10. Wealth Distribution ‘ giving it to your chosen ones’ Wealth Accumulation ‘ giving it to yourself’ Estate Planning Basic Wealth Protection ‘ quit giving it to others’ Children’s Education Retirement Planning Building Long Term Wealth: planning financial future, goal setting, regular savings plan Home Ownership Investments Cash Management: record keeping, spending plans, emergency cash reserve, regular savings plan, net worth and income-expense statements Financial Management Pyramid Credit Management: w ise credit use, avoid credit abuse, debt reduction Tax Management: reduce income taxes Risk Management: p rotection against economic loss
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Hinweis der Redaktion
Managing Your Family Finances Handout: Basic Family Financial Management Assessment Sources: Federal Trade Commission, Fair Debt Collection . March 1999. http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm. February 20, 2001. Garman, E. Thomas and Raymond Forgue, Personal Finance . Seventh Edition. Houghton Mifflin. 2003. Income, Wealth, and the Economic Well-Being of Farm Households . Resource Economics Division, Economic Research Service, U.S. Department of Agriculture. Agricultural Economic Report. No. 812. July 2002. Leonard, Robin. Money Troubles . Nolo.Com, Inc. January 2000. National Consumer Law Center, Inc., Surviving Debt , Third Edition. 1999. National Consumer Law Center, http://www.nclc.org. January 07, 2001. Personal Finance and the Rush to Competence: Financial Literacy Education in the U.S . 2000. (Used with permission 4/5/2001). Wyoming Division of Banking, http://audit.state.wy.us/banking. February 21, 2001.
What is Financial Security? To begin we should define financial security. Financial security is not being wealthy, it means having enough money so that you don’t have to worry. It means having power over financial anxiety. Financial security is the ability to meet future needs (not wants) while maintaining day-to-day obligations.
Are You Financially Literate? The nine characteristics of a financially literate person shown on this slide and the next slide are defined in the study on financial literacy -- Personal Finance and the Rush to Competence: Financial Literacy Education in the U.S., 2000. (Used with permission 4/5/2001) While most of the characteristics are self-explanatory, the first characteristic might need to be explained – Do you understand your relationship to money? This means such things as: do you understand your need for financial security, why you spend money, your tolerance for risk, whether you are controlled by your money, etc.
Households are facing diverse changes in their employment, income, investments, and expenditures. Consequently, households face wide-ranging decisions about allocating limited resource among activities. This session will look at factors affecting the financial well-being of households.
In the perfect world, we have control over the decisions we make about how we manage our money to achieve our financial goals.
In the real world, external forces from different areas push at us. These external forces have the potential to push us out of alignment with our goals.
What happens when we add another person and external pressures to this model? It becomes complicated. External forces, including invisible forces, explain why smart people sometimes do “un-smart” things.
To set goals, one needs to understand the foundation of money management. One doesn’t start with estate planning before they have a solid base. Handout: Financial Management Pyramid
List sources of income and when they are received.
Track expenses at least 2-3 months to estimate monthly household expenses. Keep track of everything down to the pack of gum you buy. Ask for and save all your receipts. If you don’t get a receipt write it down in a pocket notepad. Daily or weekly list all the expenses you have accumulated in a categorized spending list as above. Make the categories as specific as necessary to avoid a large “Miscellaneous” column as a catch-all. At the end of 3 months, total each column and divide by 3 to obtain the average monthly expense in each category.
Shred or tear up sensitive papers, especially pre-approved credit applications received in your name and other financial information that provides access to your private information. A cross-cut shredder is recommended so the “dumpster divers” will have a much more difficult time putting your paperwork back together. Shred all forms that contain personal, insurance, medical, charge receipts, credit applications, checks and bank statements, credit offers, and charge card information. Be careful at ATM’s and while using phone cards. “Shoulder Surfers” can get your PIN number and access your accounts. Protect your card when using it – some cell phones have a camera component in them. Get your checks delivered to your bank, not your home address. When you order new credit cards in the mail, or your previous ones have expired, watch the calendar to make sure that your get the card within the appropriate time. If it is not received by a certain date, call the credit card grantor immediately and find out if the card was sent. Find out if a change of address was filed if you don’t receive the card or a billing statement. Cancel all credit cards that you do not use or have not used in six months. Put passwords on all your accounts. Use difficult PIN numbers on all your sensitive accounts (bank, credit cards, phone). Vary cases and alternate numbers and letters. Do not, under any circumstances, use something that would be easy to figure out like your mother’s maiden name, favorite pet’s name, birthday, SSN or sequential numbers.
Ask all financial institutions , doctor’s offices, etc., what they do with your private information and make sure that they shred it and protect your information. Get a post office box or a locked mailbox, if possible. Empty your wallet of all extra credit cards and Social Security numbers, etc. Do not carry any identifiers you do not need. Keep your Social Security card in a secure place – not in your wallet. Get credit cards and business cards with your picture on them. Do not put your credit card account number on the Internet (unless it is encrypted on a secured site.) Never give out your social security number or credit/debit card numbers on-line unless there is a locked padlock icon in the bottom right of your screen. If you must use a card for on-line purchases use a credit card rather than a debit card as credit cards guarantee you no liability, whereas debit cards may take 10 days or longer for the company or bank to research and put the money back in your account. Don’t put account numbers on the outside of envelopes, or on your checks. When you are asked to identify yourself at schools, employers, or any other kind of institutional identification, ask to have an alternative to your Social Security number. Health-insurance carriers often use Social Security numbers as identification numbers. Try to change that if you can. Monitor all your statements from every credit card every month. Check to see if there is anything that you do not recognize. Check with the Post Office to make certain that a thief hasn’t turned in a fraudulent change of address form for you. (They do this so you won’t be aware of new accounts opened or unauthorized charges to old ones.)
Order your credit report at least twice a year. Review it carefully. Immediately correct all mistakes on your credit reports in writing. Send those letters Return Receipt Requested, and identify the problems item by item with a copy of the credit report back to the reporting agency. Call these this credit reporting agency number and ask to opt out of offers for pre-approved credit cards: Experian, Equifax, & TransUnion: 888-567-8688 Write each of the three credit bureaus and tell them you do not want personal information about you shared for promotional purposes. Make a list of all your credit card account numbers and bank account numbers (or photocopy) with customer service phone numbers, and keep it in a safe place. (Do not keep it on the hard drive of your computer if you are connected to the Internet.) If you use a home computer to make purchases over the Internet, get a software firewall program (Norton, McAfee, Zone Alarm, PC-cillin, etc.) and install it. Update it regulary. This will help keep your computer secure from outside systems. Install a spyware removal program such as Ad-Aware. Also remember to update this program on a regular basis. These programs will remove malicious software (spyware) that gets installed on your computer while surfing the Internet. (Spyware can be used to collect your personal information from your computer and send it to another person over the Internet, often without your knowledge. Put a stop on mail delivery if you’re going to be out of town or have a trusted friend bring the mail inside daily. Know who you’re doing business with.
Don’t put your telephone number on your checks. Don’t put your Social Security number on your checks, driver’s license or credit receipts. Never give out your Social Security number or credit/debit card numbers over the phone unless you have initiated the call and know the number is legitimate. Avoid opening phishing emails that purport to be from your financial institution or credit card company and demand financial information or your account will be inactivated. DELETE IT WITHOUT OPENING IT or the phisher could gain access to the inner workings of your computer and all your confidential financial information. To cut down on commercial “pop-ups” that occur when on-line (and may give thieves access to your information) fill out the form of the Direct Marketing Association (DMA) found at www.dmaconsumers.org/offemaillist.html. If you’re plagued by hard copy offers arriving in your postal mail you can try contacting DMA at: Direct Marketing Association Mail Preference Service PO Box 643 Carmel, NY 10512 This is only helpful for companies that have registered with DMA and must be renewed every five years.
Report it immediately. Call any one of the three major credit bureaus to place a fraud alert on your credit report and help prevent an identity thief from opening additional accounts in your name: Equifax: Call 1-800-525-6285 or write PO Box 740241, Atlanta, GA 30374-0241 Experian: Call 1-888-397-3742 or write PO Box 9532, Allen, TX 75013 TransUnion: Call 1-800-680-7289 or write Fraud Victim Assistance Division, PO Box 6790, Fullerton, CA 92834-6790 Once the credit bureau confirms your report, it will notify the other two to place fraud alerts on your credit report, and all three bureaus will send your reports free of charge. Once you receive them, review them carefully for accounts you didn’t open and unexplained debts on your accounts. Close any accounts that have been tampered with or opened fraudulently. File a report with the local police or the police department in the community where the identity theft took place. Keep a copy of the report to validate your claims to creditors, if necessary. File a complaint with the Federal Trade Commission Visit: www.consumer.gov/idtheft Or call: 1-877-438-4338 Or write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580 This will help provide information that may help track down identity thieves.
Call all legitimate creditors and let them know about your identity theft and verify that they have your correct address. Keep a log of the actions your have taken – names of contacts, date you called, telephone or fax numbers and/or addresses, comments made (try to write them verbatim), and action promised. Also keep copies of letters written in the log and send them certified mail with Return Receipt Requested. Check with the Post Office to make certain a fraudulent change of address hasn’t been filed (so you don’t get bills and aren’t alerted to the crime).