Hallagen Ink Press CHARLOTTESVILLE, VA USA
Copyright © 2024, Michael Garrison and Tanya Brockett All rights reserved. No part of this publication may be re- pa nr oy dmu ceeadn, s d, ii sntcrliubduitnegd pohr ottroacnospmy ii tntge,dr ei nc oarndyi nfgo, romr oo rt hbeyr et el enc pt reor nmi ci sos ri omn eocf ht ahne i pc aulbml i seht he or ,desx, cwe ipt ht ionu tt ht eh ec apsrei oorf wb rriiet -f qn uo no tcaotmi omn se recmi abl oudsieesdpi enrcmr ii tt itceadl br eyvci oe wp ysr ai gnhdt cl ae wr t .aFi no ro tpheerr- msioisnssi,o”natreAqdumesints@, wHrailtleagteontIhnekp.cuobmli.sher, subject “Permis- Cover design, editing, and book design: Hallagen Ink Disclaimer: This publication is designed to provide accu- rt ea rt e caonvde raeudt .h Iotr iitsa tsi ov ledi nwf oi trhm taht ieo nu na db eo rustt tahned si nugb j tehc at tmtahte- ai nuttehl ol ercst ua na ld ppruobplei sr ht ye, r aacrceo nu on tt ienngg, af igneadn icni arl e, nmdeedr ii cnagl , l epgsayl-, cs ihmo lpol gy i ce anlt, roe rp roet nh ee ur rps r sohf ea sr si ni ognianl s ai gdhvtisc eb. aTs he de ao un t thhoerisr ae rxe- ps ieorni ea nl caes ss i sa tnadn ceed ui sc ar et iqouni.r eI fdl, etghael saedrvviiccee so or foat hceormppreotfeens t- pi nrdoifveisdsui oa nl l ay l os rh coourl pd obrea st eoluyg, hd to. nT oh te aacuctehpot ras nayn rde ps pu ob nl i ss ihbei rl -, ittiyesfoinrvaonlyvelida.bilities resulting from the actions of any par- ORDERING INFORMATION Quantity sales: Special discounts may be availa- ba sl es oocni al tai rognes ,qbuoaonkt ict lyu pb us ,r uc hn ai vseerss bi tyi ecso, ra pn odroa tt hi oenr ss ,. Faboorvdee. tails, contact “Special Sales” at the email Basic Financial Literacy/Garrison, Brockett.—1st ed.
If you let your learning lead to knowledge, you become a fool. If you let your learning lead to action, you become wealthy. ― TONY ROBBINS
Contents Preface .................................................................................... ix 1. Opening Your Mind to What You Want ............... 1 2. Your Guide to SMART Financial Goals .............. 11 3. Budgeting and Expense Management ............... 17 4. Making Regular Saving a Priority ....................... 22 5. Distinct Approaches to Wealth ........................... 29 6. Understanding Credit: Like It or Not ................. 35 7. The Strategic Edge: Debt in Wealth Building .. 50 8. Embracing Lifelong Financial Learning ............ 57 9. Retirement Planning Simplified ......................... 61 10. Demystifying Tax Planning .................................. 70 11. Insurance Planning ................................................ 80 12. Estate Planning ....................................................... 86 13. Navigating Risk ....................................................... 92 14. Long-Term Perspective ......................................... 98 15. Professional Guidance ......................................... 103 16. Regular Review ..................................................... 109 17. Staying Disciplined ............................................... 114 18. Embarking on a Lifelong Journey ..................... 120 Suggested Readings ...................................................... 124 About the Authors ......................................................... 127
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P REFACE
IN TODAY’S WORLD , where our everyday lives are ha ef oa vr mi l ya li nefdl uuec na tcieodn bi ny mf i noannecyi aml da ne caigsei omnesn, nt oc at nh al evai nv ge mt haant yt hoef l eusss of enesl iwn ge ll eoas rt naenddi nu ns cc he rotoali nr a. rTehl ye ctor uv tehr eids tt hi ree md eetna ti l. sYoeft ,btuhdegs ee tai nr eg ,tihnev ve es triyn sgk, oi lrl sptlha antnai nr eg ef os rs erne -- tial for our financial well-being and future security. Basic Financial Literacy: What You Didn’t Learn in School is perfect for those striving to understand the oi sf t we nr ict toennf uws iint hg tao pdiec eopf pu enrdseorns at al nf idnianngc eo. f Tthhies bc ho aolk- lpeansgsetso f ha ce el pd rbeya dneerws bgiaei ni nav ec lset ao rr es ,r suenr dv ienr gs t aa sn da i cnog mo -f finaInnctihailsmbaonoakg, eymoue’nlltfpinrdinmcioprleest.han just a bunch of be mo rpi nogwfei nr sa nycoiua l tfharcot su ga hn dk fni go uwrleesd. gI te’ .s Ea arcoha dc hmaappt et rh ai st
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x | Basic Financial Literacy dt oe st iagknee cdotnot reoqluoi pf yyoouur wf iint ha nt chiea lkfnuot wu rl ee ,dfgreo my o suent tei endg al ecahvi ee v aa bl laes tgi on ag l si mt op amc at .k iI nt gc oi nv feorrsmt ehde dc eocni cs ei opnt ss tyhoaut nhoeewdtthoeuyncdaenrbsteainmdpalnedmtehnetnedp.rovides an example of t e h x e a T o m h r p e is t le i c b s a o a l o n c k o d n d p c o r e e a p s c t n t s i ’ . t c a I r n l e s s l t y t e r a o a d t n e , g c it i o e d m s r p t a o l w i c p s a r t f o r e v o d i m d ja e r r e a g a o c l n o -l m i o fe r - pWr he he tehnesri v ye oouv’ er er v il ee wa r noifnegs sheonwt i a lt of i ncarne caitael cao ns ci me pptlse. be aucdhg teot ,psi ac vi se pc or enssei sntteendt il ny , ao cr l me aarkaenwd iasceciensvsei bs tl emme na tns-, ner. Basic Financial Literacy is more than just a man- ui nagl fuosr tmh aa nt af igni na ng cmi aol nf er ey e. dI to’ sma ci sa lwl ti ot hai cnt ioounr, rreema ci hn di -f wb rea’ cr ienwg itlhl ien gp rt ion ci ni pv leesst oi nu tol iunre odwi nn tehdi su cbaotoi okn, .y Bo uy ewmi l -l nn oa nt coens l yb ugt aai nl s oa l adye etpheer f ouunnddeartsitoann df oi nr ga ol iff eytoi mu re foi -f proTsopecriotnytainnudesuycocuerss.financial education journey, ws oeu’ vr cee cs otmo ph iel el pd yao lui sftu or tf hseurgegxeps taendd ryeoaudri nkgnso awnl de drgee- ae sntde ds k ii nl l s i innv pe setri snogn, abl uf idngaent ci ne g. W, ohre trheet irr ey mo ue’ nr et i pn ltaenr -- na ni ndg g, ut hi de as ne cree soonuyroc ue sr pwai tl lh pt roofvi ni daen cviaallusaubclcee isns s. i g h t s
Preface | xi tizeIdn abseofocrieetyawduhletrheoofidn,ancial literacy is not priori- Basic Financial Literacy: What You Didn’t Learn in School provides guidance awnhda tf iwl l se tnheee dg at po sk nb oe tww et oe nb ewf hi naat nwc iea l al yr es ut ca cuegshstf ual n. Idt on fefeedr s troe audnedr es r tsht aenkdn omwoldeedrgne fai nn da nccoen fai nd de n bc eu i tl dh e ya brighter future for themselves and their loved ones.
[1] O PENING Y OUR M IND TO W HAT Y OU W ANT MONEY IS A MIND GAME. A mindset primed for gp roos ws i tbhi l iat ni eds ai nb ul inf de .a Tn hc ei s rme ceongtnail zi teys, tohf et er ne ar er ef e irnr fei dn i tt oe at hs eai rg rhoowr itzho nms i nadnsde t o, ve enracbol me sei nsdeilvf -iidmu pa loss et od elxi mp ai tnad- tniaonncsi, atlh us us cfcoesst se.r iInf gyao uc osnadyu cyiovue ewnavni rto tnomaecnht i feovre f ia- st hp ae tc ii fti ci s f innoatnpc oi asls igbol ae l ,g ibvuetn dyeoeupr iunps ibdrei n, gy ionug bo er l iseuvre- ryoouunr dbienlgi esf, . tThheunsy, oi fuy owui lrl br ei sl ei e (f so ra bf aolul )t tmo otnheeyl eavnedl foi -f ng oa nf icneaanrcei anl loyt, ai nmailni gdnsme tesnhti fwt ii st hi nwohredreer .y o u w a n t t o
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2 | Basic Financial Literacy E XPANDING Y OUR F INANCIAL EQ
n a nEcmi a ol tEi oQn, ai sl ai nctoerl lni ge er sntcoen ec oonf coeur rn if ni nga nmcoi anl ewy ,e lol -r b fei -- iOnugr, ti nh fol uu ge nh tc si nagn de vf ee reyl i na gs sp eacbto ou ft mo uorn fei yn ahnacvi ea l a l ipvreos-. ft oh ue nZde inm Mp ai lcl ti oonna oi ruer wf i nhaon icmi apl aocuttsc ommi lel iso. nKse nwHi tohn hd ias, be rogoyk, sa na dn dw ph reens ewnet aptai oy nas ,b si lhl aorre isn vt he as tt wmiot hn enye gi sa tei vne- tmh oo sutgshittsu ao tri oe mn so. ”t iBounts ,wwhee cnawr rey s“ pt heantde onre rggi vy et hmr oo un ge hy wh ai pt hp yh ampopni ne ye s. sR, ejcoeyi ,v ionrg ga rnadt i tsupde en,d ii nt gi smsomn iel yi n wg i ot hr gmroa nt iet uy daen bd riimn gpsr oy voeusmy oo ur er pmoosni tei vyer ee lxapt ei or ni esnhci eps. w i t h m an o d O n e i u n y r t e s a e r t a r t v c i t t e u w a d s i e t s t h h , e t b h l e e e l n i f e s i f n s t a h , n r a c o n i u a d g l h w b w o eh r h l a i d c v . h i I o f w r w s e e p t o e h w r a c r a e b r iv d o e s r foeuarr sf i na an nd c lei smoi tri nagc hbi ee lvi ee f os uarb go ou at l os ,utrh ao bs ei l ibt ye l ti eof sg rwo iwl l ivneervs ietlayb, li yf wde i cc ut al tt iev a ot eu br e lfiienfas nocf i aa bl uonudtacnocme easn. d Cc oo nn -- faicdtei onnc es iwn iol lurreaf bl ei cl itt yt ht oe saec hbieelvi eef sf i, nl ae na dc iianlgs ut oc cpeos ss i, toi vuer ra e ys uo lut ns .gMaagney. Iotf tt ah ke es es bc eh lai en fgsi nwge ryeo ui nrg pr aairnaeddi gi mn uas nadt sphoisfittiinvge yfionuarnmciainl dresesut latbs.out money to start creating
Opening Your Mind to What You Want | 3
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a r - l lmi ei fnsd os er t b ae nh da v ieomr so, t wi o en acla nr epl artoi oa cntsi hv iepl y wr ei tshh amp eo noeuyr. Twhi lilsi npgrno ec sess s tion vcohl avlel es ni ng ter oi ns pg er ac ti ni oend, rbeef llei ec ftsi o tnh, aatn dn oa lt oe nl l gi geernsceer v ceounsc. eAr sn wi n eg d me voenl oe py , g rwe ea t eerme pmoowt ieorn aol ui nr -- speul rvseuse t oo umr agkoea lms owr ei t hi n fcoornmf i edde nfci ne a, nacni da l udlet icmi sai ot enlsy, amcohni eevyeE gQr we ai tt ehrg rf ienaatne cr ifai ln awneclila- lblei ti ne rga. cCyo(umpol innegy oI Qu r) asullcocwesssu.s to explore more opportunities for financial in i g r i f t g n A PPLYING A G ROWTH M INDSET TO F INANCIAL L IT- ERACY b u tAat igt us icdoi nr eg, ap rgirnocwi pt lhe mt hi an td ss he ta ipsens oot umr earpepl yr oa abcehl i teof cdhoaolrl etnog epso as ns idb iol ipt py ,o ri ltluunmi ti ineast. iInngf ian apnacteh, ittoowpaerndsst hf ie- nc ua mn cbi ai nl gg r otwo t h tahned enmopt ioown e r mo f e nfti. xReadt h el ri mt hi taant i souncs-, it nh de ii rv ifdi nu aa nl sc iwa li tshi t au agtri oo nw ti sh emv ei nr dcsheat nugni ndge rasnt ad ncda nt hbaet ibnrfal uc ee ntcheed i bd ye a t ht he iart af ci nt iaonncsi aal nsdu cccheos isc ei ss . nTohte ys oel eml y-
4 | Basic Financial Literacy di negtne rems si nt oe dl ebayr ni n, andaat ep tt,aal enndt poerrlsuecvkebr eu.t b y t h e i r w i l l - a n dI ne mf i np aonwc ee r, ead gartot wi t ut hd emt ionwd as er dt sf oms taenras gai npgr mo aocnt ievye. Iptoiwn setriilnl sg ai nsdeinvsi de uoafl sa gt oe nt cayk ea nc od nrter sopl oonf stihbei li irt yf i, neamn -- cc ii ar cl u mf ust ut arnec. e sI n bs teeyaodn do ft h er ei rs i gc on ni nt gr o l t, htehme ys e al vcet isv etl oy sWe eh ke tohuetr oi pt ’ ps ol er taur nn ii tni ge safboor ugtr oi nwvtehs tai nn dg , i mb updrgoevtei nmge, notr. ewni tt rhe ep nr et hnue suirasshmi p a, tnhde yc ua rpiporsoi tayc, hkfni no awni cniga l tehdaut ceavt ei or ny l g e o s a s l o s n . learned brings them closer to their financial j g o r u o S r w n e t t e h b y a m t c o k in s f d in a s a e n n t d c e i m c a h l b a s r l u l a e c c n c e e g t s e h s s e , m b ar u e a t s i i n n o d e p i v p v i o i t d a r u t b u a le n ls i t o w ie n i s t h t f h o a e r lbeaacrknsi nags ai nn ds udr emvoe ul onpt ma bel ne t o. Rb sattahcel re st hoarn svi gi enws i on fg ps ee rt -- st ho anta cl oi nnat dr iebquut ae ctyo, tt hh ee yi r sgereo twh tehma ansd vrael sui al ibelnec lee. sWs oint hs ea ancdhms eotrbeaecqk uoi vpeprecdo mt oem, t ahne ay geemwehr ga et lsitersoanhgeear d, w. i s e r , T HE B RIDGE TO D ISCOVERING Y OUR F INANCIAL D REAMS b su e c li O c e e n v s c e s e f u y a l o b u w o u r i e t t h c o m i g t n o i n g z e r e e y t a h tl a a y t n w d im ha p y t o a y c u t o r s u y a w b o e u i r l r i e t y r f i a n i t s a o e n d c i b t a o e l
Opening Your Mind to What You Want | 5 fauntyu rnee, gyaot iuv ec abne lti ae kf se t choart rneoc tliovne gme re saes ruvr ee sy ot ou . rTe hl ei as sies ibme cpaourst ea ni ft by oe fuo dr eo yn o’ tubdeilvi eevien tyoosue wt t iinl lgrfei ancahn cai aclegrot aailns sr iacl ha rpye ol epvl ee l a br ee cbaauds be eyc oa uu rs ef ao tf hwe hr ant eyvoeur hdaivde os er etnh iant tyhoeu .nEe lwi ms ,i ny ao tue al irme int iont gl ibkeelliye ftso ssoe ty og uo acl as nt hdaets si gt rne tt hc he finaAnlcsioa,lblieffeoyreousedtetisnegrvgeo.als, it’s important to take a ma cohmi eevne .t tTo htihs i n ks e lafb- roeuf lte cwt ihvaet yporuo creesasl l yl awy sa n tt ht oe fbouut nadl saot i omne faonri nc rgef ua tl i anng dg os aa tl si stfhy ai nt ga.r We nhoatt of on ll lyo dwosa abrl ee sf ionma nec ihael l pdf ruel apmr si n cai np dl e s ptaov eh etl hp ey owua yu n fcoorv esre tytoi nugr SMART goals (in the next chapter). Get Clear on Your Values and Priorities— Start bWyhpaitn pmoai tnt tei rnsg my oousrt ctoor ey ov ua ?l u Iess iat nfdi nparni oc irai tl i es se ci nu rl ii tf ye ., ferl es ee ?d oUmn d, efrasmt ainl yd, i npgeyr os ounr avla l gureoswg itvhe, s oyro us ao ms eent shei nogf dwi hr eact t iyoonu wc ahreen a sbeotut itn. gI t gios aal sl s ot heaat sti reur l yt o asl iagyn nwo i tt ho dp irsi or ur ipt ti eosr.s Bwehi negn cyloeua ra rbee ccol emaer so an dy oe uc irs ivoanl-ume sa kainndg tool—if it is in alignment, you can pursue it.
6 | Basic Financial Literacy Define Your Long-Term Vision— Imagine your iydoeua?l fEi nnavni sciioanl f ut ht ue r el i .f eWs thyal et dyooeus swuac nc et ,s swl ho eo tkh lei kr ei tt’os os uwpnpi on rgt ai nhgoymo ue ,r tlroavveedl i on ng et sh. eRwe mo rel dm, br ee tri tr oi nbgeeoapr leyn, ot or tvhi sei oonp apcotrst uans i tai e gs u ti dh iant g alwi gahi tt fyoor uy. oTuhr i sg ol aoln- sge- ttet irnmg process. Set Specific Objectives— Break down your long- tperramc t ivcias li os nt eipnst oc as np eycoi fui ct, aakcet i toon ga ebtl ec loobs jeerc tt iov ey so. uWr hd ae t- sdierbe td, fsi anvainncgi a lf oor u tac odmo ewsn? Wp ahyemt heenrt , i ti’ns v pe sa tyi inngg foofrf ry eotui rr eombej enct t, i ov re ss twa ri lt li nhge lap byuosui naecshs i, ebveei nggo ac ll se at rh aa tb oa ruet both attainable and meaningful. Prioritize Your Goals— It’s tempting to pursue mpruioltriiptilzee gaonadls foalclusat yoounrcee, ffbourtts.it’Csonimsipdoerrtawnht ictho gy oo aulrs aorvee mr aol ls tf iunragnecni ta lo rwhealvl -eb tehi ne gb. i gBgye s pt ri mi opr iat ci zt i on ng yatotuerntgioonalms,oyreoueffceacntivaelllyo.cate your resources and Consider Your Resources and Limitations— Be ri necaol ims tei c, s aavbionugts , tyi mo uer, a rneds os uk irlcl se.s ,T aiknec liundt oi nagc c yoouunrt aa nb iyl i ct yo nt os tarcahi ni et vs eocrecrht aailnl egnogaelss .tWh aht i lme iigt ’hs tgar fefaetc tt oyaoiumr high, setting goals that are overly ambitious or
Opening Your Mind to What You Want | 7 unrealistic can lead to frustration and discouragement. Adopt a Growth Mindset— Develop a mindset of gj oruorwntehy .a nEdmrbersai lci ee ncche aal lseynogue st r aa sv eor spep oy rotuurnfiitni easn cfioarl lteeamr pn oi nrga r ya nhdu r dglreosw trha,t h earn dt h avni e wi n s us er tmboa uc knst a bal es oe mb spt aocwl eesr. y oBuy r saedl fotpot ionvge r ac o mg reocwhtahl l emn gi ne sd saentd, sytoa uy motivated in pursuit of your goals. Strive for Balance— Lastly, aim for balance in yt oo u rp uarpspureo a cf ihn at on cgi aola l -gsoe at tlisn, g .dWo nh’ ti l e ni te’ gs l ei mc tp oorttha enrt ihme aplot hr t, aannt da sppeercstos noaf l y fouul fri lllimf e e, snut .c hS tarsi vree lfaot ri o an swh iepl sl -, rvoa ul unedseadn adppprri oo ar icthi etsoi ng oaal ll -asreetat isnogf tyhoaut rrlei ff el e. c t s y o u r i s n u c D s c e e is t s t c s i o n v a g n e r d S i n M f g u A l y R f o il T u lm r g f e i o n n a t a l . s n B c t i y a h l a c d t l a r r e p i a r f m y o i p n s e g i l s y t y h o o e u u r f i r t v s o a t w l s u a t e e r s d p , do be fj ei ncitni vge sy, opur iro rliot inzgi n- tge rymo u rvgi soiaolns ,, c os entstiidnegr i ns gp eycoi fui cr rf oers obuarl ac ne sc ,e a, ydooup tcianng cah ag rr to awct oh umr sien dt oswe ta, radn ad bsrt irgi vhitnegr financial future.
8 | Basic Financial Literacy E XAMPLE IN A CTION : L IZ ’ S M INDSET J OURNEY
o r i ePsi cot fumr eoLniezy, awyeorue nt ga i wn toemd abny wt hheossoeuenadr loi ef shtemr peamr -- eS nh tes’ d’ hoef at et endf ianrdg uhme resne tl fs heuc dh do il ne dg it nh rhoeurg rho tohme , ht royui sneg. tTohdo rsoe wa rngouumt et hn et srlaeifstead l va os ti icnegs iwmi pt hr ehsesri of anvoonr iLt ei zt, oi my s-. ps or ui nrtcien go f isnt rhi feera nmdi nt edn st hi oen iidnerae ltaht iaotnms hoi pnse.y w a s a h e rAaspLpirzogarcehwt oo lmd eorn, etyh. i sS hbee lfioe uf nc od nht ienrus ee ldf at ov osihdai np ge fmi nual na tciina gl swuecac let shs w, souubl cdolne sacdi ot uo stlhy e f se aa mr i ne gd itshcaot r ad cschue- wo ri tunnees xs epde cat se da wc hi ni lddf. aWl l , hsehnee vc oe ur lLdinz ’ tr es cheaikvee dt hae rfaeiesle- idni sg c oo fmuf on reta, sseh. eI nw oa ubl di d i mt op du il ss ti av ne lcye shpeernsde ltf hfer ommo nt he ye olonngfleeneotiungghptolecaasuusreest,roeunbsluer.ing it wouldn’t linger d i s cHoovwe reyv, e sr h, ae s bLei gz aenmtboa rr ke ea dl i zoen thheer dj oeut rr inme ey not fa sl eel ff -- fheecrt sf eoa fr ho fe rm aovnoeiyd wa nacsehtoalcdtiinc gs . hSehreb ua cnkd ferrosmt o oa dc hti he va t- it ni ogn h, eLri zf udl le cpiodteedn tti oa l . c Wh ailtlhe nag en ehwefro uonl dd bdeeltieerf ms iannad- embrace a new perspective.
Opening Your Mind to What You Want | 9 A N EW M ONEY M ODEL w i tDh rhaewr i pn ag r tinnes rp, i rLai zt i oh na d f ar on me p iap hr ao nmya. nS thi ec sgaewt ahwoawy me nocne es ya, nwd hber ni n gu sj oe yd i nwt ios ehleyr, lci foeu. lIdn set en ahda nocf ea sesxopc ei ar ti -- it no go l mf oornaedyv we ni tt hu rceoannf ldi cct o, nL ni ze cs tt iaornt e. dS hteo evni ve iws i oi tn ea ds aa ft uo t uc rr ee awt eh eur ne f foi rngaent ct ai abl l ea b mu nedma on rciee sw owui tl dh ehnearb lleo vheedr oneWs.ith this shift in mindset, Liz began to approach mn ootnj ue ys t wf oirt hf i noapnt icmi ailssmt a ba ni l di t yi nbtuetnftoi or nm. oSmh ee ns test ogfofaulns ag ne tda swpaoyn toarn teri yt yi n. Wg ho eu tt hae rni et ww ahsopbl ba ny ,n Li ni zg as awwe eekveenr dy ddoeellpaernahserarnelaotpiopnosrthuipnsit.y to enrich her life and d un an f A o c s l e d L i o n iz f g e p i m n o s h b s e r ib a r c i l l e i i f t d e ie . h S s e , h r s e n h f e e e w lt n f e o o m t u ic n p e d o d w b p e e o l r i e s e d i f t i i t n v o e t t h a c e k h e a a b n c u o ge n n s - - ternocl e os f nhoe lro fni gn ea rn cdeesf ,i nkendo wh ei nr gf ut thuarte .h We r i tpha seta cehx pset er ip- fsoert w, aermd ,bLriazcei nmgb ocdhi ae ldl et nh ge eess s eans c eoopfpaogr rt uo wn itthi ems i nf odr- groIwntLhiza’nsdjoruesrinlieeyn,cme.oney ceased to be a source of fl ee aa rr naendd tbheact abmy ec ha acna gt ai nl ygs ht ef or rbj eolyi eaf ns ,ds fhuel fci lol mu l de nt tr. aSnhse- form her relationship with money and unlock a
10 | Basic Financial Literacy wm oi nr dl ds eot ,f Lei nz dbleegsas npl oi vsisni gb ial i ltiifees o. fWf i int ha nhc iearl enme wp of owuenrd- ment, one adventure at a time.
11 SETTING FINANCIAL GOALS is essential for any- ol i ns he i ne mg bc laerakri nogb joenc tti hv ee isr, fyi on ua ngci ivael jyoouur rnseeyl f. Bd yi r ee cs tt ai obn- ad no dn ’ tmkontoi vwa twi ohne rt eo yaocuh iwe vaen tf itnoagnoc ioa rl ws uhcacte syso. uI fwyaonut tnoo apcahriteivc eu,l ayro ud easrtei nl iaktei ol yn taonwd amn ud rekr yt hrreos uu gl ths . l i f e w i t h f o l lOo wn e tehfef eSc tMi vAeRmT ect rhiot edr fi ao.r SsMe tAt iRn Tg tshteasned gs ofaolrs Si spteo- cbiof iucn, dM. eLaestu’ sr abbrleea, kAdc ho iwe vna ebal ec,h Rceol me vpaonnt ,e na tn da nTdi ms eee- how they can be applied in a financial context. S PECIFIC w h Wa t hyeonu swe tat ni nt gt of i naacnhci ei avle .g oVaalgsu, eb eg osapl es cliifki ce a“bs aovuet [2] Y OUR G UIDE TO SMART F INANCIAL G OALS
12 | Basic Financial Literacy mm oa knee yi t” cohra l“l ei nnvgei ns tg itno csrteoactkes ”a pl al cakn . cI nl asrtiet ya da, ns pde cc iafny er axtahcet lry twh ahna t syaoyui nwg ,a n“ St atvoe a mc coonmepyl, i”s hy.oFuo rc oeuxladmspal ye ,, “i nS ga vsep e$c2i 0f i,c0 h0 e0l pf os ryao ud of owc nu spyaoyumr eenf ftoor nt s aa nh do ums ea .k” eBs ei t- easier to track your progress. M EASURABLE T go h a i M s l s e m o a e s y u a o n r u a s b c a l a e t n t g a o c tr a h a l i s c n k g a r y a e o t u n h r u o m s p e r b o t e h g r a r e t o s y r s o m u ov e c e t a r r n i c t q im t u o a e n . y t o F if u o y r r . iancst t aa mn coeu, inf ty yoouur gwo aa nl its ttoo eplai my oi nf fadt ee,bst u, scphe ac isf y“ pt ha ey eoxf -f $g o1 a0l, 0a0l l0o wi ns cyroeud ittoc ma rodn di teobr t .y” oHu ra vai cnhgi eav emme ea ns ut sr aabnl de adjust your strategies if necessary. A CHIEVABLE w i tAh ni n arcehaicehv. aWb lhe i lgeoiat l’ s i ismopnoer t at hnat t t oi s ari me a lhi si gt ihc, as entd- tainndg dg oi saalps ptohiantt ma reen tt o. oC ol no fstiyd ecra ny ol ue ar df i tnoa nf rcui aslt rsai tt ui oan- tFioorn ,erxeasmo uprl ec ,e isf, ay no du ’ ar eb ijlui tsi te ss twa rhtei nn gs et ot t iinngv eysotu, rs egtot ai nl sg. aa gy oe aa rl tmo iegahrtnnao t1 b0 e0 %r e ar el i tsut ircn. Ionns tyeoaudr, iani mv e sf ot mr ae nmt so ri ne attainable target, such as a 7% annual return. Setting
Your Guide to SMART Financial Goals | 13 aa cnhdi ekveaebplse ygoouaml s oi tnicvraet ae sdeasl oynogu rt hcehwa nacye. s o f s u c c e s s R ELEVANT u ti e n s g R , e p a l r e i v o fi a r n i n a t t i n e g c s o i , a a a l l n s g d a o r l a o e l n , t g h c - o o te s n e r s m i t d h e o a r b t j a e w l c ig h ti n e v t e w h s e i . t r B h e i y t f o o ’s u r e r t r v s u e a l t l y - - mg oeaal nwi ni lgl fcuol nttor i yb ouut e. At os ky oyuoruor vs ee lrfa hl l of wi n aancchi iael vwi negl l -tbhei s- ignoga l ains dt oh raeptpi ri ne eesasr. l yF ,oirn vi nessttai nngc ei ,n i fa yhoi guhr - rl oi snkg, -ht ei gr hm- raer wd iaz red ysot oucr k rme tiigrhe tmneontt bsearvei lnegvsa. nEt ,nassu irtec ot hual dt jyeooupr- ga vo oa li sd apruer srue il ne vgaonbt j et oc tyi voeusr t fhi na ta nd coina’lt aasl ipginr awt i oi tnhsyaonudr values. T IME - BOUND t e i a m s T y e i f m r to a e m p -b e r o o f u c o r n r a d s c t o g in m o a a p t l e l s e a t h i n o a d n v . e lo W a se i t s h s p o ig e u h c t i t f a i o c f d d e y e a o a d u d l r i l n i o n e b e , j i e t o c ’s r - tgievnecs y. B ay nsde t thi nogl da tyi omuerlsi ne lef , yaocuc ocur ne at at eb lae s ef onrs e t oa kf iunrg- as tcat ri ot ns.aFvoi nr ge xf aomr rpel et i, rreamt heenr t t, ”h as ne ts aa ysi pn eg c, “i fSi oc md ee adda lyi nI ’el l, sbuy cthh ea se n“ dS toafr tt hci os nqturai br tuet ri n. ” gHtaov ian gr eat itri emme e- bnot uancdc oguona tl helps you prioritize your financial tasks and ensures
14 | Basic Financial Literacy tthivaets.you make steady progress toward your objec- i S s p i e m T c h i p f e i o c r r , e t a y M n o t e u i a n h s u a a v r c a e h b i i e l t e v ; , i s n e g A t t c f i i h n n i g a e n v S a c M i b a A l l e R s , T u c R f c i e n e l s a e s n v . a c B i n a y t l , b g e o a i a n n l d g s Tg ui mi dee- byoouunr d a, cyt iooun sc aann dc rkeeaet ep yc loeua rmoobt ji ev cattievde sa ltohnagt yd oo uwrnf ipnaaynmc ieanl tj oo un ran he oy .u Ws e h, pe at hy ei nr gyoofuf ’dr ee bsta, voirnign vf oers ta- ihnegl pf oyro ur ettui rrenmyeonutr, fai pn pa nl yciinagl at shpe i rSaMt iAo Rn sT i cnrt iot errei aa l ictayn. E XAMPLE IN A CTION : E MILY AND J OHN s o t w ar n M t i e n t e g h t e a i E r m c l o i i v z ly y e s a h n t o o d m g e e Jo t h h w e n h r , . e a r T e h y e t o h y u e n s y g h a c c o r o e u u d ld p a le s t d a e r r a e t g a e t m h r e t o i o r f fbaymtihl ye. Bs huet e, rl i ksei z me aonf yt hoef i ru sg, ot ahle. yI tf ef letl to vl iekrewwh ei sl hmi ne dg u p oEnmai lsyt aarn—d Jboehanu’tsi fj uo ul br nuet ydsi sttaarnt et .d o n a r a i n y S a t u r - dd ar eya emveedn ianbgo. uSti tat ihnogu isne twhiet ihr as mb aacl kl yaapradr tf mo retnhte, i trhfeuy- taudrvee knitdusr ea sn. dBaukt i twc hi tehntbhiegi re nmooudg ehsfto irnEcmo mi l ye ’ sa bnadk ti nh ge emvoerre-mlikoeunatfianngtalisvyin. g expenses, this dream seemed
Your Guide to SMART Financial Goals | 15 T HE T URNING P OINT : D ISCOVERING SMART G OALS S E M xc O A it R n e e T d , g d h o a e a y s l , s h J a d o r u h e r n d i n t s h g t i u s a m w p b i e t l r h e s d E o n m u a p i l l o y f , n i n a a n t n h d c e t e h c e w o y n o d r c e k e c s p i h t d o e o p d f . to try it. They wanted their goal to be Specific : a twhor er ke e- bde do ur ot otmh e hy onueseedienda $n4i0c e, 0 n0 e0i gf oh rb oar hdooowdn. Tphaeyy- ment. This was their Measurable target. goaTl he couple then faced the big question: Was this Achievable ? They meticulously reviewed their fai ns iadnec ehsu, sctul et . uTnhneeyc ec sa sl caur yl a et ex dp et nh se ey sc, oa un ldd erveeanl i ss tt ai crat el l dy spaovsesib$1le,1. 00 each month. It wasn’t easy, but it was h o uFsoer bEumt ibl yuai lnddi nJgo hanf, ut ht ui sr eg ot ha lewy ’ da sl no voet .j uTsht ias bmo ua td ae their goal incredibly Relevant to them. Every time tt hh ee yc of ez lyt fda ims ci ol yu dr ai ng ne ed r, st ha enyd rt he me li anudgehdt eera-cf ihl l eodt hgearmoef nigThthsetyhasteat waaited them in their future home. Time-Bound target of three years, wt hhe ii cr hpmr oogtri ev sast eodnt ah ebmi g tcoasl et anyd oa rn itnr atchke. Tk iht ec hy emn a, reka ec dh m oTn ht hr eber iynegai rnsg ltahteemr , Ec lmo si leyr at no dt hJeoihrnd raecahmi e.v e d w h a t hp au dr c ho anscee osfetehme ierdn ei mw phoosms i eb lwe . i tThhfer iye nc de lseabnr adt feadmti hl ye. It was more than a house; it was evidence of their
16 | Basic Financial Literacy dp el atceer mt oi nmaat ikoena, al i fsept iamc ee ot of mg reomwo rt iheesi.r f a m i l y , a n d a t a bIl fi sEhmi nigl y SaMnAd RJ oTh gnocaal sn, dyoo ut hci sa, ns oa cccaonmypolui s. hB ya neys -- thing in a very short period of time.
17 hy oo uwr ymo uo nu es ye ygoouers ,i nyc oo um ec. aBny purni do re irtsi zt aen dwi nh ga t w’ s h iemr e- p o rEt avne rt yt oo nyeo ub eannedf ictus tf br oamc k boundugneitmi npgo, rrteagnatr tdhl ei ns gs so. f their income level. Whether you’re a recent graduate [3] B UDGETING AND E XPENSE M ANAGEMENT CRAFTING A GOOD BUDGET is like having a map fmo or nyeoyu sr hmo uol nd e gyo. Isto hyeol pus c ay no ur edaecchi dyeo uwr hgeor ae l sy. oIunr- swt ehaadt yoof uf eceal inn gs pset un cdk a, ny do us’ raev ei ,n mc oa kn itnr og l .i tY eo aus ikenr otwo achieve your financial dreams. T HE P OWER OF B UDGETING ibt u’ sdBag u b e d o t, g u e y t t o c in u re ’ g r a e i t s i n n m ’ g t a j a k u i s p n t l g a a n b i n o fo t u e r t n t y t r o i a o u c n r k a i m n l g o d n y e o c e i u y s . r i o W s n p h s e e n a n d b i y o n o u g u t ;
18 | Basic Financial Literacy sptl aa rntni ni ng g yf oo ur rr efti irrset mj oe nb t ,oar bau ds ge ea ts ohne el pds py roouf ems sainoangael yo of uy ro uf irnfai nn ca ensc ieaflf ehcetai vl tehl ya. nIdt pl ertosvyi doeus ma ackl ee airn fpoi rcmt uerde decisions about your spending and saving habits. B UDGET S TRUCTURES y o uAr nb eueddgse ta nc da np rt ae kf eer emn caensy. Sf oo rmmes ,p edoeppleenpdri ne gf e ro na st hi me ipr lien csopmr eea ad ns hd eeextp oe rn sneos t. eObt ohoe kr s tmo amy aonput af lol ry bt ur adcgk- ea tni dn gp raopvpi sd eo rr eoanl l- itni me et oi on lssi gt hh tast ianut ot otmh eaitre f it nh ae npcri oa lc seists- ui nagt i oa ns. yWs theamt e vt he ar tmwe tohrok ds yf oo ru cyho ouo tshea, tt hyeokue ywi isl lf i un sde- regAulbaurldygaentdtysptiicckalwlyiitnhc. ludes categories for various ee xn pt eernt saei ns ms uecnht , a as nhdo us saivni gn, gtsr. a nT shpeos er t actai toeng, ogrri oe cs e hr ieel sp, yb oa uc koirf gnaenei dz ee dy. oBuur dsgpeet ni ndgi ni sgna’ tn adbi odue tn dt ief yp rai rvei na sg tyoo cuur t- sweiltfh; iyto’ su ar bf ionuatn mc i aalkgi noga l cs oannsdc ivoaul us ecsh. o i c e s t h a t a l i g n B u dTgoeotl)s, ol i rk eP oMcokne at Gr cuha rMd ocnaeny ,h Ye lNpAyBo u( Ycorue aNt ee eadn da mi n ag n, at hgeesyeo ua pr pbsu ds gy entc mwoirt he eyf of iuc ire nb talny k. Aascoc fotuhni st swarni td- cv ri de ed i itncsai gr hd tss, ci na tt oe gyoorui zre s ypoeunrd itnr ag npsaatcttei ronnss. , Ta hn edy pcraon-
Budgeting and Expense Management | 19 ao lrs owsheennd iatl’ es r tt ismweh et on ypoa uy ebxi cl lese do ry os ua vr eb uf od rg estpl ei mc i if ti cs gi noga lasp. Tp hs ,esr oe ar rees eparrocshatnhde mc o nasn tdo fei na dc ht ho ef t bheesbt uf di tgfeotr- yfooru“(bceosntsoidf”elrisstist)e.s like Forbes.com and Fortune.com Y o uY oc aund ouns e’ t ha asvper teoa dpsahyefeotr aapnpalpi cpa tt oi obnutihl da ta mb uadyg ae lt-. rs ee at duyp b ae os inmypol ue r bcuodmg pe tu. t eY ro ua rn db aa np kp l ymaa yt e aml spol a ht ea vt oe bpuordtgaeltoinrgbaonpktiinognsapapv. ailable through their online t o o Bl tuhdagt ebt ei nnge f ii st s ae vpe or ywoenr ef u. Bl yf i cnraenact ii anlg ma ba nu ad gg ee mt aenndt ut rsoi nl go ft oyool su rt o f ti nr aacnkc ey so uarn sdp ewnodri kn gt, oywo au rcdasn at ca hk iee cv oi nng- your long-term goals. C REATING A S IMPLE B UDGET 1. Track Your Money : Start by writing down at hl le t hs me ma l lo ns teuyf fy. oTuh bi sr ihnegl pi ns aynodu supnednedr, set avne nd 2. your finances better. Sort Your Spending : Group your spending ii nn tt oe rcnaet te, gtorrai ve es l l, i keet cf.o To dh ,i sf uwn ,i lrle nh et /l pm oy rotug asgeee, 3. where you can spend less. Set Limits : Decide how much you can spend in each group based on your income and
20 | Basic Financial Literacy yWohuartgoaarels.yWouhawt dilolinygoutowasnptetnoddloesmsooren otfo? 4. achieve your goals? Prioritize Savings and Debt Repayment: Mp rai ok rei tsya vi ni n gy omuor nbeuydagnedt . pTaryeiantg tohfef md e abst an toonp- nb ue gi lodt iaasbtlreo ncga tfei ngaonr icei as .l fTo uhni sd awt iiol ln . h e l p y o u 5. Check and Change Regularly : Your budget ims ne ’nt ts. eCt hi ne cskt oi tn eo; f ti te ns haonudl d mb ae kae l icvhi anng gdeos c aus- ns oe eydoeudr. bYuodugremt sohnoeuyl da nt odo .g o a l s m a y c h a n g e , p m e a n I k s n i e n s s g h h o a e r l c t p , l e s m a y r a o s p u t l e a r t n a in k f g e o r b c u o y d n o x y e - pb ua tyhi ntgo ar ehaocmh ien, gt ryaovuerl i nf ign at nh ce i awl ogrol ad l, s o, rw ehne jtohyeirn gi t ’ as comfortable retirement. E XAMPLE IN A CTION : S ARA ’ S B UDGET O VERHAUL m as o id S n e a e r y s a . a , v E a i v n e g g n g t u r e r o t l i m n o g o f n a y e n o y d u , r y m o f a i u n n ’ a r a e n g c i o n e n g s . t e B h r s g t mi t . oTr ea l mk i on ng t hw ti thha no nmeo on fe yh ea rn df rni eonsdasv ionvgesr t oc osfhf eoewofnoer d or a d y . , she lamented about her poor savings track rec- a a w p t h h t i h e c n e d e s e n h s d e ig o n to f e l t r d h , e s h t m e r r u o s g n e g l t f l h e , s d s h h e w e i w o th o ft u e s l n a d v h i s n a e d
Budgeting and Expense Management | 21 w h“aIt dI odno’;t wg ehtyi tc, ”aSna’ tr aI ssaavi de. a“ Inmy ma koengeoyo?d” m o n e y w i t h ““DNoo.y” ou have a budget?” her friend asked. m o“nTehyeins ghooiwn ga? rCer eyaotue gaosi inmg ptloe bk nu odwg e twshoeyr eo uy oc aunr d e cSi da reawsht aerrtee dy ot ur awc kainntgyhoeurr i mn coonme ey at on dg oe. x” p e n s e s a t ha ne rd fsrei tetni ndg’ s l i smu igt gs ef sotri oena ,c hc act ae tgeogroi zr iyn. gS ahr ea r p sr pi oerni tdi iznegd, hs aevr i ns tgusdceant te gl ooar ny froerp aa yn me me net r ag ne nd ccyr ef ua nt edd. Ba ys re epvaireawt e- ienxgp ehne sr ebs u(d“ Mg eat ymb eo nI t dh ol yn, ’ ts hnee ei dde tnot i fgi oe do uu tn nf oerc ecsosfaf er ye eh ve er rsya vdi anyg, s” . sI th fee lrt egaosoodn et od )s eaen hd egr rsaadvui na lgl sy gi rnocwr e ea as ec hd mt i oonn tohf . hWe ri tlhoiannaa yneda br ,uSi lat r aa spi az iadb loef fe amsei rg gnei fni cc ay nf tu np do r. - e st x a p b S e i a n l r i s t a y e ’s a m j n o a d u n r g a n r g e o e y w m s t h e h o n . w U t n s c a d th n e a r s s t e t e a t f n f y e d c o i t n u iv g u e a p b n u d fo d c r g o e n f t i t i n n r a o g n l l a c i n n ia d g l wf o hr me reed ydoeuc irs i mo nosntehya tgaol ei gsn awl liot hwys o yu or uf i ntaon cmi aal kgeo ai lns-. Ir ne gt uh lea rn se ax vt icnhga, pa t ve irt, awl ceo’ l ml apdodnreens ts ot hf we iema lpt ho rat cacnucme uo -f lation.
[4] M AKING R EGULAR S AVING A P RIORITY
22 SAVING IS OFTEN LIKENED to a foundation in the ai tr’ sc hj ui tset ct thuer eb eogf iwn ne ai nl tgh. Icmr eaagtiino en .i tI ta’ ss et hs se ebnat si ae l o, yf ea st, obwu t- es trai nr tgi ns gk yps oc ri na pt . eBr .uItt porno vi ti sd eosws tna, bmi l iot yr ea ni sd ns eeceudreidt y ,t oa raec at cahs t ah ebluofffteyr ,h ea i gf ihntasnocfi as lu bs as ft ea tnyt i na le wt tehaal tthc. uS sahv ii onng ss yn oe ut ai sg aj ui ns st t ol inf ee ’ sl auyneerx po ef cat emd ut ul tmi - bt i leerse. dY eat p, tphrios ascahf e tt oy weaTlhthe brueailldijnoug.rney to wealth extends beyond the cs toemp f oo nr t ao lf aadcdc eu rm. Iut l awt oi nugl ds abvei nbgess. t Ctoonhs ai dv ee rmi t ot rhee tfhi rasnt tshmi sa rtto bculdi mg ebt i nt og , t ahne dt oepf f—e cltiikvee sdter abtte gmi ca niangveems tei nngt ., For example, when building a house, after laying the
Making Regular Saving a Priority | 23 fsoeut nudpa t ei os ns e, ynot iua ln es ey ds tteomesr elci kt we apl ll us ,mi nbsitnagl l, aerl eo cotfr, iacnadl , amnednht se, a tri entgi r. Ienmf ei nnat n cpi laal nt se,r ma ns ,dt h de si veearrsei f yi eodu r i inncvoems te- si nt rge, apmr oss. pTehreoyu’ sr es twr uhcattutruer. n a s o l i d b a s e i n t o a t h r i v - H OW M UCH TO S AVE : F INDING Y OUR F INANCIAL E QUILIBRIUM c m a a li D n b y e r a t f e t i i r n n m a g n i a n c i i d a n e l g l i e c t x h a p e t e e r r m i t g s a h c i t s h a i t n m o e o . a T u im n h t e f t c o o o r n s a s a n e v n e e s m i u s s e a a r k g m i e n o n n c to y g fTuhni ds fcuonvde rai nc tgs al ri koeu na dbsui fxf emr ,oan tf hi ns aonfc li iavl i nc ug sehxi po enntsheast. as ub ds odrebns j ot hbel osshso, cakns uonf elxi fpee’ sc t ue nd pmr eeddiicctaal bel em et wr gi se tnsc—y , or oTthhiesreumneforgreesneceynfuenxdpeisnsliekse. having a well-stocked pa na nd tar ys ei nn stei mo fe ss eocfu nr iet ye d. B—u itt i tp’ sr oavl si doeismppeoarct ea notf nmo ti nt do on vi tei er fsi. l Ol ynocue rypo aun’ vt er ye sa tt atbhlei sehxepdetnhsies os ef cout hr iet yr ob pa ps eolri nt ue-, istp’ so tt iwmheetroe lyoooukrbseayvoi nngds. Iatr’ se as bu of fui cti ef inntdtion gc ot vheart es wmeeer t- gabenilcitiyestobgurtonwotwseoalethx.cessive that they hinder your n is e h y I . n U v a n e n l s d i t k m e e m a n s u t a l i v t s i i p n th l g y e s , n a e c o c x f o t f u e s r t n a i t n g , g e in o v f e o t s p h t p m is o e f r i n t n u t a s n n c it c a i i e n a s l f l jo o u u fo r r r - -
24 | Basic Financial Literacy swi ge n’ l li f iccoavnetr wl aetaelrt hi na ct hc ue mb ou ol akt ,i oenx .p Tl ohries s pvhaarsi oe ,u ws ha vi ceh- na nu de sr, estui rc ehma se ns tt oacckcso, ubno tnsd. sE, arceha loef stthaet es e, ma vuet un aulefsu pn rdes-, st he en trsi gi thst rmi sikxst ahna dt arlei gwnasr wd si t, ha nydo ut hr ef ikneayn lci ieasl igno fai lnsdai nn dg risk tolerance. T HE A RT OF C REATING THE H ABIT : E MBEDDING F INANCIAL D ISCIPLINE n e wF ,o rpmo si intgi v ea rsoauvti innges i hn at ob i yt oruerq ul iifree. sR ee ms ebaer dc hd i inngd ia- ct oa t teaskae nreowo th. aTbhi ti st apkeersi ot wd eins t yc -roi tni ceatlo; fi to’ rs t yw- fhi ev reed at hy es sf oeceudss sohf oyuoludr bf ue tounr es mf i naal ln, cmi aal nsat ag be ai l bi tlye aarcet isoonws ni n. Tt hh ee ec ea nr ltya gdea yosf . eI at cmh i pg ha yt cmh ee ca kn isnettot i na gs aavs ii nd ge saafci cxoe ud npt eorr- ci nuittti ianl gpbe ar icokdoins cneortt at oi nalmu xaus sr i ae sl .aTr ghee sgaovailndgus rbi na gl atnhci es otivceeronfigsahvtibnugt. to cultivate a regular, disciplined prac- o tr n a i t T n h h i e n e r g e e m g fo u p r l a h a r a i s m t i y s a o r i f n a y t t h o h o u e n r s . s e a Y f v o ir i u n s t g s f t a e a c w r t t i o w w n e i s t e . h T k s h s h i s n o h k r o t o u f r l d u it n b a s e s , gl arral dy ,usaal lvyi nbgui isl da ibnogu tubpu si ltdaimn gi nf ai n aa nn cdi adl issttaamn ci ne a. —S i mt hie- ahboiwl i t ys mt oa l lc otnhsei s at emnot luynst .e tOavseird et i mmeo,n et hy e, sneo rme gaut tl ae rr
Making Regular Saving a Priority | 25 db ue pi lodsui tps , t om suocmh elti hk ei n gt hseu bcsotna ns itsitael .n(t Atnrda i ni ti ni sg f ur nu ntso, watDcuhriitnggrothwis.)initial period, a psychological trans- fsoe rt mt oa tvi oi enwa lssaov oi ncgc unros t. Iat s’ s aa bb ou ur dt es nh si fot imn ge yt aosukr bmuitn ad s- abnr a teimn gp os wmearl li nvgi cat onrdi eps oissi tvi vi tea l f—i neaancchi a tl i mh aeb iyto. uC esleee- yf oorucre ss ayvoiunrg sc ogmr omwi t, me veennt tboy t ah issmn ae lwl ahma bo iut .n t , i t r e i n - a r eAa ss ot hf iys osuarv fi ni nga nh ac ibailt lsi foel.i dYiof iue sb, ei ct oi nmf leu me nocrees mo ti hn edr- fi nu gl ,oaf nydo umr osrpee nt hdoi nu gg ,hmt f uo lr ei ns tyroaut er gfiicn ai nn cyioa ul rd ebcui ds igoent -- mi n ag kci anng . bOuvi ledr at i ms i ge ,nti hf i icsa dn its fciinpal inncei da l arpeps er or va ec h, pt roo svai dv -- ing both security and a sense of accomplishment. S ETTING C LEAR S AVINGS G OALS : C HARTING Y OUR F INANCIAL J OURNEY c m o i u g S r h e s t t e t w i o n a n g n d c a l e e r m a . r S a p p sa e . v c W i i n fi i g c th s g o g o u o a t a l s l a s t r c i a s le n m a s r f u o c d r h m e s l i t t k i h n e e a p n t l i e o o b t n t u , i l n y o g o u u a s igdeet a. Wo fhseat vh ienrgs ma voi nn ge yf oi rn at onae ac ro-nt ec rr emt ed, eascihr ei elvi ka eb lae nt ea wr - gp aa dy gmeet not r, ha alvoinngg- tae rdme f iansepdi r ao tbi joenc tliivkee gai vheosmpeu rdpoows ne and direction to your savings efforts.
26 | Basic Financial Literacy g o aTl .hTi nh ki s oafpeparcoha cdho lml aarkseasvtehde aasc ta osft es apvtionwg amr od ryeoi unr- tme nu lt ai ot innagl ma nodn er ye ,wy aorud’ ri ne gw. oI nr skti enagdt oowf aa ri md sl essosml ye at hc icnug- tcaonugni tb, loe r—aac ov lal ce ag tei of un n, da fnoerwy ocua rr , kai dn s i. nTvi ee stthmi se nt ot tahce- gt uoranl ss yt ho eu sc or ema et et idmeeasr lmi eor ni no ttohni so ub so opkr .oTc he si ss aopf psraovai nc hg i n t oS oamn ee xecxi pt ienrgt sa ns udgmg eesatnhi na vg ifnugl emnudletai pvloers. a v i n g s a c - ctioounn/tpsertsoonuasle for specific purposes like educa- development, investments, cpoe nn tdriitbuur tei so. nAs u, tahnodr lTo.nHg -atrevr mE k se ar vei vn eg ns sf ourg gme as tj os rh ae vx -- imn og nae“yp ltahya”t aycoc uo uwn itl lt hsaptehnodl desa ca hs mmaol nl pt he rocre nqtuaagret eorf jmu sotnfeoyr af nu nd . tRa ke emtehme bf uenr , ot uh te ogfol iaflei bs untottot goi vh eo ayrodu ycoounr- trol of your money so you can live life to the fullest. A DAPTING Y OUR S AVING H ABITS : C ULTIVATING F INANCIAL A GILITY s a vLi ni kgehl ae ba ri tnsi nmgi ga hntefwe esl kui lnl foarmhi loi ba rb ya,nadd ac ph tailnl egnygoi nugr ay to fui rr s rt ,obuut itnwe .i tRh epgrualcatri c sea, vi ti nb ge ciosmae fsoaunnadtautri oa lnpa al retl oe -f mo t ehne tr oafs peef fcet cs t iovfe ymo uorn ef yi n amnacni aalg ehme ael nt ht ., Iatc tsiunpg paosr tas
Making Regular Saving a Priority | 27 sntaenpcpiainl gstsratotengeietso. more complex and rewarding fi- a d aApst yyoouu rc ohnatbi ni tus et ot oms aa tvceh, yyoouu rl eeavronl vt oi n ag dfjiunsatnacni adl spiet rucaet ni ot na gaen do fgyooaul sr. Yi nocuo mc oeu, l dt hsetna rgt rbayd us aavl liyn gi nac rs emaas lel istt aabs l ey.o Ou rb ye cooumceo uml do rfei ncdo mc rfeoarttiavbel ewaanyds ftion acnucti ael xl y- pc aenntsleys , ibmopoas ct itni nggy oyuoruarb illiifteysttoy lsea. v e( Ewa ci thh otui mt sei g nyiof iu- dwehcai dt ey onuo wt toou lgdo hoauv te fsopre tnht ai tn symo uo ro ts ha ivei ,n yg os ua cccaonu np tu. )t On evresrt ot inme eo, ft hy oe suer abdr oa pa dt eedr fsianvai nn cgi ahlasbt irtast feogrym, s tuhpepcoor rt -- ifninganycoiaulrindjoeuprennedyentcoew. ard wealth creation and E XAMPLE IN A CTION : M IA ’ S S AVINGS T RANSFORMATION AND J OURNEY OF F INANCIAL G ROWTH c sa ip v l M i i n n i g e a d r w e f e g i n n u t a l a n fr r c o l i y m a l s e b p e e l m a in n e g n d e a r n d . a o I u c n n c i a t t i i s a n i l o g ly . n , S a h l t h s e e a d v c e id o r n n t ’ c o t e a l p e d t a i r o s n - f as hb eo urt escaevi vi negd a si na bc hi ri tl dh ;d sahy e caal wr dasy, s asnpde nht et rh epma roennet ys dh ai dvne’ ta tsealvl i hn egrs at oc c do uo natni ny hdei frf ef or er mn ta. tSi vhee ydeiadrns’.t e v e n
28 | Basic Financial Literacy f d r e ie c N n is o d io w s n w , a t i f o t t h e c r a r e b p a e o t i s e n i t g a i v o s e n a m v h i e o n r n g o e s y w a m n cc i f o n o u d r n s y e t e t a a , r n M s d i a a s n m e d t a h a d a e c v o t in h n e g - ca rdevtaengcoea lh—e ra cparroef ee rs .s iTohnias l gworai tl i ng ag vceo uhresre st ha va it nwg so uel fd- fmo ar tnsa ag ecal be laer cdhi ar encgtei os ,ns. uSchhe abs eng oa tn bbuyy imn ga keivnegr ys mn ea wl l , gb ay dhgaevt iansgs of i ov ne apseirtcceanmt eo fo uh te, ra ui nt oc omma tei nagu ht oemr saat vi ci anlgl ys twr ae ne ks fse, rarnedd cfarroemf u l hl ye rt r ac chkeicnkgi nhge raecxc po eunnst e es .v e r y t w o a s uObvsetra ns itxi aml ao cnht hi esv, et hmeesnet s. mN oa ltl os nt el yp shcaudl mMi inaa tseadv ei nd es tnroounggh sfaovr i nt hg e hcaobui rt .s eT, hbi us t nsehwe hdai ds c ai pl sl ion ien ge rxat iennedde da imn ot or eo tt hh eo ru gahs tpf ue cl t ss poe fn dhienrg f iannadn cai a gl r lei faet ,e rl e as edni ns ge toof cmoonnt reoyl ao vseor uhr ec re f oi nf aenxcpe as .n Ss ihoen daenc idd ej od yt. o Tmh aa tk’ se ht heer tnreayn tshf oa rt ms t aa tritvsewpi tohwaesri nogf l reesgt ue pl a ar nsda,voi nv eg r. It ti m’ s ea, ljeoaudrs- to a path of financial stability and empowerment.
[5] D ISTINCT A PPROACHES TO W EALTH FINDING INSPIRATION FROM effective financial se tnrcaet eagni de sb uc ai lnd hweel ap l tyho. uI t ’as cnhoi et vj ue s ft i an ba on uc it aml iankdi ne pg er na nd -- dom investments; it’s about adopting a choa mb i pt sr eahnedn ss itvr ea t eugni de se resmt apnldoiynegd abnyd t hmo isme i wc khi no gh at hv ee se ux ac cme isns ef uhl loywg rdoi fwf enr tehnet i gr rwo eu aplst ,hs. uI nc ht hai ss bc hu as ipnt ee sr s, wp re o’ l -l fwe es sailot hn ac lrse, a tmi oinl l,i oe ancahi rwe si ,t h atnhde i r tuhnei q eulei tme , e tahpopdrsoaanc hd ai nrde ai vsi douf afloscaups a. rDt i sa cnodv he ro ww ht oa ta ps eptlsy tthheesi re isnusci gc ehst ss f tuol our financial goals.
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30 | Basic Financial Literacy B USINESS P ROFESSIONALS AND E XECUTIVES : T HE E ARNING F OCUS nt oi fpi Bcoau f n s c i t o n ly r e p s m o s o r p a r r t e e o t f h h e i a s e n s r i a o a r n v c e a h r l i s a e g s a e n o , r d e i s n e p x p e e c i c v i u a o l t t l i a y v l e t r h s o o l e e s a e s r . n a A t s k t i h e g y e - ag se pn ee cr ta toi fntghpe ei rr sf ionnaanl ciina cl os mu cec et hs sr ol iuegs hi nr et hl eeni rt l ef os cs uhsaor nd wp roorakc ha nt od wi ne na lot vhaitni vv eo l vt he isndkei ndgi c. aTt ihnegi ra pspt rraotxeigmi ca taepl y- 7T 0h %i s doof etshne’itr jfuosctu ms teoa np ewr soor nk ai nl gi nhcaormd ee r g; ei nt ’ es raabt ioount. wt u onri kt i iensg f os mr garrot ewr t, hi dwe int thi if ny i tnhge iarnpdr ol ef ve es sr iaogni na gl sopphpe or er -. l o o t c h a B e t r e e s y a o t b o n o d g u e t t h n 2 e e 5 i r r % a o t e o w f i n n th c e e o f i f m r o r t e i t m s f , o e t r h t o t e h s s e e t m r p a . r t o e T g f h e i i e s s s s i c e o o n n u a a l b l d s l i i a n n l g - - cpllua dc eed wi ni st oe vi ne nv et us trme seonrt sdt oe cc ikssi ownist,h wt hhee rpeo tme notni aelyf oi sr hc oi gnht r ri be ut ut er ntso, tohre ihri rf ii nn ga nscki ai lll egdo ai nl sd. iTvhi deuy aul sn dwehr os t ac na nd ti chaant tpl ye rasmo npal il f ei ef df o rt th, rwo uh gi lhe ps ma raarmt oduenl et g, ca at ino nb ea snidg ni inf -- vesTtmheenret.maining 5% of their focus is particularly in- tmerizeisntgintgh.eIitr is devoted to understanding and opti- rate of return . This means they are not jaur set apcat si vs ei vl ye l iyn ivnovl ve se tdi ni ng ienn ss tuor ci nk gs oe ra crhe ai nl ev se tsat tme ;e tnht ei ys as fruitful as possible. This could involve meticulous
Distinct Approaches to Wealth | 31 mo ra dr ki veet rrsei fsyeianrgc ht h, ec iorn isnuvl teisntgmwe ni tth pfoi nr taf no cl iioa sl et ox pme ri tt si -, gate risks and maximize returns. M ILLIONAIRES : B ALANCING E ARNING AND I NVESTING W hMi l ei l ltihoenya isrtei lsl ’ v aalpupe rdoiarcehc et si n coof mt e en g edni fef er ar t i os lni g, thht el yy. sopf et nh de i or nf ol yc 2u 0s %i s oofnt hl ee vi re triamg ei nogn hi to. wA sout bh setrasnct ai anl 6c 0o n%- tortihbeurt ep et oo pt hl ee’ si r bwu es ianl tehs .s Te sh, i sf ucnodui lndg ms teaarnt ui pn sv ews it ti hn gt hi ne pp oe rt et sn tt ioa li df oern ht iifgyhl ur ec trua rt invse, oi nr veems tpml oeyni tn go pf ipnoarnt cuina il tei exs- thaTt hmeigrhetmbaeinoivnegrl2o0o%kedof. their time is dedicated to sv ee es kt mi negn pt so lwi keer fpurl ogpreorwt yt ha caqvuei ns iut ei os n. sT, hwi sh ii nc hc l cuadne sp ri no -- vb iudsei nreesns t adl eivnecloomp me eanntd, wl ohnegr- et e rt mh e yc a mp i itgahl tg aeixnps a, nodr ts hh eoiwr bs ua s bi na el as ns ec se do ra sptparrot ancehwbve et wn teuerne se. aTrhniisn sg t, rl ae tveegry- atugninitgieost.hers’ efforts, and investing in growth oppor- T HE E LITE C LASS : M AXIMIZING I NVESTMENT R ETURNS i t s aT hdei s et ilni tcet calpaps sr o, caoc mh . pTrhi seiyn sgptehnedsounpleyr -arbi cohu,t e5x%h i bo -f
32 | Basic Financial Literacy tphrei mi r atri my ef ooc nu sd ii sr encot te oa rnngi ne gn earcat ti vi ni tgi eisn. cFoomr et ht ehmr o, ut ghhe tarl al odci at itoe n3a5l %m et ao nusnbduetr os tna wn de ianl gt ha mn du lstti rpal ti ce ag ti izoi nn g. Thhoewy ov ot hl veer sc oc amnpcl eo xn tirni vbeust temt oe nt th se ti rr awt eegai let sh, . fTuhnids i nc og ul ladr gi ne -- st oc af li en dp ruonj ieqcut se, ionrv ee sntgma ge inntgoipnphoirgt hu -nl ietvi eesl . n e t w o r k i n g s h t i r g a A h t - e s s g i t g a ie n k s i e f s i t c o i a n n m v t e u 6 s l 0 t t m % ip e l n y o t f s t t h h i e n e i i r r s u f w o b c s e u t a a s l n t h i t s i . a o T l n h p i i r n s o v j i e e n c s v t t s o m , l v e e e n x s t - pa nl odr ienf fgi ci inetne tr nwaat yi os nt ao l mmaakrek et ht se, i ro rmfoi nn de iyn wg oi nr nk ohvaartdi ve er fgoern tehr ea mt i o. nT haeni dr amp op rr eo aacbho iust l es tsrsaat eb goiuc t, ao cf ttei vne pi na sc soimv ee, wealth multiplication. E XAMPLE IN A CTION : C HARTING Y OUR W EALTH P ATH h o wL et th’ se sceopnrsiindcei rp l ae s pcraanc tbi ec aal pepxl iaemd pi nl e e vt oe r iyl lduasyt rl ai ftee. Mt haersiea , wae aml t hi d- c- lreevaet li o mn asnt raagteerg, i efsi n. dRse ailni zsipnigr atthi oen i mi n- pt oo dr teadni cc ea toef me aorrnei nt igmaen tdo gurno dwei rnsgt awnedai nl t gh ,i ns hv ee sdt emc ei dnet ss atinodnael xjopblo. ring opportunities beyond her conven- m u St ut aarl t ifnugnsdms . a lAl , sM ha er ira icnovnef si dt se innc ae ma inxdo f ksnt oocwklse adng de
Distinct Approaches to Wealth | 33 gv reos twm, es hn et gproardt uf oalliloy, i nv cernetausrei ns gt h iendt oi v emr soirt ey ocfohme pr lienx- an ni zdi npgo tt he ne tvi aallluyemoof reex rpeewr i ae rndt ii na lg l ienavr ensi tnmg , eMn tasr. iRa ej cooi ngs- af i r sr tehaal n eds tiantvee si tnmv eesnttmeexnpt e rgireonucpe . aHnedr el,e asrhnes gf raoi nms stheaatsoonf ethdeinmviellsitoonrasi,raelimgninindgseht.er approach closer to a g d ro o M w p a t i i n r n i g a g ’ y s a o m u jo r i u n w r d n s e e e a y t l t f h u o n c i u s d s e e e r s d s s c e o o n n r t e i e a s a l r a f n o i r n c r g f i i t n a ic n a a n d l c s i l a m e l s a s s r o u t n l c y - : ct ieasl s .wNeoatlat bh l yt ,oo nt he idnoke sann’dt naecetd ltiok es t at hr tews ei t hs uscucbesstsafnu-l ienadr ni vi indgu, aslas v. iTnhge, af no dc uess ps he oc iualldl y bien vae sbtai nl agn cweids eml yi. xI to’ sf nmoot nj ue ys t ma baokuet mm aokr ei n gmmo noenye. y I; ti’ts’ s aabboouutt mp l aa kn itni nggy ot hu er sc eo en ds iss ft oe nr tyl yo ut rh rf ionuagnhc isatlr ga rt eo gwi ct hp al anndn ni nugr, t uc or innt gi ntuhoeums leenavrinrionngm, aenndt.adapting to the ever-changing financial s t r aDt reagwi eisn gi n vi onlsvpeisr aut ni odne r fsrtoa mn d i ns ug cacne sds fauplp lfyi ni nagn ct hi ael dg ri fof eu rpesn. tFi raot emd tahpep er ao ranc ihnegs- foof cvuasrei od usst rwa et ea gl ti he s- cor fe ab tui ns ig- na pe ps sr oparcohf eosf smi oinl lai ol sn aa inr de s eaxnedc ut ht iev ei ns vteos ttmh ee nbt -acl ae nn ct reidc fsoi gchutsso fi nt ht oe e lwi teeacl ltahs s c, er eaac thi ognr o. uBpyo f faedros pvtai nl uga btlhe ei sne-
34 | Basic Financial Literacy sc ti ar al t ge rgoi ews t, hi n, dl ei vai rdnui anlgs cf ar on me mt bh ae r ks uocnc ea spsaetsh oo ff fti hn oa sne- who have mastered the art of wealth accumulation.
[6] U NDERSTANDING C REDIT : L IKE I T OR N OT CREDIT IS A CORNERSTONE of modern finance, ed si vs iednut ai al sl f aonr db oe tnht rpeeprrseonneaul rasn cda bn ums i anke es ss sa uv cv cye fsisn. aI nn -- cc iraelddi te—c i ss iuocnhs absypue nr sdoenr as tl acnr de di ni tg ctahred vs ,abr iuosui ns et sysp lei sn eosf of i ft sc ar enddi pt , oatne dn t mi a lopr ei t—f a lal lso. nTgh iws ci thha pt ht eeri rt ouunci qh ue se obne tnhee- iynotur ircfai cniaens c ioafl jcoruerdni et ,y ewmi tphocwoenrf ii nd ge nyc oe ua ntdo c ml a raint ya .g e W HAT IS C REDIT ? r ta o i w n A e t g r i o t a o s n d c d s o , r a e s l , e e c r n r v d e ic d e e r it s t , i h s o a a r t n a m a ll g o o r n w e e e s y m th n e e o n w t b b o , - - promise to repay the lender at a later date. This e r b r t a w o s w e e d e e n r o t a n o b o t o h b r e
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