SFL 260 Final

How much bounced check costs

$30.47

Be specific about financial obligations that the child has: In the Hill-Mulford family the children are responsible to pay:

-All college expenses after freshman year. -We pay for all room and board of the first year -Half of mission expenses -All expenses for extracurricular activities But can earn a full scholarship to one sport/activity per season by maintaining a 3.7 grade point average and above. -All clothing except underwear and socks -Can earn money earned through CaMaSeth University in the summertime. -All cell phone expenses -Can earn "cell phone scholarship" (4.0 full scholarship, 3.85 half scholarship) -Car insurance increase for moving violation and/or accident. -We pay for basic car insurance until graduation

Hill Missionary 401k

-All deposits are matched by the parents, until child graduates from high school -Balance earns 1% per month return -Can only be used for a mission, education, or down payment on a house -Maximum balance $10,000 -Parents keep sufficient real funds in the real bank to cover -HMM 401k balances -Teaches principle of using 401k in real life

How is Financial health related to marital health

-Almost 90% of couples who divorced reported having financial difficulties -Disagreements over money are a major source of conflict in marriage -Different financial values (savers vs. spenders) -Different levels of tolerance and stress related to debt -Finances greatly affect feelings and relationships

Know to what degree the FDIC insures deposits in member banks.

-Amounts above $250,000 are NOT insured per depositor -Joint depositors insured up to $500,000 -Deposits in banks and credit unions are very safe for this reason

What should we avoid like the plague?

-Creating a sense of entitlement when it comes to material things -Children should be paid for their work, and not for their whining

What are some specific examples to teach children financial principles?

-Family bank -Give children financial obligations -Introduce children to the real economy -Help children gain a perspective of generosity and sharing their money

"Bottom line on investing"

-Invest dont speculate -In budget put 10% of income into long term investments -Invest in low fee, tax advantaged mutual funds that are diversified set of stocks and bonds -Dont time the market, buy and hold!

What does Fanny's Dream teach about or financial stewardship in marriage?

-It doesn't matter how short the guy is -Couples who have similar socioeconomic status are happier than those who are different -When their house burnt down → they dealt with it together (strengthens relationship), went to work, and built it up again

How can you introduce children to the real economy?

-Open a bank account and checking account -Have them write checks -Get a debit card

Popular benefits of Affordable Care act

-Young adults can stay on their parents' health insurance until the age of 26 (great boon to BYU students who want to start a family) -If anyone gets really sick, insurance companies cannot terminate coverage (no lifetime caps) -Wellness and pregnancy exams are free to the patient -Health insurance companies are required to use at least 80% of premiums on providing actual medical services

Know what are tax deductibles

-charity contributions -qualified home mortgage interest for 1st and 2nd homes -Taxes -Interest on loans

Cardinal rule with credit cards

-pay off on time every month -keep track of spending as you go -if you can't, preform plastic surgery and cut it up

Collision auto insurance

-pays for damage to car if collided with other car (regardless of who is at fault) -covers collision with non-living object -rolling car over

Comprehensive auto insurance

-protects from risks other than collision -theft, vandalism, lightning, fire -animals earthquakes etc.

How much a 'point' is when it comes to closing costs on a home

1 point = 1% of the cost

How much a car typically depreciates

1 year = 25% 2 years = 40% 3 years = 50%

4 ways to manage risk

1. Avoid it. You can take care of yourself, avoid high risk occupations, eat well, and exercise 2. Reduce it. You can reduce some risks by adding fire extinguishers and burglar alarms, adding airbags, or getting regular medical checkups. 3. Assume it. You can retain the risk through self-insurance. If the costs are not too high, you can assume some risks yourself. 4. Transfer it. You can transfer the risk to others by purchasing insurance. You are paying premiums to transfer the risk to an insurance company.

3 types of assets

1. Cash -Checking accounts, CDs, etc. -Benefits = liquidity, low risk, good for short term -Disadvantages = low rate of return (inflation) 2. Fixed-income investments (Bonds) -Benefits = greater rate of return than cash, stable income -Disadvantages = less liquidity than cash, less rate of return than stocks 3.Equities (Stocks) -Large cap $10+ billion capitalization -Mid cap $2-10+ capitalization -Small cap <$2 billion capitalization -Benefits = Excellent return on long investments -Disadvantages = market volatility, more risky

What are 3 essential things we should teach children about finances?

1. Deny themselves 2. Work for what they want 3. To know that wants are not always satisfied

7 suggestions for finding harmony

1. Enhance energy -reduce energy depleting activities -schedule energy creating activities at the end of the day 2.Increase quality time -High quality family times= Morning rituals, crossroad times, mealtimes, bedtimes 3.Learn to bundle -Exercise with family member to bond -Take spouse on business trips 4.Focus on most important things -good, better, best -FHE -Family vacation & temple worship 5.Work flexibly -telecommuting -job sharing -part time 6.Simplify your life -prioritize the family (learn to say no to others and yes to family) -let go of material possessions -stay within your budget and save 7.Center on the Savior -Consecrate your life to the Lord

From what 2 perspectives can family finance generally be viewed?

1. Eternal perspective -All material resources are owned by God -We are stewards -We don't really own anything, it ALL belongs to God 2. World's materialistic perspective -Anything else

3 keys to counter a culture of entitlement?

1. Freely giving -all needs and some wants -most important= love, connection, care 2. Limiting -Seeing that kids don't get too much -Make sure some wants are frustrated (thats life!) -Disciplining (you get what you get) 3. Containing -Help children work through negative feelings about limiting

What are the 4 principles upon which the stewardship perspective is based?

1. Ownership: God owns everything 2. Stewardship: meet all needs and as many worthy wants as possible 3. Agency: make wise financial choices to save and sacrifice (helps you master the flesh) 4. Accountability: to each other and to God

Know the primary purposes of SFL 260

1. The core purpose of this course is to help you become a wise steward of your material resources in such a way that you, your spouse, and your family gain eternal life. 2. To teach you to magnify your financial stewardship and use prudent financial management so you can more fully bless yourself, your family, and others. 3. It is NOT primarily to teach you how to get rich or accumulate wealth.

Teaching children (8 principles)

1. Use family budget 2. Provide real world financial experience for your kids 3. Live within your means 4. Example is the best teacher 5. Open family financial communication 6. Work hard 7. Give freely of your resources (tithing/fast offerings) 8. Save & sacrifice

LDS leaders said are legitimate debts

1. mortgage 2. education 3. transportation

Rules for the Hill-Mulford Family Bank

1.Children may invest their money in, and borrow money from the Family Bank. -After tithing, after long term savings 2.Money invested earns 10% interest/month -Maximum savings balance: $100 3.Money borrowed costs 10% interest/month -Maximum debt: $100 This teaches children important lessons about savings, investing, and interest.

What are 3 costs a couple should understand before making major purchases?

1.True cost: total cost including recurring costs, maintenance, insurance, interest, etc. 2.Opportunity cost: what else could we do with the money? Is this the most important? 3.Relationship cost: how will this purchase affect our relationship?

Auto liability insurance coverage

100,000 - bodily injury per person, per accident 300,000 - limit paid to all persons per accident 50,000 - property damage

Golden percentage of a down payment

20%

Know the exemption amounts for 2015

4,000

FICO score for excellent credit

720-850

Life expectancy

78.7 overall 76.2 men 81 women

On average how much does it cost to feed a family?

A "typical" young LDS family (two parents, four kids ages 2-10) Thrifty plan: $1,169.81 per month; $15,237.72 per year Liberal plan: $2,519.82 per month; $30,237.84 per ye

401(K)

A defined contribution (DC) retirement plan offered to employees in which a specified amount of money is taken from both the employer and the employee on a regular basis and invested.

Individual Retirement Account (IRA)

A tax-advantaged retirement plan that is managed by the individual who owns the plan. Maximum contributions are $5500 per year until age 50. Money may not be drawn without a penalty until age 59.5. There is a tax deduction on contributions to this fund, but when the money is withdrawn it will be taxed.

Roth IRA/401 (K)

A type of retirement plan in which contributions are taxed before they are put into the account and money is not taxed when it is withdrawn. With roth accounts the principal AND earnings are withdrawn tax-free.

Know how much you need to save in order to be on track in your retirement savings

Age 35: one times current salary Age 45: three times current salary Age 55: five times current salary Age 67: eight times current salary

Retirement age for those born in 1960+

Age 67, reduced benefits can start at 62 or delay til 70 for enhanced benefits

Know what percentage of couples who divorce are having financial problems

Almost 90% of couples who divorced reported having financial difficulties

Formula for Net worth

Assets - Liabilities = Net worth

What are 3 ways we can effectively share our resources in the Church?

Be a diligent full-tithe payer Be generous with fast offerings Be generous with other offerings

Know when a couple should start talking about finance.

Before getting officially engaged

Negative outcomes of overworking

Bread winner feels like he needs to provide more and more and results in work becoming a vice (workoholics) You begin to hate your life Bad health

How can you save money on transportation costs?

Buy a used not new car Make your car payment ahead of time Get a smaller car Get a junk car for male teenage drivers Get a scooter or motorcycle Shop around for insurance Get along with one car Service car regularly, use synthetic oil Walk or bike places Avoid trips (bundle)

Biggest financial mistake made by recent graduates

Buying a home they cannot afford

How can you get the most from your vacation dollar?

Camp and backpack Leverage timeshare presentations Airline miles from your credit card Get good deals online Hotels.com Travelocity.com Skyauction.com Stay with family members Vacation at home

How do you make the most of your entertainment budget?

Dollar theatre free/cheap DVDs at library Amazon prime Check out books instead of buying them (online library) Go to the park Go for a walk

Know which tax credit yields the greatest benefit to married BYU students with children and modest incomes

Earned income credit

Standard deduction amounts for 2015

Filing Status Standard Deduction (2015) Single $6,300 Married filing jointly $12,600 Married filing separately $6300 Head of household $9,250

How can you reduce monthly household expenses?

Get rid of cable (get HD antenna from costco for $30) Get rid of your landline Be "smart" about your cell phones, family plans Cut your family's hair lower/raise the thermostat Turn off electronic devices Shut the doors Dry clothes on a clothes line

How much can you save by making a loaf of whole wheat bread?

Great Harvest Whole-Wheat bread: $5.50 Homemade: $0.69 Savings: $4.81/loaf

How can you get the most from your food budget?

HALT Go with a list, keep on fridge Make a menu Shop the ads and ad match Buy store brands Take advantage of loss leaders Pay cash from envelope Buy in bulk Cut back on meat Buy lunch fixings

How can you save money on taxes?

Have kids be generous contribute to tax-deferred retirement savings (401k, Roth-IRA, IRA) Make all your contributions and pay all your mortgage interest in alternating years contribute appreciated stock for tithing

HALT

Hungry Angry Lonely Tired

Where you can find the price of a used car

Kelly blue book.com

Investing

Long term Implies stewardship, while also involving ownership Slow, disciplined process of acquiring wealth

Special occasions on a budget Christmas

Make a budget for christmas and stick to it Keep track of credit card purchases Give thoughtful but inexpensive gifts Photo calendar Homemade presents

Category most overlooked in a budget?

Miscellaneous

Know whether or not your spouse's credit score will be considered when you apply for a mortgage

New spouse's credit is not merged with yours, does not affect your credit score But when you apply for a mortgage to buy home, both credit scores are considered

Greatest contributor to FICO score

Payment history 35%

Budget

Plan for future spending

The later you teach your children to be financially self-sufficient, the more it costs

Pre schoolers: financial mistakes cost $5 Pre teens: $50 Teens: $500 Young adults: $5,000 Middle age adults: $50,000

Net worth/ Balance sheet

Present financial situation

Income/Expense statement

Record of family's PAST cash inflows and outflows

Weddings

Set a budget and offer to let your child keep whatever he/she does not spend Offer an alternative to reception, etc. Have the reception and wedding breakfast at the Church Make your own wedding dress

How can you save money when you go out to eat?

Share the meal with your date Appetizer, entree, dessert Share a $5 long subway special Opt for a late lunch vs. dinner Less expensive Less crowded Better digestion Drink ice water, not soda (most marked up item on the menu!) Use coupons/savings cards and books (2 for 1) But, don't skimp on tips

What are some ways to save money on household purchases?

Shop at garage sales in nice neighborhoods early in the day Go online Ksl.com Craig's list Amazon.com Shop at DI and other thrift stores 30 day wait for major non-essential purchases

4 Whats of family finance

Spiritual: to bring us to Christ Temporal: To help us become wise stewards Individual: to accomplish your divine mission Family: to return with your family back to Heavenly Father's presence

Pros & Cons of Whole v Term

TERM Inexpensive Easy to understand Low commissions Can convert to a permanent policy later (ex: whole life, universal life) Premiums increase as the insured ages No cash value Generally can not be purchased after age 65 WHOLE LIFE Builds cash value Premiums stays level Some policies can pay their own premium with internally generated dividends Tax-deferred growth of cash value Very expensive compared to term High commissions Low rate of return compared to stock investments Complex Illustrations can be misleading

Know what the effective yield of an interest investment is

The actual amount of interest paid Also known as APY (annual percentage yield)

Speculating

The practice of engaging in risky financial transactions, often promising greater than market-rate return, in an attempt to profit from fluctuations in the market Desire for short term gain by foolishly accepting greater risk Day trading: buying and selling stock within the same trading day

Listen to what happens when a couple is hangry!

When hungry, you have low blood sugar so you are irritable and cannot think straight; couples turn on each other

Know whether or not it is a good idea for married couples to hold all assets in common

YES hold all assets in common -joint checkings/savings accounts

What does the music metaphor of harmony have to do with life?

You are the composer, orchestrator, and director of your life's symphony Marriages and families flourish as we seek harmony and reduce conflict

Best advice for investing in the stock market

You can't get greater than market rate returns without taking greater than market rate risks If it sounds too good to be true, it probably is There's no such thing as a free lunch Don't try and time the market

Know what a loss leader is

a product sold at a loss to attract customers

Best thing you can do for your car

change the oil on time every time

Actively managed fund

funds that are managed by professional investors who constantly "buy low" and "sell high"

Passively managed funds

funds that are managed by professional investors who invest using the "buy and hold" strategy (BETTER in the long run) (Less transaction fees and payment for the professionals)

Term life insurance

premiums cover death benefit only, pure insurance Contains no cash value Much less expensive per month

Whole life insurance

premiums cover death benefit plus an investment plan with modest but guaranteed returns Investments create cash value Eventually you have "paid up" life insurance and no premiums Much more expensive per month

Marginal tax rate

rate at which the next dollar is taxed