interested in learning
more about investing, always remain clear and knowledgeable about what you are investing
in and the amount of risk involved.
Update your initial Financial Plan at least once a year to measure your accomplishments,
revise old goals and set new ones. As financial hopes, dreams and wishes change, your
strategy for achieving them will change. Keeping your plan current is part of ensuring
success. Change things in your portfolio as…
• You grow older.
• Your investment portfolio expands.
• You become more knowledgeable about investing.
Watching your investments grow (hopefully) can be very exciting and will definitely
be educational. Your investment portfolio will consist of whatever investments you make.
Start with one or two (take your time at the beginning) and then grow your portfolio by
investing regularly (dollar cost averaging).
Over time, you may want to expand the types and kinds of investments you have and make,
or you may find yourself comfortable with a basic type of portfolio. Over time, you will have
different choices – the kinds of choices that provide new, better and different outcomes
than you had before you began investing. These choices will include whether to invest…
Conservatively – Investing in a way that presents less risk of losing your principal but also
less likelihood of making a significant return (Return – the income an investment provides in
one year’s time).
Moderately – Investing in a way that provides more of an opportunity for increasing your
principal, but more of a possibility for losing some of your initial investment than you may
lose with conservative investing.
Aggressively – Investing in a way that creates the opportunity to make a great deal of
money along with the risk of losing a great deal of your money.
Remember all investing involves some degree of “Risk.”
Time is a crucial risk factor in investing. The more time you have, the more risk you can
afford to take. The less time you have, the less risk you will want to take. Why do you think
that is?

The more time you have for your investments to grow,

the more likely they are to grow – OVER TIME.
With time on your side, you can wait out (or take advantage of) the down periods in the
stock market so that you are in the market when things turn around. If you don’t have time
on your side, you may not be in a position to “risk” having your money in the market during
down times.
This is known as the investor’s paradox.
The more time you have, the more risk you can take
but the less risk you need to take.
The less time you have, the more you need to

earn but the less risk you can afford to accept.
While your savings are “safe” in a savings account, they aren’t working nearly as hard for you
because they aren’t earning very much interest – passbook savings accounts earn low
interest. When your money is knowledgeably invested in the stock markets – which may
soar or sink at any given moment – it has the potential to earn much more interest.
Historically, over time, the stock market has averaged a 12% return annually. Safe is a
relative word. In this case, the price you pay for safety could be an unsafe or insecure
financial future.
Remember, THERE ARE NO GUARANTEES IN INVESTING.
Many different factors affect your

investments including:
 Inflation
 Risk
 Return
 Taxes
If you work, you already know how much

of your check goes to taxes.

“Tax savvy” investors use tax-deferred investments to maximize their investment dollars.
Tax-deferred investments let you invest your money without paying taxes on the interest
you earn (defers the taxes on the interest) until some future point which is often not until
you retire.
Deferring the tax payments until retirement provides two benefits.
1. You may pay less in taxes as you may be in a lower tax bracket when you retire
because you no longer bring home a paycheck.
2. More money to invest since in most cases you invest with pre-tax dollars. Taxes
aren’t taken out so those additional dollars are working hard for you over time.
Qualified Retirement Savings Plans

The 401k and the 403(b) are company savings plans that enable you to invest your pre-
tax dollars into specific mutual funds that your company has selected. Qualified
Retirement Savings Plans are the best way to invest for the long term because neither the
amount you contribute – nor what you earn from the plan – is taxed until you start
withdrawing the money.
Consider contributing to your company 401k or 403(b)

if there is one – ESPECIALLY if there is a company match.
Non-Qualified Retirement Plans

These plans let your money grow tax-deferred, but you invest money which you have
already paid taxes on so you have less to invest. Some have contribution limits and some
charge penalties if you make withdrawals before the age of 59 ½.
Regular Investing
There is a great deal to know about investing. Among the first things to be aware of include:
• There is NO limit on the amount you can invest.
• There are NO restrictions on the amount of money you can make.
• There are NO restrictions on the amount of money you can lose other than the
amount you invested.
• There are fewer restrictions on when you can withdraw the money although there
are cases where that may not always true.
• If you own your stock(s) for over a year before selling, then the amount your
investments appreciate is taxed at the lower, long-term capital gains rate.
IRAs (Individual Retirement Plans) Always subject to

change
IRAs are personal retirement savings plans. Anyone who earns taxable income (wages,
salaries, fees, tips, bonuses, commissions, taxable alimony, etc.) can contribute to an IRA.
With a traditional IRA, you can earn tax-deferred interest and/or capital gains. You usually
can’t begin to spend that money until age 59 ½ and you must eventually take out all of the
money in a Traditional IRA, or be taxed on it at an exorbitant rate.
If you invest in a Roth or Education IRA, you invest after tax dollars which are not tax
deductible. However, all earnings are tax-free when withdrawals are made. With a Roth IRA
you never have to withdraw the money, but you can begin spending it at age 59 ½.
Husbands and wives may each have an IRA even if one person in the marriage is not
working.
You may contribute a maximum amount ($5,500 or $6,500 if you’re 50 or older). The rules
for these contributions are in constant flux. To see the latest rules, please see IRA
Contribution Limits. Roth IRAs are not tax deductible.
If you were to invest $2,000 every year (in a 28% tax bracket) in ten years (earning 7%
annually) you would have almost $30,000, and in thirty years you would have over
$200,000. If you invested the same amount with the same circumstances, but in taxable
investments, you would have a return of around $26,500 after 10 years and only $140,000 in
thirty years – a significant difference. Remember, investing does not come with guarantees!
According to the website rothira.com, “On August 17, 2006, President Bush signed into law
the Pension Protection Act of 2006. This law made permanent increased contribution
limits to IRAs (including Roth IRAs) that would otherwise have expired after 2010. It also
made permanent the Roth 401(k), which would otherwise not have been available after
2010.” Additional information is available at the Roth 401(k) Web Site.

SEP IRA
A SEP is a Simplified Employee Pension plan. Because this is a simplified plan, the
administrative costs should be lower than other, more complex, plans. Under a SEP,
employers make contributions to traditional Individual Retirement Arrangements (IRAs) set
up for employees subject to certain percentage-of-pay and dollar limits.
Spousal IRA
A married person who earns income may contribute to an IRA established for the benefit of
his or her spouse for any year prior to the year that spouse turns age 70½. This may be
done whether or not the spouse is earning income, and as long as the husband and wife file
a joint income tax return for the year in which the contribution is made.
The contribution to your IRA and to your spouse's IRA is the lesser of 100 percent of your
combined compensation or $5,500 (or $6,500 if you are 50 or older).
An IRA may be a good place to begin your saving and investment plan.
Do you know what an investment is? Provide your definition.

An investment is…
..................................................................................................................................................................................................
..................................................................................................................................................................................................
Every time you make an investment

you buy a piece of a company (stocks) or
get a promise of repayment (bonds).
Stocks are equity investments. An equity investment means you own a piece of the
company you have invested in; you share in that company’s earnings. You invest in the
company with the hope that over time the company will be successful.
When a company is successful, the stock becomes more valuable and people pay more for
it. If the value of the stock increases, you share the earnings of the company in the form of a
dividend (the profit companies pay to their shareholders). If the value of the stock
declines, you lose that part of your investment – the principal. If dividends are paid, they
are typically continued whether the price of the stock is rising or falling.

Stocks
• Are volatile (they fluctuate in value)
• Dividends and capital gains are usually subject to tax
• Are subject to many external influences that will affect their performance including:
− Economy
− Company management
− Interest rates
− Political environment
For every company you are considering investing in conduct research. Begin your research
with the company’s…
• Past performance
• Management team
• Future potential
• What the company produces, how, when, where and why
Over time, stocks have had the strongest overall performance record in the investment
world. That is why stocks (purchased directly or through stock mutual funds) are considered
to be an important part of asset building.
Bonds are debt investments. Your money is a loan to a company or government for a
specific/fixed period of time. That company or government promises to pay you back at a
specific time plus interest. Bonds provide the following:
• Regular income from interest payments (called “fixed income” because they usually
pay the same amount of interest).
• Floating rate notes have coupons that reset periodically.
• Income bonds pay no interest unless the company has earnings.
• Return of principal or investment amount at the end of specified term.
Bonds are generally less volatile (risky) than equities. However, bond income and principal
are usually vulnerable to inflation and the loss of value. Some bonds are indexed to inflation

(Treasury Inflation Protected Securities). There’s the possibility of losing money if the bonds
are sold before the end of the investment term because you would be selling them at the
current prevailing market rates, and you are locked into income for term. There is no
growth in bonds.
Mutual Funds pool money from you and many others. You buy shares in a mutual fund.
The mutual fund then buys stocks, bonds or other investments with the pooled money.
Mutual funds purchase many different kinds of investments – more than individuals who
invest on their own are able to.
As a result of mutual funds being managed by professionals, you get the benefit of their
expertise. Fund managers set out their goals and management style information in the
company’s prospectus. This is a document describing the chief features of a mutual fund
for prospective buyers, investors, or participants. The funds earn interest on their
investments and pay your share of the earnings as dividends. Dividends are part of a
company’s earnings, divided among all of its stockholders.
Mutual funds may be an excellent way to begin your investment journey because they…
• Are managed by professionals.
• Spread the risk among many people and different investments.
• Invest your money in different types of investments.
• Invest your money in numerous companies and industries (low-cost

diversification).
Mutual funds help reduce risk but do not eliminate it. This is known as Diversification.
Diversification means you don’t put all of your money into just one company, one type of
investment (such as stocks), or one industry. For example, if you are buying stocks, consider
owning shares in a variety of different companies from large and small pharmaceutical,
transportation, retail, oil and utility companies, etc. If you are buying bonds, consider
corporate and government bonds, as well as long- and short-term maturities. Municipal
bonds are more of a tax issue.
Diversification is an important method for managing (reducing) “Risk.”
The theory behind diversification is that if one type of investment or industry is doing well,
another one may not. It would be great to have all your money in the investment or

industry doing the best, but that is highly unlikely. Investing in a variety of industries and in
different types of investments increases the chance that some of your money will be in the
right place at the right time.
There are different kinds of stocks including:
Blue Chips
Blue Chip Companies have been in business for a long time. Therefore, they have a longer
history of profitability (which is something you are looking for) and are generally more
stable. They usually have the highest prices per share and are more likely to pay dividends.
The list of Blue Chip companies changes from time to time.
You can often purchase Blue Chip shares directly from the company to avoid paying a
commission (*Commission is the fee you pay for making an investment). However, the
company may charge some type of trading cost which is typically lower than the
commission.
Mid-Cap
Mid-Cap is an abbreviation for mid-sized capitalization or companies. Stocks in middle-sized
companies are generally lower in price and have greater growth potential than Blue Chip
companies. However, Mid-Caps may provide less income and have more risk.
Small-Cap
Small cap stocks are stocks which tend to be riskier but offer the most opportunity for big
price increases. They also offer the greatest potential for losing money.
Asset Allocation is necessary when you begin planning your investment portfolio because
you need to determine how much of your money you want to “allocate” to, or invest in,
each type of investment (stocks, bonds, money market, real estate, etc..) Traditional asset
allocation planning uses age and stage of life to determine how much of your portfolio
(assets) should be in which types of investments.
1. Younger people can be more aggressive investors (higher risk investments; if they
lose money, they have more time to regroup and to recoup.

2. Older investors may not have the time they would need to regroup and recoup
following any losses. Older people generally need portfolios that are structured in
somewhat less risky investments (E.g., more bonds – fewer stocks).
3. As investors approach or reach retirement, they may need to use or remove money
from certain investments and re-evaluate their portfolios in order to protect their
capital.
There is no such thing as a risk free or perfect investment. Before making investments, you
need to understand the following:
• The steps that are involved
• The choices you have
• The potential outcomes or consequences of your choices
This is especially true with investment risk. All companies, including blue chip companies,
are vulnerable to the ebb and flow of the business cycle. Every investment and portfolio is
subject to market fluctuations and the risk of losing some, or all, of the invested capital.
Fluctuations in the market are caused by the following:
• The state of the economy
• The world situation (politics)
• Investor sentiment (how investors think and feel about the economy and the world
situation)
In order to be a successful investor, you must know what is going on in the world and in the
economy. You must also know how other investors feel about what is going on in the world
and in the economy. In the late 90’s, when dotcoms were “hot,” many people made a great
deal of money.
At the end of 2000 and into 2001 when the dotcoms grew “colder,” many people lost a great
deal of money. The same thing can happen in other industries as well – from technology
and biotechnology, to drugs and banking.
Real estate is a perfect example, as demonstrated by the mortgage meltdown of 2007-2008

and beyond. The impact of the “Great Recession” will continue to be felt in the US and
around the world for many years.

The media popularized the concept of “Market Timing,” but most successful investors
consider this a failed strategy and avoid trying to get in and out of the market based on the
best time.
The only way to know what is happening in various companies, industries and the world is
by reading, listening to the news, and following your investments and the markets. To stay
current with what is “in” and what is “out,” you must stay current with world news.
Devote time and energy to learning about the following:
• Investing principles
• How business works
• How government functions
• How business and government impact the stock markets
• All of the internal and external influences that can and do impact your investments
• The companies you are considering investing in
To do this, you should…
• Read the business section of the paper
• Read other financial publications
• Watch financial programs
• Take advantage of all the free research and information available on the Internet
(*Caution: Not everything is accurate or honest)
• Take a course at a local community college
• Attend free investment seminars (*Caution: They are most likely trying to sell you
financial products)
Following the above steps will help you to know much more about the stock market, interest
rates, the economy, financial trends and how all of these affect your investments and
financial future. Keep in mind that much of what you read and hear from experts is
predominantly individual opinions.
Please make sure to refer to this workbook’s appendix for helpful investing apps. If you
feel comfortable with technology, you may find them helpful in your plan to diversify
your investments at your comfort level of risk.
Learn to distinguish opinions from facts.
What qualities do you think a good investor needs to have?
Successful investors need to be…
• Patient
• Disciplined
• Firm in their convictions
• Knowledgeable
• Hungry (for information and profits)
• Willing to take some risks in order to achieve some rewards
Stocks and bonds are not the only types of investment instruments. Others include:
Money Market Deposit Accounts

A Money Market Deposit Account is typically from a bank and is usually insured. It includes
check-writing privileges and a bank ATM card. You can take your money out at any time. It
will earn less interest than your investments in stocks because your money remains liquid
(available to you). However, on the interest rate continuum, it will receive a slightly higher
return than a savings account but a lower rate than most other fixed investments.
Money market investments…
• May require a minimum balance (banking and money funds)
• May have an annual fee (banking MMDA)
• Money Market Mutual Funds are not insured
Certificates Of Deposit
Certificates of Deposit are issued for a specific period of time (3 months, 6 months, 1 year, 5
years, etc.) for a fixed rate of interest. They are insured by the FDIC for up to $250,000. There
is a penalty fee if funds are removed before the expiration date.

Real Estate
Real estate is another type of investment. You may purchase real estate as one of the
following:
• A personal asset – to live in.
• An investment – for resale.
• Rental property – for income.
Risk pyramid from investopedia.com
Be advised that the above pyramid is strictly for illustration purposes to provide a
visual of how investments that move up the Risk Pyramid have increased growth
potential and inflation protection PLUS much greater risk. Investments lower
on the Risk Pyramid are traditionally safer but have less inflation protection.
Futures and options do not have increased growth potential and are not protected against
inflation.
• Mutual funds come in all risk categories.
• Corporate bonds would be less risky than blue chips.

Do you think you might like to start investing but still don’t feel quite ready?
A Practice (or mock) Portfolio is an excellent way to test your investing savvy.
A Practice Portfolio allows you to identify the stocks you want to purchase, the amount of
money and the number of shares you wish to invest without actually making any
investments using real money. You fill out the information on the Practice Portfolio form,
along with the date you are purchasing the stocks (remember this is not real – it is pretend
or practice), and then you begin tracking your Practice Portfolio.
Follow your Practice Portfolio for three to six months and see how well it does. Take this
opportunity to learn more about the companies you have “invested in” and why some of
your stocks may do better than others. Follow the stock market and become an
“information junky.” The more you know, the better you’ll become at spotting trends and
understanding the economy and the politics that influence your investments’ performance
and impact your financial future.
Before beginning your Practice Portfolio, select your stocks. Where and how do you think
you should begin your selection?
The best place to begin your stock selection is with things you know.
People who tend to live paycheck to paycheck observe what everyone else is
wearing, buying and doing. Then, they wear, buy and do the same things.
Financially secure people observe what everyone else is

wearing, buying and doing. Then, they INVEST in the companies
that make what everyone else is wearing, buying and doing!
Do you think that makes a difference in peoples’ lives? Of course, it does. Buying those
items has no long-term benefit. Investing in them, as part of a financial planning strategy,
does have long-term benefits.
Invest in things you know about, care about or are interested in.
• Do you enjoy cooking? What is happening in the cooking industry that might make
a particular culinary company a good investment? (E.g., Does it specialize in
organic/low fat food?)
• Where do you shop – Wal-Mart, Target, Sears, Nordstrom, or Bloomingdales? You

might want to consider investigating/researching one of those retailers to invest in.

• Are you into technology, exercising, music, etc.? Are you taking a new medication?
Are you committed to improving the environment?
Any of your interests, or any area

of your life where you are a
consumer, has the potential to help
you find stocks you might wish to
invest in.
Invest in companies you can…
• Relate to
• Understand
• Care about
If you are more interested in

Socially Responsible Investing (SRI), then you can search for stocks and mutual funds for
companies that avoid spending on the military, alcohol, tobacco, gambling, etc., and ones
which treat their employees and the environment with respect and compassion.
There are many companies to invest in; therefore, look for the ones that you can feel good
about owning and…
• Watching prosper
• Helping yourself to prosper
Sufficient research allows your investments to add value to your life and portfolio.
Below is an example of a Practice Portfolio form. It explains what each of the categories is.
Following the sample Practice Portfolio form is a Practice Portfolio for your use. It is
followed by a Practice Portfolio Tracking Form to use in order to track your stocks on a
weekly basis.

Give the name of the company and the ticker symbol for the company.
(*A ticker symbol is the system of letters used to identify specific stocks and
mutual funds on various stock exchanges.)
Tickers generally have from 1-5 characters:
NYSE: 1-3
AMEX: 3
Name of
company NASDAQ: 4-5
& ticker Open-ended Mutual Funds : 5
symbol
Exchange Traded Mutual Funds: 3
Examples:
Amazon – AMZN
General Electric – GE
Sun Microsystems -SUNW
Martha Stewart – MSO
Krispy Kreme – KREM
What stock exchange is the stock or mutual fund listed on?

Stock exchanges or (markets) are where buyers and sellers trade securities (stocks,
bonds, and other financial instruments).
The major American stock exchanges include:
New York Stock Exchange (NYSE)
Stock American Stock Exchange (AMEX)

Exchange National Association of Securities Dealers Automated Quotations (NASDAQ)
Examples:
Amazon – AMZN – NASDAQ
General Electric – GE – NYSE
Sun Microsystems – SUNW – NASDAQ
Martha Stewart – MSO – NYSE
Krispy Kreme Donuts – KREM – NASDAQ

What Amazon – E-commerce/Products

industry General Electric – Diversified Manufacturing
is the
company Sun Microsystems – Computers
in? Martha Stewart – Multimedia
Krispy Kreme – Retail-Restaurants
This is the day in the past year that the stock sold at its highest. You find this
number on the financial page in the business section of your newspaper or on
52 Week
the Internet.
High
(include Amazon – $75.25 (3/24/2000)
date)
General Electric – $60.50 (8/28/2000)
Sun Microsystems – $64.66 (9/01/2000)
Martha Stewart – $34.81 ((9/05/2000)
Krispy Kreme – $108.50 (11/02/2000)
This is the day in the past year that the stock sold at its lowest. You find this
number on the financial page in the business section of your newspaper or on
52 Week
the Internet.
Low
(include Amazon – $9.59 (3/01/2001)
date)
General Electric – $42.08 (3/15/2000)
Sun Microsystems – $18.00 (3/01/2000)
Martha Stewart – $13.06 (4/17/2000)
Krispy Kreme – $21.00 (4/4/2000)
This is the price you would pay on the day you buy the stock.
If you purchased these stocks on March 7, 2001, you would have paid the
Price following:
per Amazon – $11.94 per share
share General Electric – $46.15 per share
Sun Microsystems – $21.69 per share
Martha Stewart – $20.49
Krispy Kreme – $76.38

How many shares are you buying for your Practice Portfolio?
This will be determined by the cost of the shares and the amount of money you
# of
have available for investing. Stocks are usually bought in lots of 100 *. Even
Shares
though this is a Practice Portfolio, try to keep your investments within a reasonable
amount in order to have a realistic sense of how well your portfolio would have
performed if you had actually bought these stocks.
* See below to learn more about DRIPS
A DRIP is a Dividend Reinvestment Plan. A DRIP is an excellent way to start investing.

DRIPs enable you to buy shares of a company's stock directly from the company. When you
buy from the company, you eliminate broker commissions.
• Only certain companies offer DRIPs.
• To qualify, you must own one share of the company’s stock in your own name.
• If you don’t own one share, then you usually must purchase it through a broker
(person who buys or sells investments) and pay the commission (the charge you pay
for buying or selling an investment –usually a percentage of the sale).
• You can then open a DRIP account with the company which will enable you to buy
additional shares directly through the company.
DRIPs help you "dollar-cost average." Dollar cost averaging means you are buying shares
(you can actually purchase partial shares this way) when the stock is high as well as when it is
low. Buying fewer shares when the cost is high and more shares when the cost is low
reduces the average overall cost.
If you purchased these stocks on March 7, 2001, you would have paid the following:
Total
Amazon – $11.94 per share x 100 shares – $1,194.00
dollars
General Electric – $46.15 per share x 100 shares = $4,615.00
invested Sun Microsystems – $21.69 per share x 100 shares = $2,169.00
Martha Stewart – $20.49 x 100 shares = $2,049.00
Krispy Kreme – $76.38 = $7,638.00

If you had purchased stock in these companies on March 7, 2001, then this is what it would
have looked like on the first day.
Practice Portfolio
Starting Date: March 7, 2001
Name of Stock What 52 Week 52 Week Total

Price Total dollar
company Market industry is High Low # of dollars
per value of
& stock Trading the (include (include Shares invested in
share portfolio
symbol On company in date) date) this stock
1. E-
$75.25 $9.59
Amazon NASDAQ commerce 100 $11.94 $1,194.00
3/24/00 3/01/01
AMZN products
2.
General Diversified
$60.50 $42.08
Electric NYSE Manufactur- 100 $46.15 $4,615.00
8/28/00 3/15/00
GE ing
3.
Sun Micro- $64.66 $18.00
Systems NASDAQ Computers 100 $21.69 $2,169.00
9/01/00 3/01/00
SUNW
4.
Martha $34.81 $13.06
Stewart NYSE Multimedia 100 $20.49 $2,049.00
9/05/00 4/17/00
MSO
5.
Krispy
Retail- $108.50 $21.00
Kreme NASDAQ 100 $76.38 $7,638.00 $17,665.00
Restaurants 11/02/00 4/04/00
Donuts
KREM
What can you learn by looking at a stock’s high and low prices and the dates they reached
those highs and lows?
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..................................................................................................................................................................................................

How can that information help you know how your stock(s) is/are doing now?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
How can that information help you know whether this is a good stock for your portfolio?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
How can that information help you as you track your stocks over time?
..................................................................................................................................................................................................
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..................................................................................................................................................................................................
These are the kinds of questions to consider with your Practice Portfolio and when you
actually begin investing.
Now it is time for you to begin your own Practice Portfolio. Have fun!
• All information in the examples is provided to help you to understand how individual
stocks and markets function.
• It is important to always remember that investing in individual stocks carries many

risks.
All investing involves risks. Make sure to find trustworthy financial advisors and information
before making any investments.

Practice Portfolio
Start Date: …………………………………………
What Total
Name of Stock 52 Week 52 Week
industry Price dollars Total dollar
company Market High Low # of
is the per invested value of
& stock Trading (include (include Shares
company share in this portfolio
symbol On date) date)
in stock
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Practice Portfolio Tracking Form

Start Date: …………………………………………
Number of Number of
weeks Name of Number Current Current weeks Name of
Purchase
since company of Initial dollar price dollar since company
price per
began & Stock shares investment per value of began & Stock
share
Practice symbol purchased share investment Practice symbol
Portfolio Portfolio
End of
Week
#1
Date
/ /
End of
Week
#2
Date
/ /
End of
Week
#3
Date
/ /
End of
Week
#4
Date
/ /
End of
Week
#5
Date
\/ /
End of
Week
#6
Date
/ /
End of
Week
#7
Date
/ /

Number of Number of
weeks Name of Number Current Current weeks Name of
Purchase
since company of Initial dollar price dollar since company
price per
began & Stock shares investment per value of began & Stock
share
Practice symbol purchased share investment Practice symbol
Portfolio Portfolio
End of
Week
#8
Date
/ /
End of
Week
#9
Date
/ /
End of
Week
# 10
Date
/ /
End of
Week
# 11
Date
/ /
End of
Week
# 12
Date
/ /
What information do you think you need to watch as you track your stocks or mutual funds
over the coming months?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................

Does the above Practice Portfolio include all the information you need to know about any
stock you are considering investing in? It does NOT. For one thing, it doesn’t identify the
fees and commissions you would have to pay. The Practice Portfolio is merely a place for
you to begin to familiarize yourself with what you need to know, have and do to prepare to
invest in stocks.
This form should help you identify any other information you feel you need to know before
investing your hard-earned money into specific stocks. Remember, companies sell shares of
stock in order to raise capital (money) for their businesses. Make sure you know what that
company does, whether it is likely to be successful, and whether it will put your money to
good use. While there is always risk involved, you want to know that – given its track history
and the current and projected market conditions – it is expected that both the company and
you will profit.
There are many Internet sites where you can set up and track a Practice Portfolio. Whether
you start your Practice Portfolio here or on the Internet, a Practice Portfolio is a wonderful
way to begin to learn about investing and about stocks.
Your Practice Portfolio will help you do the following:
• Discover what you know and don’t know about business
• Discover what you know and don’t know about finance and investing
• Develop a feel for what investing is all about
• Identify the role investing can play in your financial future
The investing section of this workbook is just about complete. Do you feel ready to begin
investing? Surprisingly, the answer to that question could be both yes and no!
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................

The yes part addresses the fact that you may very well be ready to begin investing in certain
financial instruments. Which investments do you think those might be?
..................................................................................................................................................................................................
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..................................................................................................................................................................................................
If you said no, which investments do you think you may not be prepared to invest in?
..................................................................................................................................................................................................
..................................................................................................................................................................................................
..................................................................................................................................................................................................
The yes part of the answer is that you may be ready to begin investing in an IRA, a 401(k) or
a 403(b), or possibly even in mutual funds. With a 401(k) or a 403(b), someone where you
work can help to guide you through that process. When you open an IRA at a bank or an
investment company, someone will explain it to you.
You will still have choices and decisions to make about which investments to place your
money in. If you need more help or information from whoever is working with you, ASK for
IT! If you need time to make those choices, tell whomever you work with that you will get
back to him/her.
The no part of the answer is that in all likelihood you still have a great deal more to learn
before beginning to invest in individual stocks or bonds (options, futures, etc.). You need to
spend time doing the following:
• Researching the companies you are considering investing in.
• Learning more about the economy and politics to have some sense of external
influences that might impact your investments.
• Learning more about investing and the stock market in general.
You have only just begun your journey into the world of investing, but you are off to a good
start. Even those who have been investing for years know that there is always more to learn.

Below are three examples that are provided – strictly as illustrations – of why and how
investing is an important part of asset building. These calculations “assume” that the money
was invested at the beginning of each month. If the money were invested at the end of
each month, then the numbers would be different. The calculations may not be
numerically correct.
These illustrations provide you the opportunity to see what investments might look like over
time. They can also help you understand the following:
1. The importance of saving or investing as soon as possible.
2. The difference a higher interest rate could potentially make.
3. The difference saving or investing more money could potentially make.
In each example, Susan began saving or investing at age 30 and continued for 10 years.
Afterwards, she didn’t save or invest any more money (silly Susan).
Anne began 10 years later, at age 40 and continued for 20 years. In each example, Anne
saved twice as long as Susan and twice as much money as Susan saved or invested.
At age 60, Ann had less money than Susan. Why?
In the first example, each woman saved or invested $50 a month (a little over $1.60 a day).
In the second illustration, they doubled their savings or investments each month to $100 (a
little over $3.30 a day).
In the third example, each woman increased her savings or investments to $200 a month
(about $6.50 a day).
Each example gives you the amount of money they would each have at age 60 based on a
6% return and an 8% return.
In each scenario, even though Ann saved twice as much money, Susan had more than twice
as much money at age 60. In each instance, this was significantly more money than Ann.
This is due to the power of compounding!
What can you do to be in a position to begin to save or invest $50, $100 or more a
month in order to have thousands of dollars at age 60?

Example 1: The Price of Waiting and the

Difference of a Higher Interest Rate
Age Year Number Susan Anne
30 1. $600
31 2. $600
32 3. $600
33 4. $600
34 5. $600
35 6. $600
36 7. $600
37 8. $600
38 9. $600
39 10. $600
40 11. $600
41 12. $600
42 13. $600
43 14. $600
44 15. $600
45 16. $600
46 17. $600
47 18. $600
48 19. $600
49 20. $600
50 21. $600
51 22. $600
52 23. $600
53 24. $600
54 25. $600
55 26. $600

56 27. $600
57 28. $600
58 29. $600
59 30. $600
Total Saved $6,000 $12,000

Total Value at 6%
$48,963 $22,782
Return
Total Value at
$70,881 $28,633
8% Return

30 1. $1,200
31 2. $1,200
32 3. $1,200
33 4. $1,200
34 5. $1,200
35 6. $1,200
36 7. $1,200
37 8. $1,200
38 9. $1,200
39 10. $1,200
40 11. $1,200
41 12. $1,200
42 13. $1,200
43 14. $1,200
44 15. $1,200
45 16. $1,200
46 17. $1,200
47 18. $1,200
48 19. $1,200
49 20. $1,200
50 21. $1,200
51 22. $1,200
52 23. $1,200
53 24. $1,200
54 25. $1,200
55 26. $1,200
56 27. $1,200
57 28. $1,200
58 29. $1,200
59 30. $1,200
Total Saved $12,000 $24,000

Total Value at
$97,972 $45,565
6% Return
Total Value at
$141,761 $57,266
8% Return


30 1. $1,200
31 2. $1,200
32 3. $1,200
33 4. $1,200
34 5. $1,200
35 6. $1,200
36 7. $1,200
37 8. $1,200
38 9. $1,200
39 31. $1,200
40 32. $1,200
41 33. $1,200
30 1. $2,400
31 2. $2,400
32 3. $2,400
33 4. $2,400
34 5. $2,400
35 6. $2,400
36 7. $2,400
37 8. $2,400
38 9. $2,400
39 10. $2,400
40 11. $2,400
41 12. $2,400
42 13. $2,400
43 14. $2,400
44 15. $2,400
45 16. $2,400
46 17. $2,400
47 18. $2,400
48 19. $2,400
49 20. $2,400
50 21. $2,400
51 22. $2,400
52 23. $2,400
53 24. $2,400
54 25. $2,400
55 26. $2,400
56 27. $2,400
57 28. $2,400
58 29. $2,400
59 30. $2,400
Total Saved $24,000 $48,000

Total Value at
$195,851 $91,129
6% Return
Total Value at
$283,523 $114,532
8% Return
Investing is NOT an exact science.
There are no guarantees in life. Everything is constantly changing. To be successful, you need
to know what the changes are and why they are happening. That is true in your personal and
professional life and certainly in your financial life (including your investments). Investing is an
important asset-building strategy and a component of financial security, but you shouldn’t
invest unless you are willing to do the work required to be a knowledgeable investor.
There aren’t any shortcuts in life or in investing.
Remember to go back and complete your Beginning Financial Plan by identifying your
Potential Investment Choices.

Insurance
What is insurance, and why do you need it?
Insurance is what you buy to cover your risks.
You’ve already explored some of your feelings about risk – particularly financial risk. You
know that most things in life have some element of risk.
Insurance is one way to financially compensate for risk.
Obviously, no amount of money could compensate for:
• A car being stolen
• The loss of a loved one
• Being robbed of personal possessions
• The loss of a home to a fire or disaster
• An injury that prevents working or alters your lifestyle
However, some of your losses may be offset when you can afford to replace the material
things that have been taken from you or to rebuild/remain in your home. Financial
compensation from insurance may also help the healing process and improve your ability to
deal with the loss. Without insurance, you may not be able to replace things that have been
taken from you, or you may be unable to maintain your former lifestyle. When someone
dies, your life is forever changed. But if you can eliminate having to deal with financial loss
at the same time as emotional loss, you may be able to eliminate some of your suffering.
Technically, insurance is a legal contract between an insurance company and you. You pay
for insurance in order to protect yourself or your family from the potential financial loss that
might result if you were to…
• Die
• Become ill/disabled
• Lose your assets

** Some states require auto insurance in order to protect others. Some lenders require home owner’s insurance in
order for borrowers to get a mortgage.
You purchase insurance to counter the potential cost of loss. You are
incurring a known insurance cost in case of a loss.
Evaluating your insurance needs is an important part of financial planning. Assessing how
much and what type(s) of insurance you need is not a simple task. The role insurance plays
in your financial picture will be different from the role it plays in anyone else’s. Influencing
factors include:
• Age
• Health
• Lifestyle
• Marital status
• Number of dependents
• Other sources of income
If you are a single parent and the sole income provider, what would happen to your
child(ren) if you became incapacitated or died? Who would provide for them? Who would
pay for your funeral expenses? While no one else can ever replace a parent, if money is
provided for your child(ren)’s immediate and potential long-term needs (like college), then
their lives could continue with at least some degree of order, quality and normalcy.
There are many different types of insurance. Not all insurance is applicable to every lifestyle.
It is important to know the advantages and disadvantages (expense – you are paying money
for something you hope never to have to use or at best for protection that will be used only
after your own death) of each type. Insurance is not necessarily a good choice as an
investment vehicle although some types of life insurance are marketed in that way.
There is insurance for just about every possible item and condition imaginable including:
• Auto
• Motorcycle
• Condominium
• Renters
• Life
• Health
• Pet
• Disability
• Long-term care
• Home
• Fire
Health insurance pays some or all of your medical bills when you are ill, or if you have an
accident. Health insurance can be very expensive. However, the cost of obtaining adequate
healthcare without it is far more expensive.
Disability insurance provides you with income in the event something happens to you that
prevents you from working.
Your income is your greatest asset. That means your ability to work is critical to your
financial future. Disability insurance pays a percentage of your income if you become sick
or injured and cannot work. The income you receive from disability insurance is fixed (i.e., it
does not increase over time).
Property and liability insurance protect your home, car and other possessions in case of
accidents or theft. You work hard for the things you have. Therefore, you need to provide
adequate protection for your possessions and the possibility that someone might be injured
while in your home. This type of protection is an “umbrella” liability policy that provides
extra protection in the event of a damage award in excess of your basic policy.
Life insurance provides money for the dependents in your family who rely on your income
in the event of your death. How would your loved ones survive financially if you died?
It isn’t possible, or prudent, to try to cover every possible risk in life.
It is important to make knowledgeable decisions about which risks should be covered in

order to have peace of mind and to provide for your family’s financial future. There is no
sense in being insurance poor. However, there is also no sense in failing to protect your
family’s health and financial well-being in case something happens to you or your assets
(home, car, etc.). The role insurance should play in protecting you, your family and your
assets will vary depending on your age, marital status, number of dependents, income, etc.
Make time to learn more about insurance.

Estate Planning
Participant Story
Carol, a single 36-year-old dental hygienist, was getting ready for a date when she
realized she was out of toothpaste. She had almost two hours to get ready, so she
decided to walk to the drugstore a few blocks away to get toothpaste. Carol left her purse
at home and only took a few dollars in cash with her.
The checkout at the drugstore was very slow and in her haste to get back home to finish
getting ready, Carol crossed in the middle of the street. She never saw the car that hit her.
Carol had no purse and no identification with her. When she arrived at the hospital, in a
coma, she was admitted as a Jane Doe.
Carol came out of her coma several days later in pain and not functioning at full capacity.
She was able to contact some friends, but that did not solve her problems.
Carol had never created a medical proxy or asked anyone to take responsibility for her
health care decisions in the event she was unable to. Nor did she have a power of
attorney that would allow her friends or family to manage her money while she was
incapacitated.
Although Carol had money in the bank, she was unable to access it. Therefore, her bills
went unpaid the entire time she was in the hospital. This had long-term effects on Carol’s
credit report – as well as on her life.
How prepared are you for emergencies, accidents or illness?
Are you:  Very prepared  Moderately prepared  Not at all prepared

Most people fail to prepare for emergencies, accidents or illness because they…
• Don’t think about them.
• Think it won’t happen to them.
• Don’t want to think about dying.
• Feel it won’t matter if it does happen.
• Believe someone will take care of it/them if something does happen.
Everyone needs to prepare for the possibility of an emergency, accident or illness. If you are
married or living with a spouse or partner, develop your plan together. If you are single,
divorced, widowed, etc., create a plan of action for yourself.
Traditionally, this area of planning is called Estate Planning. Many people resist
the concept of an estate (estate = property, possessions, etc.,) because they
don’t consider their financial situations very “estate-like.” This is because
many individuals don’t understand what an estate or estate plan is.
Your estate consists of everything (anything) you own including:
• Your home
• Other real estate
• Bank accounts
• Investments
• Retirement benefits from your employer
• IRA(s)
• Insurance policies
• Collectibles

Personal belongings
When you add these up (including death benefits from insurance policies, etc.), you may
own more than you realized. Even if you don’t, you still need to do estate planning to…
• Specify who receives your assets or belongings after you die.
• Select who will act on your behalf if something happens to you.
• Arrange your affairs to prevent your assets from going to the government for taxes
or the attorneys for legal fees.
• Plan who will care for your children.
If you aren’t comfortable talking about estate planning, perhaps you would feel more
comfortable calling this your “Personal Disaster Prevention Plan” or PDPP. That’s what it is –
your plan to prevent personal disaster in the case of illness, emergency or death.
Regardless of what you call it, your Personal Financial Inventory or PFI (you will learn more
about this later in this workbook) is an important part of your planning process. By
gathering all of your pertinent information in one place, you facilitate someone else’s efforts
to manage your affairs in case of an emergency, accident, illness or death.
• The first thing you must do is to make certain whomever you choose to handle your
affairs, in times of crisis is amenable to taking on this responsibility.
• The second thing you must do is to make certain that the person(s) you want to
handle your affairs at such times knows the location of all your information.
Regardless of your age, marital status, whether or not you have young children or children
from previous marriages, etc., estate planning is important for everyone – not just for
“wealthy” people. Every person needs to have a plan to cover transferring assets to loved
ones or having their health needs attended to if and when disaster strikes.
The following is a basic overview of the various documents (legal and general) you need to
know about and consider having in case of an emergency, illness or death.
This material is broad in scope; it is not meant as a substitute for an attorney’s advice.

The first thing to consider is the person(s) to be notified in the case of an accident. Carry an
emergency contact list with you which includes the names and telephone numbers of your
physician(s) and the people to be contacted if something were to happen to you. Include
their work and home numbers, cell phone numbers and e-mail addresses. Be certain to tell
the people on your list that they are on it. Make certain they know what you want done in
such a situation.
Emergency Contact List

Your Name: Home Phone:
Street Address:
EMERGENCY Medical Information (allergies, medication, etc.)
Cell Home Work

Name E-mail
Phone Phone Phone
Doctor
Doctor
If you were to become ill, disabled or incapacitated, who would know how you want your
medical and financial needs taken care of? Whom would you call in an emergency? Who
would make decisions on your behalf if something were to happen to you?
If you died, someone would need to know certain things about your financial situation and
wishes. If you were to become disabled or incapacitated, someone would need to be able to
manage your care. These are not easy or pleasant circumstances to consider, but they are
important ones.

A medical proxy is the document indicating the person you want to make your health care
decisions if you are unable to make them. Once you have made this document, keep it in a
safe place. Make certain that the person you named knows where to locate this document.
Some people give a copy of their medical proxy to their doctor and to the person named in
the proxy.
A Living Will is the document that identifies how you want to be cared for if you are judged
to be in a terminal, irreversible medical condition requiring life support. Accidents do
happen. Therefore, it is important to know what life supports you would or wouldn’t want in
such a situation. This serves as a directive to physicians should you not want any artificial
methods to extend your life.
HIPAA Authorization HIPAA, the Health Insurance Portability and Accountability Act, is a
Federal law that sets rules and limits on who can look at your medical records or receive
your health information. Covered entities that violate HIPAA face stiff penalties which make
them reluctant to share medical information with anyone but the patient – including close
family members.
A HIPAA authorization allows you to name an individual who can have access to your
medical information so that your health care provider or insurance company has no
reservations about sharing medical information with the person(s) you have authorized.
Additionally, put your wishes in writing (a living will) and make certain the person you want
to act on your behalf knows how you want things handled. A living will is an important legal
document that needs to be signed, witnessed and properly executed. Your life could depend
on it.
A Power of Attorney is a viable legal document authorizing the person you identify to act
on your behalf if you were alive but incapacitated in a manner that prevented you from
handling the following:
• Writing checks
• Making calls
• Gathering information
• Accessing your accounts in an emergency
• Having money wired to you for your use in another state or country
• Paying your rent/mortgage or other bills

This is a big responsibility. Select someone you trust and make certain she/he is willing to
take on this responsibility. Certain financial institutions (banks, brokerage houses, etc.) may
require their own forms be used for this purpose. Others accept a power of attorney
prepared by your attorney or an appropriately executed form available from most office
supply stores. Know who accepts what and how often they need to be updated.
If you do not have a durable power of attorney in place, a court-ordered guardianship may
be necessary. This can be time-consuming and expensive.
A will is a binding legal document that indicates how you want your assets distributed when
you die. It names the individual(s) you want to handle your final affairs and the individual(s)
you want to receive your assets. Whether your estate is small or large, you need a will to
assure your wishes are followed and your possessions are divided as you want them to be.
Make certain your executor is willing to accept this responsibility and knows where your will
is kept.
If you die without having a will, you die in testate. Without a will, the state you live in
determines how your estate is distributed and what happens to minor children. Often, this
results in very different outcomes than you would have wanted. Your estate could end up
going to your ex-husband/ex-wife or to other relatives, rather than to the friends or charities
you might have preferred.
There is a great deal to know about estate planning and the associated documents. Each
serves a different but important purpose in your life and death. This broad overview
provides you with the essentials of planning and preparing for unexpected emergencies or
death. Spend time learning more about each document and deciding how you want to
handle these matters because estate planning is an important part of taking control of your
money and gaining control of your life.

Net Worth Statement

A net worth statement is simply a snapshot that shows your financial situation at any one
point in time. Your net worth statement shows how much money you would have if you
were to convert everything you own into cash and then use the cash to pay off everything
you owe (your debts).
Your net worth statement includes:
• What is owned – these are called your assets
− Cash
− Bank accounts (money in your checking, saving and money market accounts,
etc.)
− Investments (stocks, bonds, mutual funds)
− Property
• What is owed to creditors – these are called your liabilities. These include what you
owe currently such as short term debts (credit cards, insurance, personal loans) and
long term debts (mortgages and other loans that you will be repaying over time).
− Loans
− Credit cards
− Leases
The number indicating the difference between what you own and what you owe is
considered your “net worth.”
A net worth statement is an important financial tool. Completing your net worth statement
should be easier once you have completed your Personal Financial Inventory (found below)
because you will have organized and gathered all of the necessary information in one place.
Your net worth statement provides a baseline picture (number) for your current financial
situation. It helps you measure your progress toward your financial goals. Your net worth
statement provides a relatively concrete number for measuring whether your assets are
growing or declining and whether you debt is growing or declining.

You should update your net worth statement at least once a year. Some people do this on
January 1st. Others do it on their birthdays. Also, update your net worth statement whenever
your financial situation changes significantly (e.g., You inherit money, lose your job, get a
promotion, etc.).
Your financial picture (net worth) is a reflection of your financial life story.
You are much more than your financial picture.
You and your life are very different and separate from your financial story/picture.
Never confuse your self-worth with your net worth.

Net Worth Statement

Assets – What You Own
Cash on hand ..........................................................
Checking Account ..........................................................
Savings (CDs, IRAs, U.S. Savings Bonds, etc.) ..........................................................
Investments (market value of car, jewelry, bicycle, home, etc.) ..........................................................
Money owed you
Cash Value of Life Insurance ..........................................................
Personal property ..........................................................
Other ..........................................................
Other ..........................................................
Other ..........................................................
Total Assets ..........................................................
Liabilities – What You Owe

Credit and charge card balances ..........................................................
Monthly bills ..........................................................
Educational loans ..........................................................
Personal loans ..........................................................
Installment loans (auto, furniture, bank loan)
Mortgage balance ..........................................................
Other ..........................................................
Other ..........................................................
Other ..........................................................
Total Liabilities ..........................................................

Total Assets ..........................................................
(minus)
Total Liabilities ..........................................................
Net Worth (Total Assets minus Total Liabilities) ..........................................................

Participant Story
Andy was reluctant to do a net worth statement. He feared it would only make him feel
worse about his financial situation. Several weeks passed before he could bring himself to
actually pull together all of the information he needed to complete the net worth
statement.
Andy spent extra time doing his mindfulness work and listening to music before
beginning this exercise. He worked slowly and precisely thinking that perhaps it wasn’t
such a bad thing that he didn’t have that many assets. At least he didn’t have to spend as
much time filling this out as someone with many assets.
Andy knew that his liabilities exceeded his assets, but he didn’t have any idea what that
figure was. He was both surprised and pleased to discover that his net worth wasn’t
nearly as bad as he had anticipated. It was actually significantly better than he had
imagined it would be.
When Andy discovered this, he was motivated to find ways to increase his income so that
he could reduce his debt and start increasing his assets. Andy admitted he was glad he
had finally done his net worth statement because it helped him feel better about himself
and his ability to become more money-wise.
Learning your net worth number is similar to learning your weight when you begin a diet.
You knew it was high before you stepped on the scale. Through dieting and exercise you
can lose weight. Through continued use of the Financial Social Work principles you can
improve your life and your net worth.
You have already begun building a strong foundation for your financial future. Remember, it
took you all of your life to reach the point where you are now, and it will take you some time
to change your circumstances. You can do it if you want to badly enough!
• Don’t focus on what you haven’t done or don’t have.
• Focus on what you do have and what you are now doing to change your situation.
• Don’t worry about the mistakes you may have made in the past.

• Think about the choices you are making now to improve your life and your financial
future.
• Don’t be concerned with where you are now.
• Concentrate on where you want to be in the future.
No matter your age or your circumstances, be grateful for the opportunity,

information and understanding you now have for increasing your
emotional stability by improving your financial circumstances.
Your net worth statement is just one of numerous financial tools to help you to better
understand your financial picture and assess your success over time to improve your
financial situation.
Your PERSONAL FINANCIAL INVENTORY (PFI) is a financial tool designed to assist you in
organizing all of your important financial information. It is designed to facilitate locating
these items in times of need or emergency.

Personal Financial Inventory

Use a sectioned notebook or file folders to organize the following personal papers.
List the location for the following:
• Your safe deposit box
• The key to your safe deposit box
• Safe deposit box number
Section I: ..........................................................................................................
• Your name (and maiden name if applicable)
• Social Security Number
• Parents’ names
• Where your parents are buried
• Spouse’s name
• Spouse’s social security number
• Spouse’s parents’ names
• Where spouse’s parents are buried
• Children’s names
• Children’s social security numbers
• Children’s current addresses

Section II: .........................................................................................................
Names, addresses and phone numbers for the following:
• Accountant
• Attorney
• Doctors
• Dentists
• Siblings
• Siblings’ offspring
• Siblings’ in-laws (where buried)
• Organizations to which you belong
• Schools from which you graduated
Insurance and medical including:
• Policy numbers and types
• To whom they are payable
• Who pays
• Due dates
Location of policies including:
• Auto
• Homeowners or renters
• Life
• Disability
• Long Term, etc.

Bank information including:
• Names
• Location
• Phone numbers
• Types of accounts
• Account numbers
Section III. Credit Information ....................................................................
• Recent credit reports (past 3- 5 years)
• Credit card names
• Credit card account numbers
• Credit card addresses
• Credit card 800 numbers
• Dates for billing cycle (beginning, ending, due dates)
• Telephone cards
• Gas cards
• Frequent flyer information
• Any consolidation loans, bankruptcies, credit counseling information

Section IV. Assets .............................................................................................
Major home improvements including:
• What
• Where
• Receipts
Jewelry information including:
• Inventory
• Description
• Where located
• Estimate or appraised value
• Special insurance policies
Bank account information including:
• Names and addresses of banks
• Account numbers
• Phone numbers
• Names on accounts
Brokerage account information including:
• Company names and addresses
• Names of contacts
• Phone numbers
• Account numbers
• Copies of statements

Mutual funds information including:
• Names of funds
• Phone numbers
• Account numbers
• Inventory of safe or safe deposit box
Section IV. – Assets
Stocks, bonds information including:
• Phone numbers
• Account numbers
• Account information
Real estate, mortgages, deeds information including:
• Phone numbers
• Account numbers

Pensions, annuities information including:
• Phone numbers
• Account numbers
• When received
Section V. Net worth Statement
• Should update 1 or 2 times annually.
Section VI. Miscellaneous
• Any powers or trusts you are responsible for
• Any special people who need to be notified in case of your illness or death
• Any other information you deem necessary
• Copy of your original will
• Copy of your durable power of attorney, health care proxy, living will
• Location of all original documents (if safe deposit – where located and number)
estate tax records, past taxes

Summary
This workbook provided you with important financial tools and information. Saving,
investing, insurance, a net worth statement, estate planning and a financial inventory are
each different pieces of the economic literacy and self-sufficiency puzzle. Used together,
they are the financial tools that will take you from where you are to where you want to be
while helping you create long-term financial security. They provide the information you
need to increase your assets, protect the assets you accumulate and measure how well you
are succeeding with all of your efforts.
Spend time studying, evaluating and using all of these tools. The more you integrate them
into your life and your thoughts, the more likely you are to achieve your financial goals.
While some may not apply to you or your situation today, they are all likely to apply in the
future if you follow through with your commitment to become more money-wise.
Determine which ones should be a part of your financial plan as well as when and how to
include them.
Now that you have a better understanding of investing, you will probably feel a greater
impetus to make different financial choices today than you may have made in the past.
These different types of financial choices will help you have more money to save, invest and
begin building or increasing your assets.
Remember, the more money you have to invest and the better you become
at investing, the more secure your financial future is likely to be.
There are no guarantees when it comes to investing as there are no guarantees in life.
However, this doesn’t mean that you should avoid investing or avoid living life to its fullest.
This workbook has covered many principles to help you improve your financial future. The
basic investment information included here provided an introduction to your investment
education – an education that should continue for the rest of your lifetime.
• Trust yourself to find where and how investing fits into your life and your financial
picture.
• Trust that you will find the best way to put your money to work through your
investments.

• Trust that YOU can do it! You really can – if you want to badly enough.
• The truth is you can do anything you set your mind to doing.
As you move toward the completion of the Financial Social Work Certification, spend time
with your feelings and hear what they have to tell you.
Do you feel excited and ready to meet new challenges? Do you feel ready to take control of
your money and your life?
Or, do you feel like you haven’t done the work you need to do? Are old habits keeping you
stuck. Are old fears rearing their heads? Is uncertainty creating your discomfort?
“All great achievements require time. “

Anne Frank
Don’t be unrealistic with your expectations.
Unrealistic expectations will only sabotage your efforts.
Trust that you have planted the seeds of new beginnings – YOU HAVE !
Your past will always play a part in your future.
Be selective in how much influence you give to your past. Build upon past accomplishments
without sacrificing present or future ones.
Celebrate how you have grown and changed. Who you are today reflects the risks you took,
the lessons you learned and the choices you made yesterday. Your life is fashioned by the
choices you make and the choices you avoid making. You now have the opportunity to
make new, better and different choices upon which to build and to shape your future.
Celebrate all you have accomplished along

with all that remains to be accomplished.

If you’ve done the work in this workbook…
• You have grown: personally, professionally, and financially.
• You have changed: your thinking, your behavior and more – in countless ways.
• You have learned: how to take control of your money and gain control of your life.
• You have explored: who you are today and who you want to become tomorrow.
• You have made choices: how much effort you wanted to put in which, in turn,
determined how much you are able to take out in the future in terms of savings, etc.
• You have expanded: your sense of self.
• You have increased: your self-esteem.
• You have discovered: that wanting, striving and working to accomplish more is
what living is all about.
• Honor the journey that is yours alone • Honor your strengths.

to take.
• Honor the unknown for all it has yet
• Honor the person you were, the to reveal.
person you are and the person you
• Honor the challenges you have
want to become.
faced.
• Honor the opportunity to always be a
• Honor the promises that you make to
student of life.
yourself – they matter the most.
• Honor the lessons you have learned.
• Honor your courage – it is ever-
• Honor the future that is yours to present even when you question or
create. doubt it.
• Honor your feelings and all they can • Honor yourself – all that you are and
teach you. all you can become.
~~~~~

• Stop sabotaging yourself – you are • Stop resisting change.

better than that.
• Stop living in the past.
• Stop settling – it isn’t necessary or
• Stop holding on too tightly.
appropriate.
• Stop wasting your time.
• Stop struggling – life doesn’t have to
be hard. • Stop regretting.
• Stop waiting, hoping, blaming and • Stop fighting yourself.

instead, start acting, doing and • Stop giving away so much of
being. yourself.
• Stop judging and expecting too • Stop being afraid.
much of yourself and of others.
• Stop stressing so much.
• Stop trying to control people,
• Stop living in denial.
situations and outcomes – you can’t!
• Stop paying so much for the privilege
• Stop discounting your feelings.
of spending money you don’t have.
• Stop ignoring your own needs.
• Stop trading your future security for
• Stop playing the peacemaker. present gratification.
• Stop having unreasonable • Stop wishing and start doing.
expectations.
• Stop taking life for granted.
• Stop beating yourself up.
• Stop waiting for things to get better,
• Stop holding yourself back. to change, etc. and start making
• Stop worrying. them better.
• Stop making excuses. • Stop postponing joy.
• Stop placing limitations on yourself. • Stop being a victim.
• Choose to heal. • Choose to understand.
• Choose to be happy. • Choose to set goals
• Choose to be all you can be. • Choose to have ambitions
• Choose to be healthier. • Choose to focus on your strengths.
• Choose to surround yourself with • Choose to be successful.

healthy, loving, supportive people.
• Choose to know what you know.
• Choose to do what needs done. • Choose to do what’s important first.
• Choose to be more positive. • Choose NOT to be a statistic.
• Choose to work to achieve your • Choose to be thankful.

goals.
• Choose balance and harmony.
• Choose to do one thing differently
• Choose to set your own pace.
each week.
• Choose to count your blessings –
• Choose to surround yourself with
often and slowly.
others on the journey to personal
and financial growth/change. • Choose to focus on what is right in
your life – not on what is wrong.
• Choose to always be mindful.
• Accept that not everyone is going to
• Choose to find your purpose and love, understand or appreciate you; it
passion. doesn’t matter as long as you love
understand and appreciate yourself.
• Choose to learn your lessons.
• Accept that others may not always be
• Choose to share what you know. honest with you, but you must
• Choose to always be present always be honest with yourself.
• Choose to influence. • Accept that others may not always be

there for you, but you must always
• Choose to mentor.
be there for yourself – you can count
• Choose to make a difference. on yourself.
• Choose to risk failure. • Accept that you don’t know
• Choose to risk success. everything – no one does – and
that’s ok.
• Choose to risk.
• Accept that you get what you believe
• Choose to s-t-r-e-t-c-h. you deserve – no more and no less.
• Choose to bring out the best in • Accept yourself just as you are(all
yourself. change begins with self-acceptance).
• Choose to bring out the best in • Accept that you really are good
others. enough.
• Choose to connect to your own • Accept that you already do enough.
resilience.

• Accept that where you are is where • Accept others just as they are – stop
you need to be for NOW. trying to change them.
• Accept that you are deserving. • Accept that you don’t know
everything – you will always be a
• Accept that no one is going to rescue
student of life and all that it entails.
you – you must rescue yourself.
• Accept life as it is and not as you
• Accept that your future is yours
think it should or could be.
alone to create and manage.
~~~~~
• Trust that you can stand up, take • Trust that you have a unique
care of, and rely on yourself. contribution to make in this world.
• Trust yourself to define who you are • Trust that life is a self-fulfilling
and to create a better future. prophecy.
• Trust yourself to live life to its fullest. • Trust that you can have and be
anything you want when you’re
• Trust your ability to access your
willing to work for it.
creativity.
• Trust that perseverance has more
• Trust yourself to meet more of your
power than magic wands and
potential.
wishing wells.
• Trust that it is healthy to set
• Trust that you can pass any test
boundaries.
(time, love, friendship, etc.).
• Trust that it is ok to say NO.
• Trust that there is always HOPE.
• Trust yourself to distinguish between
• Trust your efforts.
healthy and unhealthy giving in a
relationship. • Trust yourself.
• Trust that you can have what you

want when you know what you want.
~~~~~
• Start seeing your relationships as • Start expecting more from all of your
they are – not as you want or wish relationships.
them to be.

• Start understanding that being alone • Start letting go.

isn’t the same as being lonely.
• Start counting your blessings.
• Start trusting your own instincts.
• Start living your life in a manner that
• Start being your own best friend. supports your truest self.
• Start being yourself, instead of who • Start living with intention.

you think you’re “supposed” to be or
• Start being more flexible.
“others” want you to be.
• Start embracing change.
• Start giving yourself permission to
want the things you want and to do • Start treating yourself with respect.
the things you want to do. • Start thinking more positively.
• Start expecting to be treated with • Start making a difference.
respect, dignity, kindness and
• Start having more fun.
compassion.
• Start listening more.
• Start living your life more pro-
actively. • Start laughing more.
• Start being open to all of life’s • Start acting/being more confident.

possibilities.
• Start enjoying the moments, days,
• Start creating healthy rituals of and weeks of your life.
passage.
• Start living with joy, passion and
• Start looking for the opportunity in enthusiasm.
every situation.
~~~~~
• Believe in your ability to actualize • Believe that you can change your
your hopes, dreams and wishes. outcomes by changing your
behavior.
• Believe in your commitment to
financial self-sufficiency. • Believe you can make a difference.
• Believe in your right to follow your • Believe in your goals.

own path.
• Believe you can be anything you
• Believe in the importance of want to be.
advocating for yourself.

• Believe the journey is as important as • Believe you can build your own
the destination – enjoy it. future.
• Believe you can prosper. • Believe you can live with integrity.
• Believe you can do anything you • Believe you have what it takes.
want and need to do.
• Believe your time has come.
• Believe life doesn’t have to be a
• Believe in your own ability.
struggle.
• Believe in yourself.
• Believe you can triumph over
adversity.
• Believe you can have the life you

want.
• Believe you can keep going no

matter what happens.

Finally, develop your own list of things to Honor, Stop, Choose, Accept, Trust, Start and
Believe.
Honor ..............................................................................................................................................
Honor ..............................................................................................................................................
Honor ..............................................................................................................................................
Stop .................................................................................................................................................
Stop .................................................................................................................................................
Stop .................................................................................................................................................
Choose ...........................................................................................................................................
Choose ............................................................................................................................................
Choose ............................................................................................................................................
Accept .............................................................................................................................................
Accept .............................................................................................................................................
Accept .............................................................................................................................................

Trust ...............................................................................................................................................
Trust ................................................................................................................................................
Trust ................................................................................................................................................
Start ................................................................................................................................................
Start ................................................................................................................................................
Start ................................................................................................................................................
Believe ............................................................................................................................................
Believe ............................................................................................................................................
Believe ............................................................................................................................................
Only you can give yourself the gift of self-love, self-acceptance and emotional and financial
stability. The choice is yours to make; the consequences are yours to live with.
Please Choose Wisely!
Remember to refer to the supplementary appendix for this workbook. It contains links to
various helpful apps, videos and webinars on the information in this workbook. It will
be updated on a periodic basis. When FSW updates these supplements, you will be
emailed updated copies.


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Reeta Wolfsohn, CMSW

CENTER FOR FINANCIAL SOCIAL WORK

Financial Goal Setting ........................................................................................................................ 5

Four Important Steps to Achieving Your Goals .............................................................................8

Goal Success Grid ............................................................................................................................. 12

Money Mission Statement ...............................................................................................................14

Create A Money Mission Statement ............................................................................................... 15

Money Mission Work Space............................................................................................................. 16

My Money Mission Statement ......................................................................................................... 16

U.S. Inflation Table (2000-2014) ................................................................................................... 30

© Reeta Wolfsohn, CMSW 2014 Page 1 of 111

The Rule of 72 .......................................................................................................................................................... 48

Beginning Financial Plan................................................................................................................. 50

Practice Portfolio ............................................................................................................................. 69

Practice Portfolio Tracking Form ...................................................................................................72

Estate Planning ................................................................................................................................. 85

Emergency Contact List .................................................................................................................. 88

Net Worth Statement ....................................................................................................................... 91

Personal Financial Inventory .......................................................................................................... 96

© Reeta Wolfsohn, CMSW 2014 Page 2 of 111

“The most popular labor saving device is still money.”

© Reeta Wolfsohn, CMSW 2014 Page 3 of 111

© Reeta Wolfsohn, CMSW 2014 Page 4 of 111

Financial Goal Setting

• Make life more interesting because success brings

• Are inherently solution-oriented; they create

• Are personal and individual; not determined by another person or mandate.

Without goals you plan to fail by failing to plan!

© Reeta Wolfsohn, CMSW 2014 Page 5 of 111

Goal Setting involves the following:

• Understanding where you are today.

• Identifying where you want to be in the future (Goals).

• Recognizing which of your behaviors do/don’t support your goals.

• Replacing sabotaging behaviors with more positive ones.

• Developing a strategy for success.

Goal Setting requires the following:

1. An honest assessment of where you are today.

2. A clear understanding of where you want to be tomorrow.

S.M.A.R.T. Goals – S is for Specific

This provides the Who or What the goal is about.

© Reeta Wolfsohn, CMSW 2014 Page 6 of 111

S.M.A.R.T. Goals – M is for Measurable

S.M.A.R.T. Goals – A is for Achievable

S.M.A.R.T. Goals – R is for Relevant

S.M.A.R.T. Goals – T is for Time

© Reeta Wolfsohn, CMSW 2014 Page 7 of 111

Four Important Steps to Achieving

Step #1: Take Action

− A relatively new concept is an

− You may have different goals,

− Hold each other accountable.

− Help each other refocus should one falter.

• Put Technology to Work for YOU

Use Apps to alert you to…

• Use the time you’ve scheduled with your money.

• Pay bills that are due.

• Address the “To Do Lists” of your life, etc.

• Set incentives and consequences.

− Goal Achievement requires supporting new, different and better behaviors.

© Reeta Wolfsohn, CMSW 2014 Page 8 of 111

• Avoid setting yourself up for failure by doing the following:

− Not practicing an all-or-nothing attitude.

− Making time to determine what you learned from past mistakes.