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Life Cycle of Financial Planning

Take Charge of Your Finances

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Financial Planning
Many people follow a similar financial pattern during their life BUT Everyone has an individualized financial plan.

Financial planning is a tool used to achieve financial success based upon the development and implementation of financial goals.
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Financial Plan Influences


Financial planning is influenced by many factors: These factors can be expected and unexpected.

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Financial Goals
Financial goals are specific objectives to be accomplished through financial planning Financial goals should be SMART goals:
Specific Measurable Attainable Realistic Time Bound

An essential step to creating a financial plan

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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SMART Financial Goals

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Lifestyle Conditions

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Financial Life Cycle


A life cycle is a series of stages in which an individual passes during his or her There is a typical life cycle pattern lifetime that applies to most people Includes three stages The amount of time it takes to move through the financial life cycle varies for every individual
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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An Individuals Financial Life Cycle


Single * Marriage * Start and Raise Family Approachi Retirement ng Years Retireme nt Stage 3: Years

Stage 2: Wealth Accumulation Stage 1: Basic Wealth Protection

Wealth Distribution

20

30

40 50 60 Years of Age

70

80

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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An Individuals Financial Life Cycle

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Personal Financial Management Pyramid

Estate giving it to your Plannin g Long Building chosen ones Term Wealth: Wealth goal setting, Accumulation retirement planning, investments giving it to yourself Building Financial Security: goal setting, savings plan, home ownership, childrens education Risk and Tax Management: Basic goal setting, insurance, protection against Wealth economic loss, income tax reduction Credit and Debt Management: Protectio goal setting, credit use, avoiding credit abuse, n debt reduction quit giving it Cash Management: goal setting, emergency, cash reserve, record to others keeping, spending plans, net worth, and incomeexpense statements
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Wealth Distribution

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Life Cycle Events Activity


People in certain age groups tend to have similar life cycle needs What activities and events require financial planning during each stage?
High School Ages 13-17 Identify Young Adult Ages 18-24 someon Adult With or Without Children Ages 25-34 e you Working Parent or Adult Ages 35-44 know in Midlife Ages 45-54 each Pre-Retirement Ages 55-64 categor Retired Ages 65 and older

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


High School Ages 13 17
Developing a plan for eventual independence Preparing for career Evaluating future financial needs and resources Exploring financial systems banks, etc. Developing a personal system of record keeping

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Young Adult Ages 18 24
Establishing a household Training for a career Earning financial independence Determining insurance needs Establishing credit Establishing savings Creating a spending plan Developing a personal financial identity Developing a personal financial system
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Adult With or Without Children Ages 25 34
Child-bearing Child-raising Starting an education fund for children Expanding career goals Managing increased need for credit Discussing and managing additional insurance needs Creating a will Maximizing financial management by all members of household

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Working Adult or Parent Ages 35 44
Upgrading career training Building on childrens education fund Developing protection needs for head-of-household Need for greater income due to expanding needs Establishing retirement goals
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Midlife Ages 45 54
Assisting with higher education for children Investing Updating retirement plans Developing estate plans

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Pre-Retirement Ages 55 64
Consolidating assets Planning future security Re-evaluating property transfer Investigating retirement part-time income or volunteer work Evaluating expenses for retirement and current housing Meeting responsibilities of ageing parents
Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Traditional Age Group Financial Planning Needs


Retired Ages 65 and older
Re-evaluating and adjusting living conditions and spending as related to health and income Adjusting insurance programs for increasing risks Acquiring assistance in management of personal and financial affairs Finalizing estate plan Finalizing will or letter of last

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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True or False?

Everyone has the same financial plan.

Family Economics & Financial Education May 2010 Introduction to Finance Unit Life Cycle of Financial Planning Slide # 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona