STATEMENT OF FINANCIAL POSITION AND INCOME AND EXPENSE STATEMENT

ADVANCED LEVEL

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

AGENDA• Primer:

What is Net Worth? an Asset? a Liability?

• Statement of Financial Position• Income and Expense Statement• Net Worth Activity

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

3 MONEY MANAGEMENT TOOLS

What is my financial position

today?

Work together to help you objectively evaluate your past, present, and future

financial decisions

What is my future money

management plan?

Statement of Financial Position

Income & Expense Statement

Spending Plan

How have I managed my

money in the past?

Reach net worth level

desired

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHO IS WEALTHIER?

Let’s learn more to answer this question!

Income - $14,120,000

Net Worth - $120 Mill

Income - $19,200,000

Net Worth - $115 Mill

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

Net Worth Wealth

Is an objective measure of financial

wealth

Indicates the monetary value of all possessions

that a person or household owns, minus the total amounts owed

to others

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

NET WORTH VS. INCOME

Net Worth Income

A person may have high income and low net worth or vice versa

Depends on how a person manages their

income

Money received such as wages earned from

working for pay

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHO IS WEALTHIER?

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

HOW DO YOU DETERMINE WHAT YOUR NET WORTH IS?

Statement of Financial Position - A financial statement that describes an

individual or family’s financial condition on a specified date by showing assets,

liabilities, and net worth

Shows a person’s net worth

Similar to a net worth statement or balance sheet

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

THREE COMPONENTS

1. Assets2. Liabilities3. Net Worth

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHAT IS AN ASSET?

Asset - Everything a person owns

with monetary value

Cash

Value of personal

possessions

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHAT ARE LIABILITIES?

Liabilities – A debt or

obligation owed to others

Loans (mortgage, automobile,

student)

Balance on a credit card

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

LIABILITIES VS. EXPENSES

Liabilities ExpensesDefinition

Characteristics

Example

Money owed to others

Money spent

Total amount owed

Bills paid on a regular basis

Automobile loan - $5,490 owed

Monthly payment to repay that automobile loan -

$180/month

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

HOW CAN YOU INCREASE NET WORTH?

Evaluate how you manage your

money Liabilities

Assets

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 14Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

SUMMARY

Assets – Liabilities = Net Worth

Net worth is an objective measure of wealth

Net worth is your “financial thermometer” to objectively measure your financial position

To increase net worth you will have to increase assets or decrease liabilities

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

• https://docs.google.com/spreadsheet/ccc?key=0AgC8bo4HR-otdDJYY1JMakpnOWlNNDZ6SDZERkJXRkE&hl=en#gid=0

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 16Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

NET WORTH ACTIVITY• Step 1

• Let’s read the handout together about a recent college graduate and highlight and underline important financial information

• Step 2

• Go to the PCs and find the Mommy’s Net Worth Calculator on the Anfindsen Global Drive• Complete the spreadsheet using the Biography• When done check your answers

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 17Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

START DAY 11

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 18Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

THE COSTS ADD UP

How much do you think each item would cost if purchased every day for one month?

Item Average Cost of Item

Approximate Cost Per Month

if purchased every day

Approximate Cost Per Year if

purchased every day

16 oz. soda $1.00 - $2.00 $30.00 - $60.00 $365.00 - $730.00

16 oz. energy or sports drink $2.00 - $3.00 $60.00 - $90.00 $730.00 -

$1095.00

Candy bar $0.75 - $1.25 $22.50 – $37.50$273.75 - $456.25

16 oz. Latte’ or flavored coffee $2.50 -$3.50 $75.00 - $105.00 $912.50 –

$1277.50

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

Income and Expense Statement - lists and

summarizes income and expense transactions that have taken place

over a specific period of time, usually a month or

year

THE INCOME AND EXPENSE STATEMENT

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 20Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

THREE COMPONENTS

Income

Expenses

Net gain or net loss

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 21Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHAT IS INCOME?

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 22Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

INCOME CATEGORIES

Unearned income – income received from sources other than

employment

Received Income from Government Programs – offer a

form of income, usually temporary

Earned income – any money earned from work

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 23Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

WHAT ARE EXPENSES?

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 24Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

• Taxes• Saving and Investing• Insurance• Housing• Transportation• Food• Other

EXPENSE CATEGORIES

Expenses will vary for every person

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 25Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

EXPENSE CATEGORIES• Variable Expenses are those that

change each time period

• Fixed Expenses are expenses that remain the same each time period

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 26Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

NET GAIN OR NET LOSS

Net loss

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 27Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

FIND A TRACKING METHOD THAT WORKS FOR YOU

A written system is more effective than a mental system – like Evan you can trick yourself into

thinking you spend less than you do!

Record in writing Smartphone Keep receipts

Depository institution

account statements

Money management

computer software program

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 28Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

Statement of Financial Position

Income & Expense Statement

Spending Plan

What is my financial position

today?

What is my future money

management plan?

How have I managed my

money in the past?

Net Gain Net Loss

A spending plan will help you plan your spending

Use that money for savings or other

expenses

Increase income and/or decrease expenses

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© Take Charge Today –August 2013– Statement of Financial Position – Slide 29Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

SUMMARYTells you where your

money is coming from and where it is going

Three components: income, expenses, and

net gain/loss

Use a tracking method that works best for you

Customize income and expense categories